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July 30th, 2009
It's official: Grifols coming to San Marcos

San Marcos Mayor Susan Narvaiz, right, presents a gift to Texas Secretary of State Hope Andrade, right, at the announcement that Grifols, Inc., will locate facilities in San Marcos. Staff photo.

Executive Editor

The economic outlook in San Marcos took a step up Thursday as city, state and county officials announced that Grifols, Inc., will locate new research, testing and warehouse facilities in San Marcos.

Grifols will open a 72,000 square-foot plasma testing and research facility at River Ridge Business Park in 2010, then add a warehouse and fractionation plant scheduled for completion in 2012-2013. Grifols produces medicines for bleeding disorders and other diseases, deriving cures from human plasma donations.

The first phase will add 100 jobs, with another 90 coming in the second phase. In total, the Grifols operation will add 190 jobs at average salaries exceeding more than $38,000. Grifols will invest $76 million in land, buildings, machinery and equipment.

“What does this mean?” San Marcos Mayor Susan Narvaiz asked. “It means more opportunity for our citizens.”

According to the U.S. Census Bureau’s 2007 estimates, the latest available, the median household income in San Marcos was $26,641.

Grifols, founded in Barcelona, Spain, in 1943, makes plasma derivatives and other medical materials for the bioscience, diagnostic and hospital sectors. The company collects plasma at 80 facilities in 26 states.

Chris Healey, Vice President of Governmental and Public Affairs for Grifols, said the company considered building the facility as a complement to its United States headquarters in Los Angeles, or as part of a large manufacturing facility in Phoenix, AZ. However, Healey said, “Texas offers the enterprise fund and the San Marcos community is very welcoming.”

Texas Governor Rick Perry (R) touted the contribution of his Texas Enterprise Fund (TEF), which kicked in $500,000 for the Grifols project. The governor’s office said the TEF now has invested more than $383 million in projects that have generated 55,587 new jobs and more than $14 billion in capital investment since Perry first created the fund in 2003.

But city and county governments also made major contributions to the recruitment of Grifols. The city will refund 75 percent of the company’s personal property taxes generated for the next ten years to an estimated total of about $1.8 million. Hays County will make the same kind of personal property tax refund to an estimated total of about $2.1 million.

“This is a great opportunity,” Hays County Precinct 3 Commissioner Will Conley (R-San Marcos) said. “We hope it builds on more opportunity in the future.”

According to the city, the Grifols project will be the first manufacturing facility of its type in Texas, and the sixth in the United States.

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19 thoughts on “It's official: Grifols coming to San Marcos

  1. This really is good news. I look forward to learning more about the facility and the jobs it will bring for our citizens and I hope this is the first of many.

  2. $3.8 million in ANNUAL welfare to create 100 initial jobs. That means local taxpayers are paying $38,000 per job created, which just happens to be the average annual salary. Then, as state taxpayers, we give another $500,000 — no wonder Arizona didn’t match our bid.

  3. I’m not sure where you get $3.8 million annually. It says $3.9 million total. That, and it is 190 jobs. 100, then another 90. That works out to $2,000 per year, per job.

    Plus, if some of those employees become new homeowners, then the property taxes they pay will offset some of the property taxes not paid by the facility.

  4. Plus, this sounds to me like the type business that could very well produce spin off businesses. Further it is type business, biomedical, that as far as I know is not represented in San Marcos at this time. This is where tax incentives should be used.

  5. The record reports the payments as “annual.”. The above report could be read consistently depending on what “total” modifies. I am not aware of the enforcement provision which mandates the later 900 jobs be added.

  6. It’s about $1.8 million, total, from the city, and about $2 million, total, from the county. That’s not annual. It’s total. I refer you to the specific motions approved by the Hays County Commissioners Court and the San Marcos City Council.

    The county motion offers “75 percent of personal property and inventory taxes taken annually for ten years on each phase over a term of 15 years for an estimated total of $2,008,695 in exchange for the location of a biomedical facility employing 190 full time employees with an estimated average annual wage of $38,571.”

    The city council motion, which passed, reads, “Consider a motion to offer an economic development incentive under Chapter 380 of the Texas Local Government Code to Grifols, Inc. in the form of refunds of 75% of personal property taxes paid annually over a term of 15 years for an estimated total of $1,829,190 in exchange for the location of a biomedical facility employing 190 full-time employees with an estimated average annual wage of $38,571 in the City of San Marcos and authorizing the city manager to negotiate the terms and conditions of and execute on behalf of the City a Chapter 380 economic development agreement with Grifols, Inc. consistent with such offer in the event such offer is accepted by Grifols, Inc.”

  7. Thanks Bill. I shouldn’t believe the record. I am opposed to government incentivizing the private sector, but at least the deal is not as expensive as I thought.

  8. I’m actually quite please with this outcome and see the incentives as “seed” money the city is outlaying. Since good opportunities usually don’t come looking specifically for you and say “we’re here”, especially in hard economic times, this as an important step for our city to take if we want to be competitive in netting our share of technical industries. The short-term cost to our city is quite reasonable in comparison to the incentives I’ve read about being offered by other municipalities, and the real benefit to our community will come if we can establish an economic climate/reputation in San Marcos that is attractive for these and other kinds of technical industries. The end goal is not a short sighted quick return on our dollars, but to raise the standard-of-living and attract like development for the long run.

