Agenda

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10.

City Council Regular Meeting

Meeting Date:

01/28/2020

BACKGROUND

Councilman Scagliola requested staff research and make a presentation to City Council on creating a Tax Increment Reinvestment Zone (TIRZ) in the Norhthcliffe area as a means to fund additional infrastructure improvements. Tax Increment financing redirects some of the ad valorem tax from property in a geographic area designated as a Tax Increment Reinvestment Zone (TIRZ) to pay for improvements in the zone. So in this way it is not an additional tax on property owners like a Public Improvement District (PID). Tax Increment Reinvestment zones are a governed by Chapter 311 of the Tax Code.

When the City Council creates a TIRZ, a "snapshot"of the baseline existing taxable value is taken. It is only the tax revenue off of increases in valuations that is directed to the TIRZ, the baseline taxes will continue to go to the general fund. The following explains how this works in practice. Each year the appraisal district assigns a value to the taxable real property within the zone. The year the zone is created, that value is the tax increment base. Every following year, that value is the captured appraised value. The captured appraised value minus the tax increment base is the tax increment.

Each participating taxing unit chooses a percentage of its tax increment that will be deposited in the tax increment fund. If a taxing unit does not set the percentage when the zone is created or when it joins the TIF project, it defaults to 100 percent of the tax increment.

The city can sell tax increment bonds or notes to raise revenue to pay for project costs. The principal and interest from tax increment bonds and notes may only be paid from money in the tax increment fund.

A TIRZ is often created to fund construction projects such as roads, sidewalks and other public infrastructure.

GOAL

The local governments that participate in a TIF project make an up-front commitment to creating public improvements within the zone. These improvements encourage private investment in the zone, such as new business growth, that increases property values and generates new tax revenues.

COMMUNITY BENEFIT

A TIRZ can potentially jumpstart development to get things moving a bit faster and, ultimately, to generate new tax revenue. It can also build needed public infrastructure in areas lacking adequate development to attract businesses;
encourage development, thereby increasing property values and long-term property tax collections; and
reduce the cost of private development by providing reimbursement for eligible public improvements.

SUMMARY OF RECOMMENDED ACTION

None at this time, staff is seeking direction from City Council.

FISCAL IMPACT

This can vary depending on a variety of factors.

RECOMMENDATION

None at this time.

Attachments
Creating a TIRZ