Anyone from San Marcos can tell you that grocery shopping, particularly when the university is in session, can be a bit hellacious. There is just not enough parking or store space to accommodate all of the local shoppers. A decision made at Tuesday’s San Marcos City Council meeting is sure to make an impact as, by the end of 2026, there will be three of the beloved Texas grocery chains in town — the “small H-E-B,” the “big H-E-B” and the “new H-E-B.”
The San Marcos City Council unanimously approved an incentive package for the new store and boisterously expressed their excitement about the upcoming project.
San Marcos Mayor Jane Hughson said she wanted to thank Joe Pantalion, San Marcos assistant city manager, and Christian Smith, San Marcos economic and business development manager, for recommending “something that sounded weird at the time,” referring to the tax incentives for a grocery store development adopted in May.
“I did the happy dance in the office. I really did,” Hughson said. “Things are moving forward and that’s very exciting. I think H-E-B is such a wonderful partner in our community. They are always there when we need them.”
San Marcos City Council Member Mark Gleason said he was glad that the council set the precedent that if the city wants and needs something “they can preemptively offer up incentives.” He was also very glad that the other two stores will remain active as well.
“I want the community to see that this offer still stands. I would love to see a discount grocer[y store or] something else to come in and take advantage of this,” Gleason said. “I’m thrilled about this. I hope the community understands that this offer was not done directly for them. This was done to incentivize additional grocery stores. … I also want to commend staff. This is the kind of thing you can do again for some other things.”
According to city documents, the incentives will be in the form of refunds of a percentage of additional property and sales taxes generated by the new store over five years. On May 7, council voted to adopt a resolution supporting tax incentives for grocery store development. In August, H-E-B submitted a request for in- centives citing this resolution as having a direct and material impact on their decision to construct another store in San Marcos. H-E-B will now construct an approximately 100,000 square foot grocery store with an additional 10,000 square foot convenience store with fuel pumps and a car wash on 18 acres at the southeast corner of I-35 and E McCarty Lane. H-E-B will receive a percentage of annual property and sales tax collections over five years based on the following schedule: 80% in year 1, 80% in year 2, 60% in year 3, 50% in year 4 and 25% in year 5 with a minimum capital investment of $53 million.
Christian Smith, San Marcos Economic and Business Development Manager, said the capital investment of $53 million would lead to the creation of 212 full-time jobs and 238 additional part-time jobs. Net tax collection for this project for Hays County over the five-year period would be $1.5 million and San Marcos Consolidated Independent School District would receive $2.4 million.
“Over that five year period we would estimate an approximately a little over $100,000 in city rebated property taxes while retaining about $600,000,” Smith said. “On the sales tax side we’d be rebating approximately $1.4 million in sales taxes and retaining about a million dollars over that five year period.”
San Marcos City Council Member Jude Prather wanted to give credit “where credit is due” and thanked Hughson for pushing the project forward.
“This is a great example of what happens when political leadership and everyone gets on the same page,” he said. “Things can get done. This will greatly improve the quality of life for our citizens.”
San Marcos City Council Member Alyssa Garza wanted to thank the citizens of San Marcos for being relentless in their pursuit of a new grocery store.
