H-E-B plans to build 1-million-square-foot distribution center on 871 acres of land at the southwest corner of E. Houston St. and South Foster Road.
H-E-B plans to build a 1-million-square-foot distribution center on 871 acres of land at the southwest corner of East Houston Street and South Foster Road. Credit: Courtesy / H-E-B

City Council on Thursday voted 8-0 to approve development waivers that clear the way for H-E-B to begin construction of a new 1 million-square-foot distribution center on the far East Side later this year.

The City will waive $500,000 in water and sewer impact fees from the San Antonio Water System and $1 million in municipal development fees under eligibility rules set by the Inner City Reinvestment and Infill Policy (ICRIP).

That policy establishes priority areas within San Antonio to stimulate and facilitate private investment. Projects not located within the ICRIP Target Area – as in the case of the proposed H-E-B distribution center – are eligible for fee waivers if they are considered a targeted-industry project as defined in the City’s Tax Abatement Guidelines, include new capital investment of at least $50 million, or create at least 500 new, full-time jobs.

The recommendation to award fee waivers is based on the large capital investment, the creation and retention of a substantial number of new full-time jobs, and the project site’s location in a traditionally underserved area in a State Enterprise Zone, according to a statement provided by the City’s Department of Economic Development.

H-E-B plans to build the massive distribution, manufacturing, and food-processing plant on 871 acres of land the company purchased last year at the southwest corner of East Houston Street and South Foster Road. The terms of the land deal were not disclosed. It will be the grocery retailer’s largest single-build warehouse, allowing for volume relief at its other warehouse facilities in Northeast San Antonio and San Marcos.

“Our decision to purchase the land and construct a grocery warehouse will make H-E-B more competitive and well-positioned for the future,” said Dya Campos, H-E-B’s director of public affairs. “We are always evaluating the need for changes across our operations to help maintain a competitive advantage. The investment demonstrates H-E-B’s commitment the San Antonio community and will give us the opportunity to create more jobs in the Alamo City in the coming years.”

Construction will begin at the site near Interstate 10 later this year and is expected to be complete in 2020. H-E-B has not yet named the general contractor. When the warehouse opens, 600 H-E-B “partners” will be assigned there, with half being new jobs in San Antonio and the remainder coming from H-E-B’s existing San Antonio warehouse.

H-E-B currently operates a warehouse and distribution center at Interstate 35 and Rittiman Road, and others across the state. Campos said all H-E-B warehouses will continue to operate at full capacity.

The new distribution center is part of a long-term plan to develop a master-planned campus at the Foster Road site, which will include manufacturing, warehousing, and transportation.

The property will generate ad valorem real and personal property tax revenue for the City exceeding $8 million over the next 10 years, more than $20 million to other taxing jurisdictions, with more than $14 million to the local school district, according to documents provided by the department to City Council.

With more than 400 stores across Texas and Mexico, H-E-B employs more than 109,000 people – 20,000 in the San Antonio area – and has annual revenues exceeding $25 billion.

Mayor Ron Nirenberg and Councilman Rey Saldaña (D4), whose spouses both work for H-E-B, abstained from voting on the ordinance. Councilwoman Rebecca Viagran (D3) was absent at the time of the vote.

Shari Biediger has been covering business and development for the San Antonio Report since 2017. A graduate of St. Mary’s University, she has worked in the corporate and nonprofit worlds in San Antonio...

Jeffrey Sullivan is a Rivard Report reporter. He graduated from Trinity University with a degree in Political Science.