On July 2, 2025, the San Marcos City Council made a significant decision regarding the development of the city’s downtown area. The council unanimously approved the terms for a $9.1 million tax incentive package for Midway Development to construct a $40 million boutique hotel on the Texas State University campus. The hotel, known as “Project Cat Tree,” is expected to be a game-changer for the San Marcos economy, offering new employment opportunities and contributing to the revitalization of the downtown area.
The Development Project
The planned hotel will feature 130 rooms and a host of upscale amenities, including a rooftop bar, event lawn, amphitheater, and a high-end restaurant. Situated at North Fredericksburg and Lindsey Streets, the hotel will be strategically located to attract both university visitors and tourists to San Marcos. This development is expected to serve as a major attraction for Texas State University students, faculty, and parents visiting the campus, as well as tourists looking to experience the vibrant culture of San Marcos.
The hotel will be managed by New Waterloo, an Austin-based hospitality company known for its successful ventures in the luxury hotel industry. Their track record includes several high-profile developments in Texas, and they have been praised for their ability to blend modern amenities with a sense of local identity. This partnership with Midway Development is expected to bring a fresh level of sophistication to San Marcos’ hospitality offerings.
The Tax Incentive Package
To incentivize the project, the San Marcos City Council approved a tax rebate agreement under Texas’s Chapter 380 program, which is designed to encourage economic development in the state. The incentive package includes rebates of up to $7.3 million in hotel occupancy taxes and $1.8 million in sales taxes over a period of 10 years, with the amount of the rebates based on the hotel’s revenue per available room (RevPAR). The tax incentives will be paid out incrementally as the hotel meets revenue targets.
The agreement stipulates that the city will retain at least $1.8 million in hotel occupancy taxes and $456,000 in sales taxes, ensuring that the city will still benefit financially from the hotel’s operation. The San Marcos City Council believes that the long-term benefits of the hotel, including job creation and increased foot traffic in the downtown area, will far outweigh the initial tax incentives.
Job Creation and Economic Impact
The development of the hotel is expected to create between 207 and 256 new jobs, including positions in hospitality, maintenance, and management. These jobs will help support the local economy, providing opportunities for residents to secure employment in the growing hospitality sector. Additionally, the influx of visitors is expected to have a positive effect on local businesses, including restaurants, retail stores, and other service providers.
By attracting tourists and visitors to San Marcos, the hotel will contribute to the ongoing revitalization of the city’s downtown district. This development aligns with the city’s broader goals of enhancing the visitor experience while also fostering growth in key sectors like hospitality, retail, and entertainment.
Texas State University’s Role
One of the key elements of the project is its proximity to Texas State University, which has more than 38,000 students. The university is a major economic driver in the area, and the new hotel is expected to provide a convenient and high-quality lodging option for visiting families, conference attendees, and sports fans. The hotel will also offer amenities that cater to the university community, such as event spaces and meeting rooms, which could host academic conferences, student events, and university-related gatherings.
The Texas State University board of regents has yet to formally approve the agreement, but officials are optimistic that the project will receive the necessary approval, given the potential benefits for both the university and the city.
Conclusion
The approval of the $9.1 million tax incentive for the new hotel development in San Marcos represents a major step forward in the city’s efforts to revitalize its downtown area and bolster its economy. The project, which is expected to bring new jobs, increase tourism, and enhance the local hospitality scene, is poised to be a key driver of growth in San Marcos in the coming years. With Texas State University as a key partner, this hotel is set to become a vital part of the city’s landscape.
