With nearly 270 acres around the Schlitterbahn water park in foreclosure, some wonder what could happen to the taxpayer incentives pledged for the project. (KRIS 6 News)
CORPUS CHRISTI -
Millions of tax dollars could be at stake with a large chunk of land on Padre Island now in foreclosure.
Upper Padre Partners, which includes the same group that owns Schlitterbahn, controls 500 acres around the water park with development plans. About 270 acres of that are in foreclosure. The group has less than two weeks to come up with the money or the land could be auctioned.
The developers have two agreements with the city. One is for a $117 million tax incentive package, and the other is for the Park Road 22 bridge, which will connect both sides of the island currently split by the highway.
Businessman David Loeb served on the City Council that brokered the two agreement, and ultimately lured Schlitterbahn to Corpus Christi, The deals were written with worst-case scenario in mind, Loeb said. If the developers don’t meet the May 2 foreclosure deadline – that scenario could play out.
“If they don't build anything, then nothing happens to them and the city is not out any money,” Loeb said. “...Protecting the investment of the community was the most important thing from the council's perspective."
The incentive agreement is complex, but simply put: If the developers don’t perform then they won’t get any tax money. That tax money includes reimbursements for hotel and sales tax revenues.
So far the city has paid out $5 million in cash from sales tax revenue. The money first went to the water park, which is open for business. That was intentional, Loeb said..
“The primary thing the community wanted was for the park to get built,” he said. “I didn't get a sense that a whole lot of people in the community cared about the ancillary development."
The rest of the development includes plans for a marina, hotels, vacation, rentals, retail and restaurants. Developers have likened the plan to an experience similar to the San Antonio Riverwalk. A key piece of that project is the bridge, which recent city bids show has ballooned to an $11.7 million project.
Voters approved the project in 2004. The budget was $1.4 million, and the design idea included a simple water exchange to improve water quality in the island canals.
That all changed in 2012 when Schlitterbahn negotiated an incentive agreement with the city. When that occurred, city leaders identified about $7.5 million in funding, Loeb said. Most of the money came from money saved on other bond projects. The developer was supposed to come up with the rest of the money, Loeb said.
Also part of the agreement, the developer must build canals on either side of the highway before the bridge is built. Only the canal on the east side – near Lake Packery, is in place.
The property on the west side is now in foreclosure.
“If it's not possible for a canal to be delivered, then there's no point in building a bridge,” Loeb said.
That decision would be up to the current council.
City management is monitoring the land in foreclosure, said Jay Ellington, city parks director. Since the bridge price is over budget, the city is working to figure out how to cover those costs, he added. That could include using more savings from other bond projects or the scaling back the bridge design.
Island residents previously had pledged up to $4 million of island property tax money to get the bridge project done. That was before the construction bids came back over budget.
Island residents and business owners have called a special public meeting to discuss concerns about the development project. That meeting is set for 5:30 p.m. Monday at the Schlitterbahn water park.