- Associated Press - Sunday, March 30, 2014

VON ORMY, Texas (AP) - As motorists speed past this tiny community along Interstate 35, they might not realize they have just passed the “Freest Little City in Texas,” as Mayor Art Martinez de Vara sometimes calls it.

The mayor shies away from political labels. But there is a libertarian tinge to a “zero tax, zero fee” goal as the best way to bring economic development to this poor but proud city that incorporated on the southwest side of San Antonio just six years ago.

“I don’t consider myself a politician,” he told the Austin American-Statesman (http://bit.ly/1dM1Ed7). “I just don’t like taxes and regulations.”

It’s an attitude that prompted community leaders to cut the town’s property tax rate in half while almost tripling its sales tax revenue with the help of fast-food restaurants and truck stops lured to Von Ormy’s Interstate 35 frontage. City officials hope to recruit larger enterprises once they have installed a sewer system and to eliminate the property tax altogether.

But the “Von Ormy Way,” as it is called, is also about offering basic municipal services efficiently - and sometimes in innovative ways - to a community not accustomed to being served.

“Here, you have a government experiment,” said Joe Phillips, a longtime Von Ormy property owner.

It’s gotten the attention of the Texas Public Policy Foundation, the Austin-based conservative think tank, which invited Martinez de Vara to speak at its annual conference last month.

“The primary lesson they’ve figured out is how to run their city more efficiently while creating a better business environment,” said Jess Fields, senior policy analyst at the foundation. “They encourage development by getting out of the way.”

The “Von Ormy Way” isn’t for everyone. Von Ormy, population 1,300, relies on a city marshal and two dozen volunteer police officers as well as volunteer firefighters. Its police station is a mobile command trailer the size of an 18-wheeler. It cost $4,500. One of its two police cars was donated.

Martinez de Vara said that residents - “after being ignored by San Antonio and Bexar County for years” - are patiently waiting for services as the city pursues a largely pay-as-you-go approach to creating a city from scratch.

As the city has prospered, it has installed streetlights and paved streets, and it is building a fire station. It has trash pickup, curbside recycling and negotiated free ambulance service.

The city’s only debt is a $120,000, seven-year note that, along with grants, helped buy land where the fire station, a school, a city hall and a park are planned.

The key to the city’s future is its pursuit of a public-private partnership to develop a $4 million sewer line that would serve new businesses at the intersection of I-35 and Loop 1604.

The revenue from that line, the mayor said, would finance extending sewers to the entire city.

This is a no-frills town.

“Necessity helps enforce the philosophy,” Martinez de Vara said.

The City Council, which meets in a church, has cut the property tax rate by 10 percent each year since its incorporation. The mayor said he expects that will continue until the tax is gone.

Brian Kelsey, principal at Civic Analytics and a lecturer on economic development, said property taxes - which are less volatile than sales taxes - make up a larger share of general revenue for most cities.

“It’s not uncommon for small communities to see 15 to 20 (percentage) point swings in year-to-year taxable sales during recessions,” he said. “It’s difficult to guarantee residents a minimum level of service they can expect from a city without a stable foundation of revenue.”

Martinez de Vara agrees there is a greater risk in relying on one major tax, particularly a sales tax that fluctuates with the economy. For that reason, he said, the city had a reserve fund last year that was one-third of its annual budget and its surplus was almost 50 percent of its budget.

“We can take a substantial hit without cutting into city operations,” he said. “We just have to hedge our taxes differently than other cities.”

To Martinez de Vara, property taxes pose a risk to landowners: “The property tax is the greatest threat to keeping the land.”

That philosophy is rooted in Von Ormy’s history.

The mayor, who spent his summers as a child visiting his grandmother in Von Ormy, counts himself as a sixth-generation resident. He estimated 60 percent of the locals are descendants of five families with original Spanish land grants in the area.

Their houses and land are handed down through generations.

Although the city is almost 90 percent Hispanic, it is named for Count Norbert von Ormay Auffenberg, an Austrian nobleman, who arrived in 1886 with twenty servants.

The count gave up his dream of becoming a cattle baron and left after 18 months. But a postmaster, apparently impressed by nobility, renamed the community, misspelling the count’s name in the process.

Despite Von Ormy’s long history, it had withered in San Antonio’s shadow - and its extraterritorial jurisdiction.

Von Ormy had tried and failed to incorporate in the past, but a group of community leaders led by Martinez de Vara, a lawyer with Capitol experience, tried again in 2007.

The Legislature didn’t pass the bill that the wannabe municipality sought, but there was enough political pressure that San Antonio allowed Von Ormy to go its own way in 2008.

“This was a no man’s land,” said Phillips, a landowner at Von Ormy’s intersection of I-35 and Loop 1604. “San Antonio made it very clear it didn’t care about this area before Eagle Ford Shale.”

The recent shale oil boom south of San Antonio is increasing traffic and commerce through the area. San Antonio is growing towards Von Ormy.

“We knew we couldn’t compete with San Antonio on incentives,” Martinez de Vara said of Von Ormy’s approach to economic development.

Moe Lemos said he located his business, Manufactured Housing Consultants, a mobile home dealership, in Von Ormy because of its business climate.

“Absolutely,” he said. “We enjoy the benefits of the big city without being burdened with overregulation.”

He said the property tax cuts were a “pleasant surprise” that allowed him to expand the business and improve the facilities.

Another property owner, Charlie Brown, said he wanted to be sure all of his 100 acres for the Alamo River RV Resort was part of Von Ormy.

“Coming from California, I thought I had landed in paradise,” said Brown, a retired airline pilot. “I know how to run my life better than a bureaucrat knows.”

Von Ormy typically doesn’t impose fees on companies locating here.

When the Pilot Travel Center, a large truck stop, opened a year ago, it had a sign that was taller than normally allowed.

Von Ormy granted a sign variance.

“We didn’t realize we had a $50 fee for a sign variance,” the mayor said. “We repealed it.”

Martinez de Vara estimated the city could have collected $30,000 in “impact fees” if it had the typical fees most cities charge. Instead, city leaders expected to make that up in a matter of months from the city’s share of the truck stop’s sales taxes.

Von Ormy has one whopper of a fee, $1 million for would-be junkyards, to discourage those establishments.

The city is also adopting “defensive zoning” to encourage commercial - as opposed to industrial - development that would continue its skyrocketing sales tax receipts, the mayor said.

“We’re not anarchists,” he said. “We don’t believe in ‘no government.’ But we’re going to keep it simple.”

He said city leaders are in the process of cutting 85 pages of a proposed zoning ordinance to about four pages.

It’s that approach, Phillips said, that bigger businesses will appreciate.

“You not only have no fees and a lowering of taxes,” he said. “You have a community saying, ‘We want you.’”


Information from: Austin American-Statesman, http://www.statesman.com

Copyright © 2016 The Washington Times, LLC.

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