Development proposal outlined

By Todd Armstrong

Dave Brinson

Jack Choate

Mickey Evans

George D. Miles, Jr.

Jack Olsta

Danny Pierce

Jack Remeny

and Mac Woodward.



Property Commerce, a Houston developer, has selected the land site south of Wal-Mart along IH 45, south to Smither Road, in Tax Increment Reinvestment Zone (TIRZ) No. 1, where it proposes to build a 657,738-square-foot shopping center, Ravenwood Village, with a 133,000-square-foot Target as its anchor store, 10 pad sites and retail space available.

For more quick facts and maps, check their web site at:

www.propertycommerce.com http://www.propertycommerce.com under Property List — Other Texas Cities — Ravenwood Village.

Property Commerce intends to fund 100 percent of the project up front. The performance-based developer incentives being requested are the use of TIRZ No. 1 and a 380 agreement. These incentives are discussed in detail below.

The projected property tax base increase is $96.8 million along with projected annual retail sales of $124 million and a projected annual payroll of $10.5 million and projected job opportunities of 500.

Thus, the estimated (net) benefits to the taxing jurisdictions (2008 – 2025) are City of Huntsville, $25.2 million; Walker County, $15.9 million; Huntsville Independent School District, $25.9 million; and the Walker County Hospital District, $3 million.

That’s $70 million in potential tax revenues for our community.

It is also very important to remember that in the city and Walker County that of every $1.50 of sales taxes collected, 50 cents goes directly to reduce property taxes for all taxpayers. That is a very significant impact indeed.

Additionally, the city would receive $13.8 million in estimated utility revenues over the same 17-year period, making this one retail development our third largest single customer.

This development would significantly reduce retail leakage from our community (the loss of local retail sales and tax revenue that occurs when people shop in an area other than the one in which they live) and would increase our community’s retail market area and bring potential new customers to existing Huntsville businesses.

Other benefits include increased retail variety, increased restaurant variety, and potential city and countywide property tax decreases. And, there is the value of having not to put wear and tear on our cars and nerves by driving elsewhere to shop and acquire services not currently available here.

One thing we have learned through the Huntsville Horizon Comprehensive Plan process is that the people of this community prefer to shop and trade locally rather than drive south.

Our recent economic development leakage study tells us very clearly that hundreds of millions of dollars are leaving our community every year. This project proposal seems to us to be a good way to keep those dollars at home.

Go to www.huntsvillehorizon.com http://www.huntsvillehorizon.com under Plan Documents — Miscellaneous Documents — Retail Leakage Study Draft for more information.

This is a great opportunity for our community, including our youth, families, institutions, local government jurisdictions and our residents. There is no risk to us — just great benefits. This is a great community that is ready for, and deserves, reasonable, responsible, managed economic growth.

Why should we continue to build schools, pave streets, hire police officers, hire firefighters, pay for libraries and parks in Conroe and The Woodlands?

We need those things here in Huntsville. Imagine what needs the school district, county, and hospital district could meet with this additional public revenue. We believe that we should seriously consider this project and continue to work toward making it a reality.

The information provided above is a concise statement of the proposed Ravenwood Village project. We think it might be useful, however, to provide a brief overview of economic development, local government’s role in economic development, and the economic development incentive tools under consideration for this particular project.

Economic development is a sustainable process of: (1) creating economic opportunity for all residets, (2) stimulating business investment, (3) diversifying the public revenue base, and (4) enhancing quality of life.

Moreover, it is the process of developing and maintaining suitable economic, social and political environments, in which balanced growth may be realized, increasing the wealth of the community.

Does the City of Huntsville have a role in local ED? Absolutely!

Its role is to: (1) promote the public interest; (2) project a community image; (3) promote financial success for families and community; (4) create an environment that attracts development; (5) implement ED policies; (6) target appropriate industry and business, and (7) facilitate ED through the use of tools/incentives.

City ED goals include: (1) promoting business growth, (2) creating employment opportunities, (4) increasing tax revenues, and (4) increasing economic activity throughout the city.

City tools and incentives available for local ED include: (1) tax abatement; (2) industrial development revenue bonds; (3) tax increment financing; (4) loan guarantees.

As public officials, we are obligated to generate public revenues to pay for our public services. The two primary sources of our public revenues come from sales taxes and property taxes. We all want to keep our property tax rates as low as practicable, and we have managed to maintain the effective tax rate the last two years.

