Waterfall of projects, major investment slated for Hutto Megasite

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Jan 17th, 2024

City recently OK’d purchase-and-sale agreements for more than 150 acres there, more to come

For years, information regarding efforts to build out Hutto’s Megasite — a 1,400-acre assemblage of land along what many economic development experts consider the most-desirable stretch of highway in the country — has trickled through. But over the coming weeks and months, it’s poised to be more of a waterfall.

The land along U.S. Route 79, some of it owned by the city, has historically caught the attention of huge companies, from Tesla Inc. nearly a decade ago to Applied Materials Inc. more recently. While Tesla picked Nevada instead of Central Texas for the project it was scoping out at the time — it later put a factory and its headquarters in the Austin area — and the Applied Materials project has yet to materialize, other companies are preparing to start pouring billions of dollars into the area.

City officials last week approved a pair of purchase-and-sale agreements for more than 150 acres in the megasite for “Project Flex” and “Project Sequel,” after approving another agreement earlier this year. And another agreement could get Hutto’s blessing later this month.

The agreements pave the way for new projects that could bring upward of $150 million in investment to the megasite through another data center project, though officials shared limited details, along with other plans to bring a mix of industrial, office and warehouse space, according to Cheney Gamboa, Hutto’s newly appointed economic development director. That leaves Hutto with 138 acres of city-owned land available at the site.

Potentially tens of billions of dollars in investment and thousands of jobs could be created at the Hutto Megasite over the next few years and throughout other parts of the city, which has about 37,000 people about 30 miles northeast of Austin.

“I know the megasite is very unsexy to the average citizen, but there’s a lot of value out there,” Gamboa said. “It’s a big deal.”

Hutto leaders have also approved a construction contract to build an east-west spine road through the site that will help move two known projects along: a massive data center campus called PowerCampus Austin from Skybox Datacenters LLC and Prologis Inc., plus an industrial hub from Titan Development Ltd.

More projects on horizon

During its Nov. 13 meeting, the Hutto Economic Development Corp. approved purchase-and-sale agreements for “Project Flex” and “Project Sequel.” Gamboa declined to name the companies behind the deals but said the former would lead to smaller flex office and warehouse buildings while the latter is a proposed data center and possible warehousing and manufacturing space.

Gamboa said potentially having two data center projects in the area is going “to do amazing things for our tax base.” While the projects aren’t big job creators, they are large capital investments, meaning they generate notable property taxes for the city’s tax rolls. She said the megasite probably won’t yield any big sales tax generators.

“It’s no secret that our residents and some of our elected officials have made very candid comments about the cost of living and things like that increasing out here in Hutto – and really just in the entire Austin metro area,” Gamboa said. “We’re hopeful that even though we are adding population over that same time period, these investments will offset some of that burden and allow the city to reduce property taxes in the future. So we’re really excited about diversifying the tax base with this project.”

Meanwhile, “Project Flex” will offer more flexibility for companies looking for warehouse, distribution or office space as the city becomes a target for companies in the Tesla and Samsung Electronics Co. Ltd. supply chains. The former is operating a big factory in eastern Travis County, while the latter is building a big chipmaking facility in the suburb of Taylor, which is a stone’s throw away from the Hutto Megasite.

The EDC earlier this year approved a purchase-and-sale agreement for Project Strat3, which was previously described as a third-party logistics provider that supports inbound and outbound freight and supply-chain logistics for Samsung and other regional semiconductor-related companies. The first phase of the project is expected to include about 200,000 square feet of warehouse space and create as much as 100 jobs.

Gamboa said they will also consider “Project Fe,” another flex office industrial project, later this month that would add smaller space options for companies looking to locate in Hutto.

“We have seen a steady inquiry regarding smaller space requirements,” Gamboa said. “I think this really helps fill that gap and provides additional offerings and options for companies looking in the area.”

Megasite infrastructure progresses

The Hutto EDC also during its Nov. 13 meeting approved a construction contract to build an east-west spine road through the megasite property that companies behind committed projects have previously said is key before they can start building.

Gamboa declined to name the company that was awarded the contract. The company is aiming to start moving dirt by the end of the year and complete work by Aug. 31 of next year. The Council previously approved $18 million for the construction of the road and additional wastewater and water line and detention pond construction.

“We are moving forward with furious pace to get this selected company so they can get going,” she said. “The companies out there are teetering on this road being completed. They can’t go until we go, and we absolutely understand that.”

Haynes Strader, chief development officer for Skybox, gave an update on the company’s project during the Nov. 16 Council meeting. He said the first building is underway and already off the market. Three buildings could be done by 2026.

Officials have previously said PowerCampus data center could eventually total 3.9 million square feet across six buildings on 159 acres, and Strader noted during the meeting they’ll also now have warehouse space. Public documents note that the minimum capital investment on the project is $10 billion. Through a Chapter 312 incentives agreement, the city is poised to exempt 50% of the taxable value of personal property for 10 years, as long as the developers hit capital investment goals.

“We would ask for patience, but we’re moving fast,” Strader said.

Then there’s the 188-acre Hutto Mega TechCenter to be built within the Megasite. Initial plans call for upward of 2 million square feet of speculative high-tech industrial space, with buildings ranging from 200,000 square feet to more than 1 million square feet.

Joe Iannacone, Austin partner for New Mexico-based Titan Development, said in July the company plans to start construction by the end of this year, with the first building being delivered by this time next year.

“Although Titan cannot disclose any specific names of companies committed to the project, interest remains strong. Titan continues to field requests from semiconductor-related suppliers who are searching for space within the marketplace,” he said in a July 11 email. “Titan’s goal at Hutto Mega TechCenter is to provide a valuable supply of industrial space to support the surrounding community by bringing quality businesses and jobs to this high-tech corridor.”

Cottonwood redevelopment

The movement of projects will also have a massive impact on the development of another key piece of land in the city: a 250-acre parcel known as the “Cottonwood Tract” that was once earmarked to be the headquarters of baseball and scouting company Perfect Game Inc., which instead is going to Cedar Park.

The city over the course of this year has said the land is primed for development after purchasing it back after a spat with the former developer. The city took on massive debt and a loan to help purchase the land back. Selling off the land in the megasite will help the city pay back the loan and pay down the debt, officials said.

“The city is very excited because as we sell land out there (in the megasite) that’s revenue to the EDC,” Gamboa said, adding that the money will give them a bigger budget to use on things like incentives. “It’s no secret that we’ve taken out some debt to purchase the Cottonwood properties and things like that. We are very much looking forward to repaying those debts to the city and the bank on the loan note.”

During the Nov. 14 EDC meeting, four companies made presentations about why they should be selected as the master developer for the site. After discussion, the board narrowed down their options to two: Momark Development LLC and Midway. They voted to establish a three-person committee to meet with the companies to get more detailed information about their proposed projects and will make a final recommendation to the full board by the end of the year.

The city noted in an announcement that the two companies were selected because of their history with mixed-use developments would be perfect for Cottonwood, which officials have said would include a grocery store, restaurants and entertainment, along with parkland and city facility space.

Gamboa admitted the project has been a sore spot for the city in the past, so developing it will mark a major milestone for Hutto. But she stressed that it could be another decade until it’s fully built out.

“I think there’s a lot of fun and exciting things to come,” she said. “We just need a little bit of a patience because this is a marathon not a sprint.”

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