Trophy Club Tax Increment Reinvestment Zones (TIRZ)

Posted by Brett Oliver on Jun 07, 2013

The Trophy Club Town Council recently approved exploring the potential creation of two Tax Increment Reinvestment Zones (TIRZ) in order to increase economic development opportunities in town. There are many benefits to establishing a TIRZ in the community and Trophy Club's current position is prime for development within the proposed TIRZ areas. Benefits include an increase in value of surrounding real estate, increased sales tax, new jobs and of course, it provides an incentive for investors to build commercial developments in Trophy Club.  

What is Tax Increment Financing?

Tax Increment Financing (TIF) is a tool available to local governments to publicly fund needed improvements within a reinvestment zone by dedicating a portion of tax revenue to be reinvested within the zone. The purpose of a TIRZ is to develop an area that has remained dormant for a long period of time into an economically viable area. An effective TIRZ with a strong project plan will give a local municipality the opportunity to develop an empty commercial development or property, which in turn will enhance the quality of life for residents of the area and adjacent taxing jurisdictions through higher tax revenue. TIRZ provides local governments with a new way to fund economic development projects that may otherwise not exist.

How do TIRZ operate?

The taxing entity contributes real property taxes received from incremental value increases on property within the reinvestment zone. Most TIF tax revenue is generated from new construction built in TIRZ. New construction and incremental property value increases inside the TIRZ, allowing developer(s) to enhance projects within TIRZ, as well as provide a revenue stream for the local government to build infrastructure (sewer, wastewater, roads, etc). One of the principal advantages of a TIRZ is the ability to receive tax revenue contributions from other taxing jurisdictions that multiply the total investment allocated for economic development within the reinvestment zone. A TIRZ is not a new tax on real property, but rather an allocation of future tax revenue to a specific public project in the TIRZ. Properties inside a TIRZ pay the same taxes as those outside a TIRZ.

Taxing jurisdictions that may contribute to Trophy Club Tax Reinvestment Zone include:

  • Denton County - Economic development for Trophy Club equals more tax revenue for Denton County
  • Tarrant County - Economic development for Trophy Club translates to more businesses and people moving into Dallas /Fort Worth metroplex
  • Municipal Utility District No. 1 (MUD 1) - Economic development for Trophy Club means more water and wastewater services needed for population growth

Each taxing jurisdiction can contribute a percentage of their tax revenue toward the proposed Trophy Club TIRZs. Participation from other taxing jurisdictions occurs because economic development investment in Trophy Club benefits the other taxing jurisdictions. The proposed Trophy Club TIRZs provide the opportunity for each jurisdiction to receive tax revenue that did not exist prior to establishment of TIRZ. 

TIRZ Creation Process

Tax Increment Reinvestment Zones (TIRZ) are allowed by Chapter 311 of the Texas Tax Code. Chapter 311 establishes necessary procedures for creating and amending a TIF or TIRZ and allows a municipality to pay for monetary obligations incurred, or estimated to be incurred, in creation of reinvestment zones that are listed in a project plan. A TIRZ requires a creation ordinance and TIF project and financing plan.

Creation ordinance establishes four key elements:

  1. Boundary
  2. Term
  3. TIF Board
  4. Preliminary Project and Financing Plan

Proposed Trophy Club TIRZ (Initial Preliminary Analysis)

 

 

 

TIRZ #1 would include PD-13 Village Shopping Center, PD-30 Shops of Trophy Club, and the land surrounding the Trophy Club Municipal Complex. The proposed TIRZ #1 would include five phases of potential development for PD-30.

 





Phase A  Blue

  • Retail - 69,000 square feetTIF #1
  • Office - 49,000 square feet

Phase B Red

  • Retail - 90,500 square feet
  • Office - 22,000 square feet
  • Multifamily - 220 units
  • To be determined - 22,500 square feet

Phase C Green

  • Hotel - 150 rooms

Phase D Purple

  • Retail - 20,000 square feet
  • Office - 176,000 square feet
  • Multifamily - 130 units

Phase E Orange 

  • Retail - 25,000 square feet
  • Office - 8,000 square feet

TIRZ #2 would include PD-25 Trophy Wood Business Center with five phases of development. Phase A has already begun with Hampton Inn completed in April of 2013.

Phase A Blue

  • Hampton Inn - 95 rooms
  • Homewood Suites - 108 rooms
  • Retail - 27,000 square feet

Phase B Red

  • Medical Office Buildings - 40,000 square feet

Phase C Green

  • Office - 20,000 square feet

Phase D Purple

  • Holiday Inn - 136 rooms

Phase E Orange

  • Residential - 35 units

 Tax Increment Reinvestment Zone Examples and Further Reading: