San Antonio is once again looking to extend the life of the Midtown Tax Increment Reinvestment Zone (TIRZ), which has long kept property taxes on new development from leaving what’s now one of the city’s wealthiest enclaves.

This time the money could be headed to a project in another part of downtown, however, testing the limits of an already controversial development tool that’s expected to underwrite two major sports and entertainment districts in the coming years.

Texas gave cities permission to start creating TIRZ in the 1980s, aimed at encouraging development in blighted areas that wouldn’t attract private investment on their own.

But the the Midtown TIRZ stretching from River North up the Broadway corridor to Alamo Heights now include some of the most valuable property in San Antonio, and already been extended and repurposed to help fund dozens of projects over its lifetime.

It’s currently set to expire in 2041, when it will have funded major capital projects at the San Antonio Zoo, San Antonio Botanical Garden and Witte Museum.

But an agenda for its upcoming Aug. 19 board meeting shows it could now be extended again through 2060 — as city leaders eye that money to purchase land for the Spurs arena downtown.

Wednesday’s Midtown TIRZ board meeting is scheduled just hours before the City Council is set to discuss how TIRZ policy fits into its broader spending decisions — a potentially tense setting for the organizations competing for resources.

As city leaders try to close a budget deficit, Mayor Gina Ortiz Jones and other council members have been calling on the city to start pulling some of the $45 million per year currently captured by TIRZes back into the general fund.

The council must ultimately sign off on plans approved by a TIRZ board, and the Midtown TIRZ’s plans are expected to come before them on Sept. 3.

The next frontier in TIRZ spending

By most accounts, the Midtown TIRZ has been one of San Antonio’s best examples of the work the economic tool was intended for — helping turn an abandoned industrial site into the thriving neighborhood known as Pearl.

But most public policy experts say the zones are only successful when local leaders allow them to sunset, returning valuable property to the tax rolls.

When that doesn’t happen, researchers from the University of Texas and Rice University suggests they wind up levying an additional tax burden on residents outside the zone, keeping some of the most valuable property in the city from helping fund services that all residents use, like police and fire.

“The wealthier an area, the more tax revenue that it is able to generate through a TIRZ,” said Heather Way, clinical professor of law at the University of Texas at Austin School of Law. “That money is being captured within the TIRZ and is not going to fund other parts of the city that don’t have the ability to generate that kind of tax revenue.”

Using the Midtown TIRZ money to purchase land for the Spurs arena could be a new frontier in tax increment financing, which historically worked by concentrating funding on projects within a zone’s boundaries.

The legislature has loosened its policies some over the years, allowing TIRZ dollars to be spent outside of the zone’s boundaries if the projects have a direct impact on that area.

But experts say that typically means an adjoining road or other infrastructure in its immediate vicinity — not an NBA arena in an entirely different neighborhood.

The new Spurs arena is expected to go on the site of the old UTSA Institute of Texan Cultures at Hemisfair, nearly a mile away from the Midtown TIRZ. The site has already been razed in preparation for the arena, though the city doesn’t yet own the land.

Past city presentations have estimated the former UTSA Institute of Texan Cultures site was worth about $60 million.

That’s separate from the overall funding plans for the $1.3 billion arena, which leans on a different TIRZ at Hemisfair, among other public funding sources, to repay arena bonds. The non-binding term sheet proposes an extension of the Hemisfair TIRZ as well.

The city of San Antonio did not respond to a request for comment.

Even those closely involved with the Midtown TIRZ don’t know how much money it’s projected to generate if its expiration date is extended to 2060.

Representatives from the San Antonio Zoological Society, San Antonio Botanical Garden and the Brackenridge Park Conservancy all have existing agreements to receive money from the TIRZ, and are expected to make presentations at Wednesday’s meeting.

A new mixed-use development by the San Antonio Art Museum, led by the McCombs family, is also expected to compete for funding from the Midtown TIRZ this time around.