Window on State Government Carole Keeton Strayhorn, Texas Comptroller  
 
Texas Economic Development Incentives
March, 2003


CHAPTER 5: Tax Increment Financing

Local governments employ a number of tools to spur redevelopment and economic development within their communities. Tax increment financing (TIF) is among the most widely used of these tools. Local governments use TIFs, which are property tax incentives, to publicly finance needed structural improvements and enhance infrastructure within a defined area. These improvements are generally undertaken to promote the viability of existing businesses and to attract new commercial enterprises to an area considered to need redevelopment.

The cost of improvements to a designated area is repaid through the contribution of future property tax revenues by each taxing unit that levies taxes against the property. The additional tax revenue received from the affected properties is referred to as the tax increment.[1]


Evolution of Tax Increment Financing

California was one of the first states to institute tax increment financing, passing legislation in the 1950s to provide a mechanism for local communities to raise matching funds for federal grants.[2] At first, few states joined California’s lead. But as federal funding for urban renewal and community development initiatives waned and declining conditions in urban areas challenged municipalities, additional states adopted TIF legislation. The bulk of this legislation was passed from the mid-1970s through the late 1980s. Currently, 48 states authorize the use of TIF by local governments.[3]

Most TIF laws originally focused specifically on enabling redevelopment projects for “blighted areas” within urban centers.[4] However, in many states, TIF has evolved to serve more broadly as a tool for economic development, a mechanism through which local governments compete to attract business expansions and relocations. TIF is often combined with other sources of financing for a project, including federal, state and private funding.[5]

Texas first passed TIF legislation in 1977, but the accompanying constitutional amendment put before voters in a November 1978 general election was defeated. In 1979, the Legislature again passed TIF legislation, but did not attach a constitutional amendment; the Attorney General subsequently declared it unconstitutional. During the 1981 special session, the Legislature approved another TIF law, Article 1066e. This time, the accompanying constitutional amendment passed at a November 1981 statewide election. [6] By December 1981, Texas cities, including Houston, Port Arthur, El Paso and San Antonio, were already initiating planning for TIF projects.[7]


How TIF Works

Specific provisions vary by state, but the general operations of TIF are relatively standard. Once a local jurisdiction selects an area needing development or redevelopment, the assessed property valuation is frozen for a specific period of time, usually referred to as the “duration” of the zone. The initial property valuation is the tax increment base value. The TIF authority then develops or redevelops the area by improving the infrastructure and working with private developers on construction of new structures if that is part of the project plan. As new construction occurs in the zone and private investment is attracted, the resulting annual incremental increase in tax revenue above the base is directed to the TIF fund. This revenue is either used to repay bonds that financed improvements up-front, or can be used to pay for improvements and developer reimbursements as it is raised.

For example, if the tax increment base value for a TIF zone is $15 million and improvements increase the assessed value to $20 million, $5 million is the captured appraised value. The taxes collected on the $5 million, termed the “increment” are placed in the fund to pay for TIF project costs. As such, the TIF zone does not raise new taxes in the community but rather reallocates a certain portion of increased tax base to the project that led to the increase. The cost to taxing jurisdictions participating in the project is that the captured increment is designated for expenditures in the zone, rather than for those governments’ general funds. However, once the zone is no longer in operation, the increment returns to the jurisdictions’ overall tax base.


TIF in Texas

Like the majority of states, tax increment financing authority in Texas is limited to cities. Only Hawaii and West Virginia limit TIF authority to counties, and in Kentucky only redevelopment districts can initiate TIF projects. In 21 states TIF authority has been granted to both city and county governments.[8] The concentration of TIF authority in cities is largely a result of the historical role TIF has played as a mechanism for urban renewal, but newer TIF uses may make this economic development tool of value to counties as well.

According to a nationwide review of state TIF laws, three additional features distinguish Texas law from that of other states. The first is a provision that permits property owners to directly petition a city for designation of an area as a TIF zone. The petitioning property owner must constitute at least 50 percent of the appraised value of property within the proposed zone.

Texas law also allows each taxing unit within the designated zone to negotiate with the municipality the amount of tax increment they will contribute to the fund. A taxing unit can dedicate all, a portion of, or none of the tax revenue that is attributable to the increase in property values due to the improvements within the reinvestment zone.[9]

Finally, a common component of many, although not all, state TIF laws is a specific, enumerated minimum requirement for blight within a TIF zone, such as significantly lower property values than in the rest of the community. Instead, Texas law requires that the present condition of a proposed zone “substantially impair the city’s growth, retard the provision of housing, or constitute an economic or social liability to the public health, safety, morals or welfare.” The city must also certify that development or redevelopment will not occur “solely through private investment in the reasonably foreseeable future.”[10]


Texas School District Participation in TIF

School districts are among the local taxing units which may opt to contribute anywhere from zero to 100 percent of their tax increment revenue to a TIF fund. In the past, school districts could reduce the value of taxable property reported to the state to reflect any increase in appraised value that was captured by a tax increment financing fund in which the school district participated. In 1997 and 1999, the Legislature changed school funding laws, eliminating the school districts’ ability to achieve a reduction in taxable property value due to the existence of tax increment financing.[11] School districts are no longer “held harmless” for increases in taxable property values in a TIF reinvestment zone established after September 1, 1999. Since then, five tax increment financing zones have been formed according to the registry and none have school district participation.


Texas TIF Process[12]

The statutes governing tax increment financing are located in Chapter 311 of the Texas Tax Code. As noted above, TIF may only be initiated by a city. If a property is located outside of the city limits (within the city’s extraterritorial jurisdiction or beyond), it is not eligible for tax increment financing unless annexed into the city. Once a city has begun the process of establishing a tax increment financing reinvestment zone, counties, school districts and special districts are allowed to consider participating in the tax increment financing agreement.[13]

Initiation of TIF

Tax increment financing can be initiated in two ways. First, affected property owners may petition the city to create a TIF zone. The petition must be submitted by owners of property that constitutes at least 50 percent of the appraised property value within the proposed zone.

TIF may also be initiated by a city council without the need for a petition. If not initiated by petition, an area may be considered for tax increment financing only if it meets at least one of the following three criteria:

Within developed areas of the city, the reason usually cited to justify a reinvestment zone is that the area’s condition substantially impairs the city’s growth because of a substantial number of substandard or deteriorating structures. If the area is not developed, the city often indicates that the area is predominately open, and that it substantially impairs the growth of the city because of obsolete platting, deteriorating structures, or other factors.

The Texas Tax Code places several further restrictions on the creation of a reinvestment zone for tax increment financing:

Subject to the above limitations, the city council that created the tax increment financing zone may reduce or enlarge the boundaries by ordinance or resolution. If a city council enlarges the boundaries of a tax increment reinvestment zone, a school district is not required to pay into the tax increment fund any of the district’s tax increment produced from property located in the added area.

