It Really is all the Same Pot
On Friday, the Midland Development Corporation will consider the expenditure of funds in an amount not to exceed $329,661.82, for the removal, relocation and replacement of electrical facilities, and the improvement of electrical service to Blocks 55 and 56 in Downtown Midland.
For those who don't know, the demolition of the buildings between Wall, Texas, Big Spring and Colorado has been slowed by the fact the electrical service for a large portion of Downtown was routed through the center of the now demolished Permian Building and given one of the remaining buildings was the old Electric Company (TESCO) office, I'm sure they have found more of the same that needs to be fixed.
Now, the expenditure of $329.661.82 to remove, relocated and replace electrical facilities is a necessary and worthy project that will ensure the economic viability of downtown Midland...but why is the MDC forking over the dough for this project?
Aren't projects like this exactly why we created a Tax Increment Reinvestment Zone (TIRZ)? According to Monday's MRT, the TIRZ had cumulative revenues of approximately $785,000 and revenue of $345,000 last year.
According to the City's 2007 Comprehensive Annual Financial Report (pg 100) no funds had been expended through September 30, 2007, so there was a balance of $423,952. With this years revenue around $345,000, that means the TIRZ fund has a bank of around $785,000.
Which is curious, because under the TIRZ heading in the 2007 CAFR summary, there is a list of projects including improvements to Wall Street, the Midland Hilton, new water lines and infrastructure reimbursements for new housing built in the zone by the MCDC, yet no funds were allocated for these projects from the TIRZ account?
Correct me if I'm wrong, but the CAFR would seem to indicate the City is publicizing projects as TIRZ based, but they are really banking the TIRZ money and using other funds and entities to do projects the TIRZ was created to do. How do you credit the TIRZ for something they didn't fund?
I wonder how the other taxing entities feel about the City banking TIRZ funds and paying for downtown infrastructure improvements with other funds? I'm sure that revenue differential could have helped reduce the property taxes for the County, Hospital and College Taxpayers.
Sure I understood the practice when the TIRZ generated no $$$, but the City seems to have been operating like they always have and now they wake up with over three-quarters of a million dollars in an account funded by the other Midland Taxing entities and they haven't spent a dime of it, all the while the citizens are unnecessarily paying higher taxes to those other entities.
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2 Comments
I understand timing issues, and there is nothing against the project itself. It has to be done.
However, in light of the recent headline story in the MRT regarding the TIRZ, and a quick check of the CAFR which shows no expenditures to date from the TIRZ, it can make you scratch your head.
As for saying the projects I listed are in the application phase, or recently completed, then why are they listed as completed in the executive summary for the 2007 CAFR, 2006-2007 Budget, and 2007-2008 Budget? In each report you have almost the exact same statement regarding projects completed in the TIRZ (talk about recycling):
The Tax Increment Reinvestment Zone for downtown Midland was created to fuel growth in the downtown portion of the City by reinvesting the tax revenues from the increased values in the Tax Increment Zone back into downtown. During 2006, the downtown area experienced significant growth in assessed value of real property. The Midland Hilton, new waterlines, and right of way beautification are among recent improvements in the TIRZ. Also, four homes were completed by Midland Community Development Corporation as part of an agreement in which the TIRZ will provide reimbursement for certain infrastructure improvements related to the construction of 12 new single-family homes.
I think there are projects the TIRZ will be paying for in the future, but for the last three years the writers of this report have couched projects completed by others in the TIRZ under the heading of the TIRZ, while not disclosing that funds from rising valuations in the TIRZ weren't used on these projects.
There is an allocation for $35,000 for a TIRZ #1 Development Plan but that expenditure goes back to before the 2006 budget and the funding account number is listed as 1998 GP Certificates of Obligation, Downtown, City Hall, Land. So it isn't funded by the TIRZ.
I'm curious when TIRZ funds will be spent, because there are no items in the 2007-2008 for TIRZ expenditures, and the CAFR shows no current or future liabilities book against the TIRZ funds. There may be promises of projects and agreements, but for now the TIRZ is banking funds.
That, and a development arm of the City seems to be having communicaiton issues with the public.
This was a timing issue. Utility relocation is a TIRZ eligible expense but developer was needing assistance fairly quickly. TIRZ participation would not have worked quite so well for the developer since the TIRZ typically participates after the project is complete and it is generating a positive value from any increase in property value (the tax increment). And, any TIRZ participation is usually spread out over several years. This is a 4a eligible expense so they went that route.
Some of the TIRZ projects you mention are either in the application phase (not yet given final approval) or have just recently been approved for payment. TIRZ is not so much "banking" money as it is finally realizing benefit from downtown valuations. It has only been the past few years the TIRZ has seen this type of revenue growth.