The effect tax rate is the tax rate that provides the city with the same amount of tax revenue as the prior year from existing property plus additional tax revenue from any new property.

This past year was a great year for sales tax revenues, and we received more than we estimated at the beginning of the fiscal year. In order to keep our future property tax rates low, we must continue to grow our sales tax revenues just to keep pace with increased prices of fuel, utilities, supplies, salaries, healthcare costs and employee retirement.

Plus, many residents want to add new facilities and services that will require even more tax revenues.

In order to keep our property tax rates low, we must encourage ED opportunities that will grow both our sale tax revenues as well as our property tax revenues. That is a reason we invested in an extensive ED task as part of our Huntsville Horizon Comprehensive Plan effort. And, it seems clear that most residents want reasonable and responsible growth and ED over the next 20 years.

That brings us to a general discussion of two economic incentive tools. And, we have a development proposed by a private developer that is in the early stages of consideration that includes the use of those tools.

Tax Increment Reinvestment Zone (TIRZ) is a state-authorized incentive tool that can be used by municipalities to develop or redevelop designated land by funding new public improvements to be added to the public systems, owned by the municipality to incentivize and stimulate private investment.

It is a public-private partnership between the city and a private developer who invests capital to build a large shopping center or a residential area that includes not only the structures themselves but the associated public infrastructure as well.

The infrastructure (water lines, sewer lines, streets, etc.) is completed under the standards required by the city, which will own it and maintain it.

In return, the city agrees to reimburse the developer for the costs of building the infrastructure over a 20-year period from a portion of the new tax dollars generated by the new development. These are tax revenues that would not be available without the new development. If no new taxes are generated, the developer is not reimbursed.

No tax revenues from the city and county general fund budgets are spent to reimburse the developer. There are no additional or increased taxes on existing properties. There is no forgiveness of taxes paid by the developer. It does not create a debt or obligation on the part of the city. Therefore, there is no downside and no risk to the community.

The City of Huntsville created TIRZ No. 1 in accordance with Texas statutes with specified boundaries and a TIRZ Board with members appointed by the City Council and the Commissioners Court to provide oversight.

The board reviews any requests from developers for the use of TIRZ funds and oversees the negotiations of a developer’s agreement that outlines the public project to be done as well as the value and timing of the private investment required to qualify for a reimbursement from the TIRZ fund.

As noted above, Property Commerce is currently exercising due diligence regarding the feasibility of the project. The city staff is also reviewing the proposed project to ensure that it is consistent with the current standards outlined in the city’s development code and is feasible before the legal and public processes continue.

Chapter 380 of the Local Government Code gives legislative authority and complete discretion to Texas cities to provide grants or loan of city funds or services to promote economic development and to achieve public benefits.

The city must meet requirements of the Texas Constitution and applicable statutes and be in compliance with the city charter and ensure that any other local provisions do not limit the city’s ability to provide the grant or loan. A 380 Agreement can be described as either “Infrastructure” to fund initial infrastructure requirements for a development or as an “Incentive” using fee reductions and grants to help get the project built, tax rebates to get it leased, or may also include financial incentives for infrastructure assistance specific to a particular project.

The 380 Agreement will include a recapture provision where the City will have a means to seek reimbursement of the incentives along with tangible means of measurement if the project does not fulfill its promise.

The process consists of the developer making a request for reimbursement to fund a project development “gap” created by unusual costs associated with a particular project. The request is reviewed by the duly appointed Economic Development Council board of directors. That board also oversees negotiations of a Developers Agreement which outlines what 380 Agreement funds will be used for and the value and timing of the private investment required to qualify for a 380 Agreement grant.

The Developers Agreement will also stipulate that the grant of funds to the developer can only come from funds generated by the developer’s project. If no funds or insufficient funds are generated, then the developer receives no grant or a reduced grant.

The EDC board is an advisory board which can only recommend. The final approval of Developers Agreements and the terms included rests with the City Council at a public meeting.

This project proposal is an ongoing planning process that will lead to consideration by the City Council in the near future. If you desire to share your own thoughts about local economic development in general or this proposed project in particular, you should write letters to the editor of The Huntsville Item or contact your elected and/or appointed officials by phone or email. You may also use the Huntsville Horizon Comprehensive Plan web site at www.huntsvillehorizon.com to express your views.

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