A Tax Increment Reinvestment Zone, referred to as TIRZs, is a tax tool used to incentivize growth and fund improvements in parts of a city where there is untapped economic potential. How to harness that tool and a look at some past & future Austin area developments that are the result of the incentive.
Have you ever heard of a TIRZ? TIRZ is an acronym that stands for tax increment reinvestment zone. This is used by a lot of developers and it’s a tool that municipalities and governments use to finance development in a specific zone or a specific area.
So, how a TIRZ works is any type of improvement in that specific zone, some of those taxes are set aside for future development whether it’s public streets, water and wastewater improvements, public parks or even affordable housing. So, a TIRZ appoints board members and then those members are responsible for allocating funds to develop other areas such as streets, like I said, or public improvements. So, with a TIRZ, a developer will work with the municipality or the governing body and if a developer is choosing to develop certain aspects of a property or an area, they can apply for funds to be used to build streets or some of the public improvements.
Some areas around Austin where a TIRZ was utilized, for example, the Mueller District, a TIRZ was utilized to help develop that area. One of the most recent TIRZ in the Austin area is the old Austin Statesman site owned by the Cox family. The Cox family has chosen Endeavor Real Estate Group to partner with them to build a large mixed-use project on that property and they’re utilizing TIRZ, tax increment reinvestment zone, to help pay for some of those costs. A TIRZ can be a great tool and a great benefit to the developer and also to the city.
Now, there are some opponents of TIRZ as well. They say that it pads developers pockets because they are getting some of this tax revenue from the properties in that zone. Of course, you know you need to form your own opinion and you know it’s your responsibility to elect public officials that will vote for things that you that you feel that’s valuable to you and to the greater good. But, it is a legal tool and it’s a great tool that can be used.
Currently, Endeavor Real Estate is working with the Cox family to develop the Austin Statesman site. They’re a very local, credible firm. They’ve developed big projects such as Southpark Meadows and The Domain which everyone knows.
So, highly recommend that you look into TIRZ, but this is usually more higher profile developments. I know a developer that has utilized TIRZ to develop manufactured home parks throughout Texas and he’s made a large fortune doing so. So, it can be a great tool. But, you want to do your homework and, as I’ve said in multiple videos, always work with attorneys and CPAs and financial professionals that truly understand because, these are very complex instruments that can be used, but you really need to work with experts in their field.
Feel free to reach out to us with questions or other topics you’d like to see covered.
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