Economic Development Basics - Texas Municipal League
Economic Development Basics - Texas Municipal League Economic Development Basics - Texas Municipal League
enefit to the land to be included in the zone and to the municipalityafter the expiration of a tax abatement agreement. [§ 312.201(d)](2) To be designated as a reinvestment zone, an area should bedetermined by the governing body to meet one of the six criteria listedin § 312.202.(3) Prior to authorizing a tax abatement agreement, the governing bodymust find that the terms of the agreement and the property subject tothe agreement meet the applicable guidelines and criteria adopted bythe governing body. [§ 312.002(b)]2. Tax Increment FinancingTex. Tax Code Ann. Ch. 311 (Vernon 2002 & Supp. 2004).a. What is tax increment financing? Tax increment financing is a tool tofinance public improvements within a defined area. The improvementsshould enhance the area and attract new investment. A municipality makesan area eligible for tax increment financing by designating a "reinvestmentzone," also called a "tax increment reinvestment zone," "TIRZ" or a "TIFzone." Costs of selected public improvements within the reinvestment zone("Zone") may be paid by current or future tax revenues flowing fromredeveloped or appreciated real properties in the zone. The additional taxdollars generated by growth of real property value in the Zone are called thetax increment. These dollars flow to a tax increment fund ("Fund") for aspecified term of years. Money flowing to the Fund each year is disbursedaccording to a plan and agreements approved by a Board appointed byparticipating local governmental units, as set by the ordinance designating theZone.b. What is the funding source? Additional tax dollars generated by growth ofreal property value in the zone.c. What is the benefit to the municipality? Tax increment financing comes witha built-in funding source in areas where taxable values are increasing. Themoney can only be used for public improvements described in themunicipality’s project plan.d. Initial requirements:(1) Must be initiated by petition of affected property owners or by thegoverning body of the municipality.(2) If initiated by the governing body, a finding should be made that thearea considered for tax increment financing meets at least one of thethree criteria listed in § 311.005(a)(1)-(3):(a)The area's present condition must substantially impair thecity's growth, retard the provision of housing, or constitute aneconomic or social liability to the public health, safety,morals, or welfare. Further, this condition must exist becauseof the presence of one or more of the following conditions: asubstantial number of substandard or deteriorating structures,inadequate sidewalks or street layout, faulty lot layouts,unsanitary or unsafe conditions, a tax or special assessment(13)
delinquency that exceeds the fair market value of the land;defective or unusual conditions of title, or conditions thatendanger life or property by fire or other cause; or(b)(c)The area is predominately open, and because of obsoleteplatting, deteriorating structures, or other factors, itsubstantially impairs the growth of the city; orThe area is in or adjacent to a "Federally assisted newcommunity" as defined under Tax Code § 311.005(b).(3) The Tax Code imposes several additional requirements on areinvestment zone for tax increment financing.(a)(b)(c)No more than 10 percent of the property within thereinvestment zone (excluding publicly-owned property) maybe used for residential purposes. This requirement, however,does not apply if the district is created pursuant to a petition ofthe landowners.A reinvestment zone may not contain property thatcumulatively would exceed 15 percent of the total appraisedproperty value within the city and its industrial districts.A city also may not create a reinvestment zone or change theboundaries of an existing zone if the zone would contain morethan 15 percent of the total appraised value of real propertytaxable by a county or school district.D. Miscellaneous Statutory Tools(4) The governing body must prepare a preliminary reinvestment zonefinancing plan. The Tax Code does not specify the contents of thepreliminary financing plan but a city may find it beneficial to includeeach item required for the final financing plan described in Tax Code§ 311.011.1. Chapter 380 Economic Development ProgramsTex. Loc. Gov’t Code Ann. Ch. 380 (Vernon 1999 & Supp. 2004).a. What is Local Government Code Chapter 380? Chapter 380 of the LocalGovernment Code was enacted pursuant to art. III, § 52-a of the TexasConstitution, which provides that economic development is a public purpose.According to a 1992 attorney general’s opinion, "The legislature intended§ 380.01 to authorize municipalities to offer a range of incentives designed topromote state or local economic development." Op. Tex. Att'y Gen. No.DM-185 (1992).b. What is the funding source? The statute authorizes grants and loans from cityfunds for economic development purposes, but does not specifically providefor a specific tax or fee to fund the grants and loans.A home-rule municipality may issue bonds to fund an economic developmentprogram that the municipality has established in accordance with § 380.001,but only if two conditions are met. (1) The bonds must be in an amount and(14)
- Page 3 and 4: 3. Land as an Economic Development
- Page 5 and 6: a. What is it? Sections 4A and 4B o
- Page 7 and 8: Other differencesA 4A sales tax may
- Page 9 and 10: (4) Parking Tax (§ 334.201)Imposed
- Page 11 and 12: c. How can the hotel occupancy tax
- Page 13: a. What is tax abatement? An exempt
- Page 17 and 18: That there will be a demonstrable b
- Page 19 and 20: (5) Tax Increment Reinvestment Zone
- Page 21 and 22: for nonpayment of a public improvem
- Page 23 and 24: Attachment 1PRACTICE POINTERS:PUBLI
- Page 25: Attachment 2Notice and Hearing:Sect
enefit to the land to be included in the zone and to the municipalityafter the expiration of a tax abatement agreement. [§ 312.201(d)](2) To be designated as a reinvestment zone, an area should bedetermined by the governing body to meet one of the six criteria listedin § 312.202.(3) Prior to authorizing a tax abatement agreement, the governing bodymust find that the terms of the agreement and the property subject tothe agreement meet the applicable guidelines and criteria adopted bythe governing body. [§ 312.002(b)]2. Tax Increment FinancingTex. Tax Code Ann. Ch. 311 (Vernon 2002 & Supp. 2004).a. What is tax increment financing? Tax increment financing is a tool tofinance public improvements within a defined area. The improvementsshould enhance the area and attract new investment. A municipality makesan area eligible for tax increment financing by designating a "reinvestmentzone," also called a "tax increment reinvestment zone," "TIRZ" or a "TIFzone." Costs of selected public improvements within the reinvestment zone("Zone") may be paid by current or future tax revenues flowing fromredeveloped or appreciated real properties in the zone. The additional taxdollars generated by growth of real property value in the Zone are called thetax increment. These dollars flow to a tax increment fund ("Fund") for aspecified term of years. Money flowing to the Fund each year is disbursedaccording to a plan and agreements approved by a Board appointed byparticipating local governmental units, as set by the ordinance designating theZone.b. What is the funding source? Additional tax dollars generated by growth ofreal property value in the zone.c. What is the benefit to the municipality? Tax increment financing comes witha built-in funding source in areas where taxable values are increasing. Themoney can only be used for public improvements described in themunicipality’s project plan.d. Initial requirements:(1) Must be initiated by petition of affected property owners or by thegoverning body of the municipality.(2) If initiated by the governing body, a finding should be made that thearea considered for tax increment financing meets at least one of thethree criteria listed in § 311.005(a)(1)-(3):(a)The area's present condition must substantially impair thecity's growth, retard the provision of housing, or constitute aneconomic or social liability to the public health, safety,morals, or welfare. Further, this condition must exist becauseof the presence of one or more of the following conditions: asubstantial number of substandard or deteriorating structures,inadequate sidewalks or street layout, faulty lot layouts,unsanitary or unsafe conditions, a tax or special assessment(13)
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