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Final Draft 04.29.2020 <br />The TIRZ Concept Generally <br />Atax increment reinvestment zone (°ORZ')isafinancing tool created bvthe State Legislature k) <br />assist cities and counties indeveloping orredeveloping unproductive, underdeveloped orblighted <br />areas. <br />Cities may create a TIRZ where conditions exist that substantially impair an area's sound growth and <br />where development or enhancements financed by the TIRZ significantly enhance the value of all the <br />taxable real property inaT|RZand ofgeneral benefit tothe city orcounty. <br />Prior to creation, the statute requires preparation of preliminary project plan and reinvestment <br />zone financing plan outlining specific projects toaddresstheexisbngcnmditionsandtharncthodand <br />means tofinance those projects. <br />Upon creation, the total appraised value of real property located in a T|RZ is established for the year <br />in which it was created. This is known as the base value. As new development occurs in a TIRZ, the value <br />ofreal property increases. <br />This additional value above the base value is known as the tax increment. Such tax increment is <br />typically set aside to finance improvements within aT|RZ including public infrastructure. Once all <br />projects are complete or after a defined period of time, a TIRZ is dissolved. <br />During the life ofaT|RZ acity and other participating taxing jurisdictions collect tax revenue nnthe <br />base value of a TIRZ as well as sales and use tax revenue generated by new development (unless a city <br />or county agrees that sales tax and use revenue are also part of the increment). When a TIRZ is <br />dissolved, ocity and other participating taxing jurisdictions collect tax revenue onthe tax increment <br />value created bynew development aswell. <br />� <br />� <br />� <br />Created Terminated <br />`""""~� rm,mu^"o <br />City of San Marcos <br />Zone No. 5 Project Plan and Financing Plan 3 <br />