City requests more data on Rio Grande Esplanade redevelopment

February 18, 2019 GMT

The city of Brownsville intends to fully explore the feasibility of a proposed massive riverfront redevelopment project, but needs more information from the developer: Sam Marasco, president of San Diego, Calif.-based LandGrant Development.

So says City Manager Noel Bernal, who vowed that city will conduct due diligence on the proposed “Rio Grande Esplanade” project, with the help of a consultant who has already been hired, and make a recommendation to the city commission in two or three months at the most.

He added that the city also must establish LandGrant’s financial wherewithal to see the project through. LandGrant’s proposal entails a 16-acre, mixed-use urban development atop a concrete levee structure that would replace the current earthen one, rising above Sam Perl Boulevard between the B&M and Gateway international bridges.

The mix of retail stores and restaurants would serve as the catalyst for via Americas, an encompassing development Marasco envisions that would include senior and student housing, office space, a hotel and the Kris Kristofferson Cultural & Entertainment District, to which the Brownsville-born singer/songwriter/actor has agreed to lend his name and personal memorabilia.

After the 2001 opening of Marasco’s Las Americas mall development in San Diego, Calif., just across the border from Tijuana, Mexico, Brownsville officials invited the developer here to assess Brownsville’s riverfront for a potential makeover.

In 2006, Marasco made an initial sketch for the riverfront redevelopment concept that was incorporated into the 2009 Imagine Brownsville Comprehensive Plan. Now, more than a dozen years later, the city has hired consultant Travis James, vice president of the Austin-based economic analysis and public policy firm TXP, to explore the feasibility of a Tax Increment Reinvestment Zone for the Esplanade project and two other proposed TIRZ’s.

A TIRZ is a way to attract investment and development to areas that wouldn’t otherwise attract it, with a portion of the tax revenue generated by the TIRZ going to reimburse investors over a period of years.

Marasco said the Esplanade and via Americas can’t happen without a TIRZ to reimburse LandGrant for public infrastructure improvements related to the project. LandGrant has proposed paying 100 percent of development costs but being reimbursed for the public infrastructure piece — street extensions, for example — that it will never own.

Bernal, who said he can’t vouch for anything that happened between Marasco and the city before his tenure as city manager began Dec. 3, said the city through TXP has requested detailed project information from the developer.

“Upon analyzing that, we can have a sit-down with him,” Bernal said. “What we’re asking from him is now being very well documented. He’s begun to submit some numbers and some data that we can use to analyze. He needs to submit a little bit more.”

Bernal said he considers the Imagine Brownsville Comprehensive Plan still viable and that Marasco’s proposal includes some “great elements” for downtown, such as retail development, a hotel, and housing for students and seniors.

“Those are things that could anchor and help stimulate and catalyze further downtown development,” Bernal said. “We need to fish or cut bait. If he’s the developer or the investor that we can partner with to make this happen through, using a TIRZ, great. It may be another developer. But we need to first satisfy this proposal, because there’s been a lot of conjecture, a lot of discussion.”

In a Jan. 9 email to Marasco, TXP’s James requested on behalf of the city a detailed land-use plan, project cost information by component (including land acquisition, environmental issues and infrastructure); a project timeline, pro forma (financial plan) for the different commercial tenants or project components, and documents related to contracts between LandGrant and relevant federal agencies.

Marasco submitted via email seven separate documents he characterized as summary reports that “lay the foundation for our undertaking” and show progress to date in advance of a deeper dive “into the legal and financial assessments and priorities as we may decide.”

Among them is a “means and methods of construction” summary that includes Land Grant’s steps so far, including the first: authorization from the city in 2006 to investigate feasibility of the project and “undertake significant work and actions.” The summary also lists the city’s approval in 2009 of the Downtown Revitalization Plan, which features a riverfront esplanade component.

A subsequent list of actions completed and pending includes “Legal & Enforceable Authorization” obtained from the International Boundary and Water Commission to build a new concrete levee and remove the existing earthen one, and from the Department of Homeland for the concrete levee to be used as a border barrier in lieu of the current temporary fence, which would be removed as part of the project.

Another on the list of completed actions is authorization from DHS and IBWC to build the Esplanade atop the new concrete levee/barrier. Several key items are pending, according to the list, including formation of a TIRZ by the city, drafting of a Redevelopment Project Plan and Reinvestment Zone Financing Plan by LandGrant and the city, and completion of a Final Development Agreement between the city and developer.

The fact that LandGrant managed to secure federal cooperation is significant, though the city must answer the fundamental question of whether the developer has the financial capacity to see the project through, Bernal said.

“Let’s ask those questions and see if he’s the person we need to be working with for this type of development,” he said.

Marasco said establishing financial wherewithal and commitments from funding sources is always part of the financial underwriting investigation for all participants in such cases, including the developer, municipal and county governments, retailers, hoteliers, and debt and equity sources.

“It is just another part of the analysis and goes without saying for anyone with experience,” he said.

Marasco said LandGrant intends to finance the Brownsville project like it did the Las Americas project in San Diego.

“Believe me, capitalizing major projects in the borderlands is the most difficult area in the U.S.,” he said. “I know because I have done it, and I can compare the effort to five other states and 25 other cities.”

Besides Las Americas, LandGrant’s earlier redevelopment projects include Barrio Logan Mercado, a mixed-use project in a formerly blighted area a few blocks from San Diego Bay, capital investment provided by LandGrant; Civic Center East, a $2.5 million mixed-use redevelopment in Oceanside, Calif., equity financing provided by LandGrant; and the Clairemont Redevelopment, a project to convert a complex of functionally obsolete and largely vacant buildings into a thriving retail area, financed, operated and leased by LandGrant.

The several suburban mall projects conceived, developed, financed, leased, built and sold by LandGrant include Rancho California in Temecula, Calif., Foothills Park Place and Greenway Park Plaza in Phoenix, Ariz., Mission Plaza Real in Oceanside, Whitney Ranch Center in Las Vegas, Nev., Las Campanilles Plaza in San Marcos, Calif., and Glen Cove Center in Vallejo, Calif.

On Jan. 28, James emailed Marasco on behalf of the city requesting follow-up information: land-use by square footage and corresponding site plan, infrastructure costs for which Land Grant would seek TIRZ reimbursement, and any contracts between LandGrant and the city. Marasco said provided one-page responses as requested, but has gotten no feedback yet from the city on the information he has provided so far.

On Feb. 9, James led a workshop for city commissioners, explaining in general how TIRZ’s function. Meanwhile, new Deputy City Manager Helen Ramirez brings an extensive background in planning and development in the public and private sectors that will serve the city well as it conducts due diligence on Marasco’s proposal and others, Bernal said.

“We’re at a point where he will be involved as a stakeholder, as an interested developer, to meet with our consultant and staff, myself and our incoming deputy city manager, to crunch these numbers and look at the financial feasibility of this project,” Bernal said.

“These projects are enough of a magnitude where you don’t want to rush into them, but it shouldn’t be prolonged more than it has to be. If he provides the information we need, we’ll be able to fully vet it within no more than two to three months. You can hold me to my word.”