Waco City Council OKs more money for Herringbone, quiet zone

Among the funding agreements was a Chapter 380 agreement with RAD Waco LLC, the developer of the 21-room, multi-use Hotel Herringbone set to make the shipping container conglomerate at 319 S. Fourth St. into a boutique hotel and commercial space. The agreement grants the developer a reimbursement of 75% of the city’s portion of sales tax generated at the site for six years, with a cap of $385,000.

In August 2022 the city council approved some $2.3 million in Tax Increment Financing Zone funding for the project given it invests at least $12 million, includes 4,660 square feet of retail or professional space and has a minimum of 6,000 square feet of restaurant and beverage space.

City Manager Bradley Ford said the developer intends to add a rooftop bar and event space to the project scope, adding a minimum of $593,450 invested.

“This is a pretty exciting renovation project,” Ford said. “… They’re a great follow on Instagram and Facebook. They’re tracking all their renovations and the project will include also a rooftop bar component that I believe you can see the Silos from, if I’m remembering correctly.”

According to council documents, the project’s deadline is Sept. 30, 2024.

RAD Lab, a San Diego-based architecture and development firm that specializes in shipping container buildings, took over the project Bill Wetterman first pitched in 2017 after it hit financial troubles during construction and lender TFNB Your Bank for Life foreclosed on the property.

The city council awarded a nearly $7.3 million contract for rehabilitation of Clay Avenue and 17th Street to Texas Materials Group, the lowest responsible bidder.

The project will cover mill and overlay and reconstruction of 2.31 miles along Clay Avenue, including water line improvements, Americans with Disabilities Act improvements and sidewalks, from near 32nd Street to 18th Street. It will also cover stretches of 17th Street from Waco Drive to Franklin Avenue and from the Interstate 35 frontage road to Griffin Avenue.

“This project comes as part of our 2021 Mill and Overlay Phase 4 Project and will have more than 3 miles worth of mill and overlay and street reconstruction in District 2 and District 4 on Clay Avenue, as well as segments of 17th Street,” Ford said.

Construction is anticipated to begin in January and be completed by April 2025, “so major street work occurring on this item,” Ford said.

The council approved its first reading of an ordinance to delay the implementation of a street maintenance fee, which was supposed to take effect Jan. 1. The fee, which aims to fund mounting street improvement costs without general fund impact, will now take effect in October.

The fee would have been a flat $10 per month for residential customers, appearing on their monthly water bill. For non-residential customers, it was to be calculated based on the traffic generated at a property, but the city manager’s office put a halt to its implementation after finding inconsistencies in billing methodology.

“The original implementation for this ordinance was going to be January 2024 but we’ve had some issues with the rollout of this program, particularly on the commercial billing side,” Ford said. “To address those issues, I’ve asked the city team to reassess the billing methodology to ensure the final fee meets the intended goals of the project.

Ford said the change will have an impact on the city’s budget, which anticipated millions of dollars in revenue from the fee.

“We had anticipated some revenue in that time so we will be bringing forward action items to address the shortfall with the first quarter budget amendment in February,” he said.

Council Member Jim Holmes said he agrees with the idea of hitting pause on the fee’s implementation and applauded the city’s response as it tries to work out the new program’s kinks.

“I think we’re being responsive to the community right now and demonstrating intent to collaborate and nailing down the math, so I think our response was appropriate,” Holmes said. “… We’re trying to figure out how to pay for nearly $2 billion worth of infrastructure needs and it’s hard to figure out ways to pay for it and how to prioritize it, what can wait and what needs to happen now, what is maintenance and what is new construction, urban, suburban and getting that all right.”

The council approved an update to the city’s funding commitment to Union Pacific for implementation of a quiet zone along the railroad’s path downtown. The updated cost of $4.4 million now includes crossings at Second, Third, Fourth, Fifth, Sixth, Eighth, 11th and 13th streets, with an additional yearly payment of $109,000 for maintenance of grade crossing warning devices.

Improvements to safety features at each street crossing are required to create a quiet zone along the Union Pacific Railroad from Peach Street to 13th Street through downtown. With the new crossings installed, trains passing through would not be able to blare their horns at crossings except in an emergency.

Funding for planning was approved by the downtown Tax Increment Financing Zone in 2017, followed by some $800,000 in city funding for work at Fourth and Fifth streets and other engineering costs. Earlier this year the city council allotted about $1.2 million for work on crossings at Second, Third, Sixth and Eighth streets, plus maintenance costs as the city awaited updated pricing from Union Pacific. Future cost updates are expected to add University Parks Drive and Peach Street, though contracts, timelines and pricing are up to the railroad company.

“I just want people to know that we’re still trying to get this initiative complete, but I’ve had experience in my investment banking days of working with a … major railroad and it takes time,” Holmes said. “I mean, we’re dealing with Union Pacific. They’re not doing anything bad. They don’t have to be in a hurry to respond so I think we’re going as fast as we can. I like way we’re doing this project. We’re staying steady … keeping it tracked, so to speak.”