Rather than lure developers to a $450 million project with promises of large tax incentives, the city plans to use recent legislative changes to help fund the work, officials said.
The city council voted 6-0 Tuesday to approve a predevelopment agreement with Epicenter of League City LLC for a project that could bring four hotels, a convention center, arenas for a hockey and a baseball team, restaurants and shops, among other business, alongside Interstate 45.
Residents in the days since the vote have questioned the move, asking what incentives the city offered developers and citing frustration with recent deals such as one that brought Nebraska-based Cabela’s Wholesale Inc. to the city.
The city in 2015 inked two agreements in that deal. One was a so-called 380 agreement under which the city will reimburse developer Pinnacle Fund Alliance up to $9.3 million over 15 years. The reimbursement will be paid from the sales tax revenue generated by the Cabela’s store and the other new retail at Pinnacle Park, 2471 Interstate 45. The city also agreed to pay Cabela’s $825,000 directly.
But unlike some previous developments, this one won’t be paid for with resident taxes or city funding, according to a city spokesman.
Rather, city officials will provide some benefits via House Bill 2445, a piece of legislation that went to the governor May 30, 2017, and was approved without his signature June 15, 2017, amending Chapter 351 of the Texas Tax Code.
“Basically, for those that qualify, a city can pledge up to 10 years of the state sales taxes and hotel taxes for eligible expenditures on qualifying projects,” said Scott Livingston, League City’s director of economic development.
The state generally takes a share of sales and hotel taxes collected in cities.
The bill added League City as one of only about 20 communities in Texas that can use the state’s share of the tax revenue for qualifying projects, he said.
For a project to qualify it must include a convention center and at least one hotel within a 1,000-foot radius of one another and the city must own the convention center and land under it, Livingston said.
The proposed $450 million commercial development would include four hotels, a convention center for a hockey team and a baseball team, restaurants and shops, and other businesses.
Once a project is approved, the state rebates sales and hotel taxes on the property for 10 years for use on convention center-ancillary facilities, Livingston said.
But the state comptroller can declare some businesses, such as a dry cleaner, as not ancillary to the hotel and convention center, Livingston said.
The state refunds sales and hotel taxes for qualifying businesses to the city, which then gives it to the developer, officials said.
The rebates can only be used on the development, officials said.
As part of the agreement, the developer would fund the design and construction of a new sports complex for the city on the growing western side of town on about a 100-acre site near the Bay Colony subdivision.
The new sports complex would replace the Chester L. Davis Sportsplex, which sits on prime real estate along Interstate 45 where the proposed new development would rise.
The Chester L. Davis Sportsplex is near the intersection of I-45 and state Highway 96 in League City.
Builders couldn’t begin construction on the new development until the new sports complex is constructed, city officials said.
Officials with Epicenter League City LLC said they were excited to work with the city on the new development.
“It will be a spotlight as travelers come down I-45,” said David Miles, one of the principals with Epicenter League City LLC.
The principals involved in the project have a combined 70 years of experience and have worked on projects of different sizes across the region, Miles said.
Now that the city has reached a predevelopment agreement, staff will work with the developer over the next several months toward a development agreement to be finalized perhaps by the end of January, officials said.
Once a final development agreement is signed, construction could begin as soon as 30 days later, officials said.