In which SA contemplates giving its lunch money to the playground bully

Last year, shortly after the disclosure of intense talks with H-E-B over the construction of a downtown supermarket, City Hall announced $1 million in taxpayer monies to attract an unspecified banner-name operator. It went unsaid but residents knew exactly which storefront planners envisioned: the chain Mayor Julián Castro has referred to as San Antonio’s “official store.” So the release this week of an RFI for companies tantalized by the incentive feels like a dog-and-pony show designed to deflect the criticism of citizens who might oppose a handout to one of San Antonio’s richest corporations.

In no other metropolitan area in the United States do shoppers patronize a supermarket chain that wields such dizzying market dominance. Outside of South Texas, any metropolis you care to name is plied by myriad local, regional and national supermarket chains. Kroger, Albertsons, Publix, Vons, Ralphs, Safeway, Food Lion, and other major banners constantly compete for customers. A national survey by Consumer Reports published last May revealed that, “[o]ne-third of subscribers surveyed said they had given the heave-ho to a nearby grocery store.”

Good luck with that here. With rare exception, H-E-B – which declined requests for an interview for this story – provides virtually the only traditional supermarket service, even though groceries remain big business in the U.S. According to a research report on retail by Wells Fargo Securities last August, “The vast majority of people (more than 80 percent of those we surveyed) indicate that they still shop at a traditional grocery store (i.e., Safeway, Kroger, Albertson’s, etc.) as one of their primary grocery destinations.” Locally, the competition H-E-B faces comes not from supermarket powerhouses such as those, but indirectly from niche or natural chains like La Fiesta or Whole Foods, hypermarket formats operated by Walmart and Target, and military commissaries.

Council Thursday approved a package of incentives for Nexolon America LLC, a key manufacturing partner for OCI Solar America, which landed CPS Energy’s contract for 400 megawatts of solar power earlier this year. In return, Nexolon will build a plant and headquarters on 86 acres at Brooks City Base at an estimated investment of $115 million and provide jobs for 404 workers that pay at least $11.08 an hour, the current living wage.

The standard incentives – an economic-development grant, tax abatements and fee waivers worth almost $4 million – were enriched with a more unusual gift: $12 million in future funding for Brooks, the South Side technology campus and housing development that’s emerging slowly from the remains of the former Kelly Air Force Base.

The $12 million makes up the difference in the purchase price for that 86 acres, which has been valued at $17 million by Brooks and the City. Brooks’ policies require it to receive fair market value for its property, but Nexolon will pay just $5 million for it. The payment will come in the form of upfront rent for 10 years, but during Council’s questioning on Thursday, it emerged that Nexolon will own the land at the end of that decade, and can take title to it at any time after the full payment has been made.

Deputy City Manager Pat DiGiovanni arrived at the Brooks Development Authority board meeting Tuesday afternoon ready, he said, to vote. The agenda included a controversial incentive package for Nexolon LLC, the Korean company set to make components for CPS Energy’s 400 megawatt solar-power deal with OCI.

The board ultimately voted to negotiate terms with Nexolon, which is expected to get control of 86 acres valued at $17 million for an upfront 10-year lease payment of $5-million, according to sources familiar with the details. In return, Brooks gets a manufacturing plant and company headquarters with national ambitions, and more than 400 jobs that will pay on average more than $44,000 a year on the city’s economically challenged South Side. The company’s investment is being estimated at $115 million.

Thursday, a divided Council is set to take up its end of the bargain, which will close the real-estate gap with a promise to find $12 million – in the 2017 bond or elsewhere – to invest in Brooks infrastructure. The Council package also includes more traditional incentives for locating the plant within city limits – an economic-development grant of approximately $400,000, a 10-year personal-property tax abatement valued at $2 million, and SAWS fee waivers worth roughly $500,000.

DiGiovanni abstained because his vote wasn’t needed to move the deal forward, but his presence signaled the importance of the deal to Mayor Julian Castro and City Manager Sheryl Sculley. DiGiovanni, who is leaving the City at the end of the year to lead the downtown redevelopment agency Centro Partnership, has been keeping a low profile since the Convention Center ethics implosion this fall that threatened his career and the city’s largest single construction project to date.

Council appoints the Brooks board members, and DiGiovanni holds the District 10 seat, a position ceded to the City Manager’s office by gentleman’s agreement since the board's inception. But District 10 Councilman Carlton Soules sent DiGiovanni a letter dated November 26 notifying DiGiovanni that Soules would be replacing him.

CPS Energy is pulling the plug on millions of dollars it gives to local municipalities for electric infrastructure projects.

The utility, owned by the City of San Antonio, had set aside one percent of its annual revenue to create the Community Infrastructure Economic Development fund. That money was given to municipalities in Bexar County to help them pay for electric projects. The fund currently has a balance of nearly $10.5 million.

But earlier this year CPS Energy decided to do away with the fund, angering city leaders in the small municipalities that say they depended on that money.

"We're building a municipal building and a fire station. And so, the funds were going to be used to install the public lighting in the park," Art Martinez de Vara, mayor of Von Ormy, said. Martinez de Vara says CPS got rid of the fund without even asking how it would affect cities like his.