City hits pause, revises downtown grants

City leaders plan to put the brakes on programs offering public funds to developers who spruce up downtown buildings while officials tweak the 2-year-old program in hopes of better results revitalizing the long blighted area.

Changes will likely focus on using the public incentives in a more concentrated area around the city-supported hotel and convention center being built downtown, following concern from members of the Odessa City Council and appointees of the city’s economic development board that the grants are not creating the desired effect.

“We have so many dilapidated buildings on Grant Street and around in downtown, and I think most of us envisioned that this money would go to improve those areas,” District 3 Councilwoman Barbara Graff said. “And that’s not what’s happening with our grant situation. Almost everything that the money has gone to has been to improve buildings that to begin with don’t look that bad and basically are already occupied.”

Graff said she was disappointed that the grants had not brought in more of the restaurants, entertainment and stores to once-blighted buildings that could be used to draw people to the area.

A majority of council members recently supported modifying the program. No changes have been approved yet, but they could include a tiered system awarding greater amounts of public funds to developments based on their proximity to the hotel and convention center — an idea Mayor David Turner said he advocated.

“We want the area by the convention center to look the best, and we need to give Downtown Odessa a little bit of direction to say: These are the most important areas, contact these owners, let’s work with them,” Turner said, referring to the city department managing the programs.

Members of the City Council and the Odessa Development Corporation have also discussed revising the boundaries for the downtown that were approved in 2015: from First Street to 10th Street and Adams Avenue to Bernice Avenue.

Before the moratorium, any developer could apply within the downtown boundaries.

“This is no different than any other public program the City Council works with: The bigger you make the eligible area, the less effect you are going to see for the dollars you spend,” Interim City Attorney Gary Landers said. “The smaller you make the area, the more visual impact.”

The City Council and the Odessa Development Corporation created the two programs offering downtown grants to businesses in early 2016. One grant program targets façade improvements, the other matches infrastructure investments in downtown buildings.

In some cases, the grants have supported businesses, such as The French Press Café, whose owners fixed an empty property at 511 N. Grant Ave. and opened with the help of a more than $50,000 infrastructure grant in 2016. Tejas Shooting Sports also received two grants totaling more than $130,000 to build an indoor shooting range and to fix up the exterior of the business on Eighth Street.

But in others, the grants helped fund facelifts to attorneys’ offices and in one case incentivized a private parking lot.

“This is a new program,” ODC President Betsy Triplett-Hurt said. “…So if this is the way it’s been done and we are all getting a little uncomfortable with the how it’s been done, then now is the time to put it on pause, and let’s make it really good.”

The grants represent just a piece of the city’s overall investment in the downtown area and just one program aimed at luring more businesses. The city has also purchased several downtown properties and invested more than $31 million in the downtown hotel and convention center.

The grant programs from the beginning were planned as a temporary but important way of supporting the city’s overall goals in the area and the public investments in it.

The programs still draw a lot of interest, Downtown Odessa Executive Director Lawanna Lambert said.

“I had two phone calls yesterday and I don’t want that to stop — We are very blessed in that department,” Lambert said. “But with every change, every growth, you have to take a step back and look at things. Maybe we can tweak this, maybe we can tweak that. Maybe that will help the program.”

So far, the city has approved more than $310,000 worth of infrastructure grants since the beginning of the program.

Meanwhile, the city has approved about $170,000 worth of façade grants. Under that program, the city can reimburse a developer up to 80 percent of the cost of façade improvements, up to $30,000 for buildings on corners or of exceptional size.

Façade grant spending was capped at $250,000 annually, enough for developing about a block per year by city officials’ estimates.

There’s also a cap under state law for using ODC money on façade grants. That’s because the city justifies the expenses as a promoting economic development because the downtown improvements make the city more attractive for new business development.

The law allows economic development agencies like the ODC to spend up to 10 percent of their revenue for promotions — money also used for marketing the city and other programs. They can also use past money budgeted for promotions but never spent.

The city hasn’t come close to reaching the limit, but that potential constraint supports the need for concentrating the investments in a smaller area, District 4 Councilman Mike Gardner said. At the same time, Gardner said narrowing the scope of the program could lessen demand Downtown Odessa sees.

The decision to review the grant programs came as the ODC considered a façade grant application by the owner of the Crenshaw Flooring building at 615 E. Eighth St., on the eastern edge of the downtown boundary.

The owner requested a $30,000 grant, which is the maximum amount for an individual grant, available for buildings of exceptional size or on corners. The owner also planned to invest more than $51,000 privately in the new exterior.

It was the kind of incentive that made city leaders uncomfortable.

“How many tourists are going to be going to that?” Graff said.

But the City Council is still set to vote on awarding the grant Tuesday, after reasoning that the owners, Yung Ham, LLC, made their application under the existing rules.

“We need to restructure,” District 5 Councilman Filiberto Gonzales said. “We need to look at it and make some changes, positive. And I think it’s going have a positive impact for everybody. But we cannot hold it against them if we haven’t done it.”