The Mall That Ate Katy

Big money, big lobbyists, big tax breaks. The Mills Corporation is bringing one of its "megamalls" to Katy, and it's hardly business as usual in the little town on the prairie.

That might have been the end of it, if not for an anonymous phone call Jinny Baker received in September. Did she know that the watershed land to be bought with the Mills donation was owned by a guy named Nelson? Sure enough, within days, the subdivision residents had confirmed that the conservancy planned to purchase the rice farm owned by David Nelson, the cousin of city administrator Johnny Nelson.

The first chance anyone had to ask Johnny Nelson about his cousin's land was at the October 13 council meeting, which was also the first opportunity for the public to offer comment on the megamall project. The room filled up early, though the high degree of civility made it difficult for an outsider to tell at a glance who was pro-mall and who wasn't. When council disappeared into a closed session, the crowd mingled easily.

The mood shifted, however, when Falcon Point resident Jim Strong nervously asked the council if Johnny Nelson had disclosed that the Katy Conservancy land was his cousin's. Strong stressed that he suspected nothing un-toward, but, noting that ownership of the property had become something of a topic of conversation around town, he asked someone "to clear this matter up."

It's hard to ask a question like that without annoying somebody, and in this case, it probably should have really annoyed Johnny Nelson. But if it did, Nelson didn't let on; the city administrator just sat back in his chair and let Mayor Hank Schmidt handle Strong.

"If anyone is insinuating something here," Schmidt began uncomfortably, "this will be viewed pretty seriously. I'm afraid you have been misled. I've known the principals and the people involved all my adult life. The people here may be family, but they are not close family."

Johnny Nelson, who still hasn't discussed the issue publicly, did not return calls from the Press. He told a mall opponent from Pin Oak Village, however, that insinuations that he's been somehow compromised are "slanderous."

This kind of talk normally doesn't see the light of day around Katy proper, where people have known Johnny Nelson for almost 60 years. But across the freeway, outside the city limits, even the appearance of a conflict of interest is enough to generate a conspiracy theory or two among a group of people who feel they're about to be fed to the wolves.

Not that there doesn't seem to be something inevitable about Katy Mills. Until recently, city officials said it was premature to discuss the property-tax package being negotiated with Mills, but at the same time they were touting the rosy scenario for new sales-tax revenue being projected by the developer.

Last week, the city produced a preliminary financial analysis of the deal by Legg Mason Wood Walker, a brokerage and investment firm that is acting as the city's financial adviser. The six-page document predicted about $128 million in new sales taxes from Katy Mills and the surrounding development over the next 20 years. Legg Mason also estimated that once the $41-million infrastructure costs for the mall are paid off, the city of Katy, Fort Bend County and the Katy ISD will realize an additional $7 million annually in additional property-tax revenue.

Those projections are based on 100 percent participation in the tax-increment financing plan by the city of Katy and Katy ISD, meaning the two jurisdictions would forfeit all of the additional property taxes for the 20-year life of the TIF. Fort Bend County's contribution was figured at 50 percent, or roughly $600,000 a year.

Neither Katy ISD trustees nor Katy councilmembers would discuss the financing plan, preferring to wait until public hearings can be held. But at least one elected official is skeptical of the projections, particularly when it comes to the benefits that might accrue to Fort Bend County residents like Jinny Baker and her neighbors.

"I'm hoping that we're going to work out a deal that will provide these people in the county with some additional amenities, so that they get something out of this thing," says County Commissioner Andy Meyers. "They purposely moved out of Houston to get away from all the hustle and bustle they found there, and suddenly it's followed them out to where they've moved. They're not very happy about it, and I don't blame them."

Marsha Myers, who lives in Falcon Point, says any optimism that she and the Mills Corporation could peacefully co-exist faded after a brief conversation with project director Elizabeth Link over future development around the mall.

"Liz was talking about putting in a skating rink and some batting cages and then a community center, with a dry cleaners and a grocery store," Myers recalls. "I said, 'Oh. you mean a strip center?'' She said, 'No, a community center -- a place where the community shops.' "

By August, Myers and about two dozen homeowners in Pin Oak Village and Falcon Point were convinced Link was soft-pedaling the impact that 15 million mall visitors a year might have on their neighborhoods. They organized a committee and started researching the Mills Corporation, writing letters to Katy officials, requesting records and information from city hall and generally making a nuisance of themselves.

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