A Tax Increment Reinvestment Zone (TIRZ) is an economic development tool used by cities and the county to attract developers to invest in projects on vacant land or run-down properties. As the zone is developed, a portion of the additional tax revenue generated by the development is refunded to cover the cost of the necessary infrastructure, such as roads, drainage and utility lines. The investment for TIRZ is not only good for our communities; it is an investment without risk to the taxpayer because the county’s financial commitment is contingent on the success of the zone. If the zone is successful, the county reaps the financial rewards after termination of the TIRZ and receives a healthy financial and infrastructural boost in that area.
Successful TIRZ’s include.
McAllen Tres Lagos:
•Tax Increment Financing (TIF) is a financing method local governments can use to pay for improvements that will bring private investment to an area.
•TIF redirects some ad valorem taxes (property taxes) from property in a geographic area designated in a Tax Increment Reinvestment Zone (TIRZ) to pay for improvements in the zone.
•TIRZ allow development in certain areas that may other wise not develop. It allows the city and county to take a proactive approach to economic development and use tax increment financing as a tool to recruit business.
•In the example below, the geographical jurisdiction shaded in orange is designated as a Tax Increment Reinvestment Zone.
• A percentage of property taxes within the zone are reinvested into the zone’s development.
• A TIRZ has the potential to generate other forms of revenue, like sales taxes.
•Similar to a tax abatement, a municipality will never receive less ad valorem taxes because of the creation of a TIRZ.