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