The Buda Economic Development Corp. is working on a plan to help the city capture almost $248 million of annual retail sales it is currently losing to competing markets in Austin, Kyle and San Marcos.
In January, Buda EDC Director Ann Miller began working with a team of three consulting firms—Pegasus Planning, The Retail Coach and Texas Perspectives—to determine how the city could stem the flow of sales tax dollars out of the city.
When it is completed in August, the strategic plan will detail what kinds of businesses the city should target and how they should be incentivized.
“This strategic plan is going to focus on what are Buda’s strengths, what are our weaknesses and what are our opportunities, so we know exactly what businesses to go after and recruit,” Miller said.
Aaron Farmer, vice president of The Retail Coach, used the population and demographics of Buda’s primary retail trade area to determine how much money residents within that area should be spending on different retail categories, including dining, electronics and general merchandise.
The retail study found that the city is losing money to competing markets in all but three retail sectors—general merchandise, recreational vehicles and sporting goods.
In addition to strong showings in each of those three sectors, according to the Texas Comptroller the city’s sales tax deposit for the month of May was up 26.8 percent compared with the same time last year.
Miller said she attributes the spike in sales tax to a 24 percent annual growth rate in Buda’s residential permits from 2012 to 2013.
“The economy is growing and people are spending more money, and we’re experiencing a massive residential boom. S o as more and more people live in Buda and the surrounding area, they’re going to spend money here,” Miller said.
Farmer estimates Buda’s primary retail trade area, which includes all of Buda and areas of Travis County, Kyle and unincorporated areas of Hays County, will grow from a current population of 63,000 to about 74,000 people by 2018.
The growth is going to continue, Miller said. The challenge for the EDC and city is to determine which businesses to bring along for the ride.
According to the first phase of the study, Buda’s primary retail trade area is missing out on about $63.2 million in dining sales, almost $40 million in electronics sales and about $42.7 million in grocery sales.
The study proposes four “target industries” to bolster the city’s economy. Those industries—hospitality and tourism, office, light industrial and retail—could add 845 jobs and $3.57 million annually to the city’s income through hotel, property and sales taxes, according to the study.
Farmer said the results of the retail leakage study have already prompted two meetings with restaurants interested in locating in Buda. Farmer estimated that if the two fast-casual restaurants choose to locate in Buda, residents should expect to see them up and running by late 2013 at the earliest.
“It’s not a quick process, unfortunately,” Farmer said. “I like to say it’s not an event. It’s a process.”
“Buda is about to experience a lot of growth and a lot of development,” Miller said. “Now is the time to have a policy. We don’t want to give away the farm.”
This will be the first time the city or EDC has had an incentive policy, and Miller said by laying out guidelines for the city to follow when considering which businesses to incentivize, the process will become purely objective.
“It will give us guidelines and an even playing field,” Miller said.
Cabela’s opened the doors to its Buda store on June 29, 2005, and the city reported its largest sales tax total to that point two months later. The retailer is also largely responsible for the city’s $47 million surplus in sporting goods that was uncovered by the study, Miller said.
That boon to the city’s economy did not come without costs, though. Mayor Pro Tem Bobby Lane served on council when Cabela’s was being courted. Lane said critics of the deal believe the city was too generous when it agreed to share millions of dollars of taxes with the store.
“It turned out to be a good project,” Lane said. “They made it through the recession and they didn’t close the doors. They hung in there and stayed with us.”
The plan will force the city to look at specific numbers relating to employment, capital investments and property taxes when considering incentives, because, as Miller said, “numbers don’t have personality.”
The city’s limits are bounded by Austin, Kyle, Niederwald and Dripping Springs, so Buda Mayor Todd Ruge and City Council are taking steps to ensure the city does not start to feel crowded.
“We’re going to come to a point where we’re going to run out of land,” Ruge said. “We’re landlocked. I don’t know if it’s going to happen in the next 10, 15, 20, 25 years, but it’s going to happen at some point.”
City Council has required parkland dedications from developers moving into the city since 1988 as a way to protect the city, which dubs itself “The Outdoor Capital of Texas,” from becoming overcrowded. When Silverado Crossing, a 300-unit apartment complex on Cabela’s Drive opened in 2013, the developer, JCI Residential, had to cut a check for $330,000 to go to park dedication.
“Did they like doing that? Probably not, but that’s what our rules said they have to do,” Ruge said. “We’re here. If you’d like to join us, you’re going to buy your way in.”
Pegasus Planning President Sean Garretson said the solution to the city’s land problem might require City Council to rethink the types of developments it encourages.
“Council and the economic development corporation board and staff have to be cautious in terms of what they encourage and incentivize and also try to promote a different type of development that might be a little bit denser and not so spread out as you might typically see in suburbia,” Garretson said.
Chance Sparks, City of Buda planning director, said it is unlikely that any dense developments would feature skyscrapers or “nosebleed-type buildings”—an issue that produced passionate protests from some council members at a meeting in May—because land in Buda is cheap enough that developers are willing to spread neighborhoods out.
Buda residents Dodi and Saenger Ellis, along with Gay Ruby Dahlstrom, are almost three years into a project to restore the 8.75-acre Buda Mill and Grain complex in downtown Buda.
The complex, which has been in the Dahlstrom family for five decades, will feature restaurants, a yoga studio, a farmers market, retail spaces and more when it is fully built out. The highlight for Sparks is that the developers are repurposing existing buildings on an existing footprint that would otherwise sit unused.
“You’re not going to find a city planner on earth that wouldn’t be excited about a project like that,” Sparks said. “People ask me, ‘What’s the greenest type of development?’ and the greenest type of development is the one that’s already there. That’s very true of that location.”
Garretson said the combination of growth in Austin, along with the possibility of a Lone Star Rail stop located in Buda, mean the city’s land will only become more attractive to developers.
“Ann and the leaders have a good problem to have, having to be selective,” Garretson said.