|Majestic Realty's Lewisville development|
The mushroom cloud might not be visible to the naked eye, but it’s there, rising in the sky near the southwest corner of Kyle Crossing and Kohler Crossing. If all goes according to plan, that will become the site of a half-million square feet of primarily logistics-based office/industrial/warehouse space — arguably the most significant economic development project the city has witnessed in at least the last half decade.
The City Council will consider and, if its members are thinking clearly and with the best interests of the city firmly implanted in their minds, will approve a set of economic incentives to allow the project to move forward. The city is nowhere close to giving away the store on this deal. Quite the opposite, in fact; this is an excellent deal from the city’s point of view. As I interpret this, the city will be giving the developer a limited property tax abatement for five years, beginning from the time "the developer completes and receives a certificate of occupancy for the project," which, of course, will be after the two-building project is built on the campus. The abatement decreases by 20 percent in each of the five years and only applies to the unleased portion of the project. "By way of example," the agreement states, "if in year one the developer leases 50 percent of the rentable square footage of the buildings on the property, then the incentive payment will be reduced by 50 percent."
These kind tax abatements makes sense because the city doesn’t really loose any money on the deal. No matter what, the city is going to continue to receive the property tax on that land based on its current valuation whether or not it is developed. The rebates come from increased valuations caused by the development. And, in this case, within five years, or even less if the project is fully leased before that, the city will collecting property taxes on land with a significantly higher valuation without having to rebate a single cent.
This is also wonderful news for homeowners who will now have a major business development sharing the city’s overall property tax burden.
"I could not be happier to bring this latest project before the council for a vote," Mayor Travis Mitchell said today. "Jobs are coming to Kyle."
The other piece of good news in all of this is the identity of the developer, Majestic Realty Company, a privately-held outfit that’s been successfully doing business longer than the overwhelming majority of Kyle residents have even been alive. Majestic Realty was founded by Edward P. Roski in 1948 and to give you some idea of its stability, its current chairman is the founder’s son, Edward P. Roski Jr.
"Like my father, I have always believed in the importance of investing in, and being active members of, every community in which Majestic is located," according to a letter signed by the current president and chairman of the board on the company’s website. "This core philosophy remains an integral value, impacting how we do business. Our business model of maintaining ownership of all our properties creates a vested interest for us that each one is a long term success and it also requires that we help build sustainable communities. Likewise we build long term relationships with our tenants and financial partners, helping our tenants address their real estate needs as their businesses expand across the nation. Beyond building environmentally friendly projects which create jobs close to our population centers and generating revenue for their cities, our Majestic Realty Foundation works closely with local organizations to help improve the quality of life for the at risk and underserved." (I’ll get back to that Foundation below.)
Majestic is currently involved in development projects in 10 states, but considering only its Texas projects will give you some idea of the company’s breadth and scope. It’s largest Texas project is a 215-acre master planned business park that is designed, upon completion, to total more than 3.2 million square feet of Class A warehouse and distribution facilities in seven buildings along State Highway 121 in Lewisville, just five miles from the DFW International Airport. As will be the case in Kyle, the tenants in this project will be able to take advantage of triple freeport exemptions. It’s second largest deal is a 320-acre master planned business park on I-35W just south of Fort Worth that includes 1,344,000 square feet of industrial space. It is also developing a project called Port Grande, a 1,952-acre master planned logistics park situated along the U.S.-Mexico border adjacent to IH 35 in Laredo. From what I can tell, the Kyle project will be the fourth largest of the six developments Majestic has in Texas.
"Our agreement with Majestic Realty is another step in Kyle’s quest to be an employer-friendly city," Mayor Mitchell said. "We started a few years back by targeting the light industrial industry — in earnest. To accomplish this, the city worked with the school district to become a triple-freeport tax exempt community. Since the district’s vote last year, we have gone from zero to nearly one million square feet of speculative industrial space. It’s a phenomenal exclamation point recognizing the validity of our efforts to become a triple-freeport tax exempt community. I could not be happier to bring this latest project before the council for a vote. And I remain grateful to Hays CISD for their trust in our team. Jobs are coming to Kyle."
This development could have more benefits than the ones that immediately draw your attention, i.e., two logistic centers totaling 500,000 square feet. In 2002, the company launched that aforementioned Majestic Realty Foundation, which, the company brags, has "placed grants totaling more than $10 million in hundreds of programs, organizations and communities throughout the country." The company is also a member of the U.S., Green Building Council and recipient’s of the EPA’s Environmental Justice Achievement Award. "Majestic Realty Co. has built a strong foundation and evolving expertise in green building and environmentally responsible design and service delivery," according to a corporate statement. "We are committed to a fully-integrated approach with not only the capability to build green, but implementation of a corporate philosophy which encourages sustainable practices."
The council will also decide whether to formally post notices of public hearings on the proposed annexation of four areas of land totaling nearly 260 acres, but that land growth of the city, designed primarily to ensure that the redesigned Highway 150 continues to be within the city’s limits, pales in comparison to the economic growth inherent in the Majestic project.
Also on the agenda, is the formal presentation of something I discussed following the last council meeting — the joint fundraising effort with the Make-a-Wish Foundation to pay for the construction of a roller hockey rink in Gregg-Clarke Park, just the type of a project a corporate partner like the Majestic Realty Foundation would likely be a part of.