PHARR, RGV – Arguably the most talked about person on the campaign trail in Pharr this election cycle is not even on the ballot.
Pharr City Manager Fred Sandoval has been something of a punching bag for outgoing Mayor Leopoldo “Polo” Palacios and the Pharr Forward slate of candidates Palacios is supporting.
According to Palacios, Sandoval has squandered millions of dollars on ill-thought out projects and made key decisions without consulting with the City Commission. The rest of the City Commission disputes this, arguing that great things have been happening in for the fast-growing city. Dr. Ambrosio “Amos” Hernandez, who leads the Pharr Forward slate and is running to replace Palacios as mayor, has said he would like to cut Sandoval’s salary by $100,000.
The Rio Grande Guardian caught up with Sandoval at a recent groundbreaking ceremony to ask whether he likes being in the spotlight. He gave us an in-depth interview, responding point-by-point to criticism of, among other things, the Costco Wholesale project; infrastructure investment at the Pharr International Bridge, the infamous Toby Keith concert at the Pharr Event Center, HUB Phest and the City Commission’s decision to ask him to wear multiple hats, such as running the Pharr Economic Development Corporation.
Sandoval started the interview with a defense of the hotly debated, $11 million Costco Wholesale retail development. Critics say it was a waste of taxpayer money. Sandoval argues it was a great investment for the city.
“We need to break down that $11 million figure. We need to do this the accurate way. About $5 million was spent upfront to subsidize the land purchase deal. We could not close the gap between what Costco wanted to pay for the land and the price the developer wanted to sell it for. So, we used a subsidy to close that gap. Then, there was $1 million in infrastructure improvements, water, sewer and drainage. And then we did three years of $1.5 million incentives, based on performance. They had to open up, perform; pay sales tax and everything else. That was an economic incentive, straight up. We didn’t just write them a check for $11 million,” Sandoval said.
Sandoval said one of the things that happened when the City of Pharr closed the Costco deal was that it bought other property in the vicinity from the same landowner. “We had the old hotel, the Red Carpet Inn. We had another piece of property behind Lowe’s that he owned. By default we became the biggest land owner in the area. Fast forward that to where we are now and how we spurred development. If you look at it from the angle of pulling ourselves up, making that investment, looking at it from an entrepreneurial standpoint, who else could have assembled all this property? A private developer couldn’t have. Many people tried, trust me.”
Sandoval said the City of Pharr ended up with a 35-acre retail site that was attractive to developers.
“You can ask Larry Levine, the Houston-based developer, himself. Costco is what got him energized, that and the Pappadeaux restaurant development. The $11 million we put in over three to four years has already paid off, just in building permits. It is $27 million right now if you include Costco, $12 million if you take Costco out of it. That $11 million will most likely leverage into $70 million in new developments going forward. That is just the improvements, not to mention another $150-$200 million in sales tax production. Plus, it looks set to create a couple of thousand jobs.”
Sandoval said critics ought to consider what would have happened if the Costco development had not taken place.
“If we had not made that $11 million investment, the city would have been stagnant. The Monday morning quarterbacks say cities should not develop, cities should not compete. I say, why not? What would have been the cost of not investing? We would still be here with an eyesore. We would still be here with a school that was stagnant. We would still have had a couple of landowners in the back cutting grass and baling hay,” Sandoval said.
“I will tell you what would have happened had we not invested in Costco. They would have gone to McAllen and McAllen would have been reaping the benefits. The average Costco makes $139 million a year. This one is getting close to that and is going to exceed it. Two percent sales tax at $139 million equals $2.8 million in new sales taxes for our city. That does not count property taxes. And, remember, they (Costco) did not get any ad valorem breaks and nor did At Home, Main Event, or Cinemark.”
Sandoval said everything else that gets developed on land purchased near to the Costco project is “gravy from here on out.” Asked to explain, Sandoval said: “We are not subsidizing anybody here. Let’s look around our neighboring cities. Let’s look at Edinburg and its new arena. How much of a subsidy is that, $68 million? How much of that is being paid out of the TIRZ (Tax Increment Reinvestment Zone) the city created? Those are investments cities make. McAllen is investing in its convention center. We invested in our bridge 22 years ago. People thought we were nuts spending $25 million on a bridge. Well, guess what? All of a sudden we are making a lot of money, about $1 million a month. That bridge is what puts us ahead of others. It gives us a diverse revenue stream. We, our elected officials and my staff, are trying to replicate that same entrepreneurial vision our predecessors had with the bridge.”
Cold Storage Facility
What about the empty cold storage facility near the international bridge that Mayor Palacios has complained about? Sandoval responded that Palacios voted to invest in infrastructure at the bridge. “Mayor Palacios voted for it. I do not understand why, all of a sudden, it does not make any sense to him. He had been pushing for bridge development for decades.”
