The site for the depository was selected by Austin-based Lone Star Tangible Assets, the vendor chosen by the state comptroller’s office to build and operate the facility. The exact location of the site is being withheld for security reasons, but LSTA Chairman Matt Ferris said the facility would be located near the Capital Metro railroad tracks in north Leander.
Williamson County Commissioner Cynthia Long said several cities were vying to house the Texas Bullion Depository.
“I am excited that Leander was selected to be the Fort Knox of Texas,” she said.
The plan for the depository
Gov. Greg Abbott signed the existence of the Texas Bullion Depository into law after the 2015 legislative session. At the time Abbott said having the depository would provide a secure facility for state agencies and Texas citizens to keep gold reserves secure as well as keep taxpayer funds from leaving the state through fees to store gold.
Construction on the site is expected to begin in early 2018, according to a Nov. 3 press release from the Texas State Comptroller’s Office. LSTA expects the facility to be completed in late 2018 or early 2019.
“This state-of-the-art facility will provide tremendous benefits to the citizens of Leander and will give Texans a secure facility right here in the Lone Star State where their gold and precious metals will be kept safe and close at hand,” Texas Comptroller Glenn Hegar said in the press release.
The depository will provide services to customers nationwide when it opens, and international services will be offered in future phases.
Leander also authorized LSTA to build its own on-site firearms range and tactical training area at the depository. Ferris said the LSTA will also be able to utilize the Leander Police Department’s shooting range for its internal tactical team.
Leander Police Chief Greg Minton said he is having discussions with the company on the role that Leander police would play if there were a breach in security. Because of the high level of security expected at the facility, he said he does not expect there to be issues with criminal activity.
“When you hear something like this is coming, you think of all the movies where there’s the cliche of the Pink Panther from the ’70s and ’80s, and how international criminals are going to come breach something like this,” he said. “These things aren’t built to be simple to get into. Your average person probably won’t be able to get to the front gate.”
The comptroller’s office will have direct oversight of the facility, and LSTA will undergo detailed annual audits of its operations and provide reports to the comptroller, comptroller’s office spokesperson Chris Bryan said.
He said the state office has experience with investments and oversight of taxpayer dollars but not much experience in the precious metals industry. Bryan said the comptroller’s office wanted to partner with a vendor that had experience in managing the day-to-day operations of the depository.
The cost of building the Leander facility will also be paid for by LSTA, not by taxpayers, Bryan said. Although the state may recoup any administrative costs from LSTA that it spends on oversight of the depository, he said any costs will mostly be offset in storage fees, and he said officials with LSTA also believe they can fund their operations largely through storage fees.
“I don’t believe the [Texas] Legislature, nor the comptroller, see this as a money-making opportunity for the state, but rather as a service for folks,” he said.
Bryan said the state expects the clientele to largely be made up of private investors. The state itself does not own much gold, he said—the comptroller’s office has collected about $3 million through an unclaimed property program.
As of Aug. 31, the University of Texas System, or UTIMCO, has gold stores valued at $899 million stored in HSBC bank in New York, said Karen Adler, the director of media relations for the UT System. She said the UT System pays 0.1 percent of the market value of the gold in storage fees annually. Adler said UTIMCO will consider relocating its gold stores “if the Texas depository is a robust member of the [Chicago Mercantile Exchange] and if UTIMCO’s storage costs are equal or less than what is now being paid to HSBC in New York.”
Bryan said the depository will offer competitive rates and services to satisfy the needs of UTIMCO and other large institutional investors and individuals with large precious metal holdings. He said the comptroller’s office has already seen interest from individuals to larger institutional investments.
“At the end of the day the depository is not being built for the state’s gold; it is being built for individuals, institutional investors, folks who sell directed IRAs, things like that to provide them with a place close to home to safely and securely store their gold,” he said.
Discussions with LSTA first began in April, and Leander City Council approved an economic development agreement with LSTA for the depository during a Nov. 2 meeting.
The city awarded LSTA $1.5 million in infrastructure grants and $600,000 in supplemental grants. The city will also pay portions of the facility’s property taxes and taxes on personal property, such as equipment and supplies, for a period of up to 10 years.
Leander Mayor Chris Fielder said the city is excited to build the depository in Leander.
“As one of the safest and fastest-growing communities in the nation, I can’t imagine a better place for companies in the precious metals industry to operate,” he said. “We believe Leander is a growing destination for business, and I am proud to have us represent the state of Texas in this joint enterprise.”
Williamson County’s incentive package is likely to go before county commissioners Nov. 21. The current proposal states the county would cover 50 percent of the ad valorem property tax and 100 percent of the personal property tax for five years.
Long said the facility will create jobs for Leander and Williamson County residents.
“It may mean folks in Williamson County no longer have to have a long commute to Travis County for a job, so the more jobs that we can create locally—good-paying jobs—the better it is for our citizens,” she said.
LSTA is making room for more than 300 employees at the new location, Ferris said. Company officials plan to relocate its 100 current employees and add jobs as needed, and he said nearly all positions are hired locally within a 50-mile radius.
Leander Economic Development Director Mark Willis said the agreement will bring sustainable jobs to the city’s workforce and will encourage other industries to consider Leander as a corporate destination.
Willis said LSTA will be required to retain 100 employees in the first three years at its location who make a minimum of $50,000 annually and are offered a health care benefit package.
“These are exactly the kind of jobs we’re looking for,” he said. “They are the pay level with the benefits we want, and it offers people a chance that live here to work here as well and not have to commute.”
For every two jobs LSTA brings into the city, Willis estimated that it would create another job in secondary positions in other industries, such as retail and restaurants. He said LSTA also agreed to add about $10 million to the value of the depository’s property, which will bring tax benefits to the city.
Leander spokesperson Mike Neu said the city will also receive notoriety from being the home of the first state-controlled depository in the nation.
“This will, over the next 10 years, put us on an international map,” he said. “Leander is home to the state’s only gold depository that brings in clients from around the world. And Leander benefits from that.”