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San Marcos council approves incentive package for proposed $40 million downtown hotel
Summary
The City Council approved a Chapter 380 incentive agreement to support a proposed 130-room, $40 million full-service hotel on Texas State University property at 429 N. Guadalupe Street, backing sales- and hotel-tax rebates over a staged period to help stabilize the project.
The San Marcos City Council voted 7–0 on July 1 to approve an economic incentive package with Midway Development LLC to support construction of a full-service, 130-key hotel on Texas State University property at 429 North Guadalupe Street.
Christian Smith, the city’s economic and business development manager, told council the proposed project would require a minimum $40 million capital investment and deliver a hotel product that city staff said is not currently available between Austin and San Antonio. The council-approved Chapter 380 agreement provides for a phased rebate of hotel-occupancy and certain sales taxes — starting at 95% in early years and drawing down as the hotel’s revenue-per-available-room (RevPAR) metric stabilizes — and a construction sales-tax rebate for eligible costs. The agreement includes clawback provisions and no property-tax rebates; the city, county and school district would retain 100% of property taxes on the hotel improvements.
Midway representatives and the intended operator told council they expect the hotel to open in about three years and discussed targeted hourly wages for some roles. Councilmember Lydia Rodriguez asked the developer to consider higher starting wages; Midway said it would revisit figures with the operator and could consider adjustments before second reading. Councilmembers also asked that wage commitments be extended to part-time and contracted workers such as valet service; staff said they would work with the developer on language for the second reading.
Staff presented financial models showing an estimated aggregate rebate of roughly $9.1 million over the payment period, while the city would retain an estimated $1.8 million in hotel-tax revenue, about $0.5 million in sales tax and $2.5 million in property taxes during the same horizon (estimates dependent on occupancy and qualifying rebate categories). The city’s Economic Development Board recommended the package.
The first reading passed 7–0; council approved an amendment at first reading to insert the project address (429 North Guadalupe Street) into the resolution’s text. Staff said final revisions — including wage and contractor commitments discussed during the meeting — will be brought to council for second reading.
