Last week, I received an email from a friend asking how increases in sales tax are being used and how they can’t be used. It was a great question that deserved a proper response, and I thought I would include it here for others to see as well.
Regarding the facts and figures I post, what I try to convey is the general health of the community’s economy—which doesn’t necessarily translate into additional funds for the City or EDC. The gross sales post you mentioned (Q1 18 gross sales info is now available for Marble Falls: overall, we saw an 8.09% increase over Q1 17 sales, with the strongest growth coming from wholesale trade (+36%), manufacturing (+41%), and construction (+111%)–that’s not a typo!) actually has no bearing whatsoever on either our budget or the City’s budget, since our budgets come from sales tax and not gross sales. In fact, the City has to project about 4.0 – 4.5% annual sales tax growth in order to balance their budget, and they’re about $85,000 short (1.4%) of that mark this year (FY 17-18). The EDC can be more conservative, so we don’t budget any growth—and we’re about 2.09% ahead of schedule for the year. This amounts to a little over $44,000 in new sales tax revenue, which just gets absorbed into our fund balance and helps lessen the shortfall we’ll see over the next couple of years. (By the way, the shortfall is due in large part to the receipt of bond funds in one year and then spending those funds in subsequent years.) So, long story short, what might look like big gains in sales tax doesn’t really translate that way. Big gains in property tax, on the other hand, are what enable the City to increase the street maintenance budget, add emergency personnel, buy fire trucks, etc. Property tax, of course, doesn’t help or hurt the EDC since we derive no funding from it.
I’ll add to my response that the recent gains we’ve seen in property tax have been mitigated to some extent by the City’s conservative approach to setting the tax rate. If the City Council were to maintain the tax rate or even adopt the rollback rate, there would be at least some additional funds for some of the extras that I hear people asking about: more residential sidewalks, increased park maintenance, etc. As it stands today, however, Council and staff are trying to balance the needs and wants of the citizens with keeping those citizens’ tax bills as low as possible—and I applaud them for their efforts.
As always, I’m happy to visit about these or other issues of community interest. Please let me know if you have any questions, comments, concerns, or observations.
Historically, I’ve used this blog to share information about overall economic activity and significant projects in Marble Falls. We’ve had more than our share of good news and project activity to report, especially for a community our size. Because it’s National Economic Development Week this week, however, I thought I would try to do something a little different. In this post, I thought I would step back for a moment, offer up a little bit of history, and provide some detail on a handful of EDC projects you might not know about.
The Corporation for Industrial Development of the City of Marble Falls (IDC) began in the early 1990s when the half-cent sales tax for economic development was approved by the voters in Marble Falls. In 1992-1993, the amount of revenue collected was $401,375.50. In the first couple of years, about two-thirds of this fund went toward paying the debt service on a new wastewater plant in town. That percentage dropped in subsequent years as sales tax grew with the influx of new development, even though the debt service on the plant increased from about $285k to more than $400k per year. The largest payment to the City for wastewater infrastructure was in 2009-2010, when EDC help was needed with extending the utilities to the hospital. That payment was just short of $1.5 million, and it was followed by another $1.1 million in transfers over the next 5 years. In total, the economic development sales tax has contributed over $9.1 million dollars toward the City’s wastewater fund. To put that into perspective, from 1992 until 2009, the EDC saved water customers in the city between 23% and 46% off of their monthly bills.
After getting the wastewater plant started, the next major project for the IDC was the development of the Business & Technology Park on the north side of town in the late 1990s and early 2000s. About 100 acres have been developed thus far, with another 100 reserved for education and about 100 acres remaining for new development. Today, the Park has grown to accommodate ten businesses with nearly 200 employees and more than $11.7 million in ad valorem value for the City. While all current and upcoming businesses in the Park are important, I think it would be a travesty if Marble Falls didn’t have Save the World Brewing Company in town.
While the Park was initially being developed, the IDC tackled another lofty project by bringing higher education to Marble Falls. In 2002, Texas Tech University began teaching master’s level courses at Marble Falls High School. Realizing that this could not be a long-term solution, the IDC joined forces with the Hill Country Higher Education Foundation and paid for new equipment and lease space in Gateway Park. Then, after TTU outgrew that space, the IDC bought a former church property just up the street on Steve Hawkins Parkway and remodeled it to include office space and classrooms for both TTU and Central Texas College in 2005. The building was named the Frank Fickett Higher Education Center in honor of Mr. Fickett, who provided a considerable donation toward the purchase of the property. A few years later, the IDC paid for the addition and build-out of the second floor of the Fickett Center to accommodate the growing enrollment between the two schools. To date, hundreds of students have completed degree programs at the site in Marble Falls.
