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<br />PORT CROSSING LAND, L.P. <br />3330 S. Sam Houston Parkway E. <br />Houston, Texas 77047 <br />713-578-1234 <br /> <br />December 4, 2006 <br /> <br />Mr. John Joerns <br />City Manager <br />City of La Porte <br />604 W. Fairmont Parkway <br />La Porte, Texas 77571 <br /> <br />Re: Proposed Foreign Trade Zone for Port Crossing <br /> <br />Dear John, <br /> <br />Please include our Foreign Trade Zone topic on the December agenda for City Council. We would like <br />to simplify the discussion, if possible. Instead of discussing the merits of Foreign Trade Zones and how <br />they are used, I'd like to focus simply on the industrial market around La Porte and how competitive it <br />has become. <br /> <br />Two years ago, very little activity was present. Granite Properties was building the second building on <br />Barbours Cut Blvd. for Gulf Winds in Morgan's Point and Clay Development was building several <br />buildings at Battleground in Deer Park. In addition, a few smaller buildings were being developed in the <br />area. <br /> <br />Since that time, the market has changed substantially due to low cap rates, an unbelievable surge of <br />investment capital available to the market, and the hype surrounding the new Bayport Terminal. Over <br />6.6 million square feet of industrial space has been built and leased or sold during that two-year time <br />frame. In addition, 1.6 million square feet has been built speculatively and remains available to the <br />market. Another 3.1 million is currently under construction for lease and/or sale. Over 12.7 million <br />square feet of additional industrial space is currently planned by developers that have already purchased <br />property in the area. The total square footages are astounding. <br /> <br />The competition is stiff. Developers are already offering reduced lease rates and "no rent" periods for <br />up to 6 months to attract tenants. Some sites have full Foreign Trade Zones, heavy-haul or overweight <br />permit areas, tax abatements, and other financial incentives to attract businesses. Simply put, we need to <br />assemble the best set of financial incentives possible to compete with other developers for prospective <br />tenants. We don't want to construct buildings and watch them sit empty. Major tenants and users <br />sometimes need the benefits that a Foreign Trade Zone has to offer. <br />