HOW BROWNSVILLE, THROUGH LAND SPECULATION, POLITICS, AND GREED LOST 600 JOBS, $1.9 BILLION STEEL MILL

By Juan Montoya

If it hadn't been for land speculation, the lack of real-estate for a suitable industrial park to attract industry, and the entrenched attitude that if a certain few people can't profit economically from projects they won't happen, the city's residents might have benefited and would have had a high-tech, $1.9 million environmentally-friendly steel mill that would have doubled the city's tax base.

Instead, officials from Steel Dynamics have made up their mind on where to open their next steel mill - on a 2,500-acre sorghum field near Sinton. At one time, those same officials had Brownsville on top of the list to bring the plant here on land that the Greater Brownsville Incentives Corporation was acquiring.

But the GBIC's attempts to the Planning and Zoning commission to change the zoning on land they had designated for the industrial park 10 years ago - something that former GBIC and Brownsville Economic Development CEOs failed to do - fell on deaf ears and the chance to get the $1.9 billion project expected to create about 600 jobs and produce 3 million tons of steel annually went elsewhere.

The company also scouted and considered properties in Louisiana and New Mexico, as well as those near Victoria and Brownsville. 

"We were on the top of the list until we couldn't get the land and the zoning was denied," the GBIC CEO Mario Lozoya said at the time he was communicating with officials from Steel Dynamics. 

Steel Dynamics officials issued the statement announcing their choice Monday afternoon.

"We are extremely excited to announce our selection of Sinton as the site for our next-generation, new flat roll steel mill investment," said Mark. D. Millett, president/CEO of the Fort Wayne, Indiana steel giant.

Company officials told the Corpus Christi Caller they expect the plant to serve the southwestern United States and Mexico for several years, Millett said. Company officials expect to begin construction early 2020, with operations starting in mid-2021.

“We believe a majority of the customer base will experience a significant freight savings compared to their current supply-chain configurations," Millett said.

"We are also making meaningful headway regarding regional prime ferrous scrap sourcing. We continue to grow increasingly excited about the expansive opportunities and long-term value creation our Southwest U.S. and Mexico growth strategy provides us."

The Sinton Independent School District approved tax abatements for the project a month ago. In February, San Patricio County commissioners also OK'd a tax incentives package for the project.the southwestern U.S. for land where it plans to build an electric-arc-furnace flat roll steel mill.

The GBIC ran into fierce opposition from the Community Development Corporation of Brownsville  - and their land speculator supporters - who had other plans for the land that the GBIC had designated for industrial development. The CDCB said they had moved to construct a housing development on the very acreage that was targeted by GBIC and Dynamic Steel for the plant.  

 When Lozoya told Dynamic Steel officials he thought he could get the necessary property by purchasing land around their planned industrial corridor, they told him the GBIC was again on their short list. GBIC figured it could acquire the necessary acreage (1,100-acres) for their operation. Lozoya looked at the land available east and west of the GBIC property and ran against some entrenched interests who saw the potential coming of the steel mill and saw dollar signs.

The first problem was to the east. One day after Lozoya told his board in executive session that they were going to approach the land owners east of the 141 acres, they ran into a road block.

Somehow, local real estate speculator Patricio Sampayo had heard of the GBIC plans and by the time GBIC representatives approached the owners of the 110- and 142-acre tracts owned by the MD Wheeler Tract and the 37 acres owned by the Nunez Family, he had a contract with an option to purchase the entire 289 acres.

In other words, the owners told GBIC reps, they would now have to deal with Sampayo instead of them. The price, of course, would not be anywhere near the appraisal value, but instead would include a hefty profit for the speculator. How did Sampayo know if no one but the board members and the GBIC attorney knew of the impending purchases?

After the steel company was told about the hangup on GBIC acquiring the property, they informed Lozoya they were on a fast track and that they were moving on to Corpus Christi which had the necessary acreage for them to start their operation.

That was to the east. To the west, the Community Development Corporation of Brownsville owns 215 acres it wanted to build a housing development. But that ran head on into the GBIC' Brownsville Industrial Area Plan from 2011, in turn based on the area’s designation as an industrial corridor in 2009.

Having a housing development next to an industrial corridor, south of a correctional institution, and bordered on the south downwind of the United Pacific switching yard was not only incompatible but also dangerous because of the hazardous materials carried by the railroad.

The Planning and Zoning Commisison, with land owner Abraham Galonsky pushing against it, denied the GBIC request for rezoning of the 350 acres to an industrial classification.

Galonsky was said to have told the steel mill people that they should look for land north of FM 511. Insiders say that Galonsky and some of his partners own land in the direction of the Port of Brownsville. And besides, Dynamic Steel couldn't go to the port of Bronwsville because the port had an agreement with a steel mill who chose to expand in Arkansas instead.

GBIC had agreed in principle to pay what CDCB is asking for the property, though CDCB Executive Director Nick Mitchell-Bennett said his organization has only offered a “ballpark figure” for how much cash it would require for the land, hasn’t discussed an exact dollar amount with GBIC, and hadn’t signed a contract.

 The CDCB was asking for $25,000 per acre, $12,000 more per acre than when they bought the land. The GBIC refused to pay that amount. Some sources say that Sampayo was also involved in the original sale of that 215 acres to the CDCB, with former mayor Tony Martinez acting as an intermediary.

The CDCB property is far from a main road frontage and behind a correctional institution, and is not worth anywhere near the $25,000 per acre price it is asking from the GBIC. Having paid $3,335,000 for them, it now wants GBIC to pay the $5,805,000, a neat $2,580,00 profit.

Now, as to Lozoya "slipping" Carlos Marin a "cool $2.9 million," that's totally misleading, if not just plain incorrect. Marin did have an interest with four other in vestment partners (the 68 acres under Shades of Earth). But when the GBIC said it was interested in potential purchase of the plot, Marin told Lozoya he had divested himself of the property to avoid any potential conflict of interest.

The GBIC got the 141 acres that include frontage to FM 511, access to the UP railroad to the south, and retaining ponds necessary for flood prevention for $2.7 million, averaging about $19,000 an acre, far less than the $31,000 upper level market rate for similar properties in the area and $8,000 less per acre than CDCB is demanding.

So Brownsville lost a $1.8 billion steel plant which would have doubled its property tax revenue because of land speculation based on insider knowledge from the GBIC board and is now being held hostage on the 215 CDCB acres because CDCB's  Mitchell-Bennett thinks it has the GBIC over a barrel and wants to make a tidy profit.

And so Brownsville lost 600 high-paying jobs, a state-of-the -art environmentally friendly steel mill, and will continue to stagnate unless speculators with political connections get their pound of flesh off the backs of Brownsville residents.