Bexar County Approves H-E-B Tax Break As Commissioner Calvert Breaks Down Community Benefits
Bexar County commissioners unanimously approved a $15 million tax incentive tied to H-E-B’s planned expansion of its Super Regional Center on San Antonio’s Eastside, a major industrial project expected to add hundreds of jobs and expand the company’s supply chain operations.
The project centers on H-E-B’s Foster Road campus near Houston Street, where the San Antonio based grocer is planning a $636 million expansion. County officials said the project is expected to create 720 new jobs and retain 1,389 existing positions.
H-E-B officials have said the expansion will support the company’s growing supply chain needs across Texas. Preliminary plans include a new bakery plant, refrigerated warehouse, returned goods center, transportation building and additional facilities.
The incentive approved by Bexar County is a 10 year, 85 percent tax abatement on real and personal property investments connected to the project. The estimated value of the tax break is about $15 million.
County officials said the incentive would help secure long term job growth and industrial investment in East Bexar County. Commissioners also pointed to H-E-B’s long standing role in San Antonio, its statewide employment footprint and its community support during disasters and local relief efforts.
However, the agreement also required the county to make an exception to its standard tax abatement guidelines. Bexar County’s guidelines generally cap abatements at 40 percent, although exceptions can be made for major economic development projects.
The project also starts below some of the county’s wage benchmarks. H-E-B’s base hourly wage connected to the project is expected to begin around $18.13 to $18.23 an hour, below the county’s living wage guideline of $20.18 an hour and the all industry wage benchmark of $21.34 an hour. County officials said wages are expected to increase over the life of the agreement, reaching more than $24 an hour by year 10.
Commissioners Show Support for HEB Expansion
Commissioners voiced support for the project during the meeting, describing it as a significant investment in San Antonio and East Bexar County.
Commissioner Tommy Calvert, whose Precinct 4 includes the facility, said before the meeting that he was proud the county was partnering to keep the state’s largest employer growing jobs in San Antonio.
County Judge Peter Sakai also cited H-E-B’s role in helping Texans during disasters, while Commissioner Grant Moody said the project deserved an exception from the county’s standard guidelines.
“It definitely deserves the exception. I’m not even sure there’s a need for these guidelines,” Moody said, according to Texas Public Radio. “We can make independent decisions based on the proposals that are presented to us. But I fully support this.”
Also Read: The Hidden Budget Problem Facing Bexar County
Tax Break Comes As Bexar County Faces Pressure To Protect Revenue,
The county’s decision also comes as Bexar County is preparing for what officials have described as a difficult budget cycle.
After a State of the County event hosted by the Metro SA Chamber, Bexar County Manager David Smith said the county is facing serious fiscal pressure tied to declining property tax revenue, expanded state exemptions and the end of federal pandemic era relief funding.
“It will be, in my experience…the most fiscally challenging budget process we’ve had since the housing crash of 2008,” Smith said according to TPR.
Bexar County relies heavily on property tax revenue, which Smith said he expects to decrease this year. He pointed to declining home values caused by higher mortgage rates, an increase in homestead exemptions among retirees, expanded property tax exemptions for small business owners approved by the Texas Legislature and the sunset of American Rescue Plan Act funding, which ends in December.
Those pressures led Smith to project a 2 percent decline in property tax revenue and a possible $145 million deficit by 2029.
“We’re reacting to it earlier than most, and I can tell you it’s not my intention to propose a budget that has a property tax increase,” Smith said.
The county’s financial outlook has added another layer of scrutiny to recent public incentive decisions. According to local outlets, Bexar County Judge Peter Sakai also confirmed the county will not pursue a $5 million penalty owed by Spurs Sports & Entertainment from a failed 2015 Major League Soccer expansion agreement.
The City of San Antonio is also facing its own looming shortfall, though city officials have discussed a mix of spending cuts and a possible property tax rate increase.
Calvert Breaks Down How Tax Break Benefits County Revenue And Eastside Residents
Calvert said the county’s decision came down to keeping the project, jobs and long term tax revenue in Bexar County instead of losing the expansion to another city offering a larger tax break.
“The choice for Bexar County was to have HEB pay 100 percent of its taxes in Bexar County over the long run and create over 2600 new jobs for the next 100 years,” Calvert told The San Antonio Observer. “The other option on the table was to lose the $600 plus million dollar job creator to a city where HEB paid Bexar County no taxes, didn’t hire Bexar County residents and didn’t pay taxes in another city offering HEB a 100 percent abatement that could win the warehouse competition.”
Calvert mentioned other cities were competing for the project and offering 100 percent tax abatements. He argued that Bexar County’s incentive allowed the county to keep H-E-B’s growth local while still collecting taxes in the long term.
“Instead of paying 0% in taxes elsewhere, Bexar County won the competition to keep HEB growing here to immediately expand and create 720 new jobs at the facility’s opening and pay taxes for the next 100 years,”
Calvert also pointed to worker benefits tied to the project, saying employees will receive assistance for dependents, medical, dental and vision coverage, 401(k), paid time off and discounts on H-E-B products. He said H-E-B will retain 1,389 existing jobs at the facility and projected an additional 1,232 jobs by 2038, bringing the total to more than 2,600 jobs connected to the site.
Calvert also said the project aligns with workforce needs identified through his work as chair of the county’s re-entry council.
“As chair of the re-entry council, I surveyed what types of jobs did the formerly incarcerated want. Warehouses/logistics jobs were the top choice,” Calvert said. “I also analyzed who was being hired by HEB’s current warehouses. Precinct 4 residents were the number one residents hired. HEB will continue to work with the county, me and the Reentry Center to hire justice-involved individuals.”
Calvert acknowledged concerns about wage standards, but said overtime and benefits should be considered when evaluating whether the jobs meet the county’s goals. “When you calculate the overtime that many warehouse workers are asked to work, plus benefits, the wages often exceed our minimum standards for our abatements,” Calvert said.
“I won’t let the perfect get in the way of the good. That is why we voted for a net long-term win for Bexar County.”
H-E-B Expansion Adds To Eastside Industrial Growth
H-E-B’s Foster Road campus has become a major part of the company’s manufacturing and distribution strategy. The company acquired the Eastside site in recent years with support from local incentives and has already invested hundreds of millions of dollars into the property.
The expansion would add to H-E-B’s existing operations at the site, which already employs about 1,400 workers. Company representatives said future phases could bring the total number of new jobs connected to the campus to more than 1,200 by 2038.