Establishing the Tax Increment Reinvestment Zone (TIRZ)

If an area qualifies for tax increment financing, the city must follow several steps. First, the city’s governing body must prepare a preliminary reinvestment zone financing plan. A copy of the plan must be sent to each local government that levies taxes on real property within the zone. The city then must provide written notice of its intent to designate a reinvestment zone and of the hearing on the proposed zone to the other taxing units that levy property taxes within the area.

Once the city has provided notice of a proposed zone, the other affected taxing units must designate a representative to meet with the city to discuss the project plans, including the boundaries of the development within the zone and the tax increment that each taxing unit will contribute to the tax increment fund. In addition to meeting with the other taxing unit representatives, the city must provide a formal presentation to the governing body of each county and school district that levies real property taxes within the proposed zone.

After the city has made its formal presentations to the other taxing units, the city must hold a public hearing on the creation of the reinvestment zone and evaluate the zone’s proposed benefits.

Following the public hearing, the city’s governing body may, by ordinance, designate a contiguous area within the city as a reinvestment zone for tax increment financing purposes. The adopted ordinance should include a finding that development of the area would not occur in the foreseeable future solely through private investment. If designating a reinvestment zone pursuant to a petition of the property owners, the city must specify that in the ordinance, as well.

The size, composition and qualifications of the reinvestment zone’s board of directors depend on whether the reinvestment zone was initiated by the city council or by petition. A city-council initiated zone consists of at least five and not more than 15 members, including appointees from each taxing unit levying taxes on real property in the zone. A petition-initiated zone must consist of nine members, including appointees from each school district or county that levies property taxes in the zone and has approved the payment of all or part of the tax increment.

It should be noted that designation of an area as an enterprise zone under the Texas Enterprise Zone Act (Government Code Chapter 2303) would also constitute designation of the area as a reinvestment zone for tax increment financing purposes. Such a designation would eliminate further public hearing requirements other than those provided under the Enterprise Zone Act. Participants would still need to execute the tax increment “project” and “financing” plan according to the requirements contained in Chapter 311 of the Tax Code.

Preparation and Approval of TIRZ Project and Financing Plans

Once the city has adopted the ordinance creating the zone, the board of directors of the zone must prepare both a “project plan” and a reinvestment zone “financing plan.” The project plan must include:

If a zone is created pursuant to petition in a county that has a population of more than 3.3 million, there are certain special requirements of the project plan involving residential housing that must be observed.

Further, the board must provide a reinvestment zone financing plan. It must contain the following nine items:

The financing plan may provide that the city will issue tax increment bonds or notes, the proceeds of which are used to pay project costs for the reinvestment zone. Any such bonds or notes are payable solely from the tax increment fund and must mature within 20 years of the date of issue. Tax increment bonds are issued by ordinance of the city without any additional approval required, other than that of the Public Finance Section of the Attorney General’s Office. The characteristics and treatment of these obligations is covered in detail in Tax Code Section 311.015.

After the zone’s board of directors approves both the project plan and the reinvestment zone financing plan, the plans must also be approved by ordinance of the city’s governing body and show that the plans are feasible and conform to the master plan, if any, of the city. At any time after the zone has been adopted, the board of directors may adopt an amendment to the project plan as provided under Section 311.011 of the Tax Code. The amendment takes effect on approval of the change by ordinance of the city council and in certain cases may require an additional public hearing.

Once a city designates a tax increment financing reinvestment zone or approves a project plan or reinvestment zone financing plan, the city by April 1 of the year following the year the zone is designated or plan is approved, must deliver to the state Comptroller’s office a report. The report must include a general description of each reinvestment zone, a copy of each project plan or reinvestment zone financing plan adopted and “any other information required by the comptroller” that helps in the administration of the central registry and tax refund for economic development (Texas Tax Code, Chapter 111, subchapter F).

Establishment of the TIRZ Fund

After the board of directors and the city’s governing body have approved the project plan and the reinvestment zone, the other taxing units with property within the zone must contract with the city. The contract includes the percentage of increased tax revenues to be dedicated to the tax increment fund. The tax increment fund is ultimately made up of the contributions by the respective taxing units of a portion of their increased tax revenues collected each year. Only property taxes attributable to real property within the zone are eligible for contribution to the tax increment fund. Property taxes on personal property are not eligible for contribution.

In lieu of permitting a portion of its tax increment to be paid into the tax increment fund, a taxing unit (other than a city) may elect to offer the owners of taxable real property in the zone an exemption from ad valorem taxation for any increase in the property value as provided under Tax Code Chapter 312. Alternatively, a taxing unit (other than a school district) may both offer a tax abatement to the property owners in the zone and enter into an agreement to contribute a tax increment into the fund. In either case, any agreement to abate taxes on real property within a tax increment reinvestment zone must be approved both by the board of directors of the zone and by the governing body of each taxing unit that agrees to deposit any of its tax increment into the tax increment fund.

In any contract entered into by the tax increment zone’s board of directors with regard to bonds or other obligations, the board may pledge not to approve any such tax abatement agreement. If a taxing unit enters into a tax abatement agreement within a tax increment reinvestment zone, the taxes that are abated will not be considered in calculating that unit’s tax increment deposit into the tax increment fund.

Implementation of the TIF

Once the reinvestment zone is established, the board of directors of the reinvestment zone must make recommendations to the city’s governing body on the implementation of the tax increment financing.

By ordinance or resolution, the city may authorize the board of directors of the reinvestment zone to exercise any of the city’s power with respect to the administration, management or operation of the zone or the implementation of the project plan for the zone. However, the city may not authorize the board of directors to issue bonds, impose taxes or fees, exercise the power of eminent domain or give final approval to the project plan.

Either the board of directors or the city council may enter into agreements that are necessary or convenient to implement the project plan and the reinvestment zone financing plan. Such agreements can pledge or provide for the use of revenue from the tax increment fund and/or provide for the regulation or restriction of land use. Together, the city council and the board of directors can also enter into a contract with a local government corporation (created under Texas Transportation Code Chapter 431) to manage the reinvestment zone or implement the project and financing plans.

The board must ensure that bonds have been issued for the zone, that the city has acquired property in the zone pursuant to the project plan, and/or that construction of improvements has begun in the zone. If at least one of the above three items has not been accomplished within the first three years of the zone’s existence, the other taxing units are not required to continue payments into the tax increment fund.

The board is also required to implement a plan to enhance the participation of “disadvantaged businesses” in the zone procurement process, as provided under Tax Code Section 311.0101.

Reporting on TIRZ Activities

The city must submit an annual report to the chief executive officer of each taxing unit that levies taxes on property within the zone. The report must be provided within 90 days of the end of the city’s fiscal year. The report must include the following items:


State Role in Tax Increment Financing: Annual Reporting and Central Registry

A copy of the annual report must be sent to the Office of the Attorney General and to the Texas State Comptroller’s office. Additionally, cities are now required to submit certain information to the State Comptroller’s office. In 2001, the Texas Legislature added section 311.019 to the Tax Code. This section requires the Comptroller to maintain a central registry of:

A city that designates a reinvestment zone or approves a project plan or reinvestment zone financing plan must deliver to the Comptroller’s office before April 1 of the year following the year the zone is designated or the plan is approved a report containing the following information:

Further, a city that amends or modifies a project plan or reinvestment zone financing plan must deliver a copy of the amendment or modifications to the Comptroller before April 1 of the year following the year in which the plan was amended or modified. Additionally, any city that designated a tax increment financing reinvestment zone or approved a project plan or reinvestment zone financing plan before January 1, 2001, must deliver by April 1, 2002, to the Comptroller’s office a report containing the same information described above.

