Buda City Council made the announcement after voting 7-0 to approve the economic development agreement with the city's Economic Development Corp.
BSWH intends to make at least a $35 million investment in land, building equipment and inventory.
The 77,525-square-foot complex will be the first Baylor Scott & White hospital in Hays County. This follows the opening of the medical center's first clinic in Kyle last October.
It will include a full-service emergency department, medical office space, operating rooms and an imaging center.
Buda's EDC will provide the BSWH $375,000 to be used to reimburse the company for the development of infrastructure.
If everything goes according to plan, the hospital will open Dec. 31, 2019.