Stephenville City Council gave approval to forming the city’s third Tax Increment Refinancing Zone (TIRZ) after a public hearing and creation ordinance at the Tuesday, Dec. 3 meeting.
The area is a primarily vacant 131 acre parcel of land off the Northwest Loop bordered by Frey near Forest Lane. There is a single commercial building in the zone.
Stephenville already has two TIRZ – Washington Commons (where Hobby Lobby and other stores are located), and the city’s downtown area.
So how does a TIRZ zone work? A TIRZ zone works when a municipality or county creates a TIRZ and records the taxable value of the area’s property. New taxes generated by development in the area are deposited into a Tax Increment Fund (TIF). The funds are then used to pay for public improvements and development projects within the zone. The base rate value will be established as Jan. 1, 2024 with the city participating at a rate of 60% for its real property increment. With this rate, 60% will go into public infrastructure and 40% into the general revenue.
The preliminary project and financing plan outlines the funding of $27,830,830 in public improvements related to water, sanitary sewer, and storm water facilities, as well as street and intersection improvements, open space and park facilities, utilities and street lighting and economic development grants.
Typically a TIRZ is designated by a governing body when private development activity is expected to occur within a designated area as a way to attract potential developers and investment into an area that may not otherwise occur.
Anticipated projects in the area are a mixture of single family residences, townhomes, multifamily and commercial developments.
A TIRZ can pay for infrastructure, public improvements, economic development programs or other projects that benefit the zone. A TIRZ is not a new tax on development, but rather redirects a portion of future tax generated from new development within the TIRZ.
No one spoke during the public hearing.
Councilmembers and the mayor provided feedback after a presentation was given by David Pettit with David Pettit Economic Development, LLC.
“Harbin Drive is the result of a TIRZ. It was $19 million – some of that money came out of water and sewer projects and Tarleton participated some but we wouldn’t have Harbin Drive without creating the TIRZ,” Stephenville Mayor Doug Svien said. “It’s been a great thing for us in the city of Stephenville. This would give us $18 million that we would be able to spend on other streets and projects.”
Part of the consideration of the formation of the TIRZ is the lack of lots to build homes in Stephenville and trying to increase affordable housing in the city.
“No matter if you talk to the hospital, or FMC or St. Gobain’s, one of their biggest impediments for employees is affordable housing,” Svien said. “People are living in Brock, they are living in Lipan, everywhere else besides Stephenville because of affordable housing.”
Councilmember Alan Nix expressed concern about some developers paying 100% of their infrastructures while other receive help from the city.
“That’s always been my concern for incentives of any kind – and that’s what this is – it’s an incentive for developers, in this case multiple, to develop properties and the city is providing assistance to them, which helps their profit margin. I struggle with that because traditionally, at least here, developers have borne the burden of putting in the infrastructure. The city has provided the services – water, wastewater, police, fire etc. all those things, but the developer has always borne that cost, sometimes struggled, but generally always made a profit of it,” Nix said. “It concerns me and it did at the time when we established the first TIRZ, and we’ve set precedence now. It concerns me that the city subsidizes some developers and not others.”
Mayor Svien stated he understood Nix but that the citywouldn’thaveanyof the businesses in Washington Commons without the TIRZ.
“We wouldn’t have Chick-Fil-A, we wouldn’t have McCalister’s and now Cavender’s is coming to town,” he said.
Svien named numerous improvements in town that would not have happened without TIRZ.
Councilmember LeAnn Durfey said when she first got on council and she received information about TIRZ, she understood the process, and that there was no incentive.
“There is no incentive. They are still paying for everything on their own. We are not giving them a discount on anything it just means we are getting that money back and we can spend it in that area,” she said. “It’s not an incentive at all it’s just saying, ‘Come here and we are going to help you with this, but you are going to pay for it all.’ It changed my viewpoint on this.”
The council approved the ordinance forming the TIRZ and will establish the preliminary plan and finance plan in 2025.