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Hays County approves interlocal agreement for Kyle TIRZ

HAYS COUNTY — A fifth Tax Increment Reinvestment Zone (TIRZ) is in the works for the city of Kyle.
Hays County approves interlocal agreement for Kyle TIRZ
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HAYS COUNTY — A fifth Tax Increment Reinvestment Zone (TIRZ) is in the works for the city of Kyle.

At its Dec. 19, 2023, meeting, the Hays County Commissioners Court unanimously approved an interlocal agreement — which will be in effect through Dec. 21, 2048 — regarding the city of Kyle’s TIRZ 5 to be approximately 100 acres of land located on the corner of IH-35 and Bebee Road. Under the agreement, the city and Hays County will each contribute 50% of the ad valorem real property taxes collected and received by each entity on the Captured Appraised Value in the zone.

“Basically, what happens is you will take the real property appraised value of what it is right now; I will call it the base. What you take is the increment from that base and what is added onto that base and 50% of that increment will go into the TIRZ fund,” said Assistant General Counsel Jordan Powell. “The same likewise with the city. That TIRZ fund would be utilized to fund public improvements meant to encourage development in the zone and directly around the zone — things like transportation [and] capital improvements for public use. This one, in particular, has a focus on a mixed-use of retail space, restaurants and multi-family residential living.”

The TIRZ fund will be administered by the city of Kyle with Hays County’s oversight, Powell said. This would include the two county representatives who will sit on the TIRZ 5 Board and any project expenditures using county money have to be authorized with the county representatives’ unanimous approval.

Construction is estimated to occur between 2026 and 2028, but there is a possibility that timeline could change, according to Powell.

Commissioner Debbie Ingalsbe said that while the court discussed the agreement “extensively in executive session,” it needed to be brought back into open session for the public.

She also asked for clarification on the taxes that are included, as road and bridge is typically not in an agreement like this.

“Those three different tax rates that we have included in the county’s ad valorem tax rate. We’ve got general M&O, general debt and road and bridge M&O,” Powell responded. “My understanding is that we should probably back out the road and bridge property tax portion, which is equivalent to a $0.02 tax rate in comparison to the general M&O, [which] is $0.2046, and general debt is $0.0829. So, in the scheme of things, it is the smallest. I think we should back out road and bridge should the court see fit to utilize those monies specifically for road and bridge.”

Commissioner Lon Shell agreed that the road and bridge tax rate should be taken out, as that is designated specifically for roads and road improvements in the county.

While he agrees with the 50% ad valorem tax contribution, commissioner Walt Smith expressed his concern regarding the purchase of right-of-way and construction of roadways through the TIRZ.

“I have a little bit of heartburn over discounting ad valorem tax rates and then turning around and buying property on the same facility, where they are getting a discount for those tax rates,” he said. “Initially, I think there was consideration that we would move forward with the entire agreement today. I had a lot of heartburn over that. I understand that we had to do the TIRZ today in order to capture the tax increment for calendar year 2024, that makes perfect sense.”

Smith added that agreements for TIRZ should be brought to the commissioners court earlier in the year.

“I would just encourage, not only the city of Kyle, but all of our municipalities who are looking at TIRZ. I’ll use the Dripping Springs TIRZ 1 and 2, [for example], when there was an adjustment in the map and the actual coverage area of that TIRZ last year in 2022, for us to enable the capture of that in 2023, we began that process in April of that year,” Smith said. “We had it finalized what those changes would be [and] what that map would look like by September. We, as a court, I believe adopted that in October or November.”

“We may have been talking about it for two years, but having the back and forth with our staff and ensuring that we are getting that paperwork — we get a good understanding of what it looks like, how much it’s actually going to cost [and] we get the budget estimates in a timely manner,” he continued. “All those things make these decisions a lot easier. I probably wouldn’t have as much heartburn if we had been looking at this in September.”

Commissioners Ingalsbe and Michelle Cohen were also appointed to serve on the board of directors of the city of Kyle’s TIRZ 5 for a two-year term.

To watch the full meeting, visit www.hayscountytx.com/commissioners-court/court-video.

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