San Marcos breaks ground on hotel-conference center
Project's success could rival the San Marcos outlets
By Molly Bloom
Thursday, February 01, 2007
SAN MARCOS — After nearly three years of negotiations and planning, city officials and representatives of Missouri-based John Q. Hammons Hotels & Resorts LLC broke ground Wednesday on a hotel and conference center off Interstate 35 near outlet malls.
The city, which will own the conference center, is spending more than $25 million on the project in the hope that it will generate more hotel and motel and sales tax dollars and attract large companies to visit — and relocate to — San Marcos.
Mayor Susan Narvaiz said the project could be "as monumental as the outlet malls' success."
The city will borrow $23 million to build the 77,300-square-foot conference center on five acres donated by local developer Terry Gilmore.
Hammons, which will manage and operate the center, will repay the city 30 percent of its construction costs, as well as about $515,000 a year for its lease.
The city and Hays County will reimburse construction costs using tax revenue from the project; officials estimate that they would collect $844,300 in property, hotel, sales and mixed beverage taxes in 2009.
Hammons also will pay about $50 million to build a 10-story, 250-room Embassy Suites Hotel next to the conference center on 10 acres bought from Gilmore.
Both the hotel and conference center, at I-35 and McCarty Lane, are scheduled to open in October 2008.
The city gave hotelier John Hammons $2 million outright to persuade him to build in San Marcos, including $500,000 from its economic development chest and $1.5 million to forgive a loan intended to help Hammons purchase the hotel site.
Hammons Hotels & Resorts owns 72 hotels throughout the country, many of them subsidized by taxpayers.
"If the cities . . . and communities don't have the vision, the commitment, (Hammons) will walk away," regional vice president Bob Fugazi said.
The hotel-conference center project dates back to 2003, when Hammons first spoke with council members.
Hammons originally proposed a plan to build on the hills above Spring Lake on land also owned by Gilmore. But the project was moved to the I-35 location after residents protested the environmental impact on the Spring Lake area.
The I-35 site is part of a booming section of town near new shopping centers and the expanding outlet malls.
The City of San Marcos already has 22 hotels, and more than half of them charge less than $70 a night, according to September 2006 statistics from the governor's economic development and tourism department.
The city's hotel occupancy rate averaged 62 percent.
None of those hotels have the space to hold a large meeting, Narvaiz said, and overflow from the Hammons hotel could benefit existing hotels.
Narvaiz shied away from calling the city's financial involvement in the project a subsidy. It's an investment, she said.
"You have to make an investment to get a return," she said. "This is a source of income for the community that we wouldn't have otherwise."
Projected investment, return
$50 million Cost of the San Marcos Embassy Suites Hotel
$25 million What San Marcos taxpayers will provide in incentives and for construction of the city-owned conference center adjoining the hotel
$515,000 About what the city will charge the hotelier annually to lease the conference center
$844,300 What San Marcos and Hays County officials expect to collect in property, hotel, sales and mixed-beverage taxes in 2009.