City council tables TIRZ, requests more information News Staff Tue, 06/25/2024 - 12:58 pm
(TC GORDON | THE GRAHAM LEADER) The Graham City Council met Thursday, June 20 and tabled an agenda item to pursue a Tax Increment Reinvestment Zone within the boundaries of the Downtown Development District. The council requested more information before making a decision.
Thomas Wallner editor@grahamleader.com
A decision to make the next moves on a Tax Increment Reinvestment Zone in the city’s Downtown Development District was tabled by the Graham City Council for clarification on a number of issues raised last week.
A TIRZ is a financing tool which could be used by the city to establish an earmarked fund for future projects in the downtown area, without the addition of a tax.
“A TIRZ does not increase or decrease the property tax rate for any property located within the zone,” City Manager Eric Garretty said. “Revenue for the TIRZ is derived from the anticipated increase in assessed values. The property tax rate that the council annually sets currently applies equally to all properties in the taxing jurisdiction, and no differentiation in tax rate would occur for properties within the TIRZ.”
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.
The city council met Thursday, June 20 and approved tabling the agenda item to receive additional information regarding funding generated by the TIRZ in the downtown district, adjustments that can be made to the percentage amount reserved in the increment and term limits on a TIRZ.
“There’s going to be some monies that will need to be appropriated, we’ll need to retain council and some advice on doing all the steps necessary... to establish a TIRZ,” Garretty said. “The first thing we need to know is, do you want us to come to you with those numbers and set up a budget to begin establishing a TIRZ?”
The zone 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.
“Everything will have to be approved by council, regardless of size with the TIRZ,” Assistant City Manager Grant Ingram said. “Every project that is applied for and approved would be at the mercy of the council.”
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.
The assistant city manager said the TIRZ can serve as a funding source for future development and wanted the boundaries expanded outside the limits approved by the DDD board.
“When you look at an expanded area to encompass some residential areas, we have the ability to use the TIRZ funding for incentive for redevelopment, for infill, for gentrification and improve the housing availability in our town, which is a top priority of council and our economic development organizations,” Ingram said. “…We are going to be needing to see significant improvements to water and streets and sewers as those areas are rebuilt, and this would provide that funding source for that area.”
Council Members Jack Little and Jeff Dickinson had concerns with taking money from the general fund while the city is struggling to fund the budget.
“Getting my tax statement for 2024, properties in the downtown area jumped up drastically. ...Now, if we’d had the TIRZ in effect during this, then whatever that increase was would have been put over into the TIRZ,” Little said. “...I look at what we’re presented with at the council. I look at trying to get our people more money. ...I do not want to take those tax dollars that would be used to help with that out of the council’s hands to manage.”
Dickinson said he sees the benefit to the city but says there is potential appraised value in that expanded zone that will rise in the next few years that would benefit the city.
“My hesitancy in immediately taking… and enacting it over a large portion of our downtown area is first off, we have a chief appraiser at YCAD (Young Central Appraisal District) that is doing a fantastic job, but he’s in his second year and we’re seeing appraised values that have been neglected for years and years and years that are being brought up to where they need to be,” he said. “My concern is that there is some value here that the city would recognize for its general fund that is needed across the city.”
Under the TIRZ, the city does not need to dedicate 100% of the captured new appraisal value to the TIRZ, with several on the council in favor of setting it at 50%.
The city manager calculated $10,000 a year in revenue to the TIRZ in the downtown district with 100% of the captured new appraisal value to the TIRZ, which Dickinson said he needed more clarification on with his motion to table.
“I would make a motion to table this for further information on can we get actual appraised values in this area, so we know exactly what we’re talking about, from ‘23 to ‘24 (and) ‘24 to ‘25,” Dickinson said. “...I mean, we’ve calculated 16 million and the city manager says $10,000, and I don’t have any reason not to believe him. I’m just a numbers guy. I want to see it for myself, but then we can also identify those properties that maybe we see as areas of great improvement that’s going to add more money to the TIRZ. I think we need clarification on how we can adjust that percentage throughout the duration of TIRZ.”
The city manager said even if this downtown TIRZ is not something the council favors, the city will soon bring additional TIRZ recommendations for other areas.
“If we could find... where there’s an area for potential development that a TIRZ would help fund that development, we’re going to be coming back to you with this,” he said. “...If we don’t do this, I’m going to be coming back in my proposed budget, and we’re going to have to start setting significant monies aside in the general fund budget to incentivize development. Because unless this economy drastically improves, what (Ingram) and I see when we’re talking to these folks who are doing site selection all the time unless you are offering incentives in this environment, they’re not talking to you.”
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