Finally, the Texas Department of Economic Development and the Comptroller’s office may provide technical assistance to a city regarding the designation of a tax increment financing zone or the adoption and execution of project plans or reinvestment zone financing plans.[14]


Review of Tax Increment Financing Activity in Texas

Pursuant to HB 612, passed in 2001 during the 2001 Legislature, the Comptroller’s office now includes information about tax increment financing in a biennial report to the legislature.[15] The Tax Increment Financing Zone Registry is created from annual reports submitted by cities as well as responses to the Comptroller’s new Tax Increment Financing Zone Report forms.

Characteristics of Tax Increment Financing Reinvestment Zones

According to data gathered in preparation for the Comptroller’s 2001 School and Appraisal Districts’ Property Value Study, 37 Texas cities have designated one or more Tax Increment Reinvestment Zones.[16] These cities are located in 20 different counties and range in population from just more than 2,000 (Glen Rose, Somervell County) to 2 million (Houston, Harris County).

Figure 5-1: What Size Cities Use Tax Increment Financing?

figure 5-1

Source: Texas Comptroller of Public Accounts

Of the 37 cities that use TIF, only nine responded or provided sufficient information to the Comptroller’s office for inclusion in the TIF Registry. Collectively, these cities reported on 39 TIRZs in eight counties (See Table 5-1).

Table 5-1: Reporting Tax Increment Reinvestment Zones by County and City
County City Number of
Tax Increment
Reinvestment Zones[17]
Bexar San Antonio 7
Collin Frisco 1
Fort Bend Sugar Land 2
Galveston League City 3
Harris Houston 20
McLennan Waco 3
Smith Lindale 1
Smith Tyler 1
Tarrant Keller 1
Source: Texas Comptroller of Public Accounts

The TIRZs in the registry were established between 1982 and 2000, with the majority (23) being created prior to 1999. In 1999, a total of 14 TIRZs were added by League City (1), Tyler (1), San Antonio (4) and Houston (8). League City and San Antonio each created an additional zone in 2000.

The average duration of the zones in the TIF Registry is 24.1 years, ranging from two 10-year zones (Lindale and San Antonio) to a 40-year zone in Houston. All 15 30-year zones are in Houston (See Figure 5-2).

Figure 5-2: Number of Tax Increment Reinvestment Zones by Duration

figure 5-2

Source: Texas Comptroller of Public Accounts

Of TIRZs listed in the TIF Registry, the average size is 624.8 acres. The smallest is a 10-acre residential zone in San Antonio, while the largest TIRZ is a 3,000-acre multi-use area in Houston.

According to the responses to the Comptroller’s Tax Increment Financing Zone Report forms, it appears only a portion of the cities are using debt to finance their economic development and redevelopment efforts in TIRZs (See Table 5-2).

Table 5-2: Amount of Debt Issued by Reporting TIRZs[18][18]
County City Zone Name/Number Amount of Indebtedness Date Issued
Bexar San Antonio TIRZ # 9 — Houston Street $6.4 million 2000
Collin Frisco TIRZ # 1 $8.4 million 1993
Harris Houston TIRZ # 1 Lamar Terrace/St. George Place $3.2 million 2001
Harris Houston TIRZ # 2 Midtown (original zone est. 1994) $9.0 million 1998
Harris Houston TIRZ # 2 Midtown (annexed addition to zone in 1999) $17.0 million 2001
Harris Houston TIRZ # 7 OST/Alameda $8.2 million 2001
Harris Houston TIRZ # 16 $14.1 million 2001
McLennan Waco TIRZ # 1 $2.5 million 1995
Smith Tyler TIRZ # 1 $4.5 million 2001
Tarrant Keller TIRZ # 1 $32.6 million 2001
Source: Texas Comptroller of Public Accounts

While it is not clear from the reports filed with the Comptroller’s office, presumably, improvements and redevelopment efforts in the other 30 zones are financed on a pay-as-you-go basis, or through repayments to developers.

Local Government Participation in Tax Increment Financing

Participation by local governments varies. Because cities are the only local taxing authority in Texas that may initiate tax increment financing, most city governments participate by contributing 100 percent of increased tax revenues to the tax increment fund. Within the 39 zones reported upon in the TIF Registry, 95 percent of the cities contribute all of the tax increment to the fund. The city of Sugar Land contributes 46 percent of its tax increment revenue to Sugar Land TIRZ #1, while both cities in Smith County, Lindale and Tyler, do not contribute any tax increment revenue to their respective funds.

More than 61 percent of the counties in these zones contribute all or a portion of tax increment revenue to the funds established within their jurisdiction. Of those, most (20) contribute 100 percent, while the remaining few (four) contribute between 46 and 66 percent. It is important to note that since a locality can elect to participate in tax increment zones on a case-by-case basis, a county may contribute tax increment revenue to one fund and only contribute a portion of revenue, or no revenue to another. Bexar County, for example, participates in all but one of San Antonio’s seven TIRZs, while Harris County participates in slightly less than half of Houston’s zones.

Texas community college districts participate less than both cities and counties in tax increment funds, contributing tax increment revenue in only 28.2 percent of the zones in the TIF Registry. Community college districts in Bexar, Collin, McLennan, Smith and Tarrant counties all contribute 100 percent of incremental revenue in at least one TIRZ, while no community colleges have participated in Fort Bend, Galveston and Harris Counties.

Nearly 75 percent of tax increment funds in the registry receive contributions from school districts. In 19 zones, participating school districts contribute 100 percent of tax increment revenue, while in 10 others, participation ranges from 63 to 91 percent. In the 10 remaining zones, the school districts do not participate.

Prior to September 1, 1999, school districts were able to effectively reduce the taxable property value reported to the state to reflect the value contributed to a tax increment fund. Since districts were held harmless for increases in property value in a TIRZ, schools were more inclinded to participate in a TIF. In fact, of the 39 TIRZs represented in the TIF Registry, only five were established after September 1, 1999. Currently, no school districts participate in any of these five TIRZs.

Types of TIRZs

A review of the 39 TIRZs in the TIF Registry reveals more information about the nature of the existing areas in which Texas has established zones. It is important to note that a TIRZ may be classified as a combination of these types of areas. For example, 13 TIRZs are classified as mixed residential/commercial property, while 10 are classified as mixed residential/commercial/underused/underdeveloped property. The chart below (Figure 5-3) shows the types of areas in which cities are using tax increment financing. The “other” category represents two instances in which part of an area is classified as a public park or public land.