2007 was a pivotal year for the corporation. In May of that year, Marble Falls voters approved the dissolution of the 4a corporation and the creation of the 4b corporation, which provided more flexibility on projects such as quality-of-life initiatives. In September, the original IDC merged with the new Marble Falls Economic Development Corporation. While the board remained the same through this transition, the strategic plan expanded.
The next major project was the EDC’s purchase of the property at 1707 Colt Circle in late 2009 to explore the creation of a vocational school in town. Without operational partners on board, however, the EDC ended up negotiating a lease and performance agreement with Ronn Motor Company. The EDC remodeled the building amidst much hype surrounding the company, but Ronn Motors never took off—so the EDC encouraged their departure in late 2011. In early 2012, the EDC entered into a lease/purchase agreement with CorWorth Building Systems for the property. This incubational deal resulted in the EDC winning a Community Economic Development Award from the Texas Economic Development Council that year. In 2014, CorWorth exercised their purchase option with the EDC providing owner financing. Today, CorWorth employs 40 people.
Just as CorWorth was settling into their new space in 2012, the EDC got involved with negotiations to bring Scott & White into the community. The hospital’s fundraising team set a goal of $25 million in local support to bring the finest equipment and technology to their planned campus at US Hwy 281 and SH 71, so the EDC responded to the campaign by entering into a $2.5 million performance agreement over 5 years to reimburse Scott & White for job creation. This agreement paved the way for Scott & White to consolidate three building phases into two and open their specialty clinic in 2013 and the hospital in 2015. Today, Baylor Scott & White employs 445 people with an average wage of $58,000 per year, not including physicians.
The EDC’s current major project—the Downtown Hotel and Conference Center—began in earnest in late 2013 when the EDC started to assemble real estate to support the Downtown Master Plan and the newly-formed Tax Increment Reinvestment Zone (TIRZ). After a few rounds of selective RFQs, we started a public/private partnership with Novak Cobalt Partners to develop, construct, and operate a destination boutique hotel with conference space on a portion of the land that the EDC purchased in 2014. Among the many unique aspects of the partnership, what stands out to me is the EDC’s commitment to reinvest the revenue derived from the project into improving the adjacent park space for locals and tourists alike to enjoy. The buildout of the parks in accordance with the Parks Master Plan that was adopted by the City in 2017 will be a major project for the EDC for several years to come.
While each of the above projects were and continue to be important multi-million-dollar endeavors, the half-cent for economic development has grown to accommodate other programs as well. In 2012-2013, the EDC created a Sign Replacement Program in response to the new sign ordinance adopted by the City. Thus far, the EDC has assisted 17 businesses with more than $19,000 in funding toward replacing their signage. We used this template to create another program in 2013-2014 called the Business Improvement Grant (BIG) Program, which provides a reimbursement to business owners who make physical improvements to their properties. Flat Creek Enoteca, Elwartowski Chiropractic, Mustang Lube, Numinous Coffee, Bridget’s Bed and Breakfast, and 18 others have been recipients of this grant, with the EDC providing more than $170,000 in total reimbursements to support aesthetic and functional improvements at businesses throughout the community. The third major program we created from this template is the Community Leverage Program, which is designed to provide matching funds for important community projects. From 2012 until today, the EDC has provided nearly $380,000 toward park improvements, the arts, and other non-profit groups.
Outside of these established programs, the EDC has funded more than $1.1 million in City projects since 2010. This is over and above the transfers to the wastewater fund I mentioned earlier and includes projects ranging from property acquisition to building renovations to infrastructure improvements to planning assistance. This contribution is the equivalent of more than two cents per hundred on the City’s tax rate, or a savings of about $50 each year for the average homeowner. For our current fiscal year, the EDC has budgeted an additional $281,000 toward City engineering, debt service, and planning support—another 3.87 cents off the property tax rate ($83 in savings for the average homeowner) this year for the citizens of Marble Falls. The final category I’ll mention is a critical area for Marble Falls and most other growing communities—workforce development. To date, we have contributed more than $90,000 toward programs designed to train, certify, and provide wraparound services to students in the medical, plumbing, and electrical fields. We’ll keep an eye open for opportunities in additional fields and continue to work with our partners at the Workforce Network, the Marble Falls ISD, CTC, and others.
