The City of McKinney Reinvestment Zone Number 1 board on Tuesday approved a partial award to HUGS Café Inc. to help fund fire suppression and related systems at the nonprofit’s proposed headquarters at 221 Andrew Street.

Staff recommended denying the applicant’s full request of $147,781.85 because the application did not meet the board’s funding policy without a match. Instead staff recommended a 50/50 match, which staff calculated as $73,890.93, and recommended the board approve that amount as consistent with existing program rules.

Lauren Smith, executive director of HUGS Café Inc., told the board the full project is a $10 million build and that the organization has raised about $7 million in philanthropic contributions and expects $750,000 in annual sales tax revenue from café operations once open. Smith said $34,000 of the TIRZ ask represents on‑site utility work bringing water and sewer into the building footprint.

Board members debated policy and precedent. Supporters said HUGS is a nonprofit with community benefits and that the building’s required town‑center aesthetics and some off‑site costs made its situation unique. Others warned approving full funding for a new‑build property could create precedent for other commercial developers to request TIRZ funds for projects that lack infrastructural barriers.

Ultimately Commissioner Hale moved to approve the staff‑recommended 50/50 match; the motion passed by a vote of 5 in favor, 3 opposed and 1 abstention. The board did not approve the applicant’s full request.

Staff will work with HUGS to document eligible costs and process the grant consistent with the match requirement and TIRZ funding limits.