In their proposed plan for a zone, cities may include expenditures for project costs related to acquisition, alteration or construction of a number of items, including: public improvements; new buildings, structures, and fixtures; existing structures; utilities, water and sewer facilities, flood and drainage facilities; streets, street lights; pedestrian malls, walkways or parking facilities; or parks and educational facilities. The majority of cities report using TIF for infrastructure development or improvements such as street improvements, adding or upgrading utilities, drainage and lighting. Again, the improvements may include multiple types (for example both infrastructure and commercial) (See Figure 5-4).

Bexar County—San Antonio
The TIF Registry includes information on seven tax increment financing reinvestment zones in San Antonio, which in 2000 had a population of 935,900. Established from 1996 through 2000, five of the zones were created to make residential and infrastructure improvements, three of which specifically include proposals for affordable single-family homes and apartments. Two of the zones (Houston Street and Inner City) are capital and infrastructure projects.

In addition to the city, which participates in all seven TIRZs, the county and community college district participate in the majority of them. School districts contribute to three of the increment funds while the University Health System participates in five.

Figure 5-3: Type of Area in Which TIRZ is Established

figure 5-3

Source: Texas Comptroller of Public Accounts

The duration of the zones ranges from 12 years (Houston Street) to 26 years (Mission Del Lago). Only the Houston Street TIRZ reports the issuance of debt, in the amount of $6.4 million, in order to finance capital projects and infrastructure improvements.

Collectively, the San Antonio TIRZs report $42.1 million in captured appraised value (increase in property value in the zone since the establishment of the TIRZ) through 2001. However, San Antonio does not report any expenditures or revenue through the same period in any of the zones.[19]

Collin County—Frisco
In 1997, the city of Frisco created a TIRZ in a mixed multi-family residential and retail/commercial area. The city, community college district and school district all contribute 100 percent of tax increment revenue raised in the zone. Frisco County contributes at a rate of 50 percent.

The 1,200-acre zone was established for a duration of 31 years. $8.4 million of debt has been issued to pay for the improvements. The captured appraised value for this zone is $185 million through 2001. The city reports $5.4 million in revenue and nearly $1.7 million in expenditures during the same period.[20] The expenditure was to reimburse construction costs for a new school.[21]

Figure 5-4: Proposed Types of Improvements in TIRZs

figure 5-4

Source: Texas Comptroller of Public Accounts

Fort Bend County—Sugar Land
In 1998, the city of Sugar Land established two tax increment financing zones for 25 years. The tracts of land are mixed retail, commercial and underused/underdeveloped. The city, county and levy improvement district contribute 100 percent of increment revenue to the zone’s fund in TIRZ #1 and 46 percent in TIRZ #2.[22] The city has not issued debt to pay for improvements in either zone.

The city reports no captured appraised value for either of the TIRZs in Sugar Land through 2001 and no revenues or expenditures were reported through the same period.[23]

Galveston County—League City
From 1997 through 2000, the city of League City established three TIRZs, each for a duration of 20 years.[24] The three zones range in size from 355 acres to 712 acres and were established on mixed retail, commercial and underused/underdeveloped tracts of land. A major thoroughfare and drainage are the proposed improvements reported for each area.

The city and county each contribute 100 percent of tax increment revenue raised in the zone to the fund. In addition, the local school district participates in TIRZ #2, also contributing 100 percent. No debt has been issued by the city for any of the improvements in the zones.

The city of League City’s TIRZ #1 reports $2.3 million in captured appraised value through 2001, and revenue of $29,100 compared to expenditures of $65,700 through the same period. The expenditure was for a reimbursement to the developer.

The city reports no captured appraised value or revenue or expenditures during the same period for the other two TIRZs.

Harris County—Houston
The majority of Houston’s 20 zones, established between 1990 and 1999, have been created to reconstruct and construct streets and infrastructure. Only two, Midtown and Main Street/Market Street, do not fit this pattern. The Midtown TIRZ was established in an area including single-family, multi-family, retail, commercial, institutional and undeveloped tracts of land. The proposed improvement is an urban mixed-use development. The Main Street/Market Street zone was also established on a multi-use tract that is being redeveloped with a high-rise office building.

Houston is the only city in the TIF Registry to report increasing the size of its TIRZs through annexations. Seven of the zones are composed of an original zone enlarged by land acquired during an annexation. In addition, seven of the zones were initiated by petition.[25]

Most of the original tracts of land on which Houston established its TIRZs contain a combination of residential, retail, commercial, institutional and undeveloped/underused areas. One includes a public park and another includes public land. Three of the zones (Midtown, Market Square and OST/Alameda) are in Houston’s proposed Downtown to Astrodome Light Rail corridor.[26]

The duration of Houston’s tax increment financing zones ranges from 15 to 40 years. Four of the zones have issued debt, for a total of approximately $51.5 million, in order to finance proposed improvements. The city of Houston contributes 100 percent of tax increment revenue raised in each of the city’s 20 zones. and local school districts participate in 90 percent of the zones at rates ranging from 51 to 100 percent. Harris County participates in seven of the zones, the Harris County Flood Control District participates in two of the zones, and the Harris County Hospital District, and the Harris County Port Authority participate in just one of the zones.

The TIF Registry notes that the city of Houston, pursuant to Section 431 of the Transportation Code, established an alternative fund. Its balance includes authority obligations through development reimbursement agreements. Authorities are empowered via a tri-party agreement to issue bonds and notes; the proceeds are deposited in the authority fund for use in implementing project plans and tax increment financing plans. Consequently, where the TIF Registry reflects negative fund balances, those differences and increment revenue collected by a city and expenditures made by a redevelopment authority are attributable to the authority financing of project cost with non increment revenue.

Of the 20 TIRZs in Houston reporting in the TIF Registry, 17 report negative balances through 2001. During the same period, cumulative captured appraised value in the 20 zones is in excess of $1.1 billion.[27] Expenditures in the zones include developer reimbursements, affordable housing payments, capital improvements, debt service, administrative fees and professional services fees.[28]

McLennan County—Waco
From 1982 through 1986, the city of Waco established three TIRZs, each for a 20-year period. The smallest zone is 72 acres and the largest is nearly 2,400 acres. TIRZ #1 was established on a mix of residential, retail and commercial land; TIRZ #2 was established on a mix of commercial and undeveloped land; and TIRZ #3 was created on an undeveloped tract. The city did not report the proposed improvements in these three zones to the TIF Registry. According to the city of Waco’s Web site, TIF has been used to help revitalize and develop the core of the city by making infrastructure improvements, landscaping and improving streetscape amenities.[29]

In all three zones, the City of Waco, McLennan County, the community college and school district all contribute 100 percent of tax increment revenue raised to the fund. Debt has only been issued for improvements in TIRZ #1 in the amount of $2.5 million.

