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San Marcos to Become Austin’s Future Freight Rail Park

Feature Photo (above): Looking west, the Union Pacific railway at Mill Road, a few hundred yards south of San Marcos Regional Airport. Land developer Mike Schroeder plans to build miles of parallel track south of the UP line for a SMART Terminal intermodal rail park. Image: Google Streets.

Posted: 1-24-2019

by Adolfo Pesquera

San Marcos (Hays County) — City Council is working on an agreement that will put San Marcos in position to be home to the largest freight rail park in Central Texas.

Last week, the council agreed on first reading to annex 934.34 acres of land located south of the San Marcos Regional Airport. The intent of the annexation was to get control of the zoning for purposes of zoning the entire property heavy industrial to pave the way for a private developer to construct an intermodal rail park.

The annexation request was made Nov. 9 by developer Michael A. Schroeder of Austin, one month after City Council approved a Chapter 380 development agreement with Katerra Inc. to construct a billion-dollar manufacturing plant on a 66-acre parcel within the 934-acre future rail park. The Katerra project, it turned out, was contingent on the ability of Schroeder to provide rail service to the future plant site. VBX reported the Katerra project Nov. 26.

The 934 acres to be annexed is highlighted in yellow.

The 934 acres to be annexed is highlighted in yellow. The future Katerra plant lies within the fuchsia pink boundary. The hatched-line portion in the blue boundary is an area where the San Marcos ETJ overlaps with the Martindale ETJ. Courtesy: City of San Marcos.

Reacting to resident objections about introducing heavy industrial development, and a probable uptick in tractor-trailer traffic, as well as concerns over the possibility of downstream flooding resulting from new impervious cover, the Planning and Zoning Commission rejected the annexation proposal in December. The P&Z vote meant City Council needed a super majority to approve the request and council sent the issue back to P&Z for reconsideration.

At its Jan. 8 session, Planning and Zoning approved the annexation, reasoning that the flooding issue was unfounded and noting that the developer was working with the Texas Department of Transportation to resolve traffic issues that could affect Texas Highway 80.

Schroeder told the planning commissioners he scouted for a site in Hays County only after he had been repeatedly rejected for two years over getting a SMART Terminal rail park site in Travis County. Except for a couple of small rail switching yards, Austin has no industrial rail park of consequence. The largest rail terminal in the region is Union Pacific’s intermodal terminal on the southwest side of San Antonio.

Schroeder chose the site because of its proximity to the Union Pacific railroad that splits in San Marcos, with one line continuing north to Austin and the other going east to Lockhart. In addition, he noted the topography.

“The property is level, which is very important, and it’s next to an airport,” Schroeder said.

The scale of the rail park master plan far exceeds the needs of Katerra. Without identifying the company, Schroeder said he has another client coming to the rail park that moves freight by tractor-trailer at a rate of 15 million miles per year. Their plan is to eliminate 80 percent of that highway mileage by switching to rail.

At maturation, the SMART Terminal will have signed agreements equal to five times the Katerra deal, Schroeder predicted.

“Union Pacific and BNSF, the two top rail carriers in the United States, are going to start picking up and dropping off cars in San Marcos,” he said.

Proposed site plan for rail park railway and other infrastructure easements. Courtesy: City of San Marcos.

Proposed site plan for the SMART Terminal, designating the paths of railways and other infrastructure easements. Courtesy: City of San Marcos.

Schroeder was seeking heavy industrial zoning for the entire park, but during the Jan. 15 City Council session it became apparent that the council members were not willing to go that far. An amendment was attached to the annexation zoning vote requiring further negotiations and a signed agreement on some form of less intensive zoning before the annexation would be brought back for the second and conclusive reading.

Mayor Pro Tem Lisa Prewitt spoke for what appeared to be the consensus position when she stated that the Katerra deal, along with its 66-acre footprint, needed to go forward, “but not the rest.” Prewitt argued that council and Schroeder needed to consider splitting the zoning, with some portion of the land being limited to light industrial.

“This development, where it’s located, by rail and by the airport, also has an environmental aspect to it,” Prewitt said. “Because what we are trying to do is enter into a new era of multimodal transportation, to where we’re not so dependent upon highways and road systems to transport all of the materials we need for manufacturing, commuting, etcetera.”

Schroeder said split zoning could work, but it was not clear how much of the land he was willing to limit to light industrial.

“There’s a huge investment on the rail,” Schroeder said as he emphasized the urgency of the Katerra deal. “$16.5 million of rail that goes in just for Katerra. But there is an area south of Katerra where it will be difficult to get rail to. That’s a substantial part that I would be willing to let go back to light industrial.”

Zoning the south end light industrial would create a buffer zone between the San Marcos River and the heavy industrial to the north, he noted.

The council agreed to take up the issue of the split zoning and refining the development agreement during a Jan. 29 workshop session. The date for the second reading is to be determined.

Michael A. Schroeder speaking to City Council. Courtesy: City of San Marcos video archives.

Michael A. Schroeder speaking to City Council. Courtesy: City of San Marcos video archives.

Schroeder is president of Schroeder Company, a land brokerage firm that he started in 1989. In July 2018, he registered two new companies with the state for purposes of establishing the SMART Terminal. San Marcos Railroad Ltd. will be a private switching carrier railroad that will provide switching services within the rail park, and Texas Transportation Partners Ltd. is an industrial logistics company dedicated to the development of the rail park.


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About the Author:

Adolfo Pesquera (Reporter/Editor) is a veteran news journalist. He has worked for Hearst Corp., American Lawyer Media, News Corp and Freedom Communications. His work has been published in newspapers and magazines across the USA. He is a journalism graduate of UT-RGV. He writes, edits and creates digital pages for VBX.

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