AGENDA CAPTION:
Title
Consider approval of Resolution 2024-208R, approving a Chapter 380 Economic Development Incentive Agreement with HEB, LP., under the City Council’s open solicitation and offer of incentives to grocery stores to locate in the city that provides incentives for HEB to construct a new grocery store at the southeast corner of IH-35 and McCarty Lane in the form of refunds of a percentage of additional property and sales taxes generated by the new store over five years; authorizing the City Manager, or her designee, to execute said agreement; and declaring an effective date.
Body
Meeting date: October 15, 2024
Department: City Manager’s Office
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Fiscal Note:
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Economic Vitality
Quality of Life & Sense of Place
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☒ Economic Development - Fiscally Responsible Incentives for Economic Development
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Background Information:
On May 7th, 2024, Council voted to adopt a resolution supporting tax incentives for grocery store development. In August, HEB submitted a request for incentives citing this resolution as having a direct and material impact on their decision to construct another store in San Marcos. HEB is now looking to construct an approximately 100,000 SF grocery store with an additional 10,000 SF convenience store with fuel pumps and a car wash at the Southeast corner of IH 35 and E McCarty Ln. In conformance with Council’s resolution, this agreement will rebate to HEB a percentage of annual property and sales tax collections over 5 years based on the following schedule: 80% in year 1, 80% in year 2, 60% in year 3, 50% in year 4, and 25% in year 5 following HEB’s construction of a minimum 110,000 SF grocery store and a minimum capital investment of $53 million.
Council Committee, Board/Commission Action:
On September 26, 2024 EDSM voted unanimously to recommend to City Council an economic development incentive with HEB rebating a percentage of annual property and sales tax collections over 5 years based on the following schedule: 80% in year 1, 80% in year 2, 60% in year 3, 50% in year 4, and 25% in year 5 following HEB’s construction of a minimum 100,000 SF grocery store.
Alternatives:
Council may vote to approve the agreement, postpone the item, or deny approval.
Recommendation:
Staff recommends approval of the agreement as presented.