During the development of the downtown master plan, we asked consultants Freese & Nichols and TXP the same question that many residents have about the revitalization of downtown: How are we going to pay for this?
Our consultants conducted a local market analysis and recommended some specific tools that could work well in our area. One that rose to the top was the establishment of a tax increment reinvestment zone, or TIRZ, also known as a tax increment financing district.
Creating a TIRZ allows cities to set aside funds to encourage development without creating a new tax. Here is how it works: After the TIRZ is established, when property values go up within the TIRZ (whether because of the addition of new properties or an increase in value of existing properties), taxes that are collected on this additional value must be used for development within the TIRZ.
TIRZ funding can be used to cover a variety of expenses outlined in the master plan, ranging from physical improvements to administrative costs. It can also be used to encourage private development through partnerships and incentives.
We already do something similar through our façade grant program, which allows property owners to apply for funds to preserve and improve historic buildings. The additional TIRZ funding could help this program to become more self-sufficient and allow us to expand the tools we use to attract developers.
About 30 residents attended a recent TIRZ workshop hosted by the Victoria Main Street Program, many of them downtown property owners interested in developing vacant land or making better use of existing buildings. I spoke to many people who were excited about the TIRZ, and I’m excited about the new life that these creative residents will bring to downtown.
TIRZ programs tend to have a cyclical growth effect, with reinvestment of funds encouraging private development, creating new property value that generates more funds to be invested, and so forth. The TIRZ is a temporary designation: Once it is finished, all of that new property value will be used to generate taxes that can be used throughout the city.
The TIRZ funding will be managed by a newly created board, with members appointed by the City of Victoria and other taxing entities that choose to participate in the TIRZ. Each entity will have the option of setting aside all or part of newly generated taxes for TIRZ development. The City plans to set aside 100% of available funding for the TIRZ.
The TIRZ is just one tool that we can use to fund residents’ downtown dreams. We are pursuing a cultural district designation for downtown, which would open up significant grant opportunities for the City and our downtown nonprofits. We will also continue to seek out available state and federal grants; the TIRZ funds will come in handy for programs that require a local match.
To learn more about the master plan and downtown incentive programs, visit www.victoriatx.gov/mainstreet. To stay up-to-date about programs and events downtown, follow Victoria Main Street Program on Facebook.
Danielle Williams is the director of the Victoria Main Street Program.