Through 2001, the city of Waco reports captured appraised value exceeding $263.7 million for TIRZ #1 and approximately $2.6 million for TIRZ #2. No captured appraised value is reported for TIRZ #3. Through 2001, nearly $3.5 million in revenues was raised in TIRZ #1, with nearly $1.2 million spent. During the same period, almost $860,000 was raised in TIRZ #2, with just more than $11,000 expended. Expenditures include administrative costs, debt service and project costs.

Since its establishment in 1988, only $336 of revenue has been raised in TIRZ #3.[30]

Smith County—Lindale
The City of Lindale established a 190-acre TIRZ in 1996 on a tract of commercial and undeveloped property. The proposed improvement is a Target Distribution Center, and a water, sewer and drainage infrastructure.

The city has not issued debt to pay for the development on the 10-year TIRZ and does not participate in the zone. Lindale ISD is the only contributor to the tax increment fund, at a rate of 100 percent.

Through 2001, the city of Lindale reports captured appraised value of $35.7 million in the TIRZ. Revenue in the fund through the same period was $1.9 million, with expenditures in the same amount.[31] Fund expenditures include a reimbursement for project costs to Target and management fees to the Tyler Economic Development Council.[32]

Smith County—Tyler
In 1999, Tyler initiated a TIRZ on 1,100 acres of industrial, retail, commercial and undeveloped land. The proposed improvement is construction of a skills training center, along with roads, parking lots, water and sewer infrastructure, lighting and sidewalks.

Tyler received the 2002 Community Economic Development Award for Texas cities in the 40,001-100,000 population category, awarded by the Texas Economic Development Council (TEDC). TEDC presented Tyler with the award for its economic development projects in 2001 and 2002. Among the projects for which Tyler was recognized is the Tyler Junior College Skills Center. Tyler Junior College obtained a bank loan for the $4.48 million center, which will be paid back with funding generated through Tyler’s TIF zone. Tyler and Lindale jointly received the same award in 1997 for the Target Distribution Center project.[33]

Like Lindale, Tyler does not contribute any tax increment revenue to the 20-year TIRZ. The county, community college district and school district all participate at 100 percent. $4.5 million in debt was issued in 2001.

Through 2001, the captured appraised value in the TIF zone was $12.1 million. The city reported revenue of $282,000 and expenditures of nearly $51,000 during the same period.[34] Expenditures were made for administrative and legal fees.[35]

Tarrant County—Keller
The city of Keller established its only TIRZ in 1998, on a 340-acre tract of commercial, residential, retail, public and undeveloped land. The city will build a Town Hall and natatorium on the site, as well as make improvements to the street and sidewalk. Nearly $32.7 million in debt has been issued to finance the improvements during the 20-year duration of the zone.

The City of Keller, and both the community college and school districts participate in the TIRZ at a rate of 100 percent. The county and Tarrant County Hospital District each contribute 66.2 percent of the tax increment value generated in the zone.

Through 2001, the captured appraised value for the reinvestment zone was nearly $27.3 million. During the same period, the city reported revenue exceeding $29.1 million and expenditures of just more than $10.2 million.[36]

Other Tax Increment Financing Activities in Texas

Corpus Christi—Packery Channel TIF[37]
In April 2001, Corpus Christi voters approved the creation of a 1,930-acre TIF district designed to spur resort development on the Padre Island Seawall and partially fund dredging of the Packery Channel. The project scope includes permanently opening Packery Channel to the Gulf of Mexico, construction of jetties and maintenance of beachfront property that is currently eroding. City-sponsored development includes a park complex, boardwalk and pavilions. $10.5 million of the TIF fund will pay for a share of the channel dredging.

A petition initiated the TIF. Private investors will develop a resort adjacent to Packery Channel and will purchase the bonds that will, in turn, provide funding for the dredging and other infrastructure development. A Houston developer, Paul Schexnailder, who originally proposed the project, may not ultimately build as large a resort as originally planned because the city is now considering proposals from other developers, including Landry’s.

Fort Worth—Texas Motor Speedway[38]
In 1995, the city of Fort Worth established a TIF district as part of an incentive plan to develop the Texas Motor Speedway. A city-created nonprofit organization, the Fort Worth Sports Authority owns the Speedway, which opened in 1997 and is exempt from property taxes. While the Speedway does not pay property taxes, the surrounding properties within the 1,489-acre district are subject to taxation.

Speedway Motorsports built and operates the Speedway. The Fort Worth Sports Authority is paying $20 million from the TIF fund to Speedway Motorsports in order to buy the stadium back and cover the cost of acquiring the site.

In 1996, the Northwest School District sued the city of Fort Worth and Denton County over lost tax revenue due to tax breaks awarded to the Speedway. When the case was settled in 1999, the school district and city agreed that two-thirds of the property taxes raised in the district would be allocated to Northwest. The other third was earmarked for any related entity in the TIF.

Due to participation in the TIF, Northwest expects to receive $21.5 million over the next 20 years. Potential plans for the funding include construction of a natatorium and an automotive training center. Texas Motor Speedway recently applied to receive $400,000 from the fund to improve roads and parking lots around the track.

Denton County joined the TIF district in 1996, which at the time measured 568.4 acres. However, the agreement between the county and city indicated the size was 950 acres. As a result, both the entities owe revenue from their general funds to the TIF fund. An April 2002 article in the Fort Worth Star Telegram indicated that Denton County commissioners were refusing to repay their share of the difference because the city made the original mistake.

El Paso—Border Health Institute and Downtown Redevelopment
Tax increment financing is a controversial topic in El Paso. A downtown TIF district was established in the 1980s and funded projects such as construction of a science museum and statues. However, the district was abolished 18 years later when the taxable value of the 173-acre tract was nearly $14 million less than when it was originally established.[39]

In spite of the failure of this TIF district, the city created two additional zones in 2001. TIF District 2 is located near Thomason Hospital and is designed to help develop a consolidated health education and health care campus called the Border Health Institute. The 1999 Legislature established the Border Health Institute through passage of HB 2025.[40] TIF District 3 covers more than 7,000 acres in Downtown El Paso and the West Side area south of Interstate 10.

