A cinema company building the first movie theater in Kyle broke ground Jan. 31 at the site of its future 75,000-square-foot entertainment facility.

Although Texas Cinema will be the first to build a movie theater in the city, it wasn't the first to propose such a project.

Schulman Partners told Community Impact Newspaper on Jan. 9 that it was backing out of an incentive arrangement it struck last year with the city of Kyle to build 68,000-square-foot entertainment center near Kyle Parkway and I-35.

The developers were proposing a cinema complex with an arcade, bowling, and a restaurant and bar. Texas Cinema later announced plans to build a similar facility.

Because Schulman Partners didn't see viability in locating in a market in which it would have a competitor with similar amenities that wasn't receiving tax benefits, it decided not to build in Kyle after all, said owner Mark Schulman.

"This will go down as one of the most interesting and unusual episodes in Kyle's economic development history," Mayor Lucy Johnson said at the ground breaking ceremony. "This wasn't the site we were expecting, this wasn't the company we were expecting, this isn't necessarily even the format we were looking at. All that doesn't matter to the kids, both young and grown, who are really going to enjoy this cinema."

The $1.1 million incentive package was contingent on the movie theater generating revenue, and since it was never built, Schulman Partners never received any payouts.

Councilman David Wilson said that while Schulman's exit was unexpected, he believes Texas Cinema will build a "great facility."

Along the Kohler's Crossing corridor that includes Hays High School and the new Austin Community College Hays Campus, the facility was strategically placed, Wilson said.

Texas Cinema expects to open its entertainment facility in late November, Vice President Mitchell Roberts said.