HARLINGEN — It appears the city will pay about $1 million more than the appraised value of the 8-acre site on which it plans to build its convention center.
The city will pay for most of the land from property tax revenue generated through Harlingen’s three tax increment financing reinvestment zones.
The Harlingen Community Improvement Board, which generates a one-eighth cent sales tax to fund quality-of-life projects, will fund the remaining $800,000.
In 2013, the city’s independent appraisal gave the land off Teege and Brazil roads near Bass Pro Shops a market value of $1.69 million.
According to the Cameron Appraisal District, the 8 acres is being subdivided from a total 12.3-acre tract appraised at $1.8 million this year.
Last year, negotiations between landowner Ezequiel Reyna and hotel developer BC Lynd led to the sale price of $2.7 million for the 8 acres.
That’s about $900,000 more than what the 12.3 acres was appraised for just three years ago.
Still, the city got a good deal, City Manager Dan Serna said yesterday.
“We feel we were able to negotiate a good price, Serna said.
The appraisal district conducted its appraisal in 2013, before the development of Sam’s Wholesale Club and other businesses.
“Since that time, there’s been additional development, additional improvements,” Serna said. “Those types of improvements tend to change the value of property.”
HVS Consulting and Valuation Services, an international consulting firm, recommended the site at Harlingen Heights over a proposed site behind Bed Bath & Beyond in the Harlingen Corners shopping center, Mayor Chris Boswell said.
In 2014, HVS conducted a feasibility study into the project to build the convention center.
“For the purposes of this study, we have recommended development of a select-service hotel and conference center on a parcel of land owned by Ezequiel Reyna Jr.,” HVS wrote. “This individual has owned the site since 1995; moreover, no transfers of the property have reportedly occurred since that time.”
Boswell said Reyna, a Weslaco developer, and BC Lynd were together negotiating a sale price with the city.
“Obviously, we tried to pay the least amount of money we could,” Boswell said yesterday. “The price was negotiated with the seller. As with any sort of negotiations, there are concessions made on both sides.”
As part of an agreement, the city will fund construction of the 43,700-square-foot convention center while BC Lynd will build an attached 150-room, upscale hotel.
“This is where the developer of the hotel wants to put the hotel,” Boswell said.
Boswell said Reyna and BC Lynd opened negotiations with the city with an asking price of $12 per square foot.
But negotiations drove down the price to $8 a square foot.
To pay for the land, city officials will draw the $1.96 million in property tax revenue three tax increment financing reinvestment zones.
Officials have agreed to take $601,312 from Zone 1, $1 million from Zone 2 and $367,162 from Zone 3, where the convention center and an adjacent $25 million hotel will be built.
Tax increment reinvestment zones are public financing tools used to fund economic development projects in which properties’ assessed values are frozen based on the theory their values will increase. The increased property taxes collected make up the increment.
Pete Smith, a city-contracted tax attorney in Dallas, gave officials a legal opinion stating tax law allows the city to fund the construction project through the three zones because the convention center would benefit the city’s overall economy.
According to Smith, property tax revenue generated within the three zones could be used to buy land for the project.
The Harlingen Community Improvement Board will fund the remaining $800,000.