Of the two, TIF District 2 is the most controversial and has led to a divisive community debate. Some citizens and groups are concerned that TIF will hurt, rather than raise, local property values, and that the city will condemn their property and take their land to make room for the Border Health Institute. The El Paso Chamber of Commerce has had so much difficulty in reaching a consensus on whether to support the TIF zones that it has commissioned several reports to guide its decision-making.[41] El Paso Mayor Ray Caballero has warned that the debate will lead the Legislature to doubt the community’s commitment to the institute, hurting its chances at state funding.[42]

In addition to these concerns, the El Paso Independent School District has indicated that it does not want to participate in the city’s TIF districts. As noted previously, a taxing unit in a TIF zone is not required to pay into the tax increment fund any of its tax increment produced from property located in a reinvestment zone. However, a subsequent section of the law states that that provision does not apply to a city along the Mexican border with a population greater than 230,000 (El Paso).[43] As a result, the school district is concerned that it could be forced to participate in a TIF district and does not feel that the district can forgo any potential revenue. Mayor Cabellero, however, has indicated that the city will not force other taxing entities to participate.[44]

Dallas—City Center TIF District
In 1996, Dallas established the City Center TIF District, containing approximately 45 percent of the land within the loop of freeways enclosing the downtown area. According to the zone’s 2000-01 Annual Report, the project has lead to approximately 1,300 completed or planned apartment units, 2,300 completed or planned hotel rooms, more than 480,000 square feet of planned retail space and the renovation of approximately 650,000 square feet of office space. Development projects also have included improved pedestrian linkages with the new DART light rail transit mall, redevelopment of street-front retail, improvements to the Universities Center and protection of historic structures.[45]

In April 2002, the Dallas Business Journal reported that the early success of many of the projects was leading to a call by developers to expand the district to include more projects.[46]

Alternative Tax Increment Financing Projects: Job Training, Small Business Improvement, Brownfields Redevelopment and Military Base Reuse

The city of Chicago has actively used TIF to promote economic development and redevelopment throughout the city in recent years. In March 2002, Chicago Mayor Richard M. Daley proposed a TIF program for job training to the Chicago City Council. Under the program, called TIF Works, businesses and non-profit organizations located within Chicago’s TIF districts can apply for TIF funds for work force development activities such as customized training. The ordinance authorizing the program passed in July of 2002.[47]

Chicago also has another alternative TIF program, the Small Business Improvement Fund (SBIF). SBIF provides matching grants, up to $50,000, to help companies in certain TIF districts make improvements to their facilities.[48]

As military bases have closed throughout the country, some states have adapted TIF legislation to pay for the conversion of bases to other economically viable uses. Similarly, some local communities have partially financed the redevelopment of brownfield sites through TIF initiatives.[49] The Government Finance Officers Association reports that TIF is one of the more popular tools to fund brownfield redevelopment throughout the U.S. and that local governments of all sizes have found success using TIF in their cleanup efforts.[50]

Alternative Tax Increment Financing: Non-property Tax Increment Financing

While tax increment financing traditionally is associated with property taxes, some states are including other taxes in TIF-like programs. California, Colorado, Illinois, Indiana, Kansas, Louisiana, Maine, Missouri, Wyoming and the District of Columbia have all, at one time or another, had sales or use tax increment financing options (STIF).[51]

In 1981, the California State Legislature adopted a program that resembles Texas’ 4A/4B Economic Development Sales Tax. The California legislation allows a local redevelopment agency to levy a sales tax rate up to 1 percent, provided the city or county reduce their rate(s) by a corresponding amount. The local redevelopment agency then used the revenue to attract retail operations through capital development projects or by rebating some of the sales tax collections to developers. Due to the resulting competition among local communities (particularly for high retail sales tax generating businesses like car dealerships, malls and hotels), and the concerns over the effect of the program on land use patterns, the state rescinded the program in 1994.[52]

Most STIF initiatives, like those in Colorado, the District of Columbia, Kansas, Louisiana and Wyoming, include the establishment of a base-year sales tax amount as tax collections from an area for a period prior to the development or redevelopment activities. Any sales tax revenue collections exceeding that base, over the specified duration of the STIF, are directed to the development/redevelopment fund.

A few states, such as Illinois and Louisiana, include state sales tax revenue in their STIF initiatives, but the majority only allows municipalities to contribute local sales tax increment or to dedicate a portion of their local sales tax to the fund. Maine has adopted an “Employment Tax Increment Financing Program,” allocating state individual income, employment and payroll taxes to the increment based on relatively complicated calculations related to establishment of a base employment level.[53]

Another tax that has sometimes been used for incremental financing is a hotel guest tax fund. Some communities commit portions of expected incremental hotel taxes to tourism-related development projects.[54]

Non-property tax increment financing programs are more likely to be effected by cyclical changes in economic activity, making them a less reliable source of revenue for development and redevelopment than property tax-based programs. Conversely, increases in revenue may also have more to do with changes in the economic climate than as a result of development supported by sales and use tax increment financing. In addition, STIFs are especially attractive in developing retail projects (hotels, automobile dealerships, malls). Competition between nearby communities over these kinds of projects, and bidding wars for development that might have occurred otherwise, have led to problems with STIF programs in California, Illinois, Louisiana and Missouri.[55]

Advantages and Disadvantages of Tax Increment Financing

A frequently cited advantage of tax increment financing is that it does not require new taxes or assessments in order to expand the local tax base. It is viewed as a self-financing tool, wherein the development pays for itself through increased revenue captured into the fund over a specified period. In fact, TIF is often viewed as an “equitable” financing mechanism because risks are shared among private property owners and all the participating jurisdictions. Further, once the period of the TIF project is over, the increased revenue is available to meet the general obligations of the local taxing jurisdictions.[56]

TIF is also a particularly flexible tool for local governments seeking to redevelop and develop areas within their communities. No federal oversight, and limited state oversight, exists for TIF projects. State TIF-enabling law typically establishes minimum parameters of “blight” that must be met, identifies maximum project terms and outlines a uniform process. Unlike state and federal programs with funding ratio requirements, detailed reporting needs and specific funding cycles, TIF can be used by a local community when and where the need or opportunity arises.

In Texas, several features of the state’s TIF law make it very adaptable to different communities’ needs. Local jurisdictions, including cities, may elect to contribute, or not, to a TIF fund in their taxing jurisdiction. Taxing units that participate in a TIF project can choose the specific percentage of tax increment revenue to contribute to the fund. When identifying areas in which to initiate TIF projects, Texas cities determine the need for TIF and while the law outlines certain criteria that must be met to initiate TIF, those criteria are fairly general and descriptive. Texas law also gives property owners the opportunity to initiate the TIF process.

Despite its apparent flexibility, TIF is sometimes criticized for the administrative complexity it imposes on local governments. Essentially, creating and managing a TIF district, or reinvestment zone, can be more complicated than administering a grant because it often involves numerous steps, including an initial market analysis, financial feasibility studies, negotiations with developers and other jurisdictions, bond sales and construction. The establishment of a TIF zone also essentially creates a “new” taxing district, which the local government must administer.

Another frequent criticism of TIF is related to the loss of control over a local jurisdiction’s tax base by the non-initiating local government(s). In some cases, a local government can establish a TIF district without the consent or involvement of the other taxing units in the jurisdiction. Texas law does not require the consent of other jurisdictions, but does call for involving them in the early planning stages and does give them the opportunity to decide the extent to which, if it all, they would like to contribute incremental tax revenue to the fund.[57]

One concern, particular to local residents in a proposed or existing TIF zone, is eminent domain and displacement of residents. While municipalities always retain the power of eminent domain, a TIF project may cause the city to exercise that power in order to meet the needs of developers as part of the redevelopment of an area. In turn, low-income residents within a zone may be relocated to another area. Some researchers have pointed out that this is simply relocating the blight to another area and potentially leads to poverty concentration.[58]

In addition, there is always the chance that unforeseen events, economic hardship and even bad planning will lead to the TIF district losing property value over the course of the project.

