By John Kanelis
A little more than a decade ago, some of Amarillo's business, civic and political leaders came up with an idea: Let's draw a boundary inside the city's downtown district and then devise a method of diverting property tax revenue to projects aimed at improving the central business district.
Thus, the city's Tax Increment Reinvestment Zone was born.
How has it done? Has the TIRZ delivered on the promises sought by those who created it? Three men -- two of whom were there at the beginning and one of whom is now serving on the TIRZ board -- say the same thing.
Yes it has, they say emphatically.
"Look at the improvements we've seen in downtown Amarillo," said Scott Bentley, who heads First United Bank and who serves as chairman of the TIRZ board of directors.
"You can drive around downtown and see the improvements everywhere you look," said Richard Brown, a principal partner in the Brown & Fortunato law firm, who helped form the TIRZ in the early 2000s.
"The property values within the TIRZ boundary have risen dramatically" since the zone was created, said Amarillo Municipal Planning Director Kelley Shaw, who serves as the city's go-to man in assisting and advising the TIRZ board members.
The taxing zone came into being in 2006. It was given a 30-year life span and is set to expire in 2036.
What does it do and how does it work?
The TIRZ comprises a large tract of land bordered on the east and north by freight rail tracks, by Interstate 40 on the south and Washington Street on the west. All the property within the TIRZ is subject to the taxing policies set forth by the zone.
The city and Potter County set the taxable value of all the property within the TIRZ at $139 million in 2006, the year that TIRZ came into being. According to Bentley, the property value of that same property in July 2015 had skyrocketed by $55 million to $194 million.
The TIRZ "receives funding from that increase," said Bentley, in the form of property taxes assessed by five of the six taxing entities that have signed on as participants. The affected entities are the city, Potter County, Amarillo College, the Amarillo Hospital District and the Panhandle Groundwater Conservation District.
The sixth entity, the Amarillo Independent School District, is prohibited by state school finance law from contributing tax revenue to the TIRZ, said Bentley, "but the district does have a representative on the TIRZ board."
The taxing entities continue to receive "the base year value of the property throughout the life of the zone," Bentley said, meaning that the revenue they get from that property is essentially frozen at the value set in 2006. The taxes collected by the increased valuation goes to the TIRZ, which then uses that money to help develop the downtown district.
The TIRZ program, said Bentley and Brown, reportedly helped persuade Southwestern Public Service, the electric utility affiliated with Xcel Energy, to relocate downtown. SPS is building a $42 million, seven-story office complex across the street from City Hall and will move into the new building in 2017 after vacating the Chase Tower.
"SPS might not have happened without the TIRZ," said Bentley, adding that the utility had "other options" it was exploring when it decided it was time to move from the Chase Tower.
So, what did TIRZ offer SPS? Bentley said the TIRZ was able to provide tax abatements to SPS in the form of a 90 percent rebate on the property tax it pays. Bentley said the TIRZ uses the rebate incentive, along with grant money it gives to businesses, to persuade businesses to relocate or expand their downtown operations.
Brown served on the TIRZ and Local Government Corporation boards until the summer of 2015. He stepped down from the TIRZ board about the time the Amarillo City Council decided against reappointing him to the LGC board.
He was there at the beginning of the TIRZ.
"It seemed that the city -- prior to when we started talking about the TIRZ -- really didn't make downtown a top priority," Brown said. He recalled having "several public hearings around the city" to explain the TIRZ idea to interested residents.
"TIRZ's role was to explain and promote the concept to taxing entities," Brown said, explaining that everyone involved in the TIRZ planning insisted that all the taxing entities sign on with "100 participation. That wasn't much of an issue until we got to Potter County."
Some county officials -- notably the late Precinct 2 County Commissioner Manny Perez -- objected to the TIRZ initially on grounds that it would deprive the county of revenue. Perez said the county couldn't afford to participate if it would surrender tax revenue to the TIRZ.
"Manny's bias was to vote 'no' on everything," Brown said. "So we went to the county precincts to see what the public wanted," he recalled, adding that "there was this vague notion that if we're going to do something to help downtown that it'll hurt me." Brown said, though, that he and others got "strong positive reaction from many neighborhoods.
"Our principal hurdle was getting Potter County on board," he said.
The county eventually agreed to become full partners in the TIRZ operation.
Shaw described the opposition by Potter County -- and by Perez in particular -- as "most fascinating." He said Perez and others asked "some very good questions," adding that they "made us think" about ensuring that all the issues were covered.
Bentley and Brown acknowledged that the "catalyst projects" now being built -- the Embassy Suites convention hotel and the parking garage next door to each other on Buchanan Street -- are direct result of the TIRZ. The multipurpose event venue -- and ballpark -- also will benefit from TIRZ funding that will be available, Bentley said.
TIRZ revenue already has provided grants for a number of downtown projects, Bentley noted. They include $943,000 for work on the Potter County Courthouse; $50,000 for parking at Amarillo College's downtown campus; $203,000 for improvements at Polk Street United Methodist Church; and $70,000 for the Fisk Building.
The taxing district also has awarded tax rebates for construction of the Toot 'n Totum downtown store and to the Fisk Building.
The TIRZ comprises members who "represent" the various taxing entities. Bentley serves as a "city representative." The law also empowers TIRZ to issue financial grants and to award tax abatements -- or rebates -- of as much as 90 percent of the tax obligation to businesses that qualify.
The future of TIRZ seems to be set, Bentley said. It is due to expire in 2036. The goal, Bentley explained, is for downtown to be "so far along" that there will be no need to extend the life of TIRZ beyond its expiration date.
"By that time, we believe downtown will be thriving and when the TIRZ expires, the taxing entities that are participating now will get a huge windfall in tax revenue," Bentley said.
Shaw sees progress already toward that end. "We've got two cranes going now," he said, noting the construction of the SPS building and the new hotel. "We'll get a third one going soon," he said. "I can't remember the last time we had that happening downtown."
"TIRZ played a big role in all of that," Shaw said, "as did all of our partners."