CORPUS CHRISTI, Texas — The Corpus Christi City Council voted to approve the North Beach Tax Increment Reinvestment Zone (TIRZ) and relevant financing plans during Tuesday’s council meeting. So that’s settled. But what’s gone into this project, and what is left to do? We’re glad you asked:
Q: What’s the TIRZ again?
A: It’s a way to put money back into a designated area. So in North Beach’s case, a TIRZ freezes its tax value when it goes into effect – for North Beach, that’s today -- and the money earned in property-value increases after the freeze goes into effect would be put into an account called a general fund. As properties within that TIRZ develop and increase in value, a significant portion of the taxes collected above the frozen value are put into the TIRZ fund, which can only be used for approved North Beach projects within the TIRZ. The financial returns accumulate over time, which is why TIRZ agreements last 20-25 years.
Q: What does the TIRZ pay for?
A: The TIRZ money mostly will be directed toward improved street signs, park improvements, tearing down blighted buildings, public safety, area beautification, parking structures, property improvements, housing development, and maintaining residential streets.
Q: Why does North Beach need a TIRZ?
A: A TIRZ is a way for North Beach ultimately to invest in itself. The area between Corpus Christi proper and Portland has been considered economically undesirable for decades; its land is prone to flooding, and without an effective way to drain it, North Beach long has been considered unattractive for development. That’s why it’s sat there for so long. In recent years, government agencies have attempted to attract investors to areas such as North Beach with tax benefits by designating them opportunity zones.
Q: But you just said North Beach floods, and that’s why people don’t build there. What’s changed?
A: Nothing. Yet. The city formed the North Beach Task Force to come up with a solution to the drainage problem, and the answer they came up with is a 6,387-foot canal that drains into Corpus Christi Bay. Once dredged, either side of the canal could accommodate River Walk-style walkways, making North Beach into a potential tourist area that could pay for itself. North Beach streets also would have to be elevated for the canal to be effective. Both projects together have a potential price tag of $73 million.
Q: But until it can pay for itself, who IS paying for it?
A: District 5 City Councilman Gil Hernandez told KRIS 6 News recently that dredging a canal and elevating the streets may not require a tax increase. He said one option is bonds -- $35 million in revenue bonds, and more than $162 million that will mature by 2027. A second option is a Texas General Land Office Community Development Block Grant that Nueces County qualifies for because of Hurricane Harvey. Another source is the recently passed Proposition 8, which will take $1.7 billion from the state rainy day fund to establish the Flood Infrastructure Fund, a grant program through the Texas Water Development Board. Canales said before the Nov. 5 election that if Prop 8 passed that Tuesday, the county would start writing its grant application Wednesday.
Q: You said something about opportunity zones. Is that the same as a tax-increment reinvestment zone (TIRZ)?
A: Nope. They have the same objective – to kick-start financing for development in a sector that previously was sluggish – but they come at it from different directions. Opportunity zones provide federal tax incentives to investors looking to direct funds to underdeveloped areas. A TIRZ usually is created by a city or county government or a percentage of land owners in the area, not a developer, but its ultimate goal also is to come up with a financing plan to attract investors to underdeveloped areas.
Q: So what, exactly, is an opportunity zone?
A: Opportunity zones were created by the 2017 Tax Cuts and Jobs Act. They are pieces of land that have been singled out by the federal government as previously underserved, so the government is willing to offer tax incentives to developers and businesspeople interested in building on land that fits this bill.
Q: How is North Beach an opportunity zone?
A: North Beach is part of a larger tract of land technically known as 2011-2015 LIC Census Tract 48355006300. It was nominated for opportunity-zone status by the State of Texas. Its designation is made official by the U.S. Treasury Department and is under IRS jurisdiction.
Q: Why is North Beach an opportunity zone?
A: “An opportunity zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment,” according to the IRS.