Katerra abandons SMART Terminal, relocates proposed facility

Katerra will no longer be a tenant of the SMART (San Marcos Air, Rail and Truck) Terminal industrial rail park. 

Hays County Commissioners voted unanimously to execute a Chapter 381 economic development incentive agreement between Hays County and Katerra Construction, LLC during Tuesday’s meeting.

Over the 10-year period of the performance-based incentive agreement, Hays County will generate nearly $2 million in new tax revenue, according to John Ellis, vice president of marketing and communications for the Greater San Marcos Partnership. 

 To receive the rebates provided by the incentive, over 10 years, the company must hire at least 530 employees. Tax rebates for real property will remain at 30% for the first three years, 20% for years four to six and 10% for years seven to 10. Tax rebates for personal property will remain at 80% years for the first three years, 70% for years four to six and 60% for years seven to 10. 

Katerra — an automated building component manufacturing and distribution facility — will no longer be located at the SMART Terminal as originally proposed. Katerra was previously slated to be the SMART Terminal’s first tenant. Instead, the facility will be located at the proposed Whisper development located at Yarrington Road and Harris Hill. 

With the loss of Katerra, SMART Terminal’s future is uncertain. Jason Giulietti, vice president of economic development for the Greater San Marcos Partnership said Katerra’s decision to locate elsewhere will temporarily delay the establishment of the SMART Terminal’s anchor tenant. 

“The Greater San Marcos Partnership continues to see considerable interest from prospects who require rail and are interested in relocating to Texas,” Giulietti said. “When fully realized, the SMART Terminal will be a major contributor to our region’s economy.”

According to Matthew Ryan, head of manufacturing and logistics for Katerra, the company expects to see groundbreaking on the new facility sometime in December or early January, depending on permitting with the City of San Marcos. 

Ryan said Katerra decided to move because the facility no longer requires a rail-served site. 

“So initially we were overweight, or lumber-based products, so inbound rail is very conducive to delivery of lumber,” Ryan said. “That balance, that mix between lumber and cold form steel has changed so that allowed us more flexibility with respect to our inbound transport, outbound hasn't changed.”

Katerra, a manufacturing company based in Menlo Park, California, will use the San Marcos facility to manufacture building components such as wall panels, roof trusses, windows, countertops. The San Marcos facility will be similar to Katerra’s Component and Finish Facility in Tracy, California. 

On Oct. 16, 2018, the San Marcos City Council approved a Chapter 380 Economic Development incentive agreement with Katerra, LLC, which pledged to produce 542 jobs at the rate of at least $15 per hour. 

The SMART Terminal, slated to be developed on State Highway 80 east of State Highway 21, was approved on March 19, 2019, when the San Marcos City Council approved a Chapter 380 economic development agreement with the industrial rail park, annexed 734 acres for the project and rezoned the annexed property to Heavy Industrial.

Caldwell County approved an economic development agreement with Katerra for purposes of local economic development through a tax rebate incentive on Oct. 22, 2018. 

Caldwell County Judge Hoppy Haden said the county worked very hard to keep it in Caldwell. Though he said the county is disappointed Katerra decided to move to Hays County, he is “glad that they at least stayed within the region.”

“We're members of the Greater San Marcos Partnership so the fact that it stayed in the region of the partnership is a good thing,” Haden said. “Just you know, once again, we were very disappointed that it didn’t stay in Caldwell County but you know, Katerra made a business decision and that's the way the cookie crumbles sometimes.”

Following the Commission’s decision to approve the economic incentive, Ingalsbe thanked Katerra for their decision to remain in the region. 

“I know that this project started out with a partnership between the City of San Marcos and Caldwell County and now it is with the City of San Marcos and Hays County but I do want to say that we worked well with Caldwell County,” Ingalsbe said. “But I just want to say that we continue to work very well together. They, Caldwell County, understood the reason for the change and so we will continue to work well together.” 

According to Giulietti, Katerra’s investment will make a significant economic impact on the region’s economy. 

“In addition, Katerra’s commitment to establish their newest manufacturing facility in the Greater San Marcos region sends a strong message across the country that the Texas Innovation Corridor is an ideal location for innovative and growing companies,” he said.