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City Council on Wednesday approved regulations governing the creation, growth and abolition of tax increment reinvestment zones, codifying what had been longtime city policy under Mayor Sylvester Turner.
The rules come three decades after the city launched a TIRZ-creating blitz that locked nearly a quarter of Houston’s property tax base in the sometimes controversial tax districts that originally were conceived as a way to redevelop blighted areas and neighborhoods.
“With so many questions surrounding TIRZ and the purpose of TIRZ … I don’t think you can talk about it just verbally,” Mayor Sylvester Turner said. “I think there has to be something that people can look to and assess and evaluate.”
Under a tax increment reinvestment zone, the property tax revenues within the zone are frozen at an agreed-upon level. As development occurs and property tax revenues rise, the amount collected above that level – the increment – is funneled back into the zone to pay for improvements that further raise property values.
Supporters say those improvements to roads, utilities and beautification projects encourage further private development, which generates more property tax revenues for the zone.
The state law that established municipalities’ ability to create TIRZes was passed in 1981. Since then, Houston has created 28 zones across the city..
The city established rules for the zones in the 1990s, but for decades those rules have been waived each time a new one was created by City Council, according to a 2022 Houston Chronicle investigation that found the zones produced bountiful public dollars for largely affluent areas while poorer neighborhoods competed with each other for resources.
Council members celebrated Wednesday’s vote, saying the rules will allow the city to better manage the zones. The council voted 16-1 in favor of the rules, with District G Councilmember Mary Nan Huffman the lone dissenter.
Huffman left the meeting after the vote and her staff said she was unavailable for comment Wednesday.
Under the approved rules, new zones would have to include areas in which 50 percent of parcels are vacant or contain blighted buildings in need of redevelopment. The rules also require the city to show that proposed developments would raise property values by 50 percent for the entire zone by the end of its initial term.
The new regulations also set a cap of 30 years for the initial term of a TIRZ, and include guidelines for expanding, shrinking or terminating zones.
Virtually all of the city’s existing TIRZes were created with 30-year terms, but many have been extended beyond that, including eight that have been lengthened to 45 years..
The ordinance essentially codifies Turner’s existing policies toward TIRZes.
The city also must show how the public projects funded through the increment taxes will bring private investment into the area under the new rules.
“This speaks well for building communities, building neighborhoods, building districts and attracting economic development,” Turner said.
Wednesday’s vote came after a month of delays from council members who wanted to view the language of the new ordinance and supporting research that was prepared by the mayor’s office. Three votes on the ordinance were delayed prior to Wednesday’s meeting as council members waited to view the document.
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