In closing, the Marble Falls EDC has a nearly 30-year history of striving to help Marble Falls be the best community it can be. The organization has attempted to be proactive, responsive, and thoughtful in the way we invest the sales tax dollars that come into our community. We want to engage in projects that will have a lasting impact on the future of our community. Based on recent developments and things that are now in the works, I have high hopes for our future. If you ever have thoughts, ideas, questions, or concerns about our role in this future, my office is always open.
In the last day or so, there has been quite a bit of dialogue about the proposed parking garage on EDC-owned property in Downtown Marble Falls. While the focus has been squarely on the garage and concerns about losing our small-town feel, there is much more to the overall project than the garage alone.
With the array of amenities that are planned for the Downtown parks, a parking garage will help us consolidate parking rather than paving any more green space than we absolutely must. The footprint is just over half an acre, versus the multiple acres we would need for surface parking. Controlled access into and out of a structured garage is much safer than hundreds of parking spaces scattered all over the area. Lastly, we believe that a strategically-located garage is preferable to asking people to park all over the place and walk several blocks to their destinations in the Texas heat.
A schematic model of the hotel and conference center shows the size of the garage in relation to the entire project
Along with the garage, a fairly long list of Capital Improvement Plan (CIP) projects will be the subject of some discussion by the City Council in the coming weeks. All of these projects were examined during the budget workshops that took place July 12th and 13th, but formal action will be tied to next year’s budget that begins on October 1st. The CIP project list was broken up into several phases, with Phase 1a being the package proposed for FY 2017-2018. Included in Phase 1a are:
All components of Phase 1 of the Downtown CIP projects are projected to be complete within 5 years
| Description | Opinion of Cost |
| Boat Ramp | $200,000 |
| Yett Street Parking | $235,000 |
| Johnson Park Restroom | $225,000 |
| Main Street Restroom | $125,000 |
| Lakeside Beach and Restroom | $476,100 |
| Lakeside Pavilion Parking | $340,000 |
| Lakeside Park Trails | $120,000 |
| Wayfinding Signage | $200,000 |
| Landscaping, Demo, Utilities, Lighting, Etc. | $855,000 |
| Mobilization and Contingency | $277,610 |
| Total Phase 1a CIP Projects | $3,053,710 |
This package of projects comes directly from the Parks Master Plan that was adopted earlier this year by the City Council. The parks plan was based on extensive feedback from the community, and many of the above projects—trails, shade, restrooms, a beach, and improved access to the lake—ranked at the top of multiple survey questions.
Of course, with such an extensive list of projects requiring a substantial sum of money, the question about how all of this gets funded is a natural one. The answer is that the City will consider issuing bonds to pay for the garage and the Phase 1a projects. The debt service for the garage would come from a combination of hotel occupancy taxes (HOT) and parking fees, while the CIP debt would be serviced using EDC funds, City general funds, HOT funds, and Tax Increment Reinvestment Zone (TIRZ) funds. In all, the annual debt service would be just under $600,000, with the aforementioned revenue streams covering the payments.
This brings me to the next logical question: what about the impact to the tax rate? The great news is that all of these projects can be funded even with a slightly lower property tax rate next year. The staff’s recommendation to the City Council at their meeting on August 1st will be to adopt the effective tax rate of $0.6341, which would be a reduction of $0.0142 (2.2%) from the current rate of $0.6483. The math works because of additions to the tax roll, strong sales tax growth, and the fact that all but one of the revenue streams to be used to cover the debt service are not tied to City property taxes paid by the general public. HOT funds, TIRZ funds, and EDC funds are all special-use funds that have specific purposes and limitations dictated by state statutes.
In speaking for the board and staff of the EDC and other members of the City’s leadership team, we are excited about what’s happening in Marble Falls, and especially in the Downtown area. With the charm and character that come from an array of locally-owned shops and cafes, to upcoming developments including residential projects and a boutique hotel and conference center, to enhanced access to beautiful Lake Marble Falls, we know that we are in the midst of something very special. The first round of Downtown CIP projects is the culmination of many years of community feedback, planning, and vision. The structured parking facility is needed to support a Downtown that will become more active and vibrant in the years to come. And being able to do these things with a reduction to the City property tax rate is a bonus.
