PHARR, RGV – There is nothing anyone can do about the “sunk costs” the City of Pharr made on two expensive economic development projects, says City Manager Juan Guerra.
Asked to define a sunk cost, Guerra said: “The money has been spent whether it was a good project or not. The money has been spent and there is nothing you can do about it.” According to Wikipedia, “in economics and business decision-making, a sunk cost is a cost that has already been incurred and cannot be recovered.”
Guerra said the two economic development projects are the Pharr Produce Park, next to the Pharr International Bridge, and the Costco development, next to Interstate 2.
“The city has two projects which are considered sunk costs. One of the projects is the Produce Park. We have invested about 11 million dollars in that park. It was promised to the community that it was the best thing in the world and that it would fill up very quickly and that the City of Pharr would make money. We had all these promises. The reality is that is not the case. That is a sunk cost. We have to move forward,” Guerra said.
“The other major project we have is the Costco development area. That was a $34 million investment. Once again, another sunk cost. There is nothing you can do about it. It is too upside down. As a matter of fact, speaking to the developers, the Mayor and I, the first thing the developer said was, ‘We know you guys are in a huge hole and we know we cannot fix it for you. What we can do is partner up with you to help make it better.’ We have to recognize that and move forward. We have got to make the best of the situation and move forward.”
Guerra made his remarks about sunk costs in an exclusive interview with the Rio Grande Guardian at the conclusion of a news conference Pharr Mayor Ambrosio Hernandez held to review City of Pharr activities in 2015. He titled the news conference, Promises Made, Promises Kept.
Investment in the Pharr Produce Park and the Costco projects was made by the previous city administration. In his remarks, Hernandez said this of the Produce Park: “We implemented an assessment on our investment at the Produce Park in South Pharr and determined that a reimbursement fee to the City was needed to ensure the return on the City’s investment.”
In his interview, Guerra said many changes have been made in the first six months of Hernandez’s tenure as mayor. One of these was Guerra’s appointment as city manager,
“In the past six months the bar has been raised. What happens when the bar is raised is all these great things you have done become the new norm. We now have to raise the bar even more. One of the ways we can do this is by getting the right employees in the right positions. You have to professionalize things, instill discipline, integrity and professionalism and get away from the compadre system. At the end of the day we need people in here not because they know people but because they can do the job. That is how you start the professionalism,” Guerra said.
Guerra said he has introduced a new program for City of Pharr employees called Pharr PRIDE. He said PRIDE stands for Professionalism, Respect, Integrity, Discipline and Ethics. “That is what we are trying to push to the employees. This is the type of expectation management has for them. Once we morph into a more professional organization then the new norm can be done on a daily basis, which is do more with less but do it professionally, correctly and precisely. Really, it starts with the employee base and the Pharr PRIDE program is the initial step to kicking if off and morphing to a more professional and disciplined employee base.”
Guerra said that there is always some resistance when a change in culture is introduced. “With any type of change there is resistance and people do not like it but at the end of the day it is what is best for the community and what is best for this organization and we are going to comply with it. It is a new level of expectation that we have for our employees.”
Guerra concluded the interview by saying that in the last six months the new administration has started to do things that in the past were thought not possible.
“Because of the leadership of the mayor and the city commission we have been able to have a clear vision. We have been able to shift priorities. We have been able to right the wrongs and change the priorities. For example, I am asked how we can afford to reduce property taxes. My reply is, we can afford it easily. Last year we lost about $700,000 in partnering up with our Events Center promoters. Different people in different management positions have different priorities. The new priority of this mayor and the city commission is to shift the focus back to the citizens of Pharr, back to the community away from what it was done in the past. We need to use whatever resources we have to benefit the citizens and so we are going to raise the bar on the level of expectations that we have for ourselves and our employees.”
Editor’s Note: This is the third in a four-part series titled Pharr – A Year in Review. Click here to read Part One, featuring Pharr Mayor Ambrosio Hernandez. Click here to read Part Two, featuring Valley Interfaith in Las Milpas. Part Four, featuring the views of Pharr International Bridge Director Luis Bazán, will be published later today.