1. What is a TIRZ? A TIRZ (also called a TIF) stands for a tax reinvestment zone created by a local government under Texas state law. A TIRZ is a geographically targeted tool for economic development in blighted and underdeveloped areas. The TIRZ taxes generated from the districts’ redevelopment are diverted from general revenue to subsidize the development. That tax diversion means local public services do not get the additional, new revenue they would normally get from new development.
2. How does a TIRZ work? Basically, a local government designates a small geographic area to be redeveloped (a “TIRZ district”) at a developer’s request. If and when that redevelopment happens, property values will go up, and property taxes will be higher. The City breaks this additional tax revenue into two streams. The first tax stream is tied to the old property value before redevelopment—the so-called “base value”—and will continue to go to general revenue. However, all or part of the increase in property taxes tied to the increase in property value (the tax increment) will be diverted to subsidize the TIRZ. These funds are not available for public services.
3. What is the South Central Waterfront (SCWF)? The SCWF District is 118 acres that It lies just south of Lady Bird Lake, from South First to several blocks east of South Congress. It has some of the most valuable real estate in Austin. The SCWF plan envisions the area as a “Second Downtown.” It would add a massive, additional 6.2 million square feet in luxury office, retail, and residential towers. The well-known Statesman property at 305 South Congress constitutes 18.3 acres of the district. This parcel is owned by the billionaire Cox Family Trusts, and its developer, Endeavor, is the largest in Central Texas. They are seeking from the city a Planned Unit Development (PUD), a special zoning district, in addition to the TIRZ tax subsidy.
4. Is there a difference between the SCWF TIRZ and the Statesman (305 S. Congress) PUD? Are they separate? Yes. The SCWF TIRZ and Statesman PUD involve different laws and require separate approval by Council. The PUD is a common planning tool; the TIRZ is a financing tool for blighted and underdeveloped property. They serve different goals, and their merits should be evaluated separately. The Statesman Planned Unit Development request is only for the Statesman’s 18.3 acres (which are just a part of the proposed 118-acre SCWF TIRZ). The City PUD ordinance [provides developers with additional up-zoning and less regulations; in exchange, the developer must provide certain required additional parkland, affordable housing, and other benefits to the public. The proposed bat-viewing park along Lake Bird Lake shore is part of the Statesman PUD requirements; it has nothing to do with the TIRZ.
5. What about the SCWF parks being provided in addition to the bat-viewing park along Lady Bird Lake? The bat-viewing park along the shore (in front of the Statesman’s vacated building) is by far the most valuable park and it is being provided by the Statesman’s PUD (not the SCWF TIRZ). The other three promised parks in the TIRZ are of much less value monetarily and as parkland. They are in the flood plain or serve as detention ponds, meaning the developers are giving the city very little of value. These three parks are a diversion: the TIRZ isn’t needed to buy these tracts for parkland if we want them.
6. What are the legal requirements for a TIRZ? Before a city or county may establish a TIRZ, it is required to follow certain processes, make certain findings, and create a TIRZ plan. These requirements are set out in Texas Tax Code, Chapter 311. Texas law, among other things, requires that before a city can establish a TIRZ that it must demonstrate that but-for the public investment (our tax dollars), the property (SCWF) would not redevelop in the foreseeable future. In particular, Texas Tax Code, Section 311.003(a) provides: “The governing body… may designate… a reinvestment zone to promote development or redevelopment of the area if the governing body determines that development or redevelopment would not occur solely through private investment in the reasonably foreseeable future.” This but-for test is often abused by cunning developers and gullible cities.