June 3rd, 2008
Kyle council passes major retail agreement

By BILL PETERSON
Editor at Large

KYLE – City officials believe they may be exiting the economic incentives business while solidifying an intersection that’s not even two years old as the best shopping area between Austin and San Antonio.

The city council approved a development agreement with David Berndt Interests, Inc., to build nearly a million square feet of retail at the southwest corner of Interstate-35 and Kyle Parkway, which opened in August 2006.

The shopping complex, to be named “Kyle Crossing Retail Center,” is expected to include a 132,000 square foot Target store that is expandable to a Super Target, an 87,000 square foot Kohl’s believed by city officials to be the largest in Central Texas, and a 45,000 square foot City Lights movie theatre. Additional retail development on the site will come to 740,000 square feet.

The ground already has been leveled on the site, which is across Kyle Parkway from the year-old H-E-B Plus! and across I-35 from the Seton Hospital project, which will include a million square feet of retail.

The Chapter 380 development agreement calls for Berndt to front the costs for infrastructure, including three public streets in and around the shopping complex. In return, Kyle will reimburse Berndt 50 percent of the sales tax generated by the property until it has paid off up to $7 million. The clock will run for ten years, starting in 2010.

By March 2010, Berndt must develop $25 million of taxable value, the project’s anchor store (the Target) must open and the property must generate at least 200 full-time equivalent jobs, or Berndt will lose its reimbursement. Kyle City Manager Tom Mattis called the deal “a no-risk proposition for the city.”

Further, Mattis said, the deal all but closes out the days of Kyle offering economic incentives for developers coming into the city. Kyle is abating two-thirds of its sales taxes from the Seton development from 2010 through 2012, then one-third from 2013 through 2024. The city also made a land for jobs deal with RSI, a manufacturer of rugged technology equipment, giving the company an operating site in exchange for a minimum of jobs for Kyle residents.

“I foresee the end of these kinds of incentives in the City of Kyle,” Mattis said. “In the future, these developments will come on their own. This project is kind of the final piece of the puzzle to make this the best retail area between Austin and San Antonio.

“Well,” Mattis added as an afterthought, “San Marcos has that (outlet) mall thing down there.”

Said Kyle Mayor Mike Gonzalez to Berndt representatives at Tuesday night’s Kyle City Council meeting, “You kind of got in at the end of the gold rush.”

The Kyle council passed a resolution in support of the agreement unanimously.

The Kohl’s is scheduled to begin construction in July and open in the spring of 2009. Target and City Lights are scheduled to open in the fall of 2009.

Mattis’ announcement of the deal somewhat put to rest a white elephant in town. The thousands who flock to H-E-B Plus!, the city’s only major grocery store, couldn’t help but notice that construction on the Kohl’s site had all but stopped since the beginning of this year. Many have feared that the project might become a casualty of the economic slow-down that has afflicted most of the country to an even greater degree than it has affected Central Texas.

“We’re living in times when people are skittish about the economy,” Mattis said. “People in Central Texas are moving projects forward quickly. But when you’re dealing with major retailers with decision makers in New York and LA, they’re reading the Wall Street Journal and they’re cautious.”