Title
Consider approval of Ordinance 2021-37, on the second of two readings, amending the project plan for Tax Increment Reinvestment Zone No. 5, also known as the “Downtown TIRZ,” approving an amendment to the Tax Increment Participation Interlocal Agreement with Hays County to extend the City’s and the County’s reduced contribution rate of the tax increment deposited into the Tax Increment Fund from 70 percent to 25 percent for one additional year; authorizing the City Manager or his designee to execute the amendment on behalf of the City; including procedural provisions; and declaring an effective date.
Body
Meeting date: May 18, 2021
Department: Finance
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Fiscal Note:
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Downtown Vitality
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☐ Economic Development - Diverse Local Economic Environment
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Downtown Master Plan
Background Information:
A tax increment reinvestment zone (“TIRZ”) is a financing tool created by the State Legislature to assist cities and counties in developing or redeveloping unproductive, underdeveloped, or blighted areas. Cities may create a TIRZ where conditions exist that substantially impair an area’s sound growth plan and where development or enhancements financed by the TIRZ significantly enhance the value of all taxable real property in a TIRZ.
Prior to creation of a zone, the statute requires preparation of a preliminary project and financing plan identifying the specific projects and means to finance the projects.
Upon creation, the total appraised value of real property located in a TIRZ is established for the year in which it was created. This is referred to as the base value. The additional value above the base is referred to as the “tax increment.” This increment usually pays for the project improvements, including public infrastructure.
Once the improvements are completed and paid for, each jurisdiction receives their share of the collected tax.
This TIRZ consists of approximately 244 acres in the San Marcos TX downtown core. The history includes, but is not limited to, rewriting the zoning standards enabling a pedestrian-oriented mixed-use environment and updating the Development Code identifying the downtown core as a Character District 5 Downtown.
Under this plan, the City and Hays County participate equally in the reinvestment zone to generate approximately $15M over the life of the Zone. These revenues will be dedicated to parking enhancements, acquisition of land, sidewalks, improved lighting and overall improvements to the downtown area.
The true value of the tax increment tool is to build economic development, increasing the tax base and possible job creation.
The geographic boundaries of the zone are from Texas State University to the North to IH-35 to the South, CM Allen and McKie on the East and several blocks to the West.
The term of the TIRZ #5 is scheduled to terminate on December 31, 2027.
The TIRZ # 5 Board met on March 22, 2021 to discuss the property tax dedication to the TIRZ #5 projects. Due to both the significant property tax assessed valuation and the COVID financial emergency, the TIRZ #5 Board agreed to continue for 2021 Property tax dedication at 25% of both City and County property tax receipts for one additional year.
Council Committee, Board/Commission Action:
On March 22 the Board unanimously agreed that only 25% of 2021 Property tax assessment taxes would be dedicated to the Tax Increment Zone for one additional year.
Alternatives:
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Recommendation:
Hold the Public Hearing and adopt the Ordinance for the first reading.