Finally, as with most local economic development tools, there is considerable debate among researchers as to the effectiveness and efficiency of tax increment financing and the extent to which benefits flow equally to the public and private sector.

Review of Literature on Tax Increment Financing

In 1990, John E. Anderson studied the effect of tax increment financing on Michigan cities, using a sample of 255 cities, 63 of which established TIFs. He found that TIF-adopting cities experienced greater property value increases than cities without TIF districts. However, he notes in his summary that data limitations in the study did not allow him to demonstrate or identify causality between TIF adoption and increased property values. In fact, Anderson suggests that study may simply show that rapidly growing Michigan cities, in particular, elected to utilize TIFs.[59]

A 1995 study by David B. Lawrence and Susan C. Stephenson used a downtown TIF program in Des Moines, Iowa,as a case study in an attempt to identify which of the participating local taxing jurisdictions receive the costs and benefits of such a project. They found that in the early years of the project (established in 1973), taxpayers throughout the greater Des Moines metro area subsidized the downtown development, but that they all eventually benefited from lower tax rates due to the initiative.

Using a different model than Anderson, Richard F. Dye and David F. Merriman conducted a study of 235 municipalities in the Chicago metropolitan area that adopted TIF programs from 1984 through 1991. Using equalized assessed property value data, the researchers concluded that municipalities establishing TIF programs grew more slowly after adoption than those that did not. They further suggest that TIF stimulates growth in one area of a municipality while stunting growth in another, leading to an overall slowdown in growth of aggregate property values.[60]

Another study, conducted by Joyce Y. Man and Mark S. Rosentraub, analyzed TIF data in Indiana cities. This study found that by comparing pre and post TIF project property values, the median owner-occupied housing values in TIF-adopting municipalities was 11 percent higher than in those not adopting TIF. In addition, they noted that the TIF programs in the sample stimulated property value growth after two years of project implementation.[61]

Ultimately, while these studies appear to contradict one another, they all show that TIF appears to increase property value growth. However, it is less clear whether that growth is entirely causal, or if TIF districts grow at the expense or to the benefit of adjacent areas within the municipality.


Conclusion

Based on the data received by the Comptroller’s office under the new reporting requirements passed by the 2001 Legislature, it is difficult to determine many characteristics of tax increment financing projects in Texas or analyze their effect. Cities are required to self-report their TIF activities and, to date, the quality and extent of the reporting has varied. In fact, some cities are not reporting or are not reporting sufficient information to be included in the TIF Registry.[62]

Even so, a few trends can be spotted when analyzing the data received from the 39 tax increment reinvestment zones in the registry. TIF usage appears fairly well distributed among a wide range of sizes of cities, indicating its functionality in a variety of municipal settings and environments.

School districts and counties participate the most in the TIRZs included in the registry. Based on the modest amount of data available, it does appear that school districts will be less inclined to contribute to TIF funds following changes in school finance law in 1997 and 1999. Over time, this may affect the number of new TIF zones created, and the amount of funds they are able to leverage. For example, in December, 2002, the Dallas Morning News reported that the Garland ISD Board declined to participate in a TIF being established by Rowlett because the move would cost the district $182 million in state funds.[63]

The majority of the tracts of land being developed or redeveloped through TIF initiatives appear to be at least partly residential and/or commercial in nature. This raises questions as to what becomes of existing homes, if any, in the residential areas within a zone and whether residents are being displaced to other areas of the municipality. In addition, the vast majority of proposed developments are described as infrastructure-related by local governments. With the information available, it is hard to ascertain whether this is because improving infrastructure, such as utilities and streets, is often viewed as a key incentive to attract developers, or if TIF is sometimes used to meet the basic needs of growing cities whose budgets are stretched.

Finally there remains the same issue in the use of TIFs for development that appears in issuing tax abatements—what would have occurred without the use of government incentives? Unlike tax abatements, however, the use of TIFs does not involve foregoing revenue, but only redirecting revenue. As such, the true economic comparison of alternatives lies in contrasting the economic gains that accrue to the TIF improvements versus other possible uses of the funds to support local government. This is a different dynamic than that presented by tax abatements.

While several cities in the TIF Registry report on captured appraised value, and revenue and expenditures, it is still difficult to determine the extent to which captured appraised value reflects a causal effect of development. In fact, in some cases, a city reports making no expenditures and still shows an increase in property values. In such cases it is hard to envision how the increased property values can be economically attributed to actions normally connected to a TIF, yet the additional taxes would accrue to the TIF fund.

Other cities in the registry show small losses in property value since establishing a TIRZ. While the initial decline may be due to the process of demolishing old structures and acquiring new properties, a loss in value is always of concern. The case of an unsuccessful TIF project in El Paso has not been forgotten by that community.

To better determine the nature and effect of TIF as a redevelopment and economic development tool, more information is needed. In particular, additional detailed information on the nature of projects and the expected results, combined with evaluative data would be useful. Some Texas cities are addressing concerns over their economic development policies and the value of engaging in incentive “bidding wars” with adjacent communities. As a result, municipalities are establishing new proposals to better evaluate their economic development initiatives. For example, in 2002, the Colleyville City Council began discussing developing a new policy requiring businesses to meet minimum performance standards to be eligible for incentives. Proposed performance standards would include property value increases, sales tax revenue generated and job creation.[64]

Overall, tax increment financing provides many cities with a useful redevelopment and economic development tool, particularly as competition between states and communities is increasing. TIF works best when a project has broad community support, is located on a site clearly in need of development, does not seek to relocate existing businesses from an adjacent area and does not lead to extensive business and residential relocations.

There does not seem to be a strong rationale to limit the availability of TIFs to only cities. This is particularly true in rural areas of the state where the county might fill this role.

Endnotes

[1] Texas Office of the Attorney General, Handbook on Economic Development Laws for Texas Cities (Austin, Texas, 2002 Edition), p. 97.

[2] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact (Albany, New York: State University of New York Press, 2001), p. 17.

[3] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact, p. 31.

[4] National Association of Counties, Presidential Task Force on Economic Development, Issue Brief, Tax Increment Financing: An Alternative Economic Development Financing Technique (Washington, D.C., January 2000), p. 1.

[5] Economics Research Associates, Review of Best Practices for Tax-Increment Financing in the United States, by David A Wilcox and David E. Versel (Los Angeles, Calif., 1999), p. 2.

[6] Texas Municipal League, Tax Increment Financing in Texas Cities (Austin, Texas, June, 1982), p. 1.

[7] Texas Municipal League, Tax Increment Financing in Texas Cities, p. 98.

[8] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact, pp. 32-36.

[9] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact, p. 158.

[10] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact, p. 159.

[11] Texas Office of the Attorney General, Handbook on Economic Development Laws for Texas Cities (Austin, Texas, 2002 Edition), p. 108.

[12] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry (Austin, Texas, December 31, 2002). pp. 10-16.

[13] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, p. 10.

