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City considering changes to key economic development tool

Council leaders fear changes will harm inner-city

SAN ANTONIO – The San Antonio City Council received a briefing Wednesday on potential changes on how the city designates Tax Increment Financing zones.

Tax Increment Financing (TIF) allows future tax revenue to pay for the construction of public infrastructure improvements. For example, the city's Inner-City TIF Zone No. 11  has helped pay for improvements to the Hays Street Bridge.

The hope is that these improvements will help spur more private development, which has been the case in the TIF zone near Brooks City Base.

The city currently has 19 TIF zones. Twelve have been created through petitions from private developers and the remaining were created by the city. Having used the economic development tool for more than a decade, the city's planning department is considering changes to the eligibility factors by which TIF zones are created.

"We're changing the (TIF) eligibility from more of a demographic basis on the lowest income neighborhoods - areas that are only (Community Development Block Grant) eligible - to expand it to other areas of the city which have a good potential market for redevelopment," said Planning Director John Dugan. "This is a tool for blight and slum redevelopment, and it's a tool that we can use very strategically. What we're just recommending is that it can be used in other parts of the city as well that don't have that restrained demographic and still be very beneficial to the surrounding neighborhoods."

Demographic eligibility factors include: high poverty, low education, high unemployment, and health risk zones.

Market factors include: recent development, identified potential development, current rental and occupancy rates, and target investment in emerging markets.

Council members who represent low-income districts, which are given high-priority in the current TIF zone creation process, worry that the shift away from demographic factors will harm their districts.

"You said that the focus would not be lost on the inner-city, but it will be diverted," District 2 Councilman Keith Toney told Dugan. "To whatever degree that focus is diverted it is going to hurt us as we try to move the economic needle."

"While we open it up to other parts of the city you lose focus on the original intention of the TIF, which is to go to areas that are constrained by these demographics," said District 4 Councilman Rey Saldana.

Dugan disagreed and said any policy changes would ensure that the city does not miss out economic development opportunities in areas that do not meet current demographic eligibility requirements.

"The potential policies we are talking about would widen the eligibility - certainly of areas like the Perrin Beitel corridor, other corridors growing out from downtown where there's a lot of vacant or under-utilized property - where there could be reinvestment," Dugan said.

For more information about TIF zones click here.