Two years, $759,875 and thousands of man hours in the making, the Paso del Norte Group (PDN) Friday unveiled its Downtown Redevelopment Plan before a special meeting of City Council.

The plan aims to transform 302.5 acres of largely crumbling El Paso real estate into a vibrant city center.

As a tentative first step, five council members voted to accept the redevelopment proposal and instructed City Manager Joyce Wilson to begin the public process required to modify the city's existing comprehensive plan and incorporate the new plan.

Rep. Eddie Holguin abstained from the vote, but Mayor John Cook said, to applause, "If I could vote, I would vote for it." His comment met with applause from the 500 or so attendees.

PDN COO Myrna Deckert, who was one of several members of the group explaining the plan and answering questions, also received a standing ovation when she concluded the presentation.

The incorporation process, which requires public hearings, could take 90 to 120 days, observers said.

If successful, the redevelopment plan would boost the Downtown tax base with high-end shopping, restaurants, a mercado, movie theaters, art galleries, homes and apartments as well as a new multipurpose arena for major sporting events, rock concerts and convention events.

Boundaries

The proposed redevelopment zone is bounded by Union Plaza on the west, Octavia on the east, Interstate 10 on the north and the Mexican border on the south.

Due largely to the rundown condition of their buildings, property owners in a major portion of the targeted area - a portion totaling 127.5 acres - owed a measly $414,000 in property taxes in 2005, Sanders noted.

By comparison, homeowners in the average El Paso subdivision contribute "two or three times that" in property taxes, said Deckert.

PDN representatives said that specific areas of Downtown would require the exercise of some governmental muscle, with the ultimate threat of eminent domain, to implement the redevelopment plan.

Sandra Almanzan said the plan calls for relocation of the residents of 33 single-family homes and 496 apartments, but that nearby, modern housing would be built for those families as a first priority.

El Paso City Rep. Beto O'Rourke, whose district includes the total 300-acre redevelopment area, has noted Downtown's constantly declining tax base means other El Paso property owners have been unfairly shouldering an increasing tax burden over the years.

"Right now Downtown is a completely non-performing part of the city's economy and tax base," O'Rourke said earlier this week.

"Currently homeowners comprise 55 percent of the city's tax base. We used to comprise 45 percent 10 years ago," he noted. "So you can see there's been a very dramatic shift, not all of it attributed to Downtown, but certainly a good part of it."

O'Rourke predicts that redevelopment would also bring prosperity to nearby neighborhoods like Sunset Heights, Five Points and Golden Hills as people move closer to the entertainment, art and employment options a vibrant Downtown would offer.

TIRZ

PDN, composed of local business and civic leaders, predicts it could take 10 to 15 years before the entire plan is realized. But the group's leaders are quick to add that some key - and very striking - features could be a reality within five years if City Council gets behind their proposal.

When it comes to implementing the overall plan, the proposed 300-acre redevelopment target zone is divided into two general sections - a Historic Incentive District and a Redevelopment District.

The Historic District, covering 175 acres, would offer various incentive packages - which officials say have yet to be determined - to encourage property owners to renovate and rehabilitate their buildings.

The Redevelopment District, on the other hand, is a much more dynamic part of the overall plan, and is intended to create so-called "drivers" to draw people and commerce Downtown.

To do this, the plan requires the City Council to authorize a Tax Increment Reinvestment Zone (TIRZ) covering those 127.5 acres that would eventually include:

• The arena and entertainment hub, to be built adjacent to the El Paso Convention Center and including Union Plaza;

• A "lifestyle and urban retail district" featuring more than 300 residential units and 900,000 square feet of retail space designed to attract many high-end shops, restaurants, movie theaters and offices;

• A mercado featuring a central plaza and amphitheatre, 300 residential units and an estimated 200,000 square feet of retail space;

• A "bi-national arts walk" stretching from the El Paso Museum of Art to the border, featuring numerous galleries, which Sanders predicts could become the premier Hispanic art venue in the U.S. and Mexico;

• A "mixed use residential area" with 1,200 lofts, apartments and houses in a wide price range and 195,000 square feet of commercial space.

Among other things, the TIRZ would allow city officials to fund public improvements for the Redevelopment District. It can freeze the district's tax base and earmark subsequent increases in property tax revenues within the district for deposit into a special TIRZ account to pay for public improvements.

PDN officials point out that in successful TIRZ programs, the public improvements spur development, which in turn increases property values, which then generate additional tax revenues for the TIRZ account.

The Downtown TIRZ would come with a muscular implementation program to force owners of blighted property to make one of three choices - exchange their property for shares in a real estate investment trust (REIT), in essence converting the property into a liquid investment delineated by shares in the trust; sell to the REIT at fair-market value, or; face an eminent domain action.

"The TIRZ gives you the right to take the property," Sanders said. "We don't want to do that, OK? First we're going to attempt to convince owners to merge their properties into the REIT, that's the first option. Or the REIT will pay cash for their properties. Unfortunately, it may happen that at some point we've got to say, 'Sorry we weren't able to work something out. Now the TIRZ is going to begin the process of taking your property at fair-market value.'"

Deckert said the city has already designated the 127.5 acres of the Redevelopment District as "blighted," which makes the exercise of eminent domain possible. There was no discussion of eminent domain at Friday's council meeting.

Making it work

Sandra Almanzan, co-chair of PDN's Downtown Redevelopment Task Force, said, "Our committee's premise has always been driven by what is doable, what is feasible, what would cause the least amount of disruption and what we can implement without city dollars. The plan for these 127.5 acres can be done without asking city taxpayers to dole out hundreds of millions of dollars."

To which Sanders added, "Creating the TIRZ will require courage on the part of the City Council. But if they don't do it, the plan won't work." If all goes well, he said, the TIRZ issue might come before the council in November. If approved the TIRZ could begin acquiring property early next year.

Well over 100 individual property owners have been identified so far in the Redevelopment District, PDN officials said.

Over the two years PDN has been working on its redevelopment plan, observers have often wondered what might become of the mostly Korean-owned retail outlets on El Paso and Stanton streets. The highly profitable shops cater to Mexicans walking over the international bridge. Many El Pasoans see those retail outlets as eyesores and an impediment to Downtown revitalization.

But Sanders noted the redevelopment plan would not touch the Korean shops.

"They'll get an incentive package, but we can't take their property," he said, adding that it's unlikely current Stanton and El Paso street shoppers would feel comfortable in the proposed "lifestyle and urban retail" district with its upscale stores, which will be located north of Paisano.

On the other hand, "Everybody will like the Mercado," Sanders predicts.

PDN is also proposing an Office of Urban Redevelopment, to be coordinated by City Manager Joyce Wilson. It would work with the newly created, but not yet activated, 2010 Foundation. The implementation plan also calls for seven task forces, with public and private sector members, to link community and business leaders as well as government officials. The task forces would help solve problems and provide the necessary follow-through lacking in previous Downtown redevelopment plans, Deckert said.

"If you're not standing in the Mercado five years after the TIRZ is created, we'll have failed," Sanders said.

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