Agenda

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10.

City Council Regular Meeting

Meeting Date:

10/27/2020

BACKGROUND

Kellum Real Estate (KRE) is the development partnership started by Kellum Family Medicine Inc. (“Kellum”). Kellum has been in Schertz and providing medical services to the community for nearly 20 years. Over the past several years, Kellum and the City of Schertz Economic Development Corporation (the “SEDC”) have been in discussion regarding the construction of new medical/office space in Schertz to accommodate expansion space for Kellum and others looking to locate in Schertz. In 2018 a performance agreement regarding this project was adopted with the SEDC but delayed and ultimately terminated by the SEDC due to project delays. However, the SEDC remained committed to reconsidering the project when it was ready to move forward.

KRE has proposed a 5.043 acre medical/office development near the current Kellum location at Roy Richard Drive and Green Valley Road. The development will consist of three buildings totaling 39,000 square feet of medical/office space and a capital investment of $10,995,899. As result of the capital investment, the development will generate at least 225 jobs and an annual payroll of $11,000,000.

In consideration the SEDC has offered to provide $350,000 to be used for infrastructure improvements (the “Infrastructure Grant”). The Infrastructure Grant will be paid to KRE upon the completion of the second building. The Infrastructure Grant will be subject to a claw back for ten years or until the completion of the third building. Throughout the term of the agreement, KRE must certify its compliance to an annual job creation and payroll schedule.

GOAL

To grow the Schertz economy through Projects that focus on the creation/retention of Primary Jobs and Infrastructure Improvements.

COMMUNITY BENEFIT

This Performance Agreement supports development 39,000 square feet of medical/office space and a capital investment of $10,995,899 and up to 225 jobs. The City of Schertz will enjoy a greater level of medical services, additional tax revenue, and continued momentum of diversified office space development.

SUMMARY OF RECOMMENDED ACTION

This action authorizes $350,000 for an SEDC Infrastructure Grant to support development 39,000 square feet of medical/office space and a capital investment of $10,995,899 and up to 225 jobs in the City of Schertz.

FISCAL IMPACT

The Infrastructure Grant will be paid through SEDC funds, no city-general funds will be used for the project. The SEDC Infrastructure Grant is worth $350,000. Over a ten-year period, the project is projected to provide over $550,000 to the city’s general fund. In the event that KRE fails to comply with the agreement, KRE will be required to repay the incentive as dictated in the performance agreement.

RECOMMENDATION

Authorization of the SEDC program and funds for the Economic Development Performance Agreement with Kellum Real Estate, LLC through the approval of Resolution No. 20-R-114

Attachments
CC Res 20-R-114 Kellum
Exhibit A-Kellum Agrmt