(Seguin) — The city of Seguin is working on yet another strategy that could help with the revitalization of the downtown area.
The Seguin City Council on Tuesday reached a consensus to move forward with a Tax Increment Reinvestment Zone, better known as a TIRZ.
Economist Travis James, vice-president of TXP, is working with the city on the creation of the TIRZ for downtown Seguin. James explained to the council how the TIRZ works, and how it might be beneficial to the downtown area.
“It’s a tool where governments, typically, cities and counties come together, sometimes college districts and they dedicate future tax revenue to pay for projects within that geographic zone. That’s the short version. So, what you are collecting today continues to go to the general fund or pay for your bonds or talk about allocating all or a portion of future revenue above what we are collecting today. That’s the increment, right? — the extra to pay for projects in the zone,” said James.
James says the zone would not require any additional tax support. He says the taxes generated in that area would be set aside to help with future projects within the zone.
“Just to be clear, it is not a tax rate increase. It is not a burden on any of the property owners. They do not have to do anything extra. We work with the appraisal district; they will code within the appraisal district file — and there is a calculation worksheet that we do. There’s a TIRZ board. You have to submit an annual report to the comptroller. It is completely transparent. The public is invited to participate in these board meetings. It’s typically created by the governing body. Cities can add a portion of the sales tax — I don’t think it’s contemplated for this one. I think we are talking about just a portion of the property tax. Some cities, New Braunfels down at the Town Creek Center, they do both property tax and sales tax. But we are just thinking about property tax with this one and that is my initial recommendation to you all,” said James.
TIRZ can be tied to a specific project, or it could be used more broadly in a downtown area. He says the money set aside in the TIRZ can be used in a variety of ways. He says it’s simply another tool for the city to use for economic development in the downtown area.
“You can pay for all kinds of things just like you do normal economic development. You can do economic development grants. You pay for infrastructure. You pay for sidewalks. You pay for utilities. You can buy land. So, you recently purchased the Wells Fargo building. If a tourist TIRZ was in place and if the TIRZ had money, the TIRZ could have done that for you. You can do building facade grants. Taht’s very common in downtown. You can do a downtown facade grant program from a TIRZ – demolition — all kinds of things typically that the public sector gets involved with as it relates to economic development. There are financing costs. You can pay for engineers, surveying, professional services those kinds of things. Some TIRZ do issue bonds. We are not contemplating that with this one but for these really big master plan TIRZ’s, once the TIRZ generates enough revenue, sometimes the TIRZ will issue debt because it’s cheaper for cities or counties to issue debt than a private development. It just saves you money. This TIRZ is not big enough for you to need to contemplate that but that is something that you may see other Tax Increment Reinvestment Zones do,” said James.
TIRZ have been successfully used by cities all over the state of Texas for some well-known economic development projects. Las Colinas in Irving, the Pearl in San Antonio and the Creekside development in New Braunfels were all developed using a TIRZ.
James says the city is just getting started with the formation of this TIRZ for downtown Seguin. He says there are several steps that will need to be followed to have the zone created.
“It’s a 7-step process. If we get the green light go ahead – you like what you are hearing, we will come back and have a a brief preliminary reinvestment zone and financing plan. That is required by law. We have to have a public hearing. We have to have an ordinance so that is the first two or three steps. Then you create what is your tax increment reinvestment zone board. You can have no less than five, no more than 15. If other taxing entities join, hopefully, the county might be interested in joining, they will have a board member or two, but you have to have at least five by state law. We then have to create what is a final project and finance plan and within that document, we have to outline what is an eligible expense. So, if you said we don’t want to fund sidewalks, let’s just pick that for example — we would not list sidewalks as an eligible expense and therefore, you can’t fund it with TIRZ money. The TIRZ board has to approve the final plan and the final plan comes back to you again for approval. So, you always have oversight and a say in what happens in this process. Then you collect the tax increment,” said James.
James shared the proposed map for the TIRZ, which includes a large portion of the downtown area. That prompted a discussion by the council that they would like the public to offer more input about the boundary lines for the TIRZ. James says those are discussions that should be taking place now, and he can shift those boundaries in the proposed map.
“It picks up the core of your downtown. There’s a number of projects in there that I think would be redevelopment and development of different buildings. We can’t have too much residential. You do have some public sector buildings whether it’s the ISD, whether it’s the county, whether it’s the city — those are outlined as well. You do have different tax-exempt properties those are going to primarily be your religious buildings up there towards the north. So, this is roughly what we are including. As I said, if you have changes or comments or want something included or excluded, we can absolutely do that just let us know and we will have to move the lines around,” said James.
The city council did not take a formal vote on the TIRZ. That is expected to come during a meeting next month. Meanwhile, the council did ask that there again be more public discussion about those boundaries for the reinvestment zone. Council members said it was important to make sure public input was received on what areas should be included in that downtown TIRZ.