Builder asks why Brownsville is sole Valley city imposing capital recovery fees

Rio Grande Guardian
BY MARIO MUÑOZ AND STEVE TAYLOR, BORDER BUSINESS
JANUARY 11, 2024

BROWNSVILLE, TEXAS – The City of Brownsville, working with consultants Freese & Nichols, hosted a public meeting at the Brownsville Events Center on Monday, Jan. 8, to discuss the proposed capital recovery fees program. 

The plan is to impose a one-time charge on developers as they begin new projects. The fees raised would go towards roadway improvements. 

At the meeting, builder Javier Peña, CFO and co-founder of Luceca Industrial & Commercial Construction, quizzed Edmund Haas, transportation planning manager of Freese & Nichols, about the proposals.

Peña asked Haas if any other city along the border is contemplating the imposition of Capital Recovery Fees. Haas replied that El Paso started such a program in 1988 but sunsetted it in 2016.

Peña asked if cities in the Rio Grande Valley that have industrial and commercial development, such as McAllen, Edinburg, Pharr and Weslaco, had considered imposing such a fee. Peña  answered his own question by saying, no.

“Why haven’t they?” Peña asked. 

“Each city has their own priorities and visions and funding,” Haas responded.

Peña said cities such as McAllen, Edinburg, Pharr and Weslaco, “are offering credits and not fees,” in an effort to attract new business. Brownsville, he said, was going in the other direction.

“Someone has to pay for this infrastructure,” Haas responded.

Peña asked Haas what the feedback was when city officials met with the Brownsville-South Padre Island Board in early December to discuss the capital recovery fees program. 

Haas responded: “It was kind of a mixed bag, quite honestly. The board of realtors, there were several of them that were very concerned, that it would have a negative impact, that they would probably go develop elsewhere.”

 But, Haas added: “there were some that kind of got it. Like, somebody’s got to pay for this stuff.”

In a press release, the City of Brownsville said the capital recovery fee will fund specific improvements that would otherwise be paid for by taxes from residents. “Capital Recovery Fees will ensure an increase in property values and attract businesses that will provide new jobs to the community,” the press release stated.

The City of Brownsville has also produced a video to promote the Capital Recovery Fees proposal. The script for the video states:

“Brownsville, Texas, is a place where you don’t have to imagine the future because you can already see it, everywhere you look. New homes, new businesses, new jobs. A new era of opportunity and prosperity that will strengthen our community for generations to come. And as we propel our city’s growth forward, the proposed Capital Recovery Fee stands as a pivotal mechanism. Its purpose is to ensure that developers actively contribute their equitable portion towards new roads and widening. Through this fee developers will play a role in financing essential infrastructure projects, such as the construction of new roads, thereby alleviating the burden on taxpayers who would traditionally bear these costs. The future of Brownsville isn’t just exciting, it’s positively extraordinary. And we’re creating it together. Learn more about Brownsville capital recovery www.brownsvilletx.gov.”

Editor’s Note: Here is a video recording of the exchange between Peña and Haas:
https://youtu.be/F0-hxW6CvdQ

Freese & Nichols analysis

After the meeting had concluded, Haas gave an interview with the Rio Grande Guardian International News Service’s Mario Muñoz. Haas said the City of Brownsville had to find a new way to fund road construction.

“The state has caps on how much they (the City of Brownsville) can tax per year. So, they’re at that three, three and a half percent or whatever it is, and so they’re really maxed out,” Haas said.

Haas pointed out that around 55 percent of the City of Brownsville’s tax collections are spend on public safety. He said that does not leave much to repair roads and build new ones.

“And so that’s really why this whole question came up. The city is going continue to grow. The city does not want to stymie growth but they understand that with new growth and development, there are going to be traffic impacts. You can see the congestion today. Then tack on new development coming in,” Haas said