Council OKs multi-use development on once-contentious property

In what city council member Travis Mitchell called "a home run for the city," the council unanimously approved a tax incentive agreement with a developer last night that paves the way for what is being called the Kyle Gateway, a retail development that will include an anchor store of at least 50,000 square feet, a hotel, additional retail outlets and "non-drive-through restaurants" to be located on 47.74 acres that many feared two years ago would become a massive truck stop.

According to the agreement, Kyle Gateway, located on the northwest corner of I35 and Yarrington Road, will include a 50,000-square-foot "department/grocery store anchor" that must open for business by the end of 2025. It will also be the site of "a national flag chain hotel having a minimum of 81 rooms" and "additional retail and non-residential facilities (i.e., office space) having an aggregate square footage totaling approximately 300,000 square feet." The agreement also specifies "front pad sites will be reserved for sales tax generating retail and non-drive through restaurants." The developer is required to have enough of these retail outlets open and in operation by the beginning of 2025 to be able to employ at least 100 full-time equivalent employees.

Except for the aforementioned deadlines, there is no construction timetable for the project although Economic Development Director Diana Blank Torres said she expects work to begin on the project "almost immediately." Mayor Todd Webster wasn’t so sure, however. He said he wouldn’t be surprised if PGI Investment, the company Kyle entered into this agreement with, flips the property.

"This is what we’ve been saying all along with go on this property," Webster said, "We have now simply put sone numbers around it. It’s about $5,2 million in roads, wastewater and water."

The agreement calls for the developer to initially bear that $5.2 million cost. However, it would be reimbursed to PGI over the next 10 years by the city rebating 50 percent of the city sales taxes generated by the outlets on the property., with the option of extending that another five years if the $5.2 million is not completely reimbursed. The initial 10-ear period begins Jan. 1, 2020.

"The folks that we’re dealing with build convenience stores and truck stops," Webster said. "What took so long is we’re working this thing out with people who don’t have experience doing large scale developments. The agreement is transferable if the city approves. I don’t know what their plans are, but I suspect it could be something that could be flipped to somebody that has experience in developing that kind of real estate. That would be my expectation."

The $5.2 million would cover the costs of a 3,500-linear-foot spine and cross road from Yarrington to Post Road, a traffic signal, a 2,400-linear-foot eight-inch water line, a 400-linear-foot 12-inch water line, 10 fire hydrants, a 2,300-linear-foot 12-inch wastewater line and 10 manholes.

‘They’re gonna have a lot of work ahead of them as far as infrastructure down there," Torres said, "because it’s a big dip down."

"I thought I would have this thing done in three months and it took two years," Webster said.

When PGI first announced its plans to locate a truck stop on the property in 2015, citizens, the overwhelming majority of which lived on the south side of Yarrington in San Marcos, overflowed City Council Chambers Jan. 26, 2016 during a Planning & Zoning Commission hearing to consider a change in the zoning that would allow for the truck stop. Although the commission voted 5-2 against, the vote was deemed illegal because many of the commissioners said expressly they were voting against the truck stop instead of deciding a zoning issue. As a result, it appeared the truck stop idea would move forward. The announcement of the illegality of the P&Z vote resulted in former San Marcos Mayor Daniel Guerrero threatening retaliation in the form of a condemnation resolution against Kyle if the truck stop wasn’t halted. Webster responded by saying he had tried to meet with Guerrero a number of times to resolve the issue, "and I each time I got blown off." Webster added defiantly "People of action don’t write resolutions."

That exchange led almost immediately to Guerrero seeking an audience with Webster to resolve the issue which ended with the announcement of a development that was, for all practical purposes, identical to the one provided in the agreement approved last night except that San Marcos is no longer providing previously agreed-to wastewater services. San Marcos has since claimed wastewater could not flow via gravity from the site to its wastewater treatment facilities.

"We will collect 100 percent of the property taxes from this substantial development," Mitchell said, "and 50 percent of the sales tax from that development for 10 years. That other 50 percent would go to rebate them for the construction of this public infrastructure that the city would otherwise have to pay. So it’s a very, very good project."

Mitchell, joined by council member Becky Selbera, then thanked Mayor Webster and others who Mitchell claimed worked tirelessly to get the deal done. "We had a situation where there was a land use proposed that wasn’t very desirable and we are absolutely turning the corner on that into a project that we can all be really proud of. Absolutely, from a financial standpoint, a home run for the city."

In other action last night:

• The council heard assistant city manager James Earp refute all the claims made by the 11 persons, seven of whom spoke longer than the three minutes allotted to them, trying to prevent a bridge over the Blanco River from being a part of the city’s Transportation Master Plan, and then voted unanimously to incorporate the bridge and four other changes to the plan.
• Voted unanimously to add Office/Institutional to the city’s list of zoning categories .It is expected another new category that will allow for mixed-used developments, will appear on the council’s agenda next month.
• Voted unanimously to nominate Community Impact publisher Rick Koch as a member of the 2018-19 Hays Central Appraisal District board of trustees. Interestingly, the council had not settled on a nominee when the item came up on the agenda, but readily agreed Koch would be the perfect choice after council member Shane Arabie pointed Koch out in the City Hall foyer.
• The council unanimously voted to reappoint three the persons mentioned in this story to the Planning & Zoning Commission as well as the three cited in that same story to the Economic Development & Tourism Board.
• The council reaffirmed the correctness of the minutes of its Aug. 1 meeting before approving them and three other sets of minutes. Council member Daphne Tenorio questioned the validity of the Aug. 1 minutes because it recorded one vote was 6-0, yet all seven council members were present. It turned out the 6-0 vote was correct because Tenorio herself had abstained from voting on that item and that abstention wasn’t duly recorded because Tenorio failed to complete and submit the required abstention forms. Tenorio did not attend last night’s meeting and thus perhaps saved herself from some embarrassment on this matter.