Not-so-super TIRZ? That’s just the latest diversion: (First in a series)

Houston-TIRZ-Map

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I couldn’t say it more effectively than the Chronicle Editorial Board did recently as they identified the latest tax diversion boondoggle, the Greater Houston Zone TIRZ:

 Houston Chronicle 7/24/2014: “Every time City Hall creates a TIRZ, it is a vote of no confidence in its own ability to properly collect and spend taxpayer dollars. It is a confession that Houston should be managed by unelected boards at secretive meetings who can issue debt without voter approval.”

Think about that. Heavily populated by the very real estate developers that benefit from these tax diversions, these special components of city government are virtually unaccountable. Their boards are appointed by the Mayor, approved by Council, and often have little interest in any input from Citizens. It’s considered bad form to oppose another District Council Members TIRZ board picks, so there is little accountability. (TIRZ: Tax Increment Reinvestment Zone)

Let’s be very, very clear. Every single dollar that is “reinvested” in a zone is a dollar that does not go into the general fund.

 Houston Chronicle 7/24/2014: “But each TIRZ represents a moment when our elected officials decided to hand over the purse strings to someone else, diverting dollars that could have been spent shoring up pension obligations or paying down debt.”

A choice to divert $10 million to pay for a park in Montrose through a TIRZ, is $10 million NOT available for street repair, or to HPD for investigating burglaries, or any other myriad, worthy projects.

The Southwest Houston TIRZ #20 which covers all of Sharpstown and extends just outside Beltway 8 has been in existence for 15 years. The first project was the modification of the Brown & Root plat in the Westchase District and the extension of Rogerdale that provided for commercial expansion. Sounds great, huh?

What was built on the vacant land across the Beltway north of Bellaire? More apartments like the Townpark Townhomes, which were the last thing we needed!

“The property was built using the Low Income Housing Tax Credit Program. This program incentivizes investors to inject capital into rental apartments for lower income Americans. The property received a tax credit allocation in 2001. The property was placed in service in 2003.  160 of 160 units at Town Park Townhomes are low income and subject to the tax credit program. Link to source.

Many of us were under the impression that the blighted, apartment complexes were all built by the late 90s, but  several hundred low income (AKA “mixed income”) units were completed as late as 2003. Meanwhile, across the Beltway we have tax subsidized construction of an office complex. The new office buildings are actually in Westchase so the management district assessment of 9 cents is diverted north and out of Sharpstown.

Yes, in 2007 we had the $3 million in improvements at Bellaire & Fondren, with pavers that failed almost immediately, and that were never fixed. The light bill seemed to be too pricey as the lantern style traffic signals that were lit at night have been dark for years, and until recently I don’t believe the hardscape items had ever been cleaned or washed.

More recently the TIRZ began construction on a $27 million dollar project to rehab Bellaire from Mary Bates to Rogerdale. This project was initially slated to run in the $16 million range and was to stop at the Beltway, but almost $10 million was added to the budget and it will now run to Rogerdale. Mary Bates to Fondren will be left as it is I guess.

 Houston Chronicle 7/24/2014: “Every time City Hall creates a TIRZ, it is a vote of no confidence in its own ability to properly collect and spend taxpayer dollars. It is a confession that Houston should be managed by unelected boards at secretive meetings who can issue debt without voter approval.”

And the source of the funds for this Bellaire Mobility project? MORE DEBT!

Yes, the TIRZ #20 issued almost $50 million in bonds this spring (which included refinancing about $25 million in 2003 & 2009 bonds) , cutting a check to the City of Houston, and naming Public Works as the project manager. The City of Houston is running the whole show, but the funds were borrowed through the TIRZ. Couldn’t the City of Houston have borrowed those funds more cheaply?

REBUILD HOUSTON is all about paying down debt, and using what would have been interest payments on road projects, except that “discrete component unit” debt such as the TIRZ accounts has grown substantially, likely reaching half a Billion dollars in the next year or so. We’re not paying down debt, it’s just moving off the main books. Through June 2013, these “discrete units” have almost $370 Million due in bonds, notes, and similar liabilities. This will easily approach $500 million in the next few years with the Uptown Bus Rapid Transit program and debt issued by the new Greater Houston TIRZ.

The TIRZ #20 currently collects a little over $5 million in property tax proceeds per year, creating a debt-to-revenue ratio of 10 to 1. That’s like the City of Houston borrowing $50 billion on revenues of $5 Billion, by all accounts a very poor idea. The decisions being made by the TIRZ #20 this year will lock in the projects and tie the hands of future elected officials for years to come.  Indeed the TIRZ #20 have yet to even reach the high point of property values before the 2007 recession, but someone thought borrowing the next ten years of tax revenue was a good idea.

There is a state cap, or limit on how much municipalities can silo or divert into these TIRZ entities, in fact a proposal to create a Spring Branch TIRZ failed to materialize a few years ago due to this limit. But clever people are always looking for ways to get their hands on tax money, and sure enough a loophole was discovered.

In the next installment we’ll look at the ramifications of the new WESTCHASE 380 FUND and their first project, a $25 million park on seven acres in Westchase near Westheimer. The long term plan diverts over $500 million from the general fund for projects exclusive to this barely 4 square mile district.

What does that mean for Sharpstown and other communities? Stay tuned!

Westchase 380 is a “Synthetic” TIRZ that avoids Cap (Part Two)

Sharpstown Subdivision (partially) Annexed by TIRZ #20 (Part Three)

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