Tax Increment Reinvestment Zone

A tax increment reinvestment zone (T.I.R.Z.) is a political subdivision of a municipality or county in the state of Texas created to implement tax increment financing. They may be initiated by the city or county or by petition of owners whose total holdings in the zone consist of a majority of the appraised property value. Tax Code Chapter 311 governs tax increment financing.

The following steps are involved in the creation of a TIRZ:

1. Property owners possessing 50% or more of the appraised value of a district may submit a petition to the county, city, or town requesting a TIRZ be set up, or the city or county may decide to create one.
2. A specific lifetime for the TIRZ is determined.
3. A TIRZ may only be city-initiated if less than 10% of its land area consists of residential area.
4. For the purposes of existing tax-collecting entities (water districts, counties, etc.) the assessed values of properties within the new TIRZ are frozen. It is assumed that property values will increase over the lifetime of the TIRZ; the property taxes collected on this increase constitute the “increment”.
5. Local taxing authorities besides the creating organization negotiate for how much of the tax increment they will donate to the fund instead of keeping for themselves.
6. The municipality or county passes an ordinance establishing a governing board for the TIRZ and the zone as a legal entity itself. The board then meets to create a budget for the lifetime of the zone, establishing what projects it will undertake and how they will be financed. This plan is passed as another ordinance.

Cameron County has entered into participation agreements with the cities of Brownsville, Harlingen, San Benito, Los Fresnos, Port Isabel, South Padre Island, and La Feria.