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CHAPTER 311. TAX INCREMENT FINANCING ACT of the TAX CODE Tax Increment Reinvestment Zones (TIRZ) are special districts created to help attract new investment to an area. They have historically been used to finance the cost of redevelopment and encourage new development in areas that would otherwise not attract sufficient market development in a timely manner. Taxes attributable to new improvements (tax increments) are set aside in a special fund to finance public improvements within the boundaries of the zone. These funds are most commonly used to fund street, water and sewer improvements but are also be used for street lighting, parking structures, sidewalks, park amenities, and landscaping. Each of these elements contributes to the viability of the neighborhood and promotes quality development. A number of Texas cities have one or more TIRZ districts with the common goal of stimulating or accommodating new private investment and thereby increasing real estate values and improving quality of life. When a specific geographic area is designated as a TIRZ, the property values on that date become the "benchmark" or the base values. Only the additional tax revenue generated from new development, redevelopment, or increased values on existing development are allocated to the TIRZ. Therefore, the district does not increase the tax rate but only reallocates all or a portion of the revenue from the increased tax base back to the area for a said period of time. If debt is incurred, the TIRZ must remain in place at least until all such debt is retired. To be designated a reinvestment zone, an area must substantially arrest or impair the sound growth of the municipality, retard the provision of housing, or constitute an economic or social liability and be a menace to the public health, safety, or welfare because of the presence of one or more of the following conditions: a) substandard or deteriorating structures, inadequate sidewalks or streets, faulty lot layouts, unsanitary or unsafe conditions, defective or unusual conditions of title, , the deterioration of site or other improvements or conditions that endanger life or property; or b) an area that is predominately open and because of obsolete platting, or other factors, substantially impairs the growth of the area. As an alternative, a TIRZ may be initiated by property owners who own a minimum of 50% of the appraised value in the proposed zone. The process for establishing a TIRZ is generally as follows: • City prepares a preliminary reinvestment zone financing plan; • Plan is provided to each governmental entity that levies taxes on real property within the zone; • City meets with other taxing entities to discuss the boundary of the district and amount of the tax increment to be contributed; • City conducts public hearing(s) and approves boundary of district by ordinance; • City appoints TIRZ Board consisting of 5 -15 members (including one appointee each from PISD, PJC, and county, plus state senator and state representative); and • TIRZ board prepares a "project plan" and a "financing plan" and submits to council for adoption. Cities are authorized to: