HOUSTON, Texas (KTRK) — With figures showing the City of Houston is contributing more to special tax districts, while other entities aren’t, some on the city council believe it’s time to look closer at these areas.
Faced with restrictions on how much property tax money cities can collect, Houston has used special tax districts for nearly 35 years to spur development.
“We have opportunities to do drainage projects, improvements at parks, green spaces, improving the quality of life,” Houston City Council member Joaquin Martinez explained.
A method that may be getting a closer look. During Wednesday’s city council meeting, a letter breaking down how much taxpayer money is going to those districts was on some members’ minds, including Julian Ramirez, who mentioned the numbers from the letter during the meeting.
“Maybe it’s time to create TIRZs in other parts of the city that haven’t had the opportunity to enjoy them,” Ramirez said.
The letter came from Baker Institute of Rice University fellow Bill King.
“We’ve done a bunch of things that don’t make a bunch of sense financially at the city, but this is one thing we could do something about in a relatively short period of time,” King explained.
In the letter, King broke down how much the city is contributing to nearly 30 districts. Six years ago, controller reports show the city gave about $140 million in tax dollars, with other entities, including schools and the county, contributing about $75 million.
Last year, figures show the city gave more than $200 million, while others gave less than $30 million. King said they reduced contributions because contractual obligations ended.
Here’s how these Tax Increment Redevelopment Zones, also known as TIRZs, work. A portion of the property taxes collected in the district stays there, instead of going to the city’s budget.
The money goes towards projects to spur development. King said an issue is that they were designed to help lower-income communities. Instead, he said the majority is going to wealthier neighborhoods.
“The other problem with this is that every one of these TIRZs has to have its own audit, its own lawyer, its own manager,” King explained. “So, there’s all this administrative cost associated with running each one of these TIRZs.”
King said ending districts altogether may not be easy. He says a $1 billion worth of debt is tied to district projects.
A number that could get larger after Wednesday’s council meeting. Council approved Memorial City’s district budget through 2030 that includes a $263 million project to build a new public safety campus, detention basin, and improve Memorial Drive.
Still, King said the city could close some and move them to other parts of the city in need of development. A review, some on the council say, could be coming after seeing the $200 million figure.
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