The city of Brownsville has concluded that a massive, mixed-use riverfront redevelopment project is not financially viable as things stand with the developer, and city staff has been pulled of the project.
City Manager Noel Bernal sent a letter to LandGrant Development President and CEO Sam Marasco III on June 3 citing several reasons why the city believes the “via Americas” concept for the riverfront — officially the Riverfront and Railyard Redevelopment Program and Project — is unworkable without further, up-front financial commitment from the developer.
Bernal wrote that, according to information LandGrant has provided so far, the project is not financially feasible without participation of the state of Texas through its Hotel Financing Zone Program, though that participation has not been secured. He also wrote that a financing plan provided by Marasco last July requires the Legislature to amend Chapter 351 of the Texas Tax Code, though that change likewise has not been made. Because Marasco has not provided a viable alternative, “we have determined that your project is not financially feasible under state law,” Bernal wrote.
He also stated in the letter that, according to information submitted by LandGrant, no property has been secured for the project or option agreement signed, and that Marasco’s request that the city secure the necessary statutory and legislative support from the state has not been agreed to and is an “undue request of city staff and resources.”
“This due diligence is part of project development, and therefore, a developer responsibility,” Bernal wrote.
Another problem issue he cited is that necessary permission for the project from the International Boundary and Water Commission has not been secured, and that no funding source has been identified for a $500,000 hydrology study required by IBWC. Bernal wrote the city is under no legal obligation to continue working on the project and wrote that the city “cannot continue to expend personnel and financial resources without further financial commitment from LandGrant Development.”
He noted in an interview that the city has already spent more than $100,000 on consulting and legal fees, and that all city staff and consultants have been instructed to stop work on anything related to via Americas.
“The city has really vetted this professionally with the right due diligence,” Bernal said. “It’s just that there are some significant deficiencies with this project.”
Marasco began looking into a riverfront redevelopment in Brownsville at the request of the city well over a decade ago, based on the developer’s success with the Las Americas retail development in San Diego across from Tijuana, Mexico, and has lined up initial pledges of cooperation from the Department of Homeland Security and IBWC in the intervening years. He was not successful in convincing the city to create a Tax Increment Reinvestment Zone for the project area in order to reimburse the developer’s outlay for public infrastructure improvements and to give the project momentum and gravitas in the eyes of state and federal regulatory entities.
The catalyst for via Americas would be the 16-acre Rio Grande Esplanade, a mixed-use, urban development that would replace the levee paralleling Sam Perl Boulevard between the Gateway and B&M international bridges. Marasco disputed each of Bernal’s reasons for deeming the project unfeasible, branding the issues over securing property or purchase options, and permission from IBWC and money for a hydrology study, “immaterial and irrelevant” at this stage of the process and “red herrings designed to obfuscate.”
Bernal’s other assertion regarding responsibility for security statutory and legislative support is “inaccurate on its face,” while his claim that the developer has provided no alternative to financing the project that didn’t involve changing the tax code “ignored any one of several formal communications” between LandGrant and the city, Marasco wrote in an email. Bernal’s assertion that the project is only feasible with the state’s Hotel Financing Zone program likewise displays an aversion to simple arithmetic and ignores detailed financing scenarios presented to the city by the developer, Marasco said.
Whatever the case, Bernal said he foresees some type of riverfront redevelopment at some point in the future, either with a developer or city-led, though the window of opportunity of further participation with LandGrant is quite narrow and depends on the willingness of the developer to commit more resources early in the game. Bernal said the city’s preoccupation with Marasco’s project was preventing other downtown projects from moving forward.
Deputy City Manager Helen Ramirez noted that several projects are underway downtown in various stages of development.
“We have six different development projects going on right now that we really need to support,” she said.