PRESENTER: Presenter
Jeff Jewell, Economic and Community Development Director
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SUBJECT: Title
Discuss and consider the approval of a resolution recommended by the New Braunfels Economic Development Corporation approving an economic development incentive, not to exceed $4,500,000, to S. Castell, LLC for open space improvements and possible entertainment and exhibition facilities, pursuant to Section 505.152 of the Texas Local Government Code.
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DEPARTMENT: Economic and Community Development
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COUNCIL DISTRICTS IMPACTED: 5
BACKGROUND INFORMATION:
In 1945, a 2.460-acre plot located at 210 S. Castell Avenue was conveyed to the Producer’s Cooperative Marketing Association. From November 1945, the site functioned as the Producer’s Co-Op Feed and Supply, serving both the local and rural economy. In 2021, the property was sold to 210 S. Castell, and the new owners announced plans to rehabilitate the buildings and convert the space into a mixed-use development. The redevelopment plan includes the transformation of existing buildings into a public marketplace that will house local businesses, retail stores, and food vendors. Additionally, the site will feature civic gathering spaces. Key renovations include the creation of:
• A public market and specialty grocery spaces.
• Public amenities such as a grand lawn, performance plaza, pavilion, and public restrooms.
A significant highlight of the project is the relocation and expansion of the existing downtown Farmer’s Market to this new venue.
Public Marketplace
The public marketplace is envisioned as a vibrant center for commerce and community engagement. This curated, year-round marketplace will offer space for owner-operated shops and stalls, with a focus on showcasing local businesses and products. The marketplace will serve as an incubator for small businesses, providing leased spaces at lower overhead costs, allowing for economic growth and community development. The owners plan to accommodate 20-30 retail and food businesses within the redeveloped 12,900 square feet of space. Public markets, even those operating only one day a week, often act as economic anchors, supporting the local business ecosystem. According to a survey by the Project for Public Spaces, 60% of market shoppers also visit nearby stores on market days, indicating the potential for increased foot traffic and retail growth.
Public Benefits and Open Space
These markets can serve as focal spaces for the community and civic events by providing active public space and a unique destination for New Braunfels residents to enjoy. Beyond commerce, public markets offer broader public benefits such as:
• Access to fresh, healthful foods.
• Job creation.
• Serving as incubators for small businesses.
• Attracting tourists.
• Preserving historic spaces.
The proposed incentive of up to $4.5 million is intended to offset the costs of creating the public space and associated improvements. The extent of the improvements will create a park like setting in the downtown area, which has been identified as a desired improvement in multiple plans and public forums including Envision New Braunfels, the 2010 Downtown Implementation Plan, the South Castell Vision Plan and the 2021 Downtown Action Plan. The open space, splashpad, public restrooms, lighting, benches, trees, and improved pedestrian connectivity will upgrade the downtown experience for all users.
The NBEDC received an initial presentation on this item at its August 15, 2024, regular meeting. After holding public hearing at its September 12, 2024, special called meeting, the NBEDC voted unanimously to approve this expenditure.
ISSUE:
The total cost of the project is estimated at $19.34 million but is not financially feasible with the additional costs incurred by constructing the open space. The development has been underwritten to verify that the open space improvements would not happen “but for” the recommended incentive. The project has an approximate $4 million funding shortfall or financing “gap.” With a gap of this nature, there are only two options: decrease development costs or increase the potential revenue from the site. Without an incentive, the planned public space and amenities would likely be removed in favor of including parking around the site, which is a more financially beneficial opportunity for the owners. The owners also could clear the site of all existing improvements, seek any associated rezonings needed and construct a new series of buildings or structures.
STRATEGIC PLAN REFERENCE:
☒Economic Mobility ☐Enhanced Connectivity ☐Community Identity
☐Organizational Excellence ☒Community Well-Being ☐N/A
FISCAL IMPACT:
The proposed incentive of $4.5 million is proposed to be delivered in tranches over a 10-year period.
The breakdown of the economic development incentive is:
Total Amount of Incentive: $4,500,000
Initial Payment: $2,000,000 reimbursed upon completion of the open space improvements, green space, and public restrooms
Annual Payments: $250,000 each year for 10 years after annual compliance audits
Compliance Audits: Completed annually; Co-Op Marketplace must remain in operation and remain open for public access a majority of the year
The proposed terms would reimburse $2 million to the owner after the improvements are constructed and provide annual payments of $250,000 for 10 years if the market continues to operate. This incentive provides a stabilized cash on cash return to the owner of approximately 7% and an unlevered Internal Rate of Return in year 10 of approximately 7.5%.
Recommendation
RECOMMENDATION:
Staff recommends approving this recommendation from the NBEDC.