Reprint from the Progress Times - March 14, 2008
©Progress Times 2008 - All Rights Reserved

Alton considers tax increment financing

 

By Kathy Olivarez

The Alton City Council heard a presentation from Lance Elliott of TIF Services of South Texas on how tax increment financing could be used for structural improvements and enhanced infrastructure within the city in their Tuesday, March 11, meeting.

The council was told that tax increment financing initiated through actions of a city council must meet one of three different criteria.

"The present condition of the areas selected must substantially impair the city’s growth, retard the provision of housing or constitute an economic or social liability to the public heath, morals or welfare."

"The condition must exist because of the presence of one or more of the following conditions: a substantial number of substandard or deteriorating structures, inadequate sidewalks or street layout, faulty lot layouts, unsanitary or unsafe conditions…or conditions life or property by fire or other cause."

Elliott said the area in the zone must be predominately open, but because of obsolete platting, deteriorating structures or other factors, it impairs the growth of the city. In addition the area must be adjacent to a "federal assisted new community" as defined under Tax Code 311.005 (b).

If a city creates the zone, the city controls the board of the zone and receives all of the income generated in the zone. The funds are then available for city capital improvement projects or for the city’s use to encourage economic development.

According to regulations no more than 10 percent of the property within the reinvestment zone (excluding publicly owned land) may be used for residential purposes. The value of the residential land in the proposed Alton TIRZ (Tax Increment Reinvestment Zone) would be valued at no more than $2,070,000.

A reinvestment zone may not contain property that cumulatively exceeds 15 percent of the total appraised property value of the city. The base value of the City of Alton’s proposed TIRZ would be approximately $20,700,000.

A reinvestment zone may not contain more than 15 percent of the total appraised value of real property taxable by a county or school district.

While determining the boundaries of the TIRZ, the zone should be large enough to accommodate the 10 percent rule for both the multi-family and single-family developments.

The city council must approve a resolution of intent to form a TIRZ zone and request that the county participate.

A preliminary financial plan and a list of public projects to be funded within the zone must be developed by the city.

After the plan is ready the city and its consultant must make statutory presentations to the county and the school district. Once county approval is received, a preliminary development plan, a final finance plan, a time line must be readied and an inter-local agreement with the county must be negotiated.

The city creates the zone, appoints the board to oversee the zone and establishes a tax increment fund. The county approves the agreement. The zone board approves the development plan and final finance plan and sends them back to the council and country for final approval.

The city council then approves both the development plan and the finance plan. Plans could be written in general terms such as "infrastructure improvements" without specifying what infrastructure improvements would be made in the plan.

Elliott explained that Alton’s current tax rate is $0.42 while Hidalgo County’s maintenance and operation tax rate is $0.52 giving a combined total of $0.95. He said the county would be contributing a dime more than the city to the project. Based on estimated income of $1 million, the TIRZ funding would be $9,568.

He further explained that only taxes from new development could be placed in the TIRZ. The city would not be losing money from its current tax base. He suggested that it could not be hard to accumulate money through Tax Increment Financing (TIF). The average value of a home in Alton is $65,000 and just 15 new homes at that value would create $1 million. A new 20,000 square foot commercial development would generate $2 million. And 125 new apartment units would generate $8,125,000.

The council will look at how the TIF might be used to help the city grow before making a final decision.

In other action the council approved a revenue recovery services billing agreement. This will be for services related to fire protection and suppression services and motor vehicle accidents of first responder/EMS services (non-patient transport). Claims will be filed against insurance companies to recover the expenditures involved.

An agreement between La Union Del Pueblo Entero (LUPE) a non-profit corporation, and the City of Alton, Hidalgo County was approved. LUPE offers community service centers and is self-funded. Services offered include income tax preparation and electronic filing, immigration for preparation, notary services, and verbal and written translations.

Self – development classes such as English as a second language (ESL), citizenship preparation in English and Spanish, and distribution of information to the public are offered. GED assistance is planned for the future.

Approval was given to a request to hire an assistant judge for the municipal court. City Manager Jorge Arcaute told the council that the workload was too much for one judge to handle. Because the city was within 60 days of an election, no one could be appointed until after the election but the city could advertise for potential judges. He said an attorney would be needed.

The council was also told a full-time warrant officer would also be needed to handle warrants and bailiff duties.

The council approved ordinance 2007-12 which approved amendments to the personnel ordinances 2003-21, 79-16, 98-07, 98-10 and 99-05. The items dealt with compensation, probation, travel expenses, grievance hearings and work attire.

The council approved Ordinance 2008-05 granting to AEP control company, and its successors and assigns a non-exclusive franchise to construction, maintain and operate lines and appurtenances and appliances for conducting electricity in, over, under and through the streets, avenues, alley and public places of the City of Alton.

Sale of surplus goods resulting from the move from the old city hall into the new facilities was approved. The city will take sealed bids for purchase of surplus equipment until 4 p.m. Wednesday, March 19. The council was told that a couple of auctions of surplus goods would be held to get rid of old merchandise.