Hays County, San Marcos partner on FM 110

More importantly, Ingalsbe added, FM 110 will provide a safe alternative for drivers who are passing through San Marcos on their way to SH 130, I-10 or local destinations such as the outlet malls and San Marcos Municipal Airport.

"Once we get the entire loop constructed, it will take traffic off I-35 to reduce congestion and give us the connectivity we need," she said.

Ingalsbe said she expects the Texas Department of Transportation's governing board, the Texas Transportation Commission, to decide whether to issue the loan at its meeting Aug. 29. The $48 million will pay for construction costs, and Hays County will pay an additional $12 million for right of way acquisition and planning expenses.

Paying back the loan

To repay the loan from TxDOT, Hays County and the city of San Marcos are studying whether to each create transportation reinvestment zones along FM 110.

A TRZ is a funding mechanism the state Legislature created in 2007. It does not raise tax rates. Instead it would allow the city and county to repay the loan using new property tax revenue generated by economic growth in the project area.

For example, if property values along FM 110 increase by 5 percent, Hays County's tax revenue will increase by nearly $34 million over the next 25 years, according to a recent study commissioned by the city and county.

Under the same scenario, the city of San Marcos' property tax revenue would increase by $71.3 million in the project area.

Hays County and the city of San Marcos are tentatively planning to commit 50 percent of the new tax revenue within each of their TRZ areas to pay for the FM 110 project. Once the debt has been repaid, the city and county can terminate the TRZs and reap all the new revenue.

"FM 110 is going to be a powerhouse on the east side," City Manager Jim Nuse said. "Even though we're sharing some of the [tax revenue], we will be gaining income, too. It will create opportunities for rooftops, and it will create opportunities for sales tax."

In September, the City Council and Commissioners Court will hold public hearings, vote whether to form the TRZs and determine what percentage of future tax revenue to contribute.

In 2010, the city of San Marcos built the first 1.2 miles of FM 110 when it widened McCarty Lane from I-35 to the Old Bastrop Highway. Hays County is currently extending the thoroughfare an additional mile to connect with Hwy. 123.