Karen Gleason
The 830 Times
City council members have approved the first reading of an ordinance to create a tax increment reinvestment zone (TIRZ) for downtown Del Rio.
The council approved the ordinance Nov. 14, following a public hearing on the proposed TIRZ and a discussion.
According to information provided to the council, the TIRZ is expected “to generate revenue. . . to begin paying for project costs.”
“Project costs may include purchase of land for public infrastructure, relocation of public utilities, water, wastewater and drainage systems, parks and landscape improvements, public roads and buildings, environmental remediation” and others, as specified in the project plan.
Mayor Al Arreola opened and closed the public hearing within a minute, as there was no public commentary on the proposed TIRZ.
Following the required public hearing, City Secretary Mari Acosta read the heading of the ordinance designating the downtown TIRZ, which will be called “Tax Increment Reinvestment Zone Number One.” The ordinance also describes the geographic boundaries of the TIRZ, created a board of directors to manage the TIRZ, and established a tax increment fund for the zone, among other details.
Councilman Jesus Lopez Jr. made the motion to approve the ordinance, with Councilwoman Ernestina “Tina” Martinez giving the second.
Before proceeding with the vote, Arreola asked if council members had any questions for City Economic Development Director Jorge Ramon or for Travis James, vice president of the consulting firm TXP, which was hired by the city to help set up the TIRZ.
“You all have a copy of the plan, and it’s been updated with the most recent numbers from the appraisal district. Everything is spelled out in this document, but I can answer any questions you have about the process or the procedures or where we are,” James told the council.
“Is this something that was presented at some other time, the package?” Councilwoman Alexandra Falcon Calderon asked.
James directed the council to the “Downtown Del Rio Tax Increment Reinvestment Zone Preliminary Project and Financing Plan” included as part of the council’s agenda packet, noting no adjustments had been made to the geographic boundaries of the TIRZ since his last presentation.
At that time, James reminded the council, the city had bought some property within the TIRZ boundaries, so he adjusted the tax base information for the TIRZ following that land purchase.
“It’s a 25-year TIRZ, 100 percent contribution. If you approve it tonight and approve it on second reading, we’ll have to come back and do the final project and finance plan, and there’s some other things; appoint board members, and those kinds of things, but the key thing we discussed last time was we needed to get this put in place this (calendar) year so that we can lock in that 2023 (property) value. So the base year would be 2023, the first year of growth – or increment, as we call it – would be 2024,” James said.
He directed council members to Page Nine of the TIRZ plan, saying that page contained the key points. James also pointed out the document includes a map detailing the current land use of property parcels in the TIRZ, as well as a table forecasting the anticipated revenue the TIRZ is expected to generate over its 25-year life span.
James explained the base taxable value of the TIRZ is about $46 million.
“That’s the base taxable value of it this year. . . There’s some things that state law outlines, where you have to go through a process, and some of it’s formulaic, and some of it is unique to you, like figuring out the right boundaries: we can’t have too much residential, can’t have too many TIRZes, so you comply with all the statutes required to create it, if you choose to,” he said.
James said the next step, if the council approves the creation of the TIRZ, is to approach county commissioners court “and engage their interest in joining.”
“We’ve had some good conversations with them, and obviously I can’t speak for commissioners court, but typically, the process is, once the city creates it, you then go speak with the other taxing entities and hope they join, and then we can collectively work to fund projects and improvements in the downtown area,” he added.
Lopez asked if the local public school district would also be involved, but James said although technically they could participate, they usually don’t “because of how state finance works.”
“It’s typically going to be the city and the county,” James said.
Arreola asked Calderon if she had any other questions.
“You just mentioned the city purchased some property. Can this be utilized?” she asked.
“You can use it to purchase property, you can,” James replied. “I think what I was referring to was, when I first ran the preliminary numbers, you hadn’t bought that property, for a new City Hall, I think, so the value of that property showed up in the (overall) taxable value (of the TIRZ). These (updated) numbers are lower, because I had to adjust for that, because you look at taxable values, but yes, you can use a TIRZ to purchase property.”
James said once he creates a final plan for the TIRZ, he will include a list of “eligible costs,” and if the council wishes, property purchases could be included on that list.
Calderon also drew James’ attention to a list of project costs included in the informational handout prepared by Ramon for the TIRZ ordinance. The list includes “façade improvements and environmental remediation,” and Calderon asked if only the city could use TIRZ funds for those purposes or if property owners downtown also could access those monies.
“You could do grants to developers. You could reimburse a developer. The entity – the TIRZ board – could do these types of projects. There’s a laundry list of things you’re eligible for, if you so choose we can narrow that list and make it very specific, so let’s just say, ‘only sidewalks,’ just to pick something. What’s most common is you leave it broad, so that way as projects come to you, you have the flexibility to fund,” James replied.
He said the eligible projects list is primarily taken from the state code on creating a TIRZ.
“This all gets identified in the final project and finance plan. What we’ve created for the ordinance is called the preliminary plan, which you’re required to do, but then we’re going to refine that and then create that final plan that outlines what eligible costs are,” he added.
Calderon said the reason she posed the question was because the city already has a façade improvement grant available for property owners as part of its Main Street Program.
James noted there “is never enough money to go around, so you’re going to have to be strategic.”
“You’ll have to decide, when do you use the TIRZ, when do you use economic development funds, when do you go try to get a federal grant, when do you use city general funds? As you go through the process and that money comes in, we’ll need to work collectively with the TIRZ board to make sure we’re using the right pot of money to pay for which type of project,” James replied.
“And all this is just for downtown?” Arreola asked.
“Right. It’s just for the downtown area that we talked about on the map, and this coincides with the Main Street Program, you have an historic downtown, and we looked at the comprehensive plan that you’ve done, and if you go through the plan, it includes most of downtown and another (map) shows you the land use. . . We really tried to focus on those corridors where we have development or where development is likely to occur,” James said.
Arreola also asked what would happen if the county declined to participate.
“Then the TIRZ could still go forward, and you could potentially revisit that down the road. Sometimes it takes them a little bit longer to get on board,” James replied.
He said one of the main things the council needed to decide was the number of persons on the TIRZ’s board of directors. He noted state law requires a minimum of five and a maximum of 15, adding that every taxing entity that joins the TIRZ gets at least one seat on the board.
“There’s no right or wrong. You can say you’re going to keep five and every time a new entity joins, we’ll add one or you can give them two or take one of your five and give them one, but you’ve got to have a minimum of five,” James said.
James recommended the city keep five board members, then give the county one or two additional members, if it decided to join the TIRZ.
He also added the county could join the TIRZ through an interlocal agreement, and he said the number of their board members could be specified in that agreement.
Lopez then amended his motion to include the requirement for the five board members, with Martinez agreeing to the change.
“I’m going to abstain from it. Conflict of interest, from where I work, that’s why I’m going to abstain,” Calderon said after Lopez proffered his amended motion.
Councilman J.P. Sanchez said he would abstain as well.
Arreola, Lopez and Martinez voted in favor of the amended motion, with Calderon and Lopez abstaining.
Mayor Pro-tem Steve Webb and Councilman Jim DeReus were not present at the meeting.
The writer can be reached at delriomagnoliafan@gmail.com .
