Texas State University is bringing a long-discussed hospitality anchor to its San Marcos campus, approving a $40 million boutique hotel that Houston-based Midway will build with a 75-year ground lease.
The university’s Board of Regents signed off on the development agreement Nov. 20, the Austin Business Journal reported, granting Midway control of a 3-acre site at 429 North Guadalupe Street with options for two 10-year extensions. The parcel once housed the school’s Richard A. Castro Undergraduate Admissions Center and sits just north of downtown, positioning the project to pull double duty for campus and city events.
Plans call for a 120,000-square-foot, full-service hotel with at least 130 rooms and a slate of amenities rarely found in the area: an event lawn and amphitheater, restaurant and bar, pool and courtyard and modern meeting spaces. Regents said the project will be the only full-service hotel of its kind near downtown San Marcos, giving the school more flexibility in hosting state and national conferences, while also feeding local tourism at a time when the metro is bulging with growth.
San Marcos, roughly 30 miles south of Austin, now counts close to 75,000 residents, and Texas State enrolls about 40,000 students. University officials pitched the hotel as overdue for a downtown that has struggled to keep pace with regional demand.
“San Marcos is long overdue for a true, full-service, top-of-the-line hotel and restaurant in the heart of downtown,” Eric Algoe, the university’s vice president for operations and CFO, said in a news release.
Midway, which has completed comparable projects in College Station, secured city and county incentives earlier this year. The city of San Marcos approved a $9.1 million package paid out over 10 installments, with no property tax rebates but significant returns on other fronts: a 95 percent rebate on sales taxes and hotel occupancy taxes that phases down over time, as well as a rebate on construction sales taxes. The city will require Midway to invest at least $40 million, start construction by the end of 2026 and finish within 30 months.
Officials estimate the hotel will generate $2.4 million in city property taxes over the first decade and $456,000 in retained sales taxes. The hotel occupancy tax rebate could reach $7.3 million, with the city keeping another $1.8 million. The incentive agreement runs 15 years from completion, after which Midway can sell its interest to a public entity without paying the incentives back.
Austin-based New Waterloo will operate the hotel, adding to a portfolio that includes South Congress Hotel and Hotel Ella.
— Eric Weilbacher
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