  9. While there is some benefit to the community in the form of jobs created, I don’t see where this deal will benefit the City much.

    The goal of incentivizing private development should be for the government to be able to recoup its investment. I don’t know how this will happen with this company:

    -since this is a research facility and no products are being provided to the consumer, I can only assume it will generate no sales tax revenue
    -we will collect virtually no property tax revenue for ten years

    I’m also not sold on the $38K/year jobs that they are creating. All it takes is a handful of executives or scientists making six figures and the annual income for the “rank and file” can easily drop to the $25K range where we already are.

    Overall, an argument could be made that the City would have been far better served financially by approving the Springtown deal that so many people seemed to hate…at least then there would have been tax revenue generated.

  10. If we were in the $25k range, we’d be a lot better off than we are today, at $16k. Also, it would take 33 jobs at $100,000 per year, to balance out the other 157 at $25,000 per year to average $38,000 overall. This is quite a bit more than a handful and a very unlikely spread.

    More people able to make a decent living = more homeowners = more property tax revenue. Also, more people able to make a decent living = more disposable income to spend at the various retail stores and restaurants.

  11. I believe the $25,000 per year that you speak of, is the median household income in San Marcos, although the estimates I have seen put it at $31,500.

    The per capita income in San Marcos is just over $16,000 per year. An easy way to remember it is to take the current minimum wage and add 50 cents.

  12. Once you acknowledge that interfering in the private sector and adjusting the risk calculus of private business is a government function, you are stuck with its exercise in deals you like and deals you don’t like. With every Grifols comes an (empty) Embassy Suites and a Springtown mess. Plus, the benefits rarely turn out as promised — it is likely that the large wage earners at Grifols will live outside San Marcos and the low wage earners will live in San Marcos. And of course, there are unintended consequences such as Grifols driving up the cost of skilled labor in the community and starving taxpaying, quality corporate citizens like McCoys of the best local talent. In the end, most on council don’t know a thing about business, so we should insist they limit themselves to core functions such as police, roads and fire.

  13. Interesting points, but I doubt the ultimate consequences will even be as simple as you have stated.

    Unfortunately, we do compete with neighboring communities and communities around the globe, who also offer economic incentives. If we are going to play ball, we need to be particular about the types of incentives we offer and the businesses we offer them to.

    In the end, if I am going to choose between bringing 190 jobs at $38,000 per year or a couple hundred minimum wage positions, I choose the latter.

    Of course, we can mitigate the need for incentives by improving our infrastructure, taking care of our neighborhoods, improving our school system and taking other similar steps, to make San Marcos a more desirable place for the best and brightest employees to live in the first place. I’m all for that.

  14. I meant to say I choose the former. Oops. It was the latter of the two recently raised issues. Don’t quote me on wanting incentives for minimum wage jobs.

  15. Yep, just like the University. The custodians and mechanics live here in San Marcos while the professors live in Austin or Wimberley and commute. Is this 100% true? Certainly not….but it’s the case enough of the time where I feel safe in making the generalization. I can easily see the same thing happening with Grifols.

    As for the Embassy, it sure looks packed when I drive by on the weekends. I also seem to remember seeing a report on how much San Marcos hotel taxes increased during the first part of this year, largely due to the Embassy. Maybe you have hard numbers I don’t to make your assessment, but it seems to me that it’s been a boon to the local economy.

  16. I’d love to see a survey of university professors who live out of town, to find out why. Based on that, I would support a multi-faceted attack.

    Absent that survey, if I had to hazard a guess, I would say that people who choose to live elsewhere do so for many reasons related to the things our residents also want to see addressed. In a 2008 survey, the top 10 items were:

    Bike lanes and routes
    Downtown parking
    Downtown redevelopment
    Traffic control
    Street maintenance
    Planning and development services (P&Z)
    Development permitting
    Economic development
    Bus system

    Schools weren’t on the survey, as they fall under different oversight. I’d add them to the list, given our failing grade and poorer overall performance, relative to the surrounding districts.

    If you can demonstrate that people who can afford to live elsewhere are doing so because of Target, JC Penney, Alamo Drafthouse, etc, I’m all ears.

  17. None of those are solved, IMO, by incentives for minimum wage jobs. We already make minimum plus 50 cents. Why take a step backward?

  18. I am wondering what the end goal is here. Do we want to incentify companies to come to San Marcos until the town becomes as big a downtown Austin? How big do we want San Marcos to get and what for? I mean do we want it bigger so we can attract more resturants to feed people or more stores to compete with the ones already here? Do we want to keep incentifying so that we have business lined up along I35 as far as our jurisdiction? Just what are we doing here and why and what is enough?

    PS: I have a lot in Willocreek that I would build a a house on and come live in San Marcos if I could get 75% of my taxes back for 10 years. I would create more value in jobs for San Marcos just working from home for the money than Grifols on a per capita basis.

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