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Wiederstein Road, the border between two townships northeast of San Antonio, is all that separates competing new mega-entertainment centers along the congested Interstate 35 corridor.
EVO Entertainment Center opened the doors to its 73,000-square-foot facility in March. Located within the city limits of Schertz, it features movie theaters, a restaurant, bowling alley, and arcades.
Across the street, a similar venture by Santikos is set to open May 23, this one in Cibolo. The 87,000-square-foot family entertainment center will feature movie theaters, a sports bar, bowling alley, and arcades.
For Santikos, however, there is a welcome mat in the form of economic incentives from its host city. In March, the City Council of Cibolo voted to give Santikos Enterprises up to $750,000 in economic incentives over five years for constructing the theater in that town of about 30,000 people.
The incentives will come in the form of tax rebates – 50 percent rebate of general fund sales tax generated by the entertainment facility per year for up to five years; 80 percent of maintenance and operations (M&O) property taxes for three years, and 50 percent of M&O property taxes for the remaining two years. In addition, the Cibolo Economic Development Corp. will pay out $23,500 per year to be used for building and improvements to the facility.
It was unclear why the incentives deal was struck only months before the complex’s projected opening, but Santikos Enterprises CEO Tim Handren said the company began discussing the arrangement with Cibolo leaders in 2016, long before he took the helm in September. Such incentive agreements are common with municipalities looking to entice businesses, he added, and he expects to do more in the future.
“An economic incentive agreement simply says the city wants us to be there and, in exchange for building our theater there, they are willing to do a rebate of some of the taxes the city collects,” Handren said. “It’s not like they are paying us money.”
In exchange for the incentives, Santikos promised to hire 40 people for full-time jobs and 65 to 100 part-timers and to continue to make grants to area nonprofit agencies via the John L. Santikos Charitable Foundation, housed in the San Antonio Area Foundation. The terms of the agreement state that the amount of those grants will be “equal to or greater than the grants given” to Santikos by the City.
The agreement puts a cap of $750,000 on what Cibolo will rebate to Santikos, but no one could say exactly when they would get to that number within five years.
“We don’t know what the general sales taxes are going to be. We don’t know what our property taxes are going to be right now,” Handren said. “It’s all contingent on the amount of business that comes through there. That’s why we’re in this together.”
The incentive package will not exceed $150,000 per year, and if Santikos achieves $15 million in annual gross sales within the agreement period, Cibolo will discontinue the rebates to Santikos. Though economic incentive agreements may be standard business practice, such thresholds are not, Handren said.
“If we get to a certain size, it might look like we were gouging the community when we don’t need to be,” Handren said. “I asked for this to be in there; they did not. … If we get to a certain revenue, then I want to relieve them of any kind of benefit because it just looks like we’re being greedy, and that’s not the kind of corporation we are.” He would not reveal projected revenue amounts, nor what the project cost to build.
Tax records show Santikos purchased the 9 acres of land for the theater in 2018 from developer Babcock Road 165, a company name registered by Fasken Oil & Gas of Midland. At the time, it was assessed at $2.4 million. The family-owned Fasken owns the surrounding land where it plans to put in a mixed-use development that includes residential, hotel, restaurants, and retail.
City Manager Robert Herrera presented the Santikos proposal at the Council’s March 12 meeting, and after some discussion, the Council voted 5-1 in favor of the agreement. One Council member noted that he polled his district and found that more than half of his constituents were in favor of the incentive plan.
“We want to partner with them to ensure success. If they don’t succeed, all that revenue goes away,” said Councilman Ted Gibbs (D4). “Not only that … but they are bringing in high quality, which also brings in tax revenue, and my feeling is that’s going supersede anything we may be giving up. They could pull out anytime they want. It’s a partnership, and there are no guarantees either way.”
But Councilman Tim Woliver (D6) pointed out that the Council has identified $267 million in projects that the City needs to address in the next five years and, while support for social welfare agencies is constructive, the tax rebates mean less money going into the general fund. He argued that Santikos is already a powerful magnet for other business that he said is going to “blow people’s minds what’s here.”
“There’s a lot of stuff we’re telling the citizens of Cibolo we need to spend on,” said Woliver, who cast the dissenting vote but insisted he is not anti-Santikos. “It’s a tough pill for me to swallow. I obviously want to see the development succeed. … It’s not their fault a duplicate competitor came up across the street. … The free-market guy that I am, it doesn’t jive with me.”
Mark Luft, director of the Cibolo Economic Development Corp., said dueling theaters in such close proximity may have had some bearing on the incentive plan. For EVO, the City of Schertz awarded economic incentives to the developer, WR1 LLC, for water and wastewater improvements, but not directly to EVO.
Luft said that because the agreement is for such a limited amount of time and money, Cibolo will “gain that back tenfold.”
“They are the most fantastic group of people to work with,” Luft said. “The San Antonio Area Foundation, they are good people – their integrity, commitment to service – I cannot say enough. To advance employment opportunities and commerce – they are helping build communities.”
Cibolo does not enter in many such agreements, common as they are in other cities, Luft said. He pointed to one grant for a major employer, the military machinery company Kalmar, when it was retooling itself to enter the private sector. “We are very cautious,” he said. “We know this is public knowledge, and we have to do the right thing for the right reason. We believe all these are there.”
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John L. Santikos, founder of the San Antonio-based entertainment and real estate business, died in 2014 and bequeathed the total book value of his businesses, reported at $605 million, to the San Antonio Area Foundation. Handren has told the Rivard Report that the figure is misleading, as it did not account for debt.
Variable dividends from Santikos investments and theater proceeds fund the causes designated by the late John Santikos – people in need, health, youth and education, and arts and culture – in eight area counties, including Guadalupe County, where Cibolo sits.
The agreement with Cibolo and the amount guaranteed for grants is in line with what the Area Foundation has historically been giving, said Rebecca Brune, Area Foundation president and chief operating officer. The agreement merely provides a more formal framework for the responsive giving that the foundation has been doing in the county up to now.
“It provides a wonderful illustration and model of how they come at it from a corporate presence and we have our core competency and value proposition, which is really investing in community,” Brune said. “So, if anything, this is an exciting illustration of the intention of why and how Mr. Santikos expected his legacy to be lived out.”
In 2017, Santikos’ personal estate provided $500,000 in surprise year-end gifts to 25 nonprofits, including $20,000 to the Rivard Report, and in 2016, the Area Foundation announced gifts nearing a total of $9.3 million to eight nonprofit organizations for capital projects.