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Sunday, March 19, 2000

Dredging Packery without tax hike
Plan involves city, county, federal funds
By Dan Parker
Caller-Times
Nine months after voters turned down a county bond issue that would have raised taxes to dredge Packery Channel and renourish a Padre Island beach, city officials say they may have found a way to execute the multi-million dollar project without raising taxes.
   Packery Channel, a small Padre Island waterway, for years has been stocked with dreams of multi-million-dollar development and fears of an expensive boondoggle.
   On Tuesday, the City Council will consider authorizing city staff to prepare a preliminary plan in which the city and other local taxing entities could end up joining with the federal government in financing the $30 million venture without raising taxes, Assistant City Manager Tom Utter said.
   The plan hinges on whether local government could raise its $10.5 million share though tax increment financing.
   Through this method, the local share would be paid for with extra tax revenue generated by increases in channel-area property values heightened by construction of the channel and the development that likely would follow, Utter said.
   Utter said he is optimistic that, if the council gives the go-ahead, staff will find that tax increment financing, known as TIF, would provide the needed money because the project would significantly increase property values.
   Supporters have said creating the new outlet to the Gulf of Mexico for boaters and fishermen would boost the local economy by attracting millions of dollars in development in the form of a marina, resorts and other enterprises.
   Supporters also have said the project would help the environment by promoting better circulation in the Laguna Madre.
   But others have argued that opening the channel would be too expensive, cause beach erosion and make storm surges more dangerous. Opponents have said that the channel eventually will get choked with sand despite dredging.
   Mayor Loyd Neal and council members Melody Cooper, Henry Garrett and Mark Scott said they expect to vote in favor of staff moving forward with the plan Tuesday.
   Other council members couldn't be reached Saturday.
   "Packery Channel was one of the commitments I made to the district during my campaign, so I'm committed to trying to make that project happen," said Scott, whose district includes Padre Island. ". . . I think this (latest proposal) represents the people's will and the statement the people made in last June's bond election.
   "My interpretation of the bond election last June was that the citizens said, 'Don't raise my taxes to fund that project,' " said Scott, who is among those spearheading the plan. "This TIF concept represents that will."
   Utter said City Manager David Garcia also is leading the charge to take on the project. Garcia was out of town and could not be reached for comment.
   Cooper said the project is needed to bring jobs to the Coastal Bend.
   "We've got to get something in here to improve the economic base and bring more jobs in," Cooper said. "We're lagging behind the rest of Texas, and I just think this (project) would be a marvelous way for us to do that."
   New access to the gulf
   Packery Channel lies adjacent to Packery Pass, a natural inlet that opens periodically with storms and fills in with sand during periods of calmer weather.
   The channel ends several hundred yards short of the gulf.
   Voters on June 12 defeated a county bond issue that would have raised taxes to dredge Packery, pump sand onto an eroded beach in front of a seawall on Padre Island, elevate the JFK Causeway and build a fairgrounds in Robstown.
   The physical scope of the project would be similar to one pitched by the county last year.
   It would mean dredging the channel and installing jetties on each side of the channel, giving Coastal Bend boaters and fishermen their only access to the gulf besides the ship channel in Port Aransas.
   New tax zone contemplated
   Sand dredged from Packery would be used to restore the eroded beach in front of the seawall on Padre Island. That would protect property and boost tourism, causing the value of property in the area to rise and helping pay for the project, Utter said.
   If the council goes forward with the plan, it would mean possibly creating a tax increment financing zone.
   The zone would include the Packery Channel and seawall areas. Property tax revenue collected within the zone would be used to pay off bonds that would finance the project.
   State law allows cities but not counties to create a tax increment financing zone, Utter said. However, counties can join the zone's board of directors and sign agreements to allow their extra property tax revenues to pay for a project, he said.
   McComb favors idea
   If the Packery Channel project is undertaken, and the county takes part, county property taxes within the zone would be used to help pay for the project in the same way the city property taxes would, Utter said.
   Nueces County Commissioner Joe McComb said he would like to see the county take part.
   "I'm delighted the city is willing to move forward with this thing," McComb said.
   "We've worked a long time to lay out the groundwork for this, and this is an opportunity for the city and county to work together to produce something really good."
   Because Del Mar College is a taxing entity in the Packery Channel area, the college could take part in the same way as the county.
   Bonds not guaranteed
   Utter said the City Council would establish boundaries for a tax increment financing zone. Taxing entities would continue receiving tax revenue on property in that zone, but any rise in property value that takes place after Jan. 1, 2001, would be used to pay for the local share of the project - if the city creates the zone this year.
   The tax increment financing zone, which would have a board of directors, would issue bonds to pay for the project. The board's members would be composed of representatives of the city and other taxing entities that decide to get involved.
   To avoid financial risk to the city, the city would not guarantee the bonds, Utter said, which means the city wouldn't be responsible for the bonds if the tax money doesn't materialize.
   Last steps of process
   If the council decides to proceed with the plan Tuesday, city staff within 60 days would bring a preliminary plan to the council and notify entities, including the county and Del Mar College, to see if they would participate. A public hearing would follow.
   The council then would have two readings on an ordinance to create the zone. A final vote could come as soon as this summer, Utter said.
   As part of the Packery Channel agenda item, the council on Tuesday must decide whether to direct staff to send a letter to the Army Corps of Engineers informing the agency that the city wants to move forward with the project.
   The project is referred to in the council's agenda as the "North Padre Island Storm Damage Reduction and Environmental Restoration Project."
   Decision due by summer
   The project was federally authorized in the Water Resources Development Act of 1999.
   The Corps of Engineers is considering taking on the project, with the federal government paying $19.5 million of the overall cost, but the Corps would not do it unless the agency determines the project would be technically feasible and environmentally acceptable, Utter said.
   The Corps could not find the project technically feasible unless local government agrees to provide $10.5 million to help get the project done, Utter said.
   By federal statute, the Corps must make a decision on whether to take on the project by June or July, Utter said.
   Congress must decide in coming months whether to appropriate the $19.5 million that would be the federal government's share, Scott said.


Staff writer Dan Parker can be reached at 886-3774 or by e-mail at parkerd@caller.com

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