Captain Obvious: “Wow—the grand opening of the new H-E-B in Marble Falls is a pretty big deal.”
Admittedly, I knew there would be some buzz surrounding the opening of the new H-E-B, but I was not prepared for more than 2,000 reactions, comments, and shares in the first week of our Facebook video post highlighting last week’s festivities. Everybody knows that H-E-B is a great company with a loyal following, but I thought I would attempt to provide some specific insights on why this is such a big deal.
Before I do, however, I would like to congratulate VALERIE HIBLER for winning the drawing for $100 in H-E-B gift cards, courtesy of the Marble Falls EDC and Squeaky Wheel Marketing.
And, now, my top ten list:
- H-E-B is a Texas-based company with Hill Country roots. When it comes to community development, the more local, the better. It just happens to be a huge bonus that H-E-B is the largest private employer in Texas.
- H-E-B has great people. From top to bottom, every H-E-B employee I’ve ever dealt with has been a consummate professional. David Crail, in particular, has been a pillar of the community and a valuable mentor to me. At last week’s ceremony, he drew the loudest applause of anyone or anything—so I know others feel the same way I do. When he announced his retirement last year, it marked the end of one era and the beginning of another. I know Rudy Gill and his team will do a great job in the coming years.
- H-E-B supports the community. As evidenced by the gifts to the Marble Falls Education Foundation, the Helping Center, and others, H-E-B supports the communities that support their stores. They truly are a great partner.
- H-E-B’s investment in Marble Falls is a beacon that signals the strength of our economy. During almost every conversation I’ve had over the last year with prospective business owners, I’ve had to answer the question about when the new H-E-B was going to open. Just as Chick-fil-A represents the strength of the food sector, Baylor Scott & White the healthcare sector, and the hotel and conference center the hospitality sector, H-E-B’s expansion illustrates that they believe in the growth of the Highland Lakes area and that they want to be a part of enhancing the quality of life for our residents and visitors. And the fact that they did this without any monetary incentives from the EDC or City is icing on the cake.
- The H-E-B development project is triggering the revitalization of FM 1431 West. When H-E-B committed to expanding their presence in Marble Falls, they considered a few sites that would have taken them off of 1431. Losing H-E-B as an anchor in that area would have been problematic if not devastating for the surrounding businesses. Instead, all the players involved got creative and figured out a way to make the site work. Once demolition of the old store and the new parking lot are completed, that area will be a shining example of the right kind of redevelopment.
- The opening of the new H-E-B store should stop much of our sales leakage to other communities. Especially lately, as the shelves of the old store got emptier and the parking lot got tighter, Highland Lakes residents started doing their grocery shopping in communities to our east. Since they made the trip anyway, they probably stopped and ate somewhere and maybe did some other shopping while they were at it. The new H-E-B—especially when the parking lot is complete—should give people everything they want from a grocery store and more, thereby keeping more dollars circulating through Marble Falls instead of other communities.
- H-E-B’s employment spectrum matches that of the community. Like the school district and the hospital, H-E-B provides jobs at a variety of wage and skill levels. These are the top three employers in Marble Falls, accounting for more than 1,500 jobs for professionals with advanced degrees and experience to part-time student workers and retirees.
- H-E-B innovates. From the curbside pickup to the lake gear to the kombucha* station, H-E-B leads the way with fresh, new ideas and products that are appropriate to the communities they serve.
- The new H-E-B has ignited a spark in the community. Outside of a few nice days here and there, the weather around here hasn’t been great lately, and it seems to have led to some moodiness and doldrums that we’re not used to seeing. That is, until the new H-E-B opened. Suddenly, everyone is positive and upbeat—even the negative nellies and CAVE people (Citizens Against Virtually Everything) don’t have anything to complain about.
- Aisle #1 is beer, and Aisle #2 is wine. This seems to be the appropriate priority in the correct order, with a very visible Save the World Brewing Company “Go Local” endcap to boot!
* Kombucha (also tea mushroom, Manchurian mushroom, formal name: Medusomyces gisevii[1]) is a variety of fermented, lightly effervescent sweetened black or green tea drinks commonly intended as functional beverages for their supposed health benefits. (Source: Wikipedia)