2001 05 24 WS MinutesMINUTES
CITY COUNCIL WORK SESSION
May 24, 2001
Members present: Council Member Victor Almendarez
Council Member Calvin Mundinger
Council Member Don Murray
Council Member Ronnie Anderson
Council Member Coleman Godwin
Pete C. Alfaro Mayor
Staff present: Monte Mercer City Manager
Ignacio Ramirez, Sr. City Attorney
Gary W. Smith City Clerk
Absent: Council Member Scott Sheley
The work session was called to order by Mayor Alfaro at 5:00 p.m.
Discuss proposed Tax Increment Reinvestment Zone No. 1.
City Manager, Monte Mercer, explained that the Council was at the start of the process.
The purpose of the meeting was to provide information on the concept of the Tax
Increment Reinvestment Zone (TIRZ). Further meetings will be scheduled, including
one at the site of the proposed zone. On the Council agenda is an item to call a public
hearing for July 26, 2001. 60 -day's notice of the hearing must be provided to all entities
that levy taxes in the proposed zone. Preliminary meetings have been held with Judge
Eckels and Commissioner Fonteno. The final decision will be made later.
In a TIRZ, the developer bears all the risk. The property owner must pay the entire tax
bill. The taxes that arise from the increased value are paid to the TIRZ board to be paid
to the developer based on performance milestones set forth in the TIRZ agreement.
David Hawes, Hawes Hill & Associates, explained the TIRZ procedure. The TIRZ will
finance public improvements. The captured tax (taxes on the value above the base value)
comes only from real property taxes. When the zone is created, the base year and base
value is established. Development that increases value above the base year creates the
incremental increase in taxable value for the captured taxes.
The significant steps are to schedule a public hearing, develop a preliminary zone
financing plan; provide publication for the public hearing; provide notice of the public
hearing and proposed zone to the other taxing entities; and make presentations to the
school district and county.
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May 24, 2001
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In the creation of the zone, the zone is designated and must include 10% or less
residential property and have arrested development due to the conditions affecting the
property.
The public hearing is to provide information about the proposed zone and to receive input
from the public concerning the creation of the zone, the boundaries of the zone, the
concept of tax increment reinvestment, and inclusion of property in the zone.
The TIRZ will be managed by a board of directors appointed by the City Council. The
board will approve a project and reinvestment plan, subject to approval by City Council.
The board will be responsible for the reimbursement agreement with the developer.
TIRZ funds are subject to the same rules as bond funds and other municipal funds. The
funds can be used to finance public improvements, either through direct financing or
through bonds.
A TIRZ can last no longer than 40 years. They generally last between 25 and 30 years.
The TIRZ can be terminated when all the projects have been completed and reimbursed.
Eligible project costs include off -site utilities, upgrading the infrastructure, land costs for
public improvements, oversizing the infrastructure, and providing landscape /streetscape
and sound buffers on public property. The City may retain administrative costs to
provide services to the zone and contributions made for the implementation of the zone.
A TIRZ is not tax abatement or a direct subsidy to the developer.
Council Member Anderson inquired about the resistance to the creation of a TIRZ in
Mont Belvieu. Mayor Alfaro explained that the TIRZ was not created because there was
no agreement between the city and county.
Council Member Almendarez inquired who David Hawes would be representing. Mr.
Hawes explained that he had been retained by the Mall interests, but if the TIRZ is
created, he would be representing the City.
Council Member Almendarez questioned whether the area selected for the TM was the
best area in the City for a zone. Hawes suggested that the proper question is whether the
TIRZ is the right tool for the situation. Council Member Almendarez inquired why the
TIRZ did not include other property in the area. Hawes responded that the property must
be within the City to be in the TIRZ. The best approach is to keep the area small to gain
the best impact and to spur development on property outside the zone. This way the City
gets the benefit of the spillover development.
Council Member Murray suggested that the proper question would be, "Are there other
areas appropriate for the creation of a TIRZ ? ".
City Manager Mercer proposed that City Council must develop a policy for the creation
of TIRZ's. Hawes stated that creation of a TM is a public policy decision. The TIRZ
agreement must place the risk on the developer to insure his performance.
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May 24, 2001
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Hawes gave a project overview. The purpose of the TIRZ is to develop the City by
creating a regional economic center to increase the economic base. Studies have shown
that growth is moving outside Harris County. An economic base produces goods and
services that are provided to outside the area. East Harris County lags behind other areas
in private sector investments. Housing starts show a big increase for north and west of
Harris County, but not east Harris County.
To attract the base economic companies, development tools must be utilized to spur
redevelopment and create the area as the eastern gateway to the Houston area.
Redevelopment of San Jacinto Mall can serve as a magnet for economic base companies.
The area is underdeveloped. Sales productivity is low. The image is poor. The Mall
suffers from disinvestments. Will Dean, San Jacinto Mall, explained that long -term
occupancy is low at the Mall; sales per square foot is low; and the taxable value of the
Mall has declined.
The Mall can be redeveloped as the new town center. Manager Mercer explained that
although discussions are proceeding with the Mall about the location of a convention
center there, it is not firm and not integral to the TIRZ.
Hawes described the repositioning of the Mall and the development of infrastructure to
open the area for development; creation of public plazas, fountains, landscaping and
monuments to make the Mall area a destination. To make it a place where people want to
go. The two phases of development would provide the infrastructure and redevelopment
of the Mall and surrounding area to provide for further development of base economic
companies. The cost of public improvements is estimated to be $19,500,000. Private
development costs are estimated at $17,000,000.
The second component of the TIRZ plan is to develop the vacant land along the corridors.
A residential development of 300 units in the north end of Eastgate is proposed. The
projections reflect an 8000% increase in taxable values. Over 30 years, the revenue
increase to the City would be $18,974,358, without spillover development, without new
retail, and without an increase in personal property.
Will Dean explained that he had not been involved in a TIRZ for a mall redevelopment,
but saw it as a jumpstart for the redevelopment. Use of the TIRZ would speed the
eventual recovery of San Jacinto Mall.
Discuss the Cedar Bayou Navigation District project.
Mayor Alfaro explained that the District Board had decided to use a site other than Ash
Lake for dredge spoil disposal. Don Johnson, representing the District was available for
(0111, questions. There were no questions.
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May 24, 2001
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Adjourn.
There being no further business, the meeting adjourned at 6:27 p.m.
7//
ry VJ. Smith
City Clerk