The city of Kyle is revising a $500,000 incentive package it awarded to Hays Co Bar-B-Que in September to smooth the relocation of the business from San Marcos to Kyle.
Under the new plan, the acclaimed barbecue joint will receive a reduced financial incentive but Kyle will take on some of the needed infrastructure improvements itself.
The 18-year-old Hays Co Bar-B-Que is planning a two-phase project on a 1.5-acre property at 505 South Old Highway 81 that could serve as a catalyst for Kyle’s downtown growth.
On June 3, the Kyle City Council approved a number of amendments to the original incentives. Among them, the city will directly take on water line improvements — estimated to cost nearly $300,000 — instead of requiring Hays Co Bar-B-Que to front the cost and then wait for reimbursement after one year, which was part of the initial deal. That will enable the project to move at a quicker pace while lessening the financial burden on the business, said Victoria Vargas, Kyle's director of economic development.
In addition, a previous requirement to bury a FiberLight telecom line was removed after determining the $112,000 cost provided limited benefit and would not significantly advance the city's goal of putting utilities underground, Vargas said in an email.
In total, Kyle's revised incentive commitment will not exceed $120,000 over three years, she said, with a reimbursement grant for electrical upgrades of up to $20,000 after this year, and a 50% rebate on property and sales taxes for three years, not to exceed $100,000. The barbecue joint is expected to receive its certificate of occupancy for the facility by Oct. 31, 2026.
The city's economic development agreement with Hays Co Bar-B-Que, under the name M&A Kingdom Enterprises LLC, originally provided a 50% sales and property tax rebate over three years, worth a maximum of $100,000. It also provided a one-time $400,000 grant to help fund property improvements, including paved parking and utilities.
Michael and Asenette Hernandez, owners of Hays Co Bar-B-Que, are planning a two-phase project — estimated to cost $2.5 million to $3 million — that would include a 2,000-square-foot restaurant, plus an outdoor area with a playscape and outdoor music stage and walk-up bar in its first phase. The second phase will include a two-story area, comprised of six shipping containers on the bottom floor and another six on the upper, to be used by other restaurants and retail operators.
The Hernandezes sold their 8,000-square-foot restaurant in San Marcos to the Hays County Food Bank about a year ago.
Last July, Kyle officials praised the business and voted to draft a Chapter 380 incentive agreement for it.
“You’re not coming from a trailer directly here — (the) barbecue business is extremely competitive," Kyle Mayor Travis Mitchell said at the 2024 meeting.
"It's extremely difficult, and a lot of times when cities want to financially incentivize a brand new small business, or a small business that maybe was succeeding out of a trailer but doesn’t know how to operate a larger facility, there’s a lot more risk to the city," Mitchell said. "But (Hays Co Bar-B-Que) is an established brand that has already made the move up."