Downtown reinvestment zone estimated to contribute $15.4 million for downtown projects over 20 years

Published on Saturday, 15 July 2017 03:24 - Written by FAITH HARPER,

A zone aimed at capturing money to help revitalize downtown will not bring in as much money for projects as originally anticipated.

In April 2016, the city of Tyler began work to re-establish its tax reinvestment zone in downtown.

Reinvestment zones involve snapshotting the property tax value on an area and capturing money from any increased value above that threshold into a fund, which can be used for improvement to the area or to help spur development in an underdeveloped or blighted area.

The downtown reinvestment zone includes 574 acres, from Front Street to Gentry Parkway, and from Palace Avenue to Beckham Avenue.

It was first created in 2008, just before the Great Recession. Since then, many properties in the area went nonprofit and off the tax rolls, causing values to go below the established baseline. No money, therefore, was captured from growth.

The city hired a firm to delete that low-performing reinvestment zone and start over, which would create a new baseline for growth.

Three taxing entities are allowing a percentage of the taxes they would have received on the increased value to go into the fund and not into their individual coffers. Those include the city of Tyler, Tyler Junior College and Smith County. State law prohibits school districts from participating in reinvestment zones.

When the project was first presented, Fort Worth-based economic developer David Pettit, a consultant brought on to help with the project, proposed a 30-year term and estimated the zone would bring in $27.6 million over its life, assuming 100 percent participation from TJC and Smith County.

But, the final approved terms will bring in less for the zone - an estimated $15.42 million - due to a shortened term and less participation from Smith County and TJC.

The term was shortened from 30 to 20 years.

The city will give 100 percent of any taxes it would have received on increased property values in the zone, but TJC and Smith County have altered their terms.

Both will participate with 50 percent of increased value for years one through five, and 75 percent in years six through 20.

The city estimates it will put in $8.63 million over the life of the term. Smith County is estimated to contribute $4.9 million, and TJC to contribute $2.54 million.

Those estimates are guesses. The true increased value will depend on the private sector purchasing and revitalizing downtown properties.

The zone was re-created in time to capture the increased value from a $12 million multi-family housing development on the old King Chevrolet property, on the west side of downtown at the intersection of West Erwin Street and Bonner Avenue.

The reinvestment zone has a board of directors that will decide how to spend its funds. That board is made up of representatives from the Tyler City Council, Smith County Commissioners Court and TJC. 

The fund has a current balance of zero dollars.

Twitter: @TMTFaith