Tax Increment Reinvestment Zone 13 was first presented to City Council for consideration on September 18, 2018 and then approved unanimously on October 2 under agenda item 27.1. The Council reps at the time were Svarzbein, Annello, Hernandez, Morgan, Noe, Ordaz Perez, Rivera and Lizarraga.
TIRZ 13 was then amended by a 6-2 vote of City Council on March 17, 2020 under agenda items 25.4 and 25.5, with Reps. Svarzbein, Hernandez, Morgan, Salcido, Rivera, and Lizarraga voting “YAY” and Reps. Annello and Rodriguez dissenting.
Tax increment reinvestment zones are defined in Section 311.005 of the Texas Tax Code. They are a financial instrument for revitalizing declining neighborhoods, but TIRZ 13 is located in the open desert in northeast El Paso.
The TIRZ includes the 2,313 acres of public land that Paul Foster swapped with the City for 44 acres of land he had owned in northwest El Paso, once earmarked for the Great Wolf Lodge.
Never mind that City Attorney Karla Nieman told City Council in open session that if Great Wolf Lodge withdrew from the deal, the land swap would die with it. The deal went on to be canceled but the land swap happened anyway and Foster got his 2,313 acres of pristine public land, where he plans to build approximately 9,500 homes.
Whereas previously investors in TIRZ 13 enjoyed a 25% break on their real property increment, in 2020 that increased to 75% of the increment for the next 50 years, until the year 2070! Granted, the investors will be required to provide much of the infrastructure within the area, but the tax break is so extreme that the City’s general fund will ultimately be deprived of tens of millions of dollars over the life of the TIRZ, and possible hundreds of millions!
The argument that the land would not otherwise be developed rings hollow. In America, investors will risk their capital on real estate projects if they are profitable and there is a market for them. It is certainly not the place of government to step in and provide corporate welfare to real estate investors.
Projects like TIRZ 13 are why homeowners bear so much of the property tax burden in El Paso and now suffer from one of the most onerous tax burdens in Texas.
Investors should pay for their own developments and assume all the capital risk and pay all their property tax, because that is the American way.