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TIRZ Basics

The City of Houston Tax Increment Reinvestment Zone (TIRZ) Program – Online Board Training Materials Robert Fiederlein Tom Mesa Finance & Administration July 1, 2007. TIRZ Basics.

richard-maxwell
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TIRZ Basics

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  1. The City of Houston Tax Increment Reinvestment Zone (TIRZ) Program – Online Board Training MaterialsRobert FiederleinTom MesaFinance & AdministrationJuly 1, 2007

  2. TIRZ Basics • Tax increment financing is a method for financing public projects. Tax increment reinvestment zones are statutorily able to engage in such financings. • Definition: In tax increment financing, when a zone is created the ad valorem tax values are “frozen” (the base year) and the taxes generated from any incremental growth in the tax base in future years (the increment) are used to finance public projects and the administration of the zone.

  3. TIRZ Basics (cont.) • Two TIRZ Types: • City-initiated • Less than 10% residential • Petition Zone • Created by petition of land owners • Maybe more than 10% residential • Requires that one-third of revenues be set-aside for affordable housing

  4. TIRZ Basics (cont.) • 22 Zones in the City • Link to map • http://www.houstontx.gov/planning/economic_dev/TIRZ11x17.pdf

  5. TIRZ Operations • Three Players • The City • The Zone • The Redevelopment Authority

  6. TIRZ Operations (cont.) • The City’s Role • Manage the overall TIRZ Program • Approve Annual Budget and Amendments • Approve multi-year Capital Improvement Plan (CIP) and coordinate with the City • Deposit tax increment revenue into fund • Appropriate revenues

  7. TIRZ Operations (cont.) • The City’s Role – In Detail • The City Council and/or the Program Administrators approve: • Development Agreements • Consultant Contracts • Authority Obligations • Bonds • Notes

  8. TIRZ Operations (cont.) • The Zone’s Role • If a Redevelopment Authority has been created the Zone’s role is limited: • Approve Annual Budget • Approve Plan Amendments • Other administrative actions

  9. TIRZ Operations (cont.) • The Redevelopment Authority’s Role • Defined by the Tri-Party Agreement • Delegation by the City and the Zone of day-to-day operations to the Redevelopment Authority • Generally responsible for the implementation of the Project and Financing Plan

  10. TIRZ Operations (cont.) • The Redevelopment Authority’s Role • Day-to-Day Administration: • Budget preparation • Project management • Hiring of consultants • Financial affairs

  11. TIRZ Operations (cont.) • The Redevelopment Authority’s Role • With regards to the financial affairs of the Zone/Authority, the members of the Redevelopment Authority board have a fiduciary duty to properly manage and account for the publics’ moneys at all times.

  12. TIRZ Operations (cont.) • It is highly recommended that upon appointment new board members request of their Zone’s administrator the following materials and that they become familiar with them: • Zone Project and Financing Plan • The most current City-approved budget • The most current annual financial audit

  13. Legal Issues • Sources of Authority • There are several sources of authority that define and/or constrain the actions of Redevelopment Authorities: • Ch. 311 Tax Code (“TIRZ Act”) • Ch. 431 Transportation Code • Ch. 394 Local Gov’t Code • Articles and By-Laws • Contracts

  14. Legal Issues (cont.) • TIRZ Zone and Redevelopment Authority Boards are subject to both the Texas Open Meetings Act and the Texas Public Information Act • New board members must receive training within 90-days of their appointment in each • Training available thru Texas Attorney General’s website: • http://www.oag.state.tx.us/opinopen/og_training.shtml

  15. Legal Issues (cont.) • In addition to open government training, board members are required to abide by state and local laws and rules governing: • Conflicts of interest • Receipt of gifts • Nepotism • With regards to these matters, board members should always consult with their board's legal counsel

  16. TIRZ #19 Upper Kirby • Created in 1999 – 15 years • Major Project and Financing Plan amendment approved by City Council in early 2007 • Multi-year CIP in place • Significant mobility and drainage projects: Kirby Drive • Pay-as-you-go CIP

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