TIRZ 101

TIRZ stands for Tax Increment Reinvestment Zone. They are special zones created by City Council to increase investment in specific areas of the city. A TIRZ works by establishing a base year for property taxes, and then setting aside any future tax revenue over the base year amount (the "tax incitement") to be used for projects within the TIRZ boundary. As an example, say a TIRZ is established in 2014 and the real estate taxes for that year are $1 million. If in 2015 the real estate taxes were $1.1 million because of property appreciation, then that extra $100,000 tax increment would be set aside for projects within the TIRZ as directed by the TIRZ board and approved by City Council.

It's important to remember that a TIRZ is not an additional tax. Instead, it is just a reallocation of the taxes that are already being collected. With a TIRZ, any increase in property values that results in a collection of additional real estate tax revenue is set aside for projects within the TIRZ boundary, instead of being sent to the City of Houston for general use.

Much more detailed information about the composition and operation of TIRZs can be found on the city's website at http://www.houstontx.gov/ecodev/tirz.html.

Background on the Midtown TIRZ Annexation

Montrose does not have a TIRZ, but Midtown does. The Midtown TIRZ, also called TIRZ #2, was established in 1994 and has resulted in the completion of several substantial infrastructure projects in Midtown including the recent improvements to Bagby Street. In December of 2014, a proposal was announced where the Midtown TIRZ would "annex" certain parts of Montrose, mainly the commercial corridors along Montrose, Richmond, Alabama, and Westheimer.

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The idea was that the tax increment and experience built up by the Midtown TIRZ could be used to help rehabilitate some of the important streets in Montrose that needed substantial improvement and repair. However, many felt that this proposal was announced very suddenly and without the input of the Montrose community. As a result of special neighborhood town halls that Council-Members Ellen Cohen and David Robinson facilitated, the voices of the community were heard, and the annexation of parts of Montrose by the Midtown TIRZ will not go forward at this time.

Next Steps

Because one of the largest concerns with the proposed annexation was the lack of Montrose community input, the process is going to start again from the ground up to make sure that community voices are heard. The Midtown TIRZ annexation is not a foregone conclusion, and there are proposals on the table for a separate Montrose TIRZ as well as the ability for Montrose to say that we don't want a TIRZ at all.

Starting in January 2015, various stakeholder committees will be formed and will have meetings to determine the specifics of how – or even whether – Montrose will participate in a TIRZ. Those committees will meet through January and February of 2015 with the goal of preparing a proposal in March that reflects the considered choices of the Montrose community. If the community would like to participate in a TIRZ, the proposal will go through a review process in April of 2015 with an eye toward presenting the proposal to City Council for approval in May.

This is an important process and everyone's voices should be heard. Watch this blog for more information on how to participate in the stakeholder committees that will be formed at the beginning of next year.

– by Ben Garry