Sandoval explained Pharr’s rationale for developing land close to the bridge.
“We put 90 acres together; we put in water, sewage and drainage. We have got the cold storage subdivision. Six of the units are under contract and a couple more are being looked at. We chose to put a couple of spec buildings on there. I think we are due to take off. That (Mazatlán to Matamoros) superhighway is going to spur a lot of development. Folks from Nogales (Arizona) are starting to develop here. I see a lot of growth down by the bridge. We have had some good firms showing a lot of interest.”
A cut in salary
And what about the proposal, floated by Dr. Hernandez on the Ron Whitlock Reports show, to cut Sandoval’s salary by $100,000 and redistribute it other city employees. Sandoval responded in this way:
“Personally, I am disappointed. I know Dr. Hernandez personally. I grew up with him. I graduated with his wife. I have always considered him a friend. I do not think the folks who are advising him have given him a true picture of what is going on in Pharr, of how well we are doing. The fact that we have consolidated those two departments (the EDC and the Chamber of Commerce) only goes to show we are trying to run lean and that we are fiscally minded. It is not about control or power mongering. It is about running lean and being accountable and providing the services that the developers and retailers need. We had so many disconnects before. In fact, Dr. Hernandez had come to see us because he was trying to do some investments in Pharr and he was victim of that disconnect at the EDC. He will remember. Now, those disconnects do not occur because everything is under one roof.”
Members on the Pharr First slate (which includes three city commissioners) have pointed out that if one combines the salary of the city manager with the economic development corporation executive director/president Pharr is saving money, as compared to cities such as Edinburg and Mission and McAllen. Sandoval put it this way: “They say I am earning more than our Governor – so does Ramiro Garza (city manager of Edinburg), so does Martin Garza (city manager of Mission), so does Mike Perez (city manager of Weslaco), and so does Roy Rodriguez (city manager of McAllen). It is par for the course for cities of our size.”
Sandoval said the City Commission gave him a base increase, raising his pay from $177,000 to $190,000. He said they then gave him $30,000 to run the EDC.
“All my counterparts in other cities make around $100,000 to $150,000 for running their EDCs. When the day comes and I cannot do that job and I decide I need to pick one or the other, city manager or EDC executive director, I will. Right now, the formula is working. We are running lean, we are answerable to everybody. I have a council I answer to and an EDC board I answer to. We have audits of the city and the EDC.”
Sandoval officially took over as head of the Pharr EDC in 2011. He had been carrying out the same role in an unofficial capacity for a couple of years before that. “I did not get any extra pay for the last three years when I was heading the EDC. I was humbled last year when they finally decided to give me a stipend for the extra work. My counterparts in neighboring cities have contracts. I am the only one that does not. I am only as good as my last 72 hours. Every day I have to earn my pay here. I do not have a golden parachute or a buyout option. When I leave I leave with what I have. I am not about to gouge the taxpayers of my beloved city with a contract that is going to pay me out if these other guys (Pharr Forward) come in.”
Sandoval added that sales tax receipts have risen 42 percent since he has run the EDC. “That seems like good ROI (return on investment) to me. Wouldn’t any competent business owner or private investor applaud 42 percent growth? I think so.”
Sniping by the Mayor
Asked to respond to Mayor Palacios’ criticism of his management style and the projects he has brought to the city, Sandoval said:
“I am a little confused by the mayor’s stance. He was part of the discussions on my pay raise. He complains the Mayor Pro Tem signed my pay raise first. There was nothing sinister going on. It is just that the Mayor Pro Tem (Adan Farias, Pharr First’s candidate for mayor) is at city hall all the time. He is a full-time mayor pro tem and he is in his office almost every day. I saw him first, he signed it first. Simple as that,” Sandoval said.
“If it was so illegal, why did he (Palacios) sign it? Why did he say I was the best thing to happen to Pharr? Why did he and his wife say they were so proud of me, that I was the best city manager he had worked with? He went on and on and on about how well I have done. He (Palacios) throws this word illegal about a lot. There was nothing illegal about it (the pay raise). It is very damaging and I am very concerned about that because I have built a good reputation over 23 years and I am not about to give it up for a political vendetta. I do not appreciate the negative publicity because I am not on the ballot.”
In fact, Sandoval said, he and Palacios go back many, many, years. “He was the one who brought me to Pharr. I have traveled with him, to Washington, Austin, Mexico. We always share rooms because he does not like to be alone and I promised his wife that I would always take care of him on the road. We have lobbied together for this city for 18 years. I do not understand why, all of a sudden, I am the bad guy.”
Sandoval went on to say that Palacios and Pharr Forward have “punched me in the nose from the get go. The very first press conference they criticized me.” He said the criticism is somewhat surprising. “They criticize my leadership. They criticize my thought process. They criticize my administrative skills. I have been here for ten years as city manager. I believe I am good at what I do and I have the track record and 22 years to prove it.”
