Communities within the greater San Marcos area and the State of Texas provide a variety of state and local incentives for all types of businesses.
Companies in the greater San Marcos region are located in one of Texas’ fastest-growing counties and most important international trade corridors. Companies here receive the benefits of:
- a pro-business climate;
- an available and affordable workforce;
- quality educational institutions and excellent training facilities;
- a strategic location between two major metropolitan areas;
- a nurturing entrepreneurial environment;
- a network of dynamic technology and service firms;
- a committed and collaborative community;
- an extensive utility infrastructure;
- a favorable tax structure;
- competitive business incentives; and
- an excellent quality of life with the amenities of the Texas Hill Country.
Incentives include financing and grant programs, as well as opportunities through Texas State University, the Texas Manufacturing Assistance Center, the Small Business Development Center (SBDC), Service Corp of Retired Executives (SCORE), San Marcos Manufacturers Association (SMMA) and the San Marcos Area Chamber of Commerce.
Development Fee Waivers
Development fee waivers are approved by the locality. They will reduce or eliminate:
building permit fees;
inspection and contracting fees;
site development permit fees;
utility connection fees; and
processing fees for platting, zoning and land use applications.
The Development Fee Waiver program does not include impact fees.
Freeport Exemption
Businesses that export tangible property may be eligible for the Freeport Exemption program. The program exempts certain types of tangible personal property from taxation that is:
- acquired in or imported into Texas to be forwarded out of state;
- detained in Texas for assembly, storing, manufacturing, processing, or for fabricating purposes by the person who acquired or imported it; and
- transported out of state within 175 days after the date the person acquired or imported it into Texas.
HUB Zones
The statewide Historically Underutilized Business (HUB) Zone Empowerment Contracting Program facilitates the use of HUBs in federal, state, and local procurement to minority and woman- owned businesses.
The program aims to increase employment opportunities, stimulate capital investment in HUB areas, increase employment opportunities, and offer economic leveraging in the community.
Eligible businesses must be registered as a small business by U.S. Small Business Administration (SBA) standards, be owned and controlled by a U.S. citizen, and be located in a HUB zone with at least 35% of its employees also residing in the zone. The Texas State University SBDC can help assist eligible companies register with the SBA.
Property Tax Phase-In Program
The City of San Marcos Property Tax Phase-In Program offers tax phase-ins for new or expanding commercial or industrial construction and business personal property taxes associated with real property. City property tax phase-ins are designated through a contract approved by City Council. Qualification criteria varies based on company size.
Micro (less than 20 employees) and small (20-99 employees) businesses must:
- create, maintain, or retain at least five jobs
- 20 percent of the job salaries for the created, maintained, or retained positions must pay hourly workers more than $17 per hour or salaried employees more than $36,000 annually
- capital investment by applicant must equal or exceed $250,000
- start-up business will be considered case-by-case
Existing businesses can apply and must provide financial statements and/or income tax returns, as well as a business plan with appropriate projected financial statements.
Medium (100-500 employees) and large (500+ employees) businesses must:
- create maintain or retain at least 10 jobs
- 20 percent of job salaries for the created, maintained, or retained positions must pay hourly employees more than $17 per hour or salaried employees more than $36,000 annually
- temporary positions will not be considered as full-time positions for phase-in purposes
- capital investment by applicant must equal or exceed $1,000,000
- start-up businesses will be considered on a case-by-case basis
Applicants can be existing businesses and must provide financial statements and/or tax returns.
Local Incentive Programs
- The Greater San Marcos Partnership, the City of San Marcos and the State of Texas provide a variety of state and local incentives for all types of businesses based on individual eligibility. Incentives also offer the opportunity to work with Texas State University, the Texas Manufacturing Assistance Center, the Small Business Development Center, Service Corp of Retired Executives, San Marcos Manufacturers Association, and the Chamber of Commerce.
- Development Fee Waivers are issued by the City of San Marcos to reduce or eliminate building permit fees, inspection and contracting fees, site development permit fees, utility connection fees and/or processing fees for platting, zoning and land use applications. Impact fees are not included in the Development Fee Waiver.
- Businesses that export tangible property may be eligible for a Freeport Exemption, which is designed to exempt part of a company’s inventory from property taxes. Eligible properties must be locally assembled, stored or fabricated and exported from Texas within 175 days of being imported or acquired and conform to qualities set by state law.
- The Historically Underutilized Business (HUB) Zone Empowerment Contracting Program provides federal contracting for small businesses located within these zones that increase employment opportunities, stimulate capital investment in HUB areas, increase employment opportunities and offer economic leveraging in the community. Eligible businesses must be registered as a small business by U.S. Small Business Administration (SBA) standards, be owned and controlled by a U.S. citizen, and be located in a HUB zone with at least 35% of its employees also residing in the zone.
- The Property Tax Phase-In Program offers tax phase-ins for new or expanding commercial or industrial construction and business personal property taxes associated with real property. City property tax phase-ins are designated through a contracted approved by City Council. To qualify, micro business or small business developments, or proposed developments, must create, maintain or retain at least five jobs and 20 percent of the job salaries must pay hourly workers more than $17 per hour or salaried employees more than $36,000 annually. Existing businesses can apply and must provide financial statements and/or income tax returns, as well as a business plan with appropriate projected financial statements. Capital investment by applicant must equal or exceed $250,000 and start-up business will be considered case-by-case. Eligible medium and large business proposed development or redevelopment must create maintain or retain at least 10 jobs, 20 percent of job salaries for the created, maintained or retained positions must pay hourly employees more than $17 per hour or salaried employees more than $36,000 per year, temporary positions will not be considered as full-time positions for phase-in purposes. Applicants can be existing businesses and must provide financial statements and/or tax returns. Applicant capital investment must be at least $1,000,000 and start-up businesses will be considered case-by-case.
- Public Improvement Districts, or PIDs, allow cities to collect special assessments on property within the city or its extraterritorial jurisdiction and may be formed to provide services like health and sanitation, water and wastewater, mass transit and security service.
- Sales tax rebate incentives are available to projects that qualify as a target industry according to these policies and procedures or make a unique or unequaled contribution to development or redevelopment efforts in the city of San Marcos due to its magnitude, significance to the community or aesthetic quality. City Council members will take into consideration the number and types of jobs to be created or retained, whether city utilities will be used, whether the project incorporates high quality architecture and site design (including landscape and public amenities beyond the minimum required in the city code), the final capacity of the applicant to undertake and complete the proposed project, whether the applicant has applied for is qualified for other incentives, market conditions and growth potential, and other factors the City Council finds relevant. Sales tax rebate incentives are available to those meeting the following minimum requirements:
- the project must result in a minimum increase taxable value for the City of San Marcos of $25,000,000 in real or business property;
- result in a minimum increased taxable value for the city of $250,000 in real and business personal property in the Downtown District or a minimum increased taxable value for the city of $15,000,000 in real and business personal property for the redevelopment, not relocation, of existing business or a sales tax increase of at least $500,00 to the city over the most recently completed year;
- will result in a sales tax increase of at least $500,000 to the city over the most recently completed fiscal year
- Developers that invest $500,000 or more in improvements to property leased from the city at the San Marcos Municipal Airport will be eligible for a credit of up to 5% of the total investment for site preparation expenses against fixed rental payments under the lease.
- Special downtown reinvestment zones provide for a tax phase-in on a case-by-case basis within the Central Business Area downtown. San Marcos has been designated as a Texas Main Street City, and the Main Street program offers a facade improvement grant available for qualified businesses.