City approves incentives for Katerra Inc.

It was a big night for economic development last Tuesday as the San Marcos City Council approved an agreement that will bring more than 500 jobs to the area and increased funding to the Greater San Marcos Partnership.

Council approved a Chapter 380 economic development incentive agreement with Katerra Inc. for the construction of a 600,000-square-foot automated building component manufacturing and distribution facility along State Highway 80 east of State Highway 21. A map shows that the facility will be located along Farm to Market Road 110 when the road is constructed.

Adriana Cruz, president of the Greater San Marcos Partnership (GSMP), gave the presentation on the agreement.

Katerra has pledged a capital investment of at least $109 million and the creation of at least 542 full-time jobs. The jobs will pay at least $15 an hour. In exchange, the city will rebate a percentage of annual payments of city ad valorem taxes generated from the facility each year for 10 years. The performance-based agreement will give Katerra annual tax rebates of 80 percent for three years, 70 percent for the next three years and 60 percent for the following four years. Katerra and the city will evaluate performance every year in an annual report. Council discussed the agreement in executive session on Aug. 7.

“I want to say how thankful we are for you, for your company,” Mayor John Thomaides said to Monica Quinones, a representative from Katerra. “... I can’t wait to vote yes.”

The economic development agreement passed 7-0.

Katerra is based in Menlo Park, California, and will use the San Marcos facility to manufacture a broad selection of building components and materials, including wall panels, floor systems, roof truss assemblies, windows, cabinets and finishes.

Council also approved an amendment to the city’s agreement with GSMP that increases the amount of money the city will pay the economic development organization during a three-year period. The previous agreement was for $375,000 annually for three years; the amendment approved last night will provide $100,000 per quarter every year for three years.

At council’s meeting two weeks ago, Thomaides had proposed adding $25,000 per year to the proposed $375,000 annual payments to GSMP. He and Cruz noted that the organization is working with Pike Powers, the man responsible for bringing the high-tech industry to Austin, and wants to continue paying him the same amount. More broadly, the GSMP is bracing for the location of the Army Futures Command in Austin. The command is expected to bring about a regional economic shift similar to the tech boom. Before agreeing to any kind of funding change, several council members wanted to find out more about the Army Futures Command. The GSMP gave a presentation about it during council’s work session Tuesday afternoon.

“I’m pretty excited about this opportunity,” City Manager Bert Lumbreras said Tuesday night. “... The bottom line for us as staff is we believe it’s a good investment.”

Council member Jane Hughson thanked Cruz and the GSMP for their work regarding the opportunities the Army Futures Command will bring.

“I think this Army Futures is going to make a huge change in the region, and I thank you for making sure we are going to be a part of it,” Hughson said.

Council member Melissa Derrick also thanked Cruz and praised the GSMP for working to bring career-based jobs to San Marcos.

Mayor Pro-Tem Lisa Prewitt asked Cruz to discuss the Army Futures Command and the opportunities it could bring. Cruz said that Texas State University was part of the bid the Austin Chamber of Commerce put forward to attract the new base.

“What it means for our region and our community is, as the Futures Command becomes established … companies will be coming to locate closer to that facility,” Cruz explained. “So there is that opportunity for companies to come here … and also the creation of new companies.”

Research from Texas State will also play a role in the new command, Cruz said, adding that it is one of the top military-friendly universities in the country, with veterans making up about 10 percent of the student population.

The funding increase for GSMP passed 7-0.