By Karen Gleason
The 830 Times
A tax increment reinvestment zone in Del Rio’s historic downtown district could generate a $5 million to $6 million over a 25-year period, members of the city’s economic development corporation (EDC) board have learned.
EDC board members heard an update on the proposed downtown tax increment reinvestment zone (TIRZ) during their most recent meeting on July 13.
Travis James, vice president of the consulting firm TXP, gave an update on the TIRZ project. James, an economic development consultant, was hired by the city earlier this year to create a tax increment reinvestment zone (TIRZ) based around the city’s historic downtown.
City Economic Development Director Jorge Ramon introduced James, who joined the meeting via Zoom.
Ramon said James has already visited Del Rio several times to gather information and data for the first phase of the TIRZ project, which is a study to see whether or not such a zone is feasible for the downtown area.
“A TIRZ is a tool that’s used by local governments to finance public improvements and infrastructure within certain geographic zones. The extra tax revenue that’s collected is referred to as the increment, and cities can choose to apply all or a portion of that increment,” James told the EDC members.
James said the taxable value for the proposed TIRZ he is reviewing for the downtown Del Rio area is currently about $44 million to $45 million.
“So all the tax revenue that’s going to the city or the county or any entity that’s joining after that initial $44 million continues to go to them. The TIRZ will collect all or a portion of new revenue generated off anything above that base value,” James said.
He briefly reviewed the steps for creating a TIRZ.
The first step, James said, is preparing a preliminary reinvestment zone financing plan.
The city must publish the hearing notice at least seven days before the hearing and subsequently hold a public hearing.
James said the city council then must formally designate the TIRZ by passing an ordinance. Part of the TIRZ designation is creating a board of directors, a minimum of five members and a maximum of 15 members, and all participating taxing entities must be represented on the board.
James said the TIRZ’s board of directors will then create a project plan and a financing plan and collect the tax increment, which will be placed in a special account.
He said the board of directors will make recommendations to the governing body.
James told the EDC board a TIRZ may not be created if more than 30 percent of the property in the proposed reinvestment zone, excluding publicly-owned property, is used for residential purposes and if the total appraised value of taxable real property in the proposed reinvestment zones exceeds 50 percent of the total appraised value of taxable real property within the city and its industrial districts.
“Jorge and I had a number of different versions of a TIRZ because the downtown area, broadly, has a lot of residential that was exceeding that 30 percent cap, so when you see the boundaries, why I went down certain roads, was to make sure that we picked up the key areas that we thought would develop without picking up too much residential property,” James told the board.
James next presented the boundaries of the potential downtown TIRZ, which he said will cover approximately 140 acres.
Roughly, the area is bounded by Ogden Street to the north, Washington, Pulliam and Canal streets to the east, Guillen, Academy and Ney streets to the south and Griner Street to the west.
James also showed a map of the same area depicting current land use codes, including parcels currently zoned single- and multi-family residential, city and county properties, properties owned by religious institutions and commercial properties.
James showed recent downtown projects on the map.
He next presented projections of the revenue a downtown TIRZ might generate.
“Let’s say the TIRZ is in place for 25 years, both the city and county participate at 100 percent, so any tax revenue we generate on property values above that $44 million. I held your 2022 tax rates constant. . . I assumed a 2.5 percent appreciation (per year), so looking at the data on the previous slide of new projects, there was about $500,000 worth of new investments made on those projects. So going forward, let’s say people are buying property and they’re investing half a million in new real property. Business and personal property is not included, just real property.
“So what does all that mean?. . . I think over the next 25 years, this zone’s going to generate somewhere between $5 million to $6 million,” James said.
That money, he said, will go into the TIRZ account, and that money must be spent within the zone.
James said the money could be spent on infrastructure, grants, public improvements, fixing up a park and lighting.
One of the EDC board members asked what other cities with downtown TIRZ areas are doing with the money they collect, and James said they are spending the revenues collected on sidewalk and street improvements, as well as façade grants, which, he noted, the city of Del Rio is already doing.
James encouraged EDC board members to review the map of the proposed district and make any suggestions before he visits Del Rio again in August.
“We can continue to tweak it and the next step will be to come back to this group or the city council and let them know where we are and then hopefully get the thumbs-up to proceed,” James said.
