Monday, January 13, 2014

Houston Uses Tax Increment Reinvestment Zones to Fund Downtown Development~Why Can't Brownsville?

Nowadays it takes a bit of creativity to fund downtown development. Federal and state monies are not as available as in years past.

As many as 37 cities in Texas and many more across the country have used Tax Increment Reinvestment Zones to finance improvements in areas that otherwise might not be developed.

The City of Houston has established at least 20 of these zones to reverse downtown blight, but also to develop raw land on the outer edges of the city and revitalize other areas that have declined.

In Texas cities or government entities can establish a TIRZ, but also property owners can do so. The owners of properties that make up at least 50% of the appraised property value of a zone can petition that a TIRZ be formed.  In such a zone, property taxes are frozen for a pre-determined number of years.  When an owner makes improvements on his property increasing its value or the property otherwise increases in value, some or all of the monies that would normally go to increased property taxes instead go into a fund to develop and improve the zone.   The percentage of what would normally be additional property taxes going into the development fund is negotiable as is the length of time the properties remain in a TIRZ.  Up front financing of development is tied to projected increases presented in a prepared plan for the TIRZ.

Downtown property owner, Attorney Trey Mendez
First alerting us to the possibility that such a zone could conceivably work in Downtown Brownsville is downtown property owner, local attorney Trey Mendez:
"More than 3 years ago when the downtown revitalization idea was just starting to be discussed, Dennis Sanchez suggested that the City implement a TIRZ, Tax Increment Reinvestment Zone. This would have meant that whenever a property increased in value in the downtown area, the additional tax dollars from that valuation would have gone into an account for use in the same area. . ./ . . . .  It would still be a good idea now and would be a no risk way of raising funds for downtown."

Mr. Mendez also suggested we contact his former law partner, Dennis Sanchez, also a downtown property owner, who had some ideas about using a TIRZ to revitalize downtown.  Here is part of the message we received from Mr. Sanchez:


Attorney Dennis Sanchez
Jim,
About 2 years ago the city commissioned a firm in Austin to perform a study on a downtown TIRZ. I went to Austin to meet with them and provide any insights which I had on the matter. There were also some meetings in Brownsville with downtown property owners.
Yet we were never advised what happened to the TIRZ study and there were never any follow up meetings.
A TIRZ is a function of how much property values appreciate as a result of the development. It is designed to motivate a property developer to take a risk in making an upfront development of distressed property, including infrastructure. Once the developer makes the investment, then the developer can receive a reimbursement from the TIRZ for certain pre--approved infrastructure expenses. A TIRZ is a good form of private/public partnership and they have been widely used in Houston.
If you care to meet some day to talk about this, let me know. In the meantime, you might ask to get a copy of the TIRZ study from Ramiro.

Dennis

City Planner Ramiro Gonzalez
We received today from City Planner Ramiro Gonzalez a 32 page document entitled "DOWNTOWN BROWNVILLE, TEXAS PRIORITIZATION & FUNDING FRAMEWORK, prepared for the City of Brownsville, the Brownsville Economic Development Council and the Greater Brownsville Incentives Corporation.  The printout was dated October 2011.  

We will take the opportunity to review the document as well as other research on Tax Increment Reinvestment Zones.  



11 comments:

  1. This sounds like a wonderful opportunity that Brownsville can't
    afford to lose. Keep us posted, Jim. Thank you.

    ReplyDelete
  2. Jim,
    The document Ramiro sent you was just another study. This one cost the city $75,000.

    ReplyDelete
  3. I wish Brownsville had more leaders like Trey and Dennis. I hope the commissioners court reconsiders the parking meter fees and does some additional due diligence such as the viability of a TIRZ

    ReplyDelete
  4. the city doesn't pay taxes, so there is no point if they are buying up all of the downtown property..

    ReplyDelete
  5. TRIZ is still putting all the risk on the property owner with his "contribution" determined by appraisal.
    Want to see it boom within 6mo? Take 6 square blocks, set property tax at zero for 10 years. That is all.

    ReplyDelete
    Replies
    1. Exactly! Had Brownsville been more aggressive on the Bass Pro Shops store it would be in Btown. The short-sided mind set of our "leaderlessness" is inconceivable. How does Harlingen get this and we don't. How did Harlingen get an Olive Garden and we got taquerias? How did we loose 600 AT&T jobs a couple of years ago and now 1,200 Convergis jobs this year? Not being aggressive with tax incentives and leaders that simply don't give a shit nor a rats ass, that's how.

      Delete
  6. Tax breaks are for billionaires like Space X. Musk's salary from Tesla alone was 78,000,000 in 2012. His net worth is around 8 billion. Little piss ants don't deserve a break.

    ReplyDelete
  7. As rumored, KMBH TV being sold, PBS may go off the air in the Valley...
    Rio Grande Guardian broke the story ...

    http://www.riograndeguardian.com/bordernews_story.asp?story_no=21

    ReplyDelete
  8. Most property owners downtown are not going to risk anything for downtown development....they want the city to do it. As long as the city attempts to use tax dollars to improve the downtown, there is no incentive for property owners to get involved and invest in their own property. At this point, why would anyone want to go downtown???? To catch a bus? To find a hooker? To drink? Surely not to eat! So, property owners are willing to let the city take the lead and foot the bill.

    ReplyDelete
    Replies
    1. Ok. So raising parking rates flies in the face of logic.

      Delete
  9. The biggest question is how implementation of a TIRZ in downtown Brownsville will serve the city as a whole. While property owners in downtown may now have an incentive to invest in infrastructure or development in that location there has been no argument as to why it is an economically prudent move. Will downtown property owners create new jobs for the city? Why not create a TIRZ in the areas surrounding the expressway by Alton Gloor or further north? It is more likely that a company or corporation with the ability to create numerous sustainable jobs will invest in a growing area of the city than a dilapidated portion of downtown. Ultimately, the creation of a TIRZ zone will serve local property owners in the area but will serve little to grow the economy of Brownsville as a whole.

    ReplyDelete

𝗧𝗦𝗖 𝗕𝗢𝗔𝗥𝗗 𝗠𝗘𝗘𝗧𝗜𝗡𝗚 𝗛𝗢𝗡𝗢𝗥𝗦 𝗧𝗛𝗘 𝗗𝗘𝗣𝗔𝗥𝗧𝗘𝗗 𝗧𝗥𝗨𝗦𝗧𝗘𝗘 𝗥𝗨𝗕𝗘𝗡 𝗛𝗘𝗥𝗥𝗘𝗥𝗔

TSC Board of Trustees Thursday evening's Texas Southmost College Board of Trustees meeting at Gorgas Hall , the first since the passing...