Wednesday,
April 16

 
BUSINESS

Subsidies all the way down

Did anybody else’s morning coffee taste unusually bitter upon reading about the proposed City incentive package to bring Korean solar-panel manufacturer Nexolon America LLC to Brooks City Base?

There are two kinds of unfortunate math in the kind of deal the City and Brooks are proposing for Nexolon. First is the mathematic equation that I’ve been teaching my 7-year-old daughter: when you subtract a negative, the result is a positive. How does that relate to Nexolon? When you remove the obligation to pay taxes, you’ve “subtracted a negative” and the taxpayer undoubtedly receives a mathematically positive benefit: they get to keep more of their money than they would have without the abatement.

Mathematically, this also means that public coffers are poorer by that same amount because the businesses that receive abatements aren’t paying into the system.1 In plain English, when public officials award a tax abatement, it’s the same thing, in math and money terms, as handing out cash from the public coffers.2

I find this math noncontroversial, but everybody I’ve talked to who works in “economic development” in San Antonio refuses to agree that tax abatements equal public handouts for private gain.

The second kind of math associated with Nexolon gets even worse. The Express-News story on the incentives quoted Mayor Castro, who supports the deal because of the “400 good paying manufacturing jobs” it is supposed to bring to San Antonio in return for the incentives.

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Brooks sends Nexolon deal to a divided Council

Illustration by Jeremiah TeutschDeputy City Manager Pat DiGiovanni arrived at the Brooks Development Authority board meeting Tuesday afternoon ready, he said, to vote. The agenda included a controversial incentive package for Nexolon LLC, the Korean company set to make components for CPS Energy’s 400 megawatt solar-power deal with OCI.

The board ultimately voted to negotiate terms with Nexolon, which is expected to get control of 86 acres valued at $17 million for an upfront 10-year lease payment of $5-million, according to sources familiar with the details. In return, Brooks gets a manufacturing plant and company headquarters with national ambitions, and more than 400 jobs that will pay on average more than $44,000 a year on the city’s economically challenged South Side. The company’s investment is being estimated at $115 million.

Thursday, a divided Council is set to take up its end of the bargain, which will close the real-estate gap with a promise to find $12 million – in the 2017 bond or elsewhere – to invest in Brooks infrastructure. The Council package also includes more traditional incentives for locating the plant within city limits – an economic-development grant of approximately $400,000, a 10-year personal-property tax abatement valued at $2 million, and SAWS fee waivers worth roughly $500,000.

DiGiovanni abstained because his vote wasn’t needed to move the deal forward, but his presence signaled the importance of the deal to Mayor Julian Castro and City Manager Sheryl Sculley. DiGiovanni, who is leaving the City at the end of the year to lead the downtown redevelopment agency Centro Partnership, has been keeping a low profile since the Convention Center ethics implosion this fall that threatened his career and the city’s largest single construction project to date.

Council appoints the Brooks board members, and DiGiovanni holds the District 10 seat, a position ceded to the City Manager’s office by gentleman’s agreement since the board's inception. But District 10 Councilman Carlton Soules sent DiGiovanni a letter dated November 26 notifying DiGiovanni that Soules would be replacing him.

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CPS Energy pulls plug on fund for municipalities

CPS Energy is pulling the plug on millions of dollars it gives to local municipalities for electric infrastructure projects.

The utility, owned by the City of San Antonio, had set aside one percent of its annual revenue to create the Community Infrastructure Economic Development fund. That money was given to municipalities in Bexar County to help them pay for electric projects. The fund currently has a balance of nearly $10.5 million.

But earlier this year CPS Energy decided to do away with the fund, angering city leaders in the small municipalities that say they depended on that money.

"We're building a municipal building and a fire station. And so, the funds were going to be used to install the public lighting in the park," Art Martinez de Vara, mayor of Von Ormy, said. Martinez de Vara says CPS got rid of the fund without even asking how it would affect cities like his.

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Wanted: Customs commissioners with border experience

One cannot credibly make the case that President Obama is a president incapable of doing big things. After all, he staked his first term on passing a sweeping overhaul of the nation’s health care system. He got it done, and he won reelection.

So it’s almost baffling that his administration, in light of achieving something so momentous, has been unable to get a Senate-confirmed Customs and Border Protection commissioner in place.

Don’t get me wrong: getting nominees through the tough confirmation process has never been a slam-dunk. (You might recall Bill Clinton’s well documented first-term struggles to appoint an attorney general.)

But CBP commissioner is a post well under-the-radar for most Americans, rarely sparking much public debate. That doesn’t mean, though, that the chairman of the Senate Finance Committee can be easily charmed, as the president found out with his nomination of Alan Bersin back in 2009 – an outstanding pick that I supported.

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Blue Star won't move to Big Tex

The new site rendering, sans Blue Star, for the Big Tex redevelopment. Courtesy NRP Group.Blue Star Contemporary, the city’s 25-year-old artist-founded gallery space and education program, is no longer planning to build a new home at the Big Tex development on the San Antonio River.

Blue Star’s gallery and student art program are located in the warehouse complex of the same name; the Big Tex site is next door. James Lifshutz, who owns both sites, has partnered with NRP Group to build a $43-million residential and retail development at Big Tex, a former brownfield once contaminated with asbestos from its days as a vermiculite-processing plant. Its long road to recovery included an EPA cleanup and a disputed cleaning bill, but groundbreaking is finally scheduled for next spring.

The original Big Tex plans called for a new Blue Star Contemporary Art Museum to be the centerpiece, but Blue Star board President Ed Valdespino says the organization will stay put and expand in its original home, an option he assumes will include Blue Star expanding into the entire warehouse building it currently occupies.  

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