Jon Mark Hogg: TIRZ Purpose is Not Profit

In an op-ed, the TIRZ Board Chair lays out why he disagreed with the recent decision of the San Angelo City Council not to grant a non-profit TIRZ funding

Jon Mark Hogg: TIRZ Purpose is Not Profit
Jon Mark Hogg 

Opinion - I was disappointed to see the San Angelo City Council reject the application of Gethsemane Baptist Church for a TIRZ grant. While there are legitimate differences of opinion on whether non-profits should be eligible for TIRZ grants, the current rule is that non-profits in the North TIRZ Zone are eligible, and were so at the time Gethsemane submitted its application. Gethsemane was even invited to submit an application by the city. In the view of a super majority of the TIRZ Board, this application met the special criteria required for non-profits to receive funding, and that was the basis for the recommendation to approve. Whether in the future non-profits should be eligible, and whether the same rule should apply to both the North and South TIRZ Zones, is still a matter of consideration and debate.

City of San Angelo Tax Increment Reinvestment Zone

It was unjust for the City Council to ex post facto deny Gethsemane’s application because the property would not have any return on investment in the form of increased property tax revenue. The rules at the time Gethsemane applied declared they were eligible