REEL DEAL: Council approves economic incentive agreement for film production studio

San Marcos will soon see a new film production studio after the San Marcos City Council and Hays County Commissioners Court both approved incentive agreements with a San Marcos-based studio management company. 

Following much consideration and discussion, the San Marcos City Council approved a Chapter 380 Economic Development Incentive Agreement with Hill Country Group, LLC, for the location of a studio facility for film and video production within the La Cima Development.

The agreement entails providing incentives in the form of refunds of a percentage of real and personal property taxes over five years for the construction of a minimum 820,000 square feet of space for the studio facility.

"San Marcos was the clear-cut choice of where we wanted to be doing business," said Zach Price, co-founder and COO of Hill Country Studios. "The natural beauty of the Hill Country, as well as the local workforce and close proximity to the talent pools of Austin and San Antonio, made perfect sense for us to locate our film production studio in the Texas Innovation Corridor.”

The studio facility would have 22 full-time employees at $100k average salary and up to 1,400 contract workers with an average of 1,200 on production projects at $80k average salary, according to a city presentation.

There would be a total capital investment of $267 million and the facility would include 820,000 square feet in production stages, workshops, offices and support spaces. Construction would be split into three phases and would begin in April 2023.

Prior to the presentation on the facility, Interim City Manager Stephanie Reyes made a statement regarding concerns over the facility being built over the Edwards Aquifer Recharge Zone.

“Staff has worked diligently to read through the concerns received and is prepared to respond to the concerns as much as possible,” Reyes said. “We recognize and value everyone’s input. Please know we very much share the desire to protect and preserve our most valuable resource as well. As a reminder, the decision tonight is whether or not council should incentivize a film studio project that has committed to being better environmentally and economically than a commercial project that could be built at this site as currently entitled in the La Cima Development Agreement, approved in 2013.”

Assistant City Manager Joe Pantalion and Economic and City Business Development Manager Kelsee Lee gave a presentation on the project in which Pantalion again mentioned that the decision council is considering is “should council incentivize a film studio project that will be better environmentally and economically than a commercial project that can be built at this site otherwise?”

The presentation showed how the proposed film studio would be favorable compared to a community commercial project through the 2013 La Cima Agreement. With the film studio having a lower percent impervious cover, there will be less runoff, less pollutant loading, more infiltration and more recharge.

“If you’re worried about the environment and if you really are concerned about the Edwards Aquifer as we are, you really have to drill down into the details and look at these items and see very fundamentally what's going to be the best scenario and in our opinion, the film studio is,” Pantalion said.

Lee also spoke of the benefits San Marcos would have with the facility including a strong economic impact, a need for local vendors for projects and the potential for collaboration with Texas State University and San Marcos CISD for internships and training opportunities.

The agreement would see San Marcos collect an estimated $161K in property taxes in 2025 following the complete buildout and $11.4 million in total over a 10 year period. There would also be a rebating property tax at a 90% rate in the first year that would decrease overtime.

Councilmember Maxfield Baker presented several concerns regarding the facility with the first  regarding the industry numbers and statistics from the presentation and related to the economic incentives.

Baker expressed frustration that city staff had not reviewed an email containing academic literature that questioned the benefits and economic incentives the industry would actually bring. Mayor Jane Hughson and Baker further had disagreement regarding making a motion to postpone the item.

Councilmembers Jude Prather and Mark Gleason shared their support for this project, with Gleason thanking the San Marcos community for their concern with this item and the importance of protecting the environment.

“We have the chance to really bring something unique to San Marcos and there is no way I would support this if I thought this was going to have a real big detrimental impact on the aquifer, I don’t think any of my colleague want to see the environment harmed in any way, shape or form,” Gleason said.

Councilmember Shane Scott also expressed his support for the project and spoke of his experience in the film industry and how the project would benefit San Marcos.

“I think that this is going to be good to diversify our economy,” Hughson said. “There'll be full time jobs there’ll be some contract jobs, it will be something different from what else we have in San Marcos to a certain extent”

Following a discussion of the rebate funding that the city would pay, Scott made a motion to call to question and end debate, which did not receive a second. Baker then made a motion to support requirements from the conservation development methods that would ensure the protection of the aquifer that Baker read from an email, however, that motion also did not receive a second.

Baker further raised questions regarding the police response time, extra requirements for police officers and protection of the aquifer if any accident were to happen at the studio among other things.

Gleason also spoke with Nicholas Kehl of Bowman Consulting to confirm the conservation and preservation of the aquifer such as rainwater and runoff collection and protection.

While on the topic of employee opportunities for the San Marcos Community, Baker suggested the implantation of an internship program. Following the motion to establish an internship program and a second from Councilmember Saul Gonzales, the motion failed.

Eric Willis of La Cima clarified that establishing a program of that sort would be the responsibility of  those who lease and contract with the facility.

“I think in the future then when having these conversations, can we not site things that are infeasible or seemingly not fleshed out, as you know, I mean we’re literally highlighting it as an opportunity and a rationale for supporting this, I think it’s kind of disingenuous,” Garza said.   

Baker made another motion to provide onsite training and access for jobs in the industry, which was not seconded. Baker also made a motion to amend the Chapter 380 Economic Development Incentive Agreement resolution’s non-discrimination to policy to match the city’s by including age, gender identity and sexual orientation.

Prather seconded the motion and brought up the amount of time being spent on the item. After the motion failed, Baker expressed disappointment saying he was “ashamed” that some of the other councilmembers would not vote in favor of the motion.

To this, Gleason answered that he was “tired of one of our fellow colleagues filibustering,” to which Baker responded by telling Gleason to  “learn what the words mean before you speak them.”

After more back and forth and a call to question from Prather, the council would go on to pass the main motion 6-1.

For the complete agenda and meeting, visit http://san-marcos-tx.granicus.com/ViewPublisher.php?view_id=9.

This story has been updated since its first publication