Working Every Angle

The city of Houston is exploiting loopholes in state law to lavish big bucks on private developers

Maybe it dawned on the trustees that if that was the case, they could vote down the TIRZ and still reap the increased property tax revenues. Whatever, in the end, they obviously didn't know what to believe about the Memorial City TIRZ and weren't about to take Metro National's word for it.

"This issue boiled down to one issue: trust," board president Brandon C. Coleman told the Press later. "The community does not have confidence in the organization that sponsored the proposal. If we would have voted for [the TIRZ], we would have lost the community's trust for years to come, and we could not afford to take that risk."

Apparently other school districts have decided that school district taxes should be spent on schools and not private real estate development. Two weeks ago the Fort Bend Independent School District rejected four TIRZs proposed by the cities of Sugar Land and Missouri City. One FBISD trustee simply said, "It's not right." Another noted that the school district couldn't afford to wait 30 years to receive the property tax benefits of the new development.

Upper Kirby property owners  claim that the bustling district  is "unable to compete in the marketplace."
Upper Kirby property owners claim that the bustling district is "unable to compete in the marketplace."
"TIRZs work," says state Representative Garnet Coleman. But he has concerns about how they are being used by the city.
"TIRZs work," says state Representative Garnet Coleman. But he has concerns about how they are being used by the city.

On the other hand, supporters of the Fort Bend zones were outraged. Sugar Land Mayor Dean Hrbacek self-righteously proclaimed his wish that voters "remember the financial stupidity" of the dissidents on the FBISD board, who, the mayor added, "dealt a blow to the children."

On that same day, August 26, trustees for the Houston Independent School District met to consider their own full plate of TIRZ issues. On the HISD agenda were seven new zones recently approved by City Council. The board would also decide whether or not to amend ten other TIRZ plans according to the scheme proposed by Brown in early August.

The HISD board has yet to reject any TIRZs created by the city, so it was hardly unexpected when trustees swiftly approved the new zones. More surprising, though, was the lack of discussion on the ethics of Brown's proposal. To be fair, trustees should always be on the lookout for ways to increase funding to the district. Still, the absence of thoughtful debate on why HISD would give up additional TIRZ revenues only to have them "kicked back" to the district suggested that trustees either didn't understand the matter or weren't sufficiently bothered by this massaging of the school-financing system.

Indeed, the board's absolute trust in the inherent goodness of tax-increment reinvestment was summed up by trustee Lawrence Marshall. "We have nothing to lose by investing in these projects," he said moments before the vote.

That may very well be true for elected officials, who, in the case of city councilmembers and HISD trustees, have come to believe that tax-increment reinvestment is a panacea. For taxpayers, though, who can say? They have become unwilling participants in a massive public spending spree that will tie up untold millions of dollars over the course of a generation.

Perhaps if the city's TIRZ program had been put to a vote, the basic premise -- that the zones are needed to encourage development that would not otherwise take place -- would have been more thoroughly evaluated. Maybe then, elected officials would have been forced to take into account the considerable amount of unsubsidized, market-driven development that has occurred in Houston the last few years.

One body that has stepped back to take another look at tax-increment reinvestment is Harris County. Commissioners are clearly in no hurry to commit millions of future tax dollars to the seven TIRZs recently created by Council. And they probably won't until the constitutional issues raised in June by county attorney Fleming are ruled on by the state's lawyers.

In the meantime, the city's TIRZ policy is likely to have at least one significant consequence: There is no longer any incentive to redevelop a neighborhood or area of town that really needs it.

"Why would anybody develop in a blighted area if they can get the same deal for going to a good area where it will almost certainly be more profitable," says state Representative Scott Hochberg. "What does the incentive become then?"

E-mail Brian Wallstin at .

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