Council approves sales-tax rebates to help secure Costco in Mayfair; agreements include city and Water Improvement District contributions

City Council approved a package of economic incentive agreements to support construction of a proposed Costco warehouse at the corner of I-35 and Kohlenberg Road in the Mayfair development area. The incentives are structured as sales-tax rebates from the city and Comal County Water Improvement District (WID) No. 3 and include an interlocal agreement, a chapter 380 agreement for the city's sales-tax share and a separate chapter 380-style arrangement for the WID's tax share.

Deputy City Manager Jordan Matney explained the agreements are necessary because the Mayfair site lies outside the municipal limits but within New Braunfels' extraterritorial jurisdiction; Comal County WID No. 3 was created for the development and holds a portion of the local sales tax revenue for the district. Matney said Costco has committed to a minimum $25 million capital investment for a roughly 50,000-square-foot store that the city's retail study suggested would reduce retail leakage and anchor further retail development on the south side of the Mayfair area.

Under the arrangements approved by council: the city will rebate up to $1.5 million of the city-retained share of sales tax generated by the Costco property over a term not to exceed eight years; the WID will dedicate up to $6.3 million of its share of sales tax to Costco over up to 20 years (the WID's portion represents a larger, longer term rebate because of the WID structure); and the city will collect and administer the sales-tax sharing for the WID. Matney said the WID will retain 25% of those taxes and dedicate 75% back to Costco as the rebate.

Public comment included both support and criticism. One resident (District 1) argued that the WID rebate would divert money that had been intended for public infrastructure (including fire infrastructure) and suggested the community would ultimately make up the difference. He also provided back-of-envelope calculations showing the total incentives would represent roughly 1.3% of local sales tied to the project. Another commenter noted potential corporate practices and asked whether Costco offers public contributions comparable to corporate philanthropy elsewhere.

Council approved all three agreements unanimously. Council members and staff said the EDC and city had negotiated the package to encourage retention of local retail spending that otherwise might leave the area and to anchor additional development. Matney said Mayfair and the EDC expect Costco will create an estimated 50 jobs with average wages in the mid-$20s per hour and will act as an anchor to induce further retail development.

Votes at a glance: Council approved (1) an interlocal agreement allowing the WID to waive a portion of its sales tax in favor of the Costco incentive arrangement; (2) a chapter 380 economic development agreement committing up to $1.5 million of the city's share of sales tax over up to eight years; and (3) a chapter 380-style agreement for the WID share committing up to $6.3 million over up to 20 years. All three actions passed on unanimous votes by council members present.

Council directed staff to continue negotiations with Mayfair and Comal County partners and to coordinate collection/administration of the rebate with the WID; staff said any future bond issuances or related debt would return to the MBU Board and City Council for separate approvals.