PHARR, RGV – Pharr City Manager Juan Guerra has explained the rationale behind the incentive packages his city used to lure three companies to open and/or expand warehouse facilities near the Pharr International Bridge.
Between them, Evergreen Cold Storage, Interenlace Group’s Project IMAS Fresh, and Spring Valley Produce will be investing $52 million in storage operations in south Pharr. The three projects will have a combined economic impact of $117 million and will produce approximately 177 new jobs.
“One of my goals when I took over as city manager was to take a close hard look at how we give out incentives. In my view, it has to be of benefit to the City of Pharr in a material amount. We should not be giving incentives to everybody. It has to be strategic because we only have so much fiscal opportunity to incentivize people. So we have to make sure it happens correctly,” Guerra told the Rio Grande Guardian.
With regard to a reduction in property taxes, Guerra introduced a sliding scale.
“We are not giving away 100 percent of property taxes. We might start at 90 percent, but that will drop to 70 percent and 50 percent as the companies grow. The developer wins from that and the city wins from that,” Guerra said. “We have to remember that these companies need some fiscal assistance to get the financial numbers to look how the bank needs them to look.”
Guerra said another incentive is to make sure the development is done correctly and quickly. “The incentives are tied to developing within the first six months of the agreements being signed. So, within six months the development should start.”
Guerra said that in the case of Evergreen, the company is already located in Pharr. He said the new development is an expansion of the Evergreen’s footprint in Pharr. “Pharr has the only full service commercial bridge in the region. We know how important we are to the country. And we know we feed the warehouses of this region. Because Evergreen is already here, we are going to give them a 50 percent reduction in tolls when their trucks cross the bridge, but only for additional truck traffic. We think this is an intelligent way of providing incentives.”
Another part of the deal will require Evergreen, Interenlace and Spring Valley Fruits to take in students as interns from local schools and colleges and help host international trade forums and job fairs.
“Overall, this new $52 million investment is a great development for the City of Pharr and the citizens of Pharr and for those who are looking for employment in this region,” Guerra said.
“We need more companies to locate here in order to boost our property tax rolls and to create more jobs. And we do not want fast food-type jobs, minimum wage jobs. We need $10, $12, $15 an hour jobs for the citizens of Pharr. We need more bridge crossings and more property taxes and more sales taxes. We need the economy of Pharr to be robust. For example, with this $50 million, if the companies want a $1 million incentive, we want that to be a fraction of what they bring in economically.”
Sergio Contreras, executive director of Pharr Economic Development Corporation, agreed with Guerra’s strategy and analysis.
“As these companies invest in our communities we are going to reimburse them on performance-based criteria. As the sub-divide a tract of land we will reimburse them a percentage based on the size of the project. As they acquire permit fees we will reimburse them depending on the project as they build and construct,” Contreras said, at a news conference held at the Pharr EDC offices to announce the new investments.
“In addition to that we will support them by providing a discount on the tolls as they cross through our bridge going southbound. All of this will depend on the size of the project. It is a partnership, not a one-way street.”
Mexican Federal Highway 40
Contreras told the Rio Grande Guardian that the vacancy rate for warehouse space in Pharr is currently running at a mere four percent. And, at the news conference, he pointed to a new report by the Center for North American Studies at Texas A&M University which shows that produce imports from Mexico are a “major source of economic activity in the Lower Rio Grande Valley of Texas.” He said this increase in produce imports explains why produce companies are expanding operations near the Pharr International Bridge.
The A&M report studied shipments from January, 2014, to November, 2015. It showed a marked difference in the trends for Pharr and Nogales, Arizona, which has always been the No. 1 land port for produce from Mexico. Pharr has been No. 2. The number of truckloads crossing through Pharr has increased by 35.7 percent. The number of truckloads crossing through Nogales has increased by 13.1 percent. “If this trend continues, Pharr will soon surpass Nogales,” the A&M report states.
“One major reason for the increase in fresh produce imports through Texas is the improvement of Mexican Federal Highway 40 between Mazatlán and Reynosa, particularly the Mazatlán to Durango portion with the construction of the Baluarte bridge and 114 additional bridges and 61 tunnels in that portion of the highway,” the Center for North American Studies report states.
“The new portion of the highway covers more than 140 miles and replaced the existing ‘Devil’s Backbone’ road built in the 1940s. These infrastructure improvements could reduce transportation time by six or more hours between Mazatlán and the Lower Rio Grande Valley and shave $500 to $1,500 off of transportation costs per load.”
Click here to read the Center for North American Studies report in full.
Contreras sketched a profile of the three warehousing companies making the new investments in south Pharr:
Evergreen Cold Storage is presently located on south Cage Boulevard in Pharr. It will be expanding and consolidating its operations in a 130,000 square feet facility, making it the largest cold storage facility in the city of Pharr. The company plans to expand over two phases to a 300,000 square feet facility, which will make it the largest cold storage warehouse in the Rio Grande Valley. The proposed project is expected to yield 120 new jobs and will increase southbound bridge traffic – for which Pharr Bridge Board collects tolls – by an estimated $562,500.
Interenlace Group is a leading custom broker with over 16 years of experience in the produce industry. It plans to establish in south Pharr a new operation for Project IMAS Fresh, a cold storage facility. The expansion is expected to create about 29 new jobs and increase southbound bridge crossings by an estimated $24,566.
Spring Valley Fruits is establishing a 22,000 square feet facility in Pharr, to include offices, dry storage, and cold storage. The expansion will create 28 jobs and is expected to increase southbound bridge crossings by $9,750.
What Pharr leaders are saying about the $52 million investment
Pharr Mayor Ambrosio Hernandez chairs Pharr EDC. At the news conference held to announce the $52 million investment, Hernandez said that over the past nine months the new administration at Pharr City Hall has begun a drive to increase economic development in all areas, with a focus on good paying jobs.
“We are working aggressively to bring new business to the city. We are particularly proud of projects such as these, which will have a direct impact on our local economy, spur trade and commerce, and provide employment opportunities for our residents,” Hernandez said. “With valuable assets such as the Pharr International Bridge and the development of the new overweight corridor, we anticipate the growth to continue, especially in agriculture and the produce industry. This is a very exciting time for the City of Pharr and the residents of Pharr.”
PSJA ISD Superintendent Daniel P. King said his district was happy to provide interns for the three warehousing companies. “We have a great partnership. We are all working together to provide a better quality of life for our citizens. It speaks volumes when you see the City of Pharr and Pharr EDC showing that education is a priority through these agreements, internships, and forums. Our citizens are looking for higher paying jobs.”