A TIRZ, or Tax Increment Reinvestment Zone, is a special type of taxing district that is established by a local government to promote economic development within a specific area. TIRZs are typically created in areas that are in need of revitalization or redevelopment, and they are designed to encourage private investment and development by using tax revenue generated within the zone to fund infrastructure improvements and other public projects.
The basic concept of a TIRZ is that the incremental property tax revenue generated by new development and increased property values within the zone is redirected back into the zone to fund economic development projects. This means that as property values within the zone increase, the additional tax revenue generated is used to fund improvements that will attract even more development and investment.
TIRZs can be used to fund a wide range of projects, including public infrastructure improvements like roads, sidewalks, and utilities, as well as parks, public spaces, and other amenities that can help to attract new development and investment. By providing a funding mechanism for these types of projects, TIRZs can help to make development more financially feasible and attractive for private investors, which can in turn help to stimulate economic growth and create new jobs within the zone.
Overall, TIRZs are a tool that local governments can use to promote economic development within specific areas and encourage private investment and development. By using incremental tax revenue to fund public projects that improve the overall quality of life within the zone, TIRZs can help to attract new investment, create new jobs, and revitalize communities that may be struggling economically.
Sources:
The International City/County Management Association: https://www.icma.org/
There are two main types of TIRZs based on who leads the creation and management of the TIRZ: Developer-led TIRZs and City-led TIRZs.
Developer-led TIRZs are initiated and managed by private developers or property owners who want to undertake a development project within a particular area. The TIRZ is established to fund the infrastructure improvements and public amenities necessary to support the project, with the expectation that the development will generate additional tax revenue that can be used to repay the TIRZ debt. Developer-led TIRZs are typically used for large-scale projects such as master-planned communities, office parks, or shopping centers.
City-led TIRZs, on the other hand, are initiated and managed by the local government or municipality. The TIRZ is established to fund public projects, such as road improvements or park construction, in a specific area with the aim of stimulating economic development and attracting private investment. City-led TIRZs are typically used in areas that are in need of revitalization or redevelopment, or in areas that have been designated as priority development areas by the local government.
Both developer-led and city-led TIRZs have their advantages and disadvantages, and the choice between the two will depend on the specific needs and goals of the community. While developer-led TIRZs can help to spur large-scale private investment and development, they can also be criticized for being driven primarily by the interests of the developer rather than the community. City-led TIRZs, on the other hand, may be seen as more democratic and community-driven, but they may be more difficult to finance and may not attract as much private investment.
Stimulate Economic Development: One of the primary goals of a TIRZ is to stimulate economic development within a particular area. By providing funding for infrastructure improvements, public amenities, and other projects that can help to attract new development and investment, TIRZs can help to create new jobs and business opportunities, revitalize blighted areas, and generate new tax revenue for the city.
Encouragw Private Investment: TIRZs can be used to leverage private investment in areas that may otherwise be overlooked or neglected. By providing a stable and predictable funding source for public projects and improvements, TIRZs can make development more financially feasible and attractive for private investors, which can help to spur additional investment and growth.
Improve Public Infrastructure: TIRZs can be used to fund a wide range of public infrastructure improvements, including roads, bridges, sidewalks, parks, and public transportation. By investing in these types of projects, TIRZs can help to improve the overall quality of life within the city and enhance the attractiveness of the area for residents and visitors alike.
Enhance Community Assets: TIRZs can be used to fund public amenities and community assets, such as cultural centers, museums, and public spaces. By investing in these types of assets, TIRZs can help to enhance the character and livability of the city, and create new opportunities for residents to engage with each other and with the broader community.
Generate New Tax Revenue: By encouraging new development and investment within a particular area, TIRZs can generate new tax revenue for the city. This additional revenue can be used to fund additional public projects and services, or to reduce the tax burden on residents and businesses in other parts of the city.
Overall, a well-designed and well-managed TIRZ can be an effective tool for promoting economic development, attracting private investment, improving public infrastructure, enhancing community assets, and generating new tax revenue for the city.
City of McAllen: McAllen has established multiple TIRZs to promote economic development and fund public projects within targeted areas of the city. These TIRZs have been used to fund a range of projects, including a new convention center and a downtown parking garage.
City of Edinburg: Edinburg has established a TIRZ to fund public improvements and promote development within a designated area of the city. The TIRZ has been used to fund a new retail center and other public projects.
City of Harlingen: Harlingen has established a TIRZ to promote economic development and fund public projects within a designated area of the city. The TIRZ has been used to fund public infrastructure improvements, including roads and drainage.
City of Pharr: Pharr has established a TIRZ to fund public improvements and attract new development within a designated area of the city. The TIRZ has been used to fund a new hotel and other public projects.
City of Weslaco: Weslaco has established a TIRZ to fund public improvements and promote development within a designated area of the city. The TIRZ has been used to fund a new retail center and other public projects.