Sandoval said all the negativity cannot be helping as he and his EDC team tries to attract more businesses to Pharr. “This is the worst I have ever seen it. I have never seen so much negativity and so much criticism of a city that, among other Valley cities, has been the model. How can a group come in wanting to be a part of it, wanting to run a city and yet seemingly try to destroy what they seek? I do not understand that.”
Naturally enough, Sandoval said he is proud of his record as city manager and head of the EDC.
“The city of Pharr has achieved so much, in terms of cleanliness, retail development, industrial development, information technology, innovation, the Chamber of Commerce re-brand. Yet, we are getting beaten to death by half-truths, innuendo and outright lies. How much negativity can money buy? At the end of May, these guys will walk away. We are invested here. I see folks all over town and when I am shopping at HEB. I see the taxpayers every day. I can assure you I can defend everything I have done for Pharr and my pledge has always been to leave it better than I found it. My big concern is what state these other guys are going to leave our great city in.”
Sandoval said the sniping and negativity reminds him of the “bad old days” of Pharr politics.
“You remember what it was like ten years. I do not know how many times the legislators would say, man, just stop your bickering. You cannot even get your own people together. Today, we do things right. Have we made a few mistakes? Who hasn’t? But have we outshined those mistakes tenfold? Absolutely – if you are not making a few mistakes you are not moving forward.”
What about the ill-fated Toby Keith concert at the Pharr Event Center? Didn’t the City of Pharr lose a lot of money by getting involved in that event?
“There was some miscommunications, some disconnects between the promoter and our staff. But, the city took it on because it was our property and we needed to make sure the venue was going to be safe, that the citizens were going to have adequate parking, adequate police protection,” Sandoval responded.
“So, we had to get involved. There is a resolution in place that allows me to do that. Our finance director had said at a retreat last year, in order for us to keep the events going we are going to have to partner with these promoters.”
The good thing to come out of the Keith event, Sandoval argued, is Pharr landed a marquee name sponsor for the Pharr Event Center.
“Toby Keith is a Ford-sponsored artist. Boggus Ford, because of their proximity, was the dealership of choice. When they saw the production and all the goodwill they became interested in investing in Pharr. And that is what led to this $800,000 contract. For Mayor Palacios to say we lost $950,000 is completely false. We spent $396,900 but gained $800,000. It (the Boggus deal) is a three-year contract for $100,000 a year with a five-year renewal option. And there is an option to escalate. So, it could be better than $800,000,” Sandoval said.
“Everyone understood the situation with the concerts. We are not in the business of putting them on to make money. We are in the business of putting them on to promote the city of Pharr. We were on their (Toby Keith) tour T-shirts, we were on their website. It was the biggest event in this area for a longtime. It was the biggest free-standing concert we have put together. It was not a financial success and we learned from that event. But, the taxpayers are not out any money. We were made whole.”
Relocating the Vipers
Sandoval also spoke about the possibility of building an indoor arena for the Vipers basketball team, which currently operates out of the State Farm Arena in Hidalgo. In the end, Edinburg did a deal with franchise.
“We dealt with the Vipers folks, we had some initial talks but I never got anything concrete from them. I never got a real number or proposal. I never got anything concrete that I could take back to the council for the commission to consider. It was hard for me to put together a package when I did not know what the actual costs for the taxpayers would be. Now, looking at the $68 million figure, I think we did the right thing in passing. I do not understand why an event center would be an issue when my critics say Pharr should not be in the concerts business. You cannot have it both ways.”
And, finally, what about the recent 2015 Pharr Hub Phestival, which, on the Friday evening, was washed out because of heavy rain?
“We have been putting Hub Phest on for ten years now. We have the process down to a science. Next year, I will invite you to one of our planning meetings where we literally operate an emergency operations center for this event. We have a team running logistics, parking; public safety, etc. Everything is mapped out and well-coordinated using GIS software. I disagree totally that we were not prepared. That could not be further from the truth. We even prepared for bad weather with rainfall insurance to cover the concerts,” Sandoval said.
“This claim we lost $500,000 is ridiculous. We put in $150,000. You go to any big event in any city, who are their biggest contributors? It is the City, the Chamber and the EDC. We have a fourth one, which is the Bridge. We put in $150,000 from the general fund and there was a $40,000 in kind contribution. We had a $200,000 insurance policy for Friday night and we got paid off. I suspect when we add it all up that we will break even or even be in the black. Yes, outdoor events, 101, guess what, it rains. That is why we had insurance. The BBQ cook off was the best we had, we had a great concert on Saturday, despite Mother Nature’s best attempts it was a success and everybody enjoyed it.”