On a rainy Tuesday afternoon, a trickle of patrons made their way into Vivel Crepes & Coffee, situated at the back of the Oaks at Lakeway shopping center.
Alongside staffing and inflation, Vivel owner and Executive Chef Ali Bendella said many Lakeway business owners face another obstacle: visibility.
“Half of my customers are from out of town, and that’s big, because if I only depend on local business, it’s not enough,” Bendella said. “We have a lot of people in Lakeway that don’t even know we exist because we can’t have signage on the streets.”
Luckily for owners like Bendella, the city of Lakeway has plans to prop up local businesses this holiday season and beyond with its “Loyal to Lakeway” Buy Local campaign, aimed at increasing awareness about the impact of supporting local businesses.
The overview
Loyal to Lakeway aims to promote local businesses by fostering economic growth and a greater sense of community in Lakeway.
Shopping in-person brings in sales tax, but so does shopping online, City Manager Joseph Molis said. Online sales tax is determined by the item’s destination, meaning purchases from places such as Amazon also result in sales tax revenue. The issue is when people travel to other cities to shop, Molis said.
“That money’s being spent anyway, but it’s being spent by people leaving the city and giving that money to the surrounding community,” Molis said. “The idea is to bring that money back into Lakeway.”
The program also aims to limit property tax increases. As the city keeps growing, more money is needed to maintain city operations.
“Those sales tax dollars ... really help us to provide the services you need,” Mayor Tom Kilgore said in a city update Nov. 14.
Sales revenues
According to the city of Lakeway:
- 1.75% of sales tax on local purchases goes toward the city of Lakeway
- 65% of retail dollars spent by Lakeway residents are spent outside of the city
- $14.9 million in lost sales tax revenue as a result of outside purchases
- 28.7% of city revenues come from sales tax
Loyal to Lakeway seeks to build synergy among local businesses, Assistant City Manager Ashby Grundman said.
“If the city had any ability to create some sort of opportunity for local business owners to network better together, I think that would be tremendous,” said Andrew Rincon, owner of Hops & Thyme and co-owner of CraigO’s in Lakeway.
Supporting local businesses helps keep money circulating locally, Eco Estate Jewelry owners Eric Hoffmaster and Alida Tallman said.
According to the city, the benefits of shopping local include:
- Keeps dollars in the community to fund infrastructure and operations
- Provides opportunities to support community groups
- Supports businesses that employ local residents
- Saves gas and time
- Generates greater impact than buying from national chains
The city has traditionally relied on new property growth to fund increasing operational costs, but as a land-locked municipality, the room for growth is running out, Molis said. With Bee Cave to the south and state laws now limiting the city’s ability to annex new property, city growth has already started the process of plateauing, signified by a downtick of new building permits in recent years, Molis said.
“It’s not one-for-one, but the better we can do at having local purchases and online purchases, the better it is for us as residents and city government,” Kilgore said in the Nov. 14 city update. “It’s easier to get that revenue than it is raising property taxes.”
A closer look
When the Hill Country Galleria opened in 2007, it became the economic engine of Bee Cave, resulting in property tax staying at $0.02 for almost two decades.
By comparison, for FY 2024-25, Lakeway passed a property tax rate of $0.1598, which is 6.65% higher than the previous year. The City Center, a mixed-use project off Main Street, is one project expected to generate future sales tax in the city.
While the center boasts almost 850 housing units spread among The Oaks at Lakeway Phase 2, Tuscan Village Section 2 and The Square at Lohmans Crossing, it will also offer 350,000 square feet of retail space.
“Having a population base within walking distance of their business, it’s going to be a huge attractor for a lot of retailers that want to come into [The Square],” Molis said.
The outlook
Once complete, The Square will transform the way people travel around Lakeway, said The Poke Hookup owner Mark Schulte, whose shop overlooks the future development that plans to build out a new section of Main Street by late 2025 or early 2026.
“There aren’t really any challenges for me personally in my business other than just ... the amount of foot traffic,” Schulte said. “This building ... was really like a dead zone here.”
Housing at The Square will also offer Lakeway business employees more housing options, which business owners have said is needed.
“Even if you can get the best business in the world there, if you can’t staff it, it doesn’t matter,” Hoffmaster said.
What’s next
Loyal to Lakeway’s success can take a few forms, according to the city, from more sales tax dollars to businesses taking initiative for efforts.
“We just want to facilitate their ability to be successful, but we want them to take over that success,” Molis said.
While development of The Square is expected to start soon, the city is still looking for ways to increase connection in Lakeway and will assess the program’s success in the next eight months.
“Shopping locally does more than provide convenience; it directly contributes to the quality of life in Lakeway,” Kilgore said in a Nov. 18 news release.
