Let the children fend for themselves

Item 25.3 on the regular city council agenda for September 20, 2016 meeting is another example of how they hide the truth in plain site.

A developer intends to build a high rise hotel on land downtown.

The item would give the developer a 50 year lease on a piece of city owned property downtown for $1,200 per year.

The property is currently owned by the developer and is on the central appraisal district tax rolls for roughly $500 thousand.  The property taxes are currently about $15 thousand a year.

The way the deal works is that the developer first gives the land to the city.

Then the developer will generously pay $1,200 each and every year for 50 years to lease the land.

Whatta deal

The developer gives the land to the city and then pays rent.  Isn’t that nice of them?

Actually

By placing the hotel on land that is owned by the city the developer avoids paying property taxes on the land.  That means that the city gets a nice new hotel downtown but the school district loses half of the property taxes that would normally have been paid each year.

Oh, and by the way the agenda item would also exempt the hotel property from the the downtown reinvestment zone, thus giving it an advantage over other downtown businesses.

We wouldn’t want to stop there.  The hotel will also be eligible to receive a rebate on hotel occupancy taxes paid by the guests for the first ten years.  Our rate in El Paso is 17.5% so if we understand the law correctly the developer will get his room rate plus 17.5% for ten years.

We deserve better

Brutus

9 Responses to Let the children fend for themselves

  1. Alberto says:

    Not sure I follow… the city loses most of the tax on a $500k property but then they will gain tax on a — just guessing, moderately — $50 million property, the new hotel. At a .03% rate wouldn’t ~$15k be a good exchange for ~$1.5 million? Plus, not sure how being EXEMPTED from a reinvestment zone is an advantage against other businesses.

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    • Anonymous says:

      Except an exemption from the downtown reinvestment zone (which was simply set up to redirect the taxes paid by folks in the zone to the zone instead of to the city) may be a weasel worded way of saying they won’t be assessed property tax on the building.

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  2. Reality Checker says:

    Are all these tax breaks and tax dodges what people are referring to when they talk about the free market? Don’t they really mean free money for some? Whatever happened to letting the markets work?

    If a business can’t pay its fair share, it shouldn’t exist, especially when they want breaks for more than three to five years.

    Any members of city council who took campaign donations from Scherr or one of his entities should recuse themselves from this discussion and any vote.

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  3. abandon hope says:

    Here’s more information on history of the Hotel Sancho Panza property.

    http://www.elpasoinc.com/news/article_cc0c278e-2efc-11e5-a230-0f14c539d202.html

    It sounds like Scherr was getting ready for the city to fund a convention center hotel. But now that the Camino/Del Norte is being remodeled, does the City need another convention hotel? The Camino developers have not yet requested City incentives, but they surely will. Maybe Scherr is trying to beat them to the dole.

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  4. abandon hope says:

    Jim Scherr, attorney and owner of the Doubletree, is the owner of record for Hotel Sancho Panza. Hotel Sancho Panza requested an incentives package from Council on Oct. 7. 2013 but it wasn’t approved. Doubletree got generous city incentives. Does anyone know why Hotel Sancho Panza is registered in Nevada?

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  5. anonymous says:

    $1,200 a year for 50 years is a whopping $60,000. That won’t even cover the legal fees and other costs the city will incur to do this deal. There will also be hidden ongoing costs and financial obligations. The city failed to tell people upfront about the ongoing costs the city would incur at the ballpark.

    The city keeps taking downtown properties like the Times building and turning them into tax exempt properties all while tell you that the economic development is increasing the tax base.

    Now you’ll have a downtown hotel that will be will exempt from the HOT tax, so the hotel that will benefit the most from being near the ballpark will not even be contributing to the financing of the ballpark in the same way as other hotels that had the increased HOT tax shoved down their throats.

    This is all about quick money. The developer will get all these tax breaks, build the hotel, and then flip it to a large hotel operator or a real estate investment group.

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  6. Jerry K says:

    Do you suppose a board member from EPISD might show up to speak against this on behalf of the district?

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  7. Now, that’s a deal. Just another example of why we can’t have nice things, like smooth, clean city streets.

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  8. Deputy Dawg says:

    And Brutus was complaining about a $1650 a month rental on 3 acres at Bowie…

    Like

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