Hey Leander. Our meeting the other night got a little awkward. Let’s talk about it.
A few people have shown concern about a couple of votes that happened: most specifically , Agenda Items 29 (TIRZ reimbursement to the City of Leander for costs associated with the Northline development) and 30 (TIRZ reimbursement to the developer of the Northline project). I voted against #29 and for #30. How could I split my vote that way?
Let’s first talk about TIRZ, because like many programs utilized in government, it can be confusing (I mean, even the name, right?). TIRZ stands for Tax Increment Reinvestment Zone; it’s a unique geographical district with boundaries decided by a city where a city wants to promote some special sort of development or redevelopment. Here’s where it starts to get confusing: In order to spur development in the TIRZ, the City and County (in Leander’s case) annually rebate up to half of the property taxes the development paid on any value above what it was when they entered into the agreement. So if they entered into the agreement and the value of the land was $100,000; the developer would receive back up to half of the city and county property tax that were charged on any value over that initial $100,000. There are a few catches to it though: 1) It’s a finite amount of money, which varies from development to development; 2) It has to be a reimbursement for infrastructure improvements the developer has made there; 3) The developments that were there before you will be paid back first; 4) There’s an expiration date where the TIRZ ceases to exist and it no longer pays out and it doesn’t matter if everyone has been reimbursed or not.
Agenda Item #29
So now that we’ve got TIRZ 101 out of the way, let’s get back to Agenda Item #29, where the City of Leander is taking out $15,000,000 (that’s MILLION) in non-voter approved bonds called “Certificates of Obligation” in order to pay for a significant portion of the roads and infrastructure of the Northline project (a private development). Item #29 is a legal contract entering the City into our own TIRZ to receive that reimbursement listed above. Let’s recall, that reimbursement is up to 50% of the city and county portions of the tax collected on the increase in value as the land is developed.
Spoiler alert: The City of Leander already collects 100% of the City portion of taxes on the property, whether improved or not. A 50% reimbursement is literally just our accountants writing a check to ourselves. Personally, I’m not impressed.
So that leaves the County portion. Now, the TIRZ board, which includes representatives from the County, met twice over the last week about this deal and at 8:20 Thursday morning, less than 12 hours prior to our Council meeting, we received copies of what Williamson County was willing to agree to. The TIRZ paperwork is fairly standard, but in order to approve this reimbursement to the City, the County required the following line:
The Priority TIRZ Reimbursements will also include reimbursements payable to the County for improvements to San Gabriel Parkway once a reimbursement agreement by and among the City, the Zone, the Authority, and the County has been approved.
Did you hear that record scratch in your head too? Remember how in TIRZ 101, I said that whatever developments came before you get reimbursed first? The County wants improvements to San Gabriel Parkway to get reimbursed before the City of Leander gets any County TIRZ money for the Northline project. That might be okay, except there are literally no details about the San Gabriel repayment: the paperwork hasn’t even been done.
So there are a few great unknowns here:
- How much money are we reimbursing (because remember, the City will have to reimburse for that road as well)?
- When will this agreement be finalized and have an effective date?
- Since this is listed as a condition in the TIRZ reimbursement contract, if the paperwork and approvals are not completed by the time that we’re ready for our first reimbursement, what happens?
Therefore, by entering into this legally binding contract, we’re agreeing to the following:
- We’re going to pay $15 mil for roads and infrastructure in a field.
- We’re going to write ourselves a check for 50% of the City property tax improvements on that land annually.
- We’re going to start reimbursing Williamson County an unknown amount of money for San Gabriel Pkwy.
- The County is also going to reimburse us for 50% of the property tax improvements at some date in the future, yet to be determined. This becomes especially crucial to know when you consider that the TIRZ has exhausted half its life and will turn into a pumpkin in about 13 years.
I don’t see any two ways around it: this is a crappy deal. It’s got unknown contingencies and an unnecessary reimbursement. Add to it the fact that because this is city initiated and not a developer, there are no performance standards. We could issue all this debt, build roads in a cow pasture, and never see another stick of development go up. That’s not an increase in value; it’s a headache. It’s roads and infrastructure that we have to maintain around land we don’t own and it’s debt we’ve taken on and paid for out of our general fund, the same fund your tax dollars go into to pay for things that affect you and your neighborhood.
Agenda Item #30
So that being said, let’s take a look at what’s behind door number 2: The next agenda item was a very similar reimbursement deal, but this time to the developer of the project. This agreement though, I felt had a lot of merit:
- A clause that says that the developer doesn’t begin to get paid until the City of Leander has been fully reimbursed.
- Another clause that lays out specific performance standards that have to be met in order to receive the money.
- Most importantly, it’s the developer getting reimbursed the money he puts into it, not debt that the City issues for the sole purpose of this development.
Here’s the thing: TIRZ reimbursements SHOULD be performance based. It’s not a giveaway. It’s “you do your chores and I pay your allowance”. If you come to the City Council seeking TIRZ reimbursement for a unicorn farm, but that reimbursement doesn’t start until you have unicorns on the ground and you’re selling them like used Chevys, then I’m going to vote to approve you. If you never sell a unicorn, we don’t owe you a penny. So yes, I voted for repaying the developer through TIRZ because he has performance standards that must be reached and at the point of this vote, the city reimbursements (which pay first) had already been approved. Win-win.
One More Thing
I want to add one more note: this Northline project is incredibly popular with my fellow City Council Members. I knew that raising my hand to say ‘no’ was going to be a losing vote. I didn’t know I’d be the only hand raised, but if I had it all to do over again, I wouldn’t change a thing.
Whether you are for or against any one thing, what we all need is to have confidence in our elected officials that they have convictions that guide them. My convictions lie in doing what is right by my neighbors, not what makes me the popular girl on the dais who votes the way her friends do. Not everyone is going to agree all the time, but we can state our reasons, understand each other, and respectfully move on to the next pressing issue with integrity and reverence.
I’m thankful every day that you’ve trusted me to do just that.