No it's not a disease, but it could influence your property
values and property tax rates long term.
The main issue seems to be is TIRZ #2 (Fort Bend Tollway/Sienna Town Center) diverting Missouri City Funds away from other projects-- particularly those on Texas Parkway or Cartwright. In our opinion, it does not and here's why we support it.
Besides being a valuable financing tool that does not require taxpayer funding, we support TIRZ #2 because it's targeted to help an area develop where development might not occur as quickly or be eclipsed by other development. For example, development could occur anywhere along the Fort Bend Parkway Toll Road. Do we want growth on the Fort Bend Toll Road to happen along the area in Houston, or do we want Missouri City to be first to establish the premiere location?
We support seizing the opportunity to gain the property tax value to pay for infrastructure and ultimately gain sales tax revenue and/or more jobs for Missouri City. The yellow area of the map is Missouri City city limits. While 2234 intersects the Fort Bend Toll Road, it does so outside the Missouri City city limits.(see more detailed map below and pictures of current projects).
This project could also raise the profile and reputation of Missouri City along a new highly traveled corridor that provides shopping and services to homes in Vicksburg, Sienna, Lake Olympia and other subdivisions through out the area. It could serve as a magnet to draw new services and complement and enhance revitalization along Texas Parkway and Cartwright as well. The entire city could benefit from reputation and new commercial tax revenues, but it takes private partner clout to work.
How does it work?
A Tax Increment Reinvestment Zone
(TIRZ) is an economic development tool available to Texas cities to help finance public improvements that are needed to promote development or redevelopment in a specific geographic area. The design of the TIRZ allows a developer to re-coup investment, but only when the actual improvement results in increasing property value; thus, generating more property tax revenue. Based on a formula, the developer begins to regain initial investment while the municipality reaps the benefits of taxes on property, but only after the property actually produces value. Many of these projects also produce sales tax revenue.
In other words, we're not paying a developer to draw up a plan. The developer's investment has to result in the developer gaining financing, attracting business to the area, producing property value and making money.
What are the attributes of a successful TIRZ?
- Has clearly identified needs and focused solutions.
- Have program and development partners to fill the need.
- Has a focused capital improvement programs, paying for needed infrastructure in the Zone based on the likelihood of development.
- Is usually a performance based public/private partnerships that is long-term.
Will the TIRZ affect my property taxes?
- Residential tax payers have no obligations to pay for public improvements designed, constructed, and built by a developer in the Zone. The developer must put enough taxable value on the ground in the Zone to generate tax increment and get paid back through subsequent reductions in tax payments.
- The City owns
the public improvements generated by the zone. It is obligated to repay the developer only if the
developer succeeds and the project makes produces property tax value or makes money. In other words, tax
payer dollars are not at risk in this process.
How
does the Tax Increment Reinvestment Zone work?
Here's an
- The value of the property within the Zone is $100.
- Taxing jurisdictions that participate in the TIRZ will
continue to receive property tax revenues generated by that $100 base
property value.
- Property taxes generated by increases in the Zone
property value above the $100 baseline - called "the increment" -
will go into the TIRZ fund.
- The TIRZ fund will be used to pay for public improvements
in the Zone and to offer economic incentives to developers proposing projects
in the zone.
Is the use
of a TIRZ on the Fort Bend/Sienna Town Center at the Fort Bend Tollway a legal and appropriate use of this economic development tool?
- Current Texas law allows the use of this economic tool for this form of development.
- Cities using TIRZ for this type of development include:
- Sugarland - Development of its Town Square and Imperial Sugar redevelopment projects
- Amarillo - Downtown convention, hotel(s), commercial, and residential space
- Manvel – Seven Oaks Ranch a master planned community
New Quest Development currently has a project underway in TIRZ #2 at Highway 6 and the Fort Bend Parkway (Toll Road) entitled Phase 1 Construction on the map just above.
What a TIRZ is not . . .
- Not a gift or windfall to developers.
- Not a tax abatement or rebate of taxes; anyone owning property in the Zone pays property taxes, including the developers
- Not a freezing of taxes or tax rates
- Not an obligation of the general fund of a City and cannot trigger a tax increase
TIRZ # 1
did not work out as was expected so what has changed that will make TIRZ #2
successful?
In TIRZ #1 the only interest from the private sector was for residential development which the City has determined can be successful without the use of a TIRZ. According to Missouri City City Manager Frank Simpson the City changed its philosophy on TIRZ from that experience.
Unlike TIRZ # 1 this TIRZ has a partner from the private sector for commercial development of the “Zone” property. The generation of commercial tax dollars from this venture fits into the City’s plan to increase city revenues. This partner has the financial clout and proven ability to execute the project. If you click on and enlarge the pictures, you will see the heavy construction and the scale of this project -- a new Kroger Signature store which anchors pad sites available to the west. The property taxes generated by this store above a certain amount go into the "tax increment" to pay for infrastructure improvements.
In summary the reason the Future Group supports TIRZ #2 is, in our opinion, it is one of Missouri City's most valuable and useful tools in financing public improvements for this commercial area when used with the right partner or partners.
TIRZ financing allows developers to front the cost of infrastructure for public improvements, and gain reimbursement from the incremental tax revenues generated in the Zone, not from Missouri City’s residents. When productive, projections of Sales Tax Revenues alone from this commercial venture are placed at $3.5 million annually, which could be a factor in reducing MC property tax rates long term.
The Fort Bend Tollway/Sienna Town Center project could also raise the profile and reputation of Missouri City and attract services in an area with location advantages of Fort Bend Toll Road access. With the increasing congestion near First Colony and Sugar Land Town Square, Missouri City's population growth, its closer to Houston location and better mobility (alternate routes) to employment centers, this project has the right ingredients for success.
According to several realtors we talked with, Sienna Plantation likely prevented Missouri City from being ignored by many realtors selling in Sugar Land and has helped increase the commercial tax base by attracting development in Missouri City along Highway 6.
Let's not forget another important fact . . .
Missouri City must also revitalize its older areas so that it does not miss opportunities from new business parks and company relocations off South Main, Buffalo Run, the Sam Houston Toll Way near 2234. That's why we favor the current development of a Cartwright / Texas Parkway (2234) plan for revitalization and the Purchase of the QV Golf Properties—it’s the whole city that counts.
To view a higher resolution map of both Missouri City TIRZ #1 and #2 press here.
