City Council approved $166 million in tax increment funding for three cultural institutions, a land acquisition for the Spurs arena and has extended the Midtown Tax Increment Reinvestment Zone (TIRZ) to 2060.
Council passed the measure — but not before also asking city staff to come back with a plan to that would sunset the tool while still supporting affordable and emergency housing initiatives.
The Midtown TIRZ funding proposals stood in stark contrast Thursday to several others that went before the council and drew requests from the council for a closer look at the city’s TIRZ policies and term extensions.
At the meeting, the council approved $50 million worth of funding for projects within four other zones, including a senior center and aquatics facility in the Inner City TIRZ, an aquatics facility and pavilion in the Mission Drive-In TIRZ, and a signage project in the Northeast Corridor TIRZ.
Funding from the Westside TIRZ for a diversion center, approved on consent, will be used for a pilot program surrounding central and downtown police substations.
The council shared full consensus on those projects, voting unanimously in support and praising Councilman Jalen McKee-Rodriguez (D2) in particular for his work on lining up TIRZ support for the senior center in his district.
“This is what TIRZ is supposed to be, this is what TIRZ was created for,” said Councilwoman Phyllis Viagran (D3).
Despite general concerns among the council about extending TIRZ terms, all four TIRZes also were stretched to 2060, matching the Houston Street and Westside zones which were extended earlier this year.
Spreading the wealth
TIRZ funds are generated when new development or property value increases occur within a designated zone, producing tax revenue above the established baseline value. The Texas Tax Code states that TIRZ funds are intended for public improvements, building public infrastructure that draws businesses, and boosting development.
The Midtown TIRZ boundaries encompass an area once blighted but where public and private development has boomed in the last decade.
With that wealth, in 2022, the board of the Midtown TIRZ agreed to start spending money on cultural assets in the city, and made awards to the San Antonio Zoo, Botanical Gardens and the Witte Museum.
With Thursday’s vote, the San Antonio Zoo, Botanical Gardens and Brackenridge Park Conservancy each will receive $10 million over five years plus financing costs, bringing the total to almost $17 million each.
The funds must be matched through private fundraising efforts and will go toward a variety of projects as determined by those entities, including an animal hospital and zoo expansion, new greenhouse, garden classrooms and seed lab, and improvements to the Sunken Gardens Theater.
The TIRZ also will contribute $60 million for the City of San Antonio to buy 13 acres of land formerly occupied by the UTSA Institute of Texan Cultures for the planned new Spurs arena. With principal and interest, the total funding package for a key component of Project Marvel will come to about $115 million.
At a meeting last week, the Midtown TIRZ board approved funding those projects based on a financing plan that would extend the term from 2041 to 2060, leaving an estimated $511 million or more for other projects in the future.
During that mid-morning meeting, and again on Thursday, District 1 residents and others said they opposed extending the TIRZ and supporting those projects with TIRZ dollars, all four of which are located outside the zone.
Some noted the lack of transparency in TIRZ decision-making — versus the bond or other funding processes which solicit public input — and in how board appointments are made, while others called for more support for basic city services over sports stadiums.
District 9 resident Cyndi Munch said she opposed extending the terms of all five of the city’s total nine TIRZ under discussion.
“There is significant fiscal impact to the city’s general fund when taxes on select property valuations do not go into the general fund,” Munch said.
“That impact of not contributing to the general fund compounds the damage it does to the city budgets every year,” she added. “A budget deficit has been blamed on a decline in property taxes, and yet five TIRZ ordinances are being considered today, and asking to keep some of the newest, most valuable properties from paying into the general fund.”
Support for the funding came from a volunteer for the Botanical Gardens, Zoo leadership, the Real Estate Council of San Antonio, the Metro SA Chamber of Commerce, among others.
“The city’s proposed acquisition provides an opportunity to put this strategically located property to productive use as part of a larger sports and entertainment district, which helps generate new private investment and economic activity downtown,” said Martin Gutierrez, vice president of government affairs and advocacy at the San Antonio Board of Realtors.
“That means new housing, commercial development, increased property values, and ultimately a stronger tax base for San Antonio,” he said.
‘Separate pots of money’
Mayor Gina Ortiz Jones was the lone vote against an amendment brought by two council members requiring city staff to develop a new Midtown TIRZ finance plan with an option to shorten the lifespan of the TIRZ and also support funding for affordable housing.
The mayor also voted against the original proposed ordinance to extend the TIRZ to 2060 and support the proposed projects, including the land acquisition.
McKee-Rodriguez registered a no vote as well — as he had promised at the previous TIRZ board meeting — while council members Teri Castillo (D5) and Ric Galvan (D6) abstained. Both measures passed.
“This is exactly the problem with TIRZ that I have,” said Galvan, whose district is not included in a tax increment zone.
“We have separate pots of money for separate little islands in our city that go to a separate board that come back to us and then we debate them … when it could have just been that same pot of money in our general fund coming here during our budget conversations,” he said.
District 4 Councilman Edward Mungia, who brought forward the amended motion to end the Midtown TIRZ earlier than 2060 and review a new finance plan, called for a step back to examine all policies for city-initiated TIRZ, including board makeup.
The policy created in 2022 mandates that TIRZ projects promote housing affordability, and more recently, some council members have viewed TIRZ funding as a way to take pressure off the upcoming bond, which is expected to have reduced capacity in 2027.
Mungia suggested discussing the issue at a future Planning and Community Development Committee meeting. “There’s a lot of work to be done,” Mungia said.
With the Midtown TIRZ taking all the heat during the lengthy council meeting, its board chair, District 1 Councilwoman Sukh Kaur, said the term of the Inner City TIRZ, led by McKee-Rodriguez, also should be reviewed.
She pointed out that, with financing costs, the $46 million aquatics center actually costs about $75 million.
“If we’re not going to be extending Midtown TIRZ, and we want to shorten all of the TIRZ, I think we should do the analysis on this one, too,” she said. Kaur is also a member of the Inner City TIRZ board which is entirely made up of members appointed by McKee-Rodriguez.
Viagran agreed that the city should consider ending a TIRZ when it’s achieved the stated intention of boosting economic development, or building senior centers. But, “TIRZ are not a bad thing,” she said. “They do help with economic development. The TIRZ are working exactly as intended.”
The mayor, who has remained steadfast in her opposition to tax increment financing as the city works to close a $158 million budget deficit, said the TIRZes only fuel inequity in a city like San Antonio.
Ortiz Jones suggested that entities like the zoo could fundraise or “dip into their own assets” to pay for things like an animal hospital. And if each of those organizations could get a little bit less funding than the $10 million offered, the TIRZ could end by 2041 as planned, she said.
“Then we could have that money back into the general fund to do all the things that we just described that are as important to our community,” she said. “In my mind, there’s no other way to say it than as bluntly as extending this TIRZ, and some of the things that are being considered, is the modern-day redlining.”
Senior Reporter Andrea Drusch contributed to this report.
