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2022 REAL ESTATE EDITION
CRAFTING THE TIRZ In order to pass the Savannah tax increment reinvestment zone, or Savannah TIRZ, City Council compiled various agenda items into one package deal including zoning, annexation, an interlocal agreement with Hays County and a development agreement.
“I decided to bring it back because I felt that this was something that the city could eventually ben- e t [from] in the long run,” Tobias said. “This has been something that has been worked on for sev- eral years now.” Funding the future TIRZs are tools utilized by municipalities to help nance economic development, infrastructure, transportation and other projects within the TIRZ boundaries. A board of directors is created to make recommendations to City Council regarding the management and operation of the TIRZ. A baseline year is established, and the zone receives an appraised value of “taxable real prop- erty,” which is $60,050. In 30 years, the appraised value of the land is expected to reach $425,520,136 and to generate $1.3 million annually to the city. Toll Brothers Development, a commercial property and residential homebuilder, is slated to build about 315 homes within the city’s TIRZ, each of which will send about $3,100 into the city general fund. Those moving into a new home built by Toll Broth- ers within the TIRZ will be paying the same amount in taxes as those living in other parts of the city, said Jon Snyder, co-founder and managing partner of special district administration rm P3Works. “That level is frozen for the life of the TIRZ. Then, any new money that is generated as you develop the property and you build houses, the taxable value goes up. Any of those new taxes generated above that base value get divided between the TIRZ and the participating entity,” Snyder said. With the city and county participating in the TIRZ, both entities will collect a portion of the property tax. Some 36.74% of the city and county tax rate will go toward the TIRZ fund for projects within the boundaries of the district. The remainder of the property taxes will go to the general fund of each municipality. The city and county, through their respective budgeting sessions, can determine what those funds will be used for over the next 30 years. “Any money that the city or the county is cur- rently getting, they keep it. It is only on additional revenue that is generated as a direct result of the development itself,” Snyder said. During the reconsideration of the TIRZ, Tobias said he wanted to dedicate a portion of the property taxes toward projects outside the zone. While a portion of the taxes cannot be set aside in that manner, the council can decide how to spend those funds during the annual budgeting process. With the deal in place, public improvements throughout the zone include road work, water, san- itary sewer, storm drainage, and parks and open space that will be executed at a cost of $42 million. Undoing the past The new Savannah TIRZ was originally formed as a public improvement district in 2015; however, it was created in the extraterritorial jurisdiction of Kyle, meaning the city would not bene t from the development. “At the time, it was believed that this was the
WHAT IS A TIRZ? A tax increment
MUNICIPALITIES CAN CREATE A TIRZ IN: • areas where growth is impaired or held back due to public health, safety or welfare; • areas open and underdeveloped due to deterioration or lack of proper infrastructure; • areas that are new and federally assisted in a city or adjacent to another federally assisted new community; or • areas where it is petitioned by property owners within the desired TIRZ*.
ARROYO RANCH RD.
reinvestment zone is a special type of taxing district that cities create and utilize to help fund: Economic development
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KYLE
SAVANNAH TIRZ
Transportation Infrastructure Other projects
SIX CREEKS BLVD.
MAP NOT TO SCALE N
315 HOMES The proposal calls for about WITHIN THE TIRZ
$60,050 Initial value of undeveloped Savannah TIRZ is
In the next 30 years, the value is expected to reach $425,520,136
*HOWEVER, A TIRZ CANNOT BE CREATED IN AN AREA IF THE DESIRED ZONE HAS MORE THAN 30% RESIDENTIAL PROPERTY SOURCES: CITY OF KYLE, P3WORKS COMMUNITY IMPACT NEWSPAPER TAXATION WITHIN THE TIRZ UTILIZING THE REVENUE
The city of Kyle and Hays County will each contribute about 36.74% of ad valorem taxes to the TIRZ fund to nance projects throughout the zone while the rest will go to the municipalities’ respective general funds.
The Savannah TIRZ was established, in part, to help fund public improvements that will ultimately bene t the incoming development and the city. PUBLIC IMPROVEMENTS INCLUDE:
AD VALOREM TAX RATES:
Storm drainage
Roads
Water
CITY OF KYLE:
$0.1867/$100 $0.1333/$100
HAYS COUNTY: 36.74% of $0.5082/$100 36.74% of $0.3629/$100
Parks and open spaces
Sanitary sewer
SOURCES: CITY OF KYLE, P3WORKS COMMUNITY IMPACT NEWSPAPER
ESTIMATED NEW REAL PROPERTY TAX REVENUE:
CITY OF KYLE: $43,424,969
$15,952,233 into the TIRZ fund
be within the PID [will be] paying an additional property tax,” Snyder said. “In the case of Savan- nah, when they looked at what infrastructure they needed to nance, the resulting equivalent tax rate was going to be too high.” The PID/TIRZ overlay will work together and against the property assessments to bring down the property taxes. Ultimately, the deal was created because there is a signi cant amount of public infrastructure proj- ects that need to be funded in that area, Assistant City Manager Amber Lewis said. “Because they are annexing into the city, the city will receive property taxes. If they had not done the PID/TIRZ [overlay], they would not have had to annex into the city, and we would not have gotten any of these improvements or property taxes to help [fund] projects in other parts of the city such as the east side, so it was just a win-win project,” Lewis said.
$27,472,736 into the city’s general fund
HAYS COUNTY: $31,009,290
$11,391,313 into the TIRZ fund $19,617,977 into the county's general fund
best that we could accomplish,” Mitchell said. “For six years, I’ve been trying to gure out how to undo this deal.” The creation of the Savannah TIRZ resulted in multiple agenda items tied into one large package deal; take one away, and the whole deal falls apart, Mitchell said. The deal included a development agreement with Toll Brothers and an interlocal agreement between the city and Hays County. In addition to the dissolution of the original PID, the PID/TIRZ overlay was created in order to keep the tax rate competitive, Snyder said. “Whatever property owner [that] is going to
For more information, visit communityimpact.com .
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SAN MARCOS BUDA KYLE EDITION • JULY 2022
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