City council to consider downtown district TIRZ News Staff Sun, 06/09/2024 - 11:43 am Tax Increment Reinvestment Zone forwarded to council
(THOMAS WALLNER | THE GRAHAM LEADER) Downtown Development District board member Michael Armstrong (left) speaks regarding the Tax Increment Reinvestment Zone which was recommended by the board Tuesday, June 4 for approval by the Graham City Council.
Thomas Wallner editor@grahamleader.com
The Graham City Council will soon make a determination on whether to pursue a Tax Increment Reinvestment Zone in the city’s Downtown Development District, which could establish an earmarked fund for future projects in the downtown area.
The TIRZ is an up to 30-year incremental financing tool which does not implement an additional tax and can be used to finance structural improvements and infrastructure within a defined area, such as funding future DDD projects. The funding can be used for projects such as parks, street improvements, sidewalks, infrastructure and economic development.
The appraised value of a property within the zone during the year it is implemented serves as the base value, with all additional improvement value being able to be used for tax purposes within the TIRZ.
For example, a property the year it is created valued at $1,000,000 that goes up 3% to $1,030,000 will only have taxes collected on the $30,000 improvement value increase for the established TIRZ fund.
“With your TIRZ you're taking any increment to the established tax base as the years progress and reinvesting that money into your zone. That can be in the form of grants. That can be in the form of public improvements,” Assistant City Manager and DDD member Grant Ingram said. “There's a lot of benefits to having dedicated money set aside for projects that come inside of this zone.”
The TIRZ is one option the city is considering as an economic development initiative. In a 4-3 vote Tuesday, June 4, the DDD board approved recommending the creation of a TIRZ within the limits of the boundaries of the downtown district, which the city council approved in April 2023.
Opposing the creation of a TIRZ was former city manager Larry Fields, who said he believes it limits the city council with the general fund. Fields said the city could utilize the Graham Economic Improvement Corporation and Graham Industrial Association for downtown projects, if needed.
“I see this TIRZ thing as very much limiting the elected officials' ability to spend tax dollars for the best interest of the community and the taxpayers,” Fields said. “...(The city council), they've got to approve the project. Okay, I get that. ...Say you bring the projects, it's $30,000, and the council says no. So there's $30,000 sitting right there that can't be used. It's wasted. It's just sitting there. It can't be used in the general fund. It can't be used for the city's operation.”
Ingram, who also oversees the Economic Development Corporation, said that using the GEIC as a primarily downtown development funding mechanism would be unfair to other businesses in the city, due to the fact the organization operates off sales taxes collected throughout the city.
“It can be (used that way), but we need to be bringing in jobs (and) we need to be doing quality of life projects. ...When we do our Facade Improvement Grant, that is not just for downtown. While most of the downtown businesses are taking advantage of it, that's available to anyone inside the city limits because our sales tax is collected inside the city limits,” he said. “If the GEIC becomes the only funding mechanism for the Downtown Development District... (because) we're collecting sales tax everywhere else, then I don't believe that's in the best interest of the GEIC.”
President of Petty & Associates, Trent Petty, spoke to the Graham City Council during their meeting Thursday, May 9 and offered the suggestion that the city increase the limits of the TIRZ further than the DDD boundaries including commercial and residential properties.
The assistant city manager said the GEDC has identified housing in as a concern for growth and improvements.
“The GEIC is exploring potential programs to help incentivize affordable housing inside the city limits,” Ingram said. “With that, we are trying to identify potential vacant lots, identify dilapidated homes, working with code enforcement on homes that are structures that may need to be removed and seeing if we cannot turn right around and incentivize developers and builders to work on infill housing.”
Ingram said that if the TIRZ extended over the vacant lots or dilapidated buildings it could be used as an economic development tool to help with housing and other concerns. City Manager Eric Garretty said the zone can also serve as a benefit to those who have residential properties within it.
“This particular TIRZ... is designed to encourage infill development,” he said. “The goal of infill development is to raise the assessed values of the properties in the zone. So if folks tear down houses and put up new nicer houses the assessed value and the market value of those new houses goes up in relation to what was there before. That's the benefit to the residents if they have a property in the same location that's worth more than it was when you started.”
There’s a limitation of no more than 50% of the city’s real property value included in a TIRZ.
The DDD board was against extending the bounds of the TIRZ outside the limits of the district boundaries, but that item could be brought up again to city council. A TIRZ can also be extended or amended throughout the term of its life.
The city is still in early discussions about the TIRZ, with an approval from city council moving the process into its next steps, which will be preparing a preliminary project and finance plan and publishing and hosting a public hearing.
“If we were to move forward and make this recommendation to council, we would then in turn hire an outside source... and they will go through the formulas and really help us to fine tune and make sure that we're abiding by all legal terms of the creation,” Ingram said.
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