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.