Business development is slowing in League City, and in a city just over halfway through construction, officials said it’s important to rekindle developer interest in the area before it’s too late. .
Over the past five years, there have been fewer new business developments across the city each year. In 2017, 18 new commercial developments were built in the city, according to League City data. In 2021, an Amazon delivery center was the only one.
In particular, the city is struggling to attract labor-intensive sites, such as office buildings, as well as destinations, such as restaurants and entertainment venues, said David Hoover, director. planning and development of League City.
“These are the kinds of things that we have a hard time getting,” he said.
City officials said there were some reasons for this trend, including the League City Council’s tendency to avoid pushing developers and the relatively new road impact fees that are being charged to developers in the League. city.
Some city council members said League City’s perks, such as its popular volunteer fire department and location midway between Houston and Galveston, should be attractive enough.
“There is already that natural incentive,” said Pro Mayor Tem Hank Dugie.
Still, officials agreed that it is crucial for League City’s long-term success to attract a greater percentage of business development to the undeveloped western part of the city than the city has today. Without new business developments, the property tax rate could increase once the city is built, Hoover said.
âWe are missing the opportunity to attract these developers who are going elsewhere,â he said. âWe are – as we speak, as far as I’m concerned – left behind. “
Lack of incentives
Riverbend is a multi-use development planned along Wesley Drive and I-45. The original plan called for the development to include high-end apartments, a hotel, marina, amphitheater, shops, restaurants and other amenities. For city officials, it was going to be a destination.
The $ 125 million, 69-acre development will not go as planned.
City council in closed session over the summer rejected a plan that included the city tricking developer, Clear Creek Point, with money to build the project within 7.5 years, with the developer only receiving no money if certain deadlines and benchmarks were missing. With that deal dead, unless another deal is struck, the development will now only include apartments and no public amenities, Hoover said.
City officials were disappointed with the decision, he said.
âWe need one or two of these Riverbend or similar type developments to show that we’re capable of doing something like that because the developers are like the pioneers of the Old West: nobody wants to be the first,â he said. Hoover said.
Council member John Bowen voted against the project. From his perspective, the Riverbend deal was not good for the city as it included investments in residences, retail and restaurants, Bowen said.
âThe three Rs are something the city shouldn’t pursue,â he said.
Dugie said he was opposed to developer incentives as well, but ultimately voted in favor of Riverbend because a lot of the gear the developer planned was reportedly public.
Hoover said League City was losing developments to neighboring cities, such as Webster, Pasadena and Dickinson, because city council did not want to incent developers, usually through what are known as the Chapter 380 agreements. According to the Texas Comptroller’s Office, these agreements for commercial and retail projects allow municipalities to offer incentives designed to stimulate business and commercial activity.
âWhen you are sandwiched around entities that have money that they use for these [commercial development] activities,â¦ they have the upper hand, âsaid Larry Millican, a board member, who also opposes the incentives.
Payments from Chapter 380 agreements to developers in League City have declined. In fiscal year 2015-16, the city invested a record $ 1.42 million in public funds in private projects. In fiscal year 2020-2021, which ended Sept. 30, the amount was approximately $ 458,000, according to city data.
Despite League City’s desire for business development, the city won’t necessarily accept any development that comes along, like the many gas stations and convenience stores that apply for permits every week, Hoover said.
“We don’t want it,” he said.
Pavement impact charge
Another factor affecting League City’s ability to attract commercial development is the pavement impact charge.
The Road Impact Fee, which the city established in January 2019, is a fee that developers must pay based on the type and location of development that goes to road projects made necessary by the developments. Residential developers must pay $ 323 to $ 3,632 per unit of service depending on the area, while commercial developers must pay $ 323 to $ 560 per unit of service. Service units are predetermined by development through a formula that measures the number of cars passing along a road, the length of the road in miles, and other factors.
Residents, city council members and city staff spoke positively about the fees; by the city collecting them, taxpayers do not subsidize road works, local residents think developers should pay.
League City is the only municipality in the Bay Area to apply the fee, which could put the city at a disadvantage when a developer contemplates the cheapest location to build, officials said.
âDo fees factor into the calculations of business owners when deciding where to build? Probably, âDugie said.
That’s why, in August, when city council members considered increasing the pavement impact charge, they chose to keep the charges fixed for commercial developments.
Had city council voted in favor of the increases recommended by the League’s Planning and Zoning Commission, fees for commercial developments would have nearly doubled in some cases. The developers likely wouldn’t choose to bring businesses to League City when they can travel to surrounding cities and not pay road impact fees, Hoover said.
The charges aren’t a complete deterrent: Despite more than $ 90,000 in pavement impact charges and no incentive provided by the city, Amazon chose to build a delivery station along Tuscan Lakes Boulevard this year. Indeed, company officials figured out League City’s natural incentives were the best place to settle, Bowen said.
However, Hoover said some city staff still disagreed that the amenities of League City alone are enough to attract the developers the city wants. Sarah Greer Osborne, the city’s director of communications and media relations, agreed.
âIf we don’t do anything, they won’t come,â she said. “We have to play ball.”
With League City half-built, authorities must ensure enough business development arrives in the city to prevent the property tax rate, which has been steadily falling, from rising again, Hoover said.
League City residences and commercial properties represent approximately 85% and 15% of the city’s tax base, respectively. For the undeveloped western half of the city, the split needs to be closer to 50-50, Hoover said.
âIt’s a big change to watch,â he said.
Commercial developments are better for the city’s tax base than residential developments because they provide property, sales and other taxes, officials said. Plus, commercial developments cost the city less to maintain on average than residential properties, city officials said.
A few council members pointed out that residences now generate more tax revenue under a law change that came into effect in October. When an owner makes an online purchase, the sales tax revenue generated goes to the city the buyer lives in instead of the seller, increasing League City’s sales tax revenue, the officials said. board members.
âWe have that going for us, but even when we get to construction, I think we’ll need more commercial to be able to fund the level of reinvestment that will be needed for our core infrastructure,â Dugie mentioned.
Another benefit of business developments is that they attract people from outside the community to spend money in League City, which further bolsters tax revenue, Hoover said.
âIt’s free money,â Hoover said. âAll you can do that attracts is gold star when it comes to doing things in cities. “
If the second half of the city were to be primarily residential by the time it was built three decades from now, the tax rate would have to rise to allow for more police, fire and other needed services, Hoover said.
There are projects on the horizon that could bring business windfall. For example, the Grand Parkway extension is expected to cross the undeveloped southwest of League City, which will attract many commercial developments, such as office buildings, officials said.
Barbara Cutsinger, marketing manager for the Bay Area Houston Economic Partnership, which promotes economic development in the Bay Area, told a League city council workshop in October that despite the COVID-19 pandemic, office development is booming near Friendswood. Such developments might be suitable for southwest League City, particularly once the Grand Parkway extension is complete, she said.
âYou want to be smart about the type of businesses that come in, but I think they’re going to scramble to fill that hallway,â Cutsinger said of the area.
Hoover said League City is poised for success.
âThe opportunities we have here are absolutely huge,â he said. âBut we’re just missing a little vision. ”