[14] Texas Office of the Attorney General, Handbook on Economic Development Laws for Texas Cities (Austin, Texas, 2002 Edition), p. 108.

[15] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, p. 16.

[16] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, Appendix 1, p. 56.

[17] NOTE: Katy is classified in Waller County in the appendix of the TIF Registry, but is classified in Harris County by the U.S. Census. It was counted in Harris County in this report.

[18] From city TIF annual reports on file with the Office of the Attorney General and the Comptroller of Public Accounts. NOTE: debt amounts rounded.

[19] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, pp. 17-23.

[20] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, p. 24.

[21] From city TIF annual reports on file with the Office of the Attorney General and the Comptroller of Public Accounts.

[22] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry (Austin, Texas, December 31, 2002), pp. 25-26.

[23] From city TIF annual reports on file with the Office of the Attorney General and the Comptroller of Public Accounts.

[24] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry (Austin, Texas, December 31, 2002), pp. 27-29.

[25] City of Houston, Planning and Development Department, “Economic Development: Tax Increment Reinvestment Zones,” http://www.ci.houston.tx.us/departme/planning/Tax_Inc_ReIns.htm. (Last visited January 13, 2002.)

[26] Federal Transit Administration, “Downtown to Astrodome Light Rail,” Houston, Texas (November 2000), http://www.fta.dot.gov/library/policy/ns/ns2001/09houstonastrodome.html. (Last visited January 13, 2003).

[27] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, pp. 30-49.

[28] Spreadsheet used to develop TIF Registry.

[29] City of Waco, Texas, “Waco Incentives,” http://wacodevelopment.com/incentives.htm. (Last visited January 13, 2003.)

[30] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, pp. 50-52.

[31] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, p. 53.

[32] Spreadsheet used to develop TIF Registry.

[33] Greg Junek, “TxEDC to Honor Tyler,” Tyler Morning Telegraph (September 5, 2002), p. 1.

[34] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, p. 54.

[35] Spreadsheet used to develop TIF Registry.

[36] Texas Comptroller of Public Accounts, Biennial Reports of Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry, and Tax Increment Financing Zone Registry, p. 55.

[37] City of Corpus Christi, “Packery Channel/TIF Information Sheet: What is a Reinvestment Zone?” http://www.ci.corpus-christi.tx.us/?fuseaction=main.view&page=506 (Last visited, January 24, 2003) and Neal Falgoust, “Packery Resort May be Cut in Half: Developer Concerned with Competition from Landry’s Proposal,” Corpus Christi Caller-Times (June 25, 2002), p. A-1.

[38] See Ginger Richardson, “TMS Spreads Wealth to Nearby Cities,” Fort Worth Star Telegram (April 5, 2002), Metro p. 1; “TIF Tiff,” Fort Worth Star Telegram (April 18, 2002), Metro p. 12; Andrea Jares, “TIF Paying off for Northwest,” Fort Worth Star Telegram (September 7, 2002), Metro p. 3; and David Wethe, “Texas Motor Speedway Plans Repairs,” Dallas Business Journal, (November 7, 2002).

[39] Daniel Borunda, “TIF District 3 Draws Fire, Support at Meeting,” El Paso Times (November 21, 2002), Borderland, p. 1B.

[40] Texas Department of Health, “Border Health Institute,” http://www.r10.tdh.state.tx.us/obh/bhi/bhi.htm. (Last visited, January 24, 2003.)

[41] Daniel Bounda, “Chamber Makes Decision on TIF District, But Wants to Tell City First,” El Paso Times (October 31, 2002), p. 1B.

[42] Daniel Borunda, “Chamber, Mayor Bicker over TIF Timetable,” El Paso Times (November 1, 2002), p. 1B.

[43] Tex. Gov’t Code Ann., §311.013.

[44] Robert Moore and Gustavo Reveles Acosta, “City Can Go TIF Alone, Mayor Says,” El Paso Times (February 20, 2002), p. 1A.

[45] City of Dallas, “FY 2000-2001 Annual Report Reinvestment Zone Number Five: City Center Tax Increment Financing District,” www.dallas-edd.org/ardv.htm (Last visited January 29, 2003.)

[46] “Downtown Promoters Pushing City for More,” Dallas Business Journal, (April 19, 2002), p. 5.

[47] Neighborhood Capital Budget Group, “What is TIFWORKS?” http://www.ncbg.org/tifs/tif_works.htm. (Last visited January 20, 2003.)

[48] City of Chicago, Office of Mayor Richard M. Daley, “City’s Small Business Improvement Fund Extended,” http://w15.cityofchicago.org./mayor/2002Press/news_press_sbifextended.html. (Press release.) (Last visited January 22, 2003.)

[49] Economics Research Associates, Review of Best Practices for Tax-Increment Financing in the United States, by David A. Wilcox and David E. Versel (Los Angeles, California, 1999), p. 6.

[50] Charles Bartsch, “Financing Brownfield Cleanup and Redevelopment,” Government Finance Officers Review (February 1, 2002), p. 26.

[51] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact, pp. 57-58.

[52] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact, p. 58.

[53] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact, pp. 58-65.

[54] Economics Research Associates, Review of Best Practices for Tax-Increment Financing in the United States, by David A. Wilcox and David E. Versel, p. 18.

[55] Craig L. Johnson and Joyce Y. Man, ed., Tax Increment Financing and Economic Development: Uses, Structures, and Impact, pp. 67-68.

[56] National Association of Counties, Presidential Task Force on Economic Development, Issue Brief, Tax Increment Financing: An Alternative Economic Development Financing Technique, (Washington, DC, January 2000), p. 5.

[57] Note: This is with the exception of the provision of the law pointed out in the section dealing with El Paso.

[58] Joel Garcia, University of Pennsylvania, A Case Study Review of Tax Increment Financing for Greater El Paso Chamber of Commerce (August 30, 2002), pp. 8-9.

[59] John Anderson, “Tax Increment Financing: Municipal Adoption and Growth,” National Tax Journal (June 1990), pp. 155-162.

[60] Richard F. Dye and David F. Merriman, “The Effects of Tax Increment Financing on Economic Development,” Journal of Urban Economics (Volume 47, Number 2, March 2000), pp. 306-328.

[61] Joyce Y. Man and Mark S. Rosentraub, “Tax Increment Financing: Municipal Adoption and Effects on Property Value Growth,” Public Finance Review, (Volume 26, Number 6, November 1998), pp. 523-547.

[62] Interview with Patricia Bailey, Administrative Operations, Property Tax Division, Texas Comptroller of Public Accounts, Austin, Texas, October 17, 2002.

[63] Bill Lodge, “District Says No to TIF, But Board Won’t Stand in Rowlett’s Way for Creation of Tax Zones.” Dallas Morning News (December 15, 2002), p. 1Q.

[64] Jennifer Radcliffe, “Policy About Perks Could Lure Business,” Fort Worth Star Telegram (January 17, 2002), P. 1, Metro.

Carole Keeton Strayhorn
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