TIRZ No. 3City Council

October 18, 2021

The “TIRZ” Tool – Overview ▪ A widely used economic development tool that allocates revenues for

public improvements with no new taxes.

▪ City directed public improvements become attractive investments to private developers in areas that need development or redevelopment.

▪ Public improvements are paid for over time by allocating a portion of the newly generated revenues collected inside the zone.

▪ 100% controlled by the City.

▪ No up-front costs required.

▪ No Debt TIRZ (also called “Pay as You Go”) has no impact on the City’s bond rating or debt capacity.

TIRZ Defined▪ “Tax increment financing is a tool that local governments can

use to publicly finance needed structural improvements and enhanced infrastructure within a defined area. These improvements usually are undertaken to promote the viability of existing businesses and to attract new commercial enterprises to the area. The statutes governing tax increment financing are located in Chapter 311 of the Tax Code.”

Example▪Property A is valued on January 1, 2020, for $1,000,000.

▪ The appraised value for January 1, 2021, goes up 3% making the property value $1,030,000.

▪ The new tax increment that goes into the TIRZ fund is the tax collected on the $30,000 value increase.

OR

▪Property A is vacant and valued at $100,000.

▪Property A is improved with improvements valued at $1,000,000 making the new property value $1,100,000.

▪ The new tax increment that goes into the TIRZ fund is the tax collected on the $1,000,000 in new improvements.

Reasons to Consider a TIRZ▪Need for major public improvements to support sound growth

and development.

▪ Lack of capital or debt funding to pay the infrastructure costs up front.

▪Regional benefits that exceed the benefits realized within the boundaries of the area.

▪Redevelopment of areas within the zone is impaired due to lack of public infrastructure and investment.

▪Allows other local taxing entities (not including schools) to participate at their own discretion.

Step 8 Submit an annual report

Step 7 Implement tax increment financing

Step 6Contribution to the tax increment fund by other taxing units

Step 5 Prepare a final project and finance plan

Step 4 Designate a reinvestment zone

Step 3 Hold a public hearing

Step 2 Publish the hearing notice

Step 1Prepare a preliminary project and finance planCreation Process

Proposed TIRZ No. 3

• City participation: 50%

• Collin County participation: 50%

Assumptions

• 799.31 Acres

Acreage

• $238.4 million

Base Taxable Value

• 2021-2051

Term

• Statutory Maximum – 50%

• Proposed Zone – 8.76%*

Percent of city’s real property value

• Statutory Maximum – 30%

• Proposed Zone – 11.44%*

Percent of Zone considered residential

*Entire TIRZ #3

boundary

• City - $50.6 million

• Collin County - $9.9 million

Projected TIRZ Fund – $60 million

Location of Public Improvements

Next Steps

▪City Council Action Requested: Conduct a public hearing and consider an ordinance authorizing the creation of Tax Increment Reinvestment Zone No. Three, City of Sachse, under Chapter 311 of the Texas Tax Code for approximately 799.31 acres of land generally located along State Highway (SH) 78, within the City of Sachse in both Dallas County, Texas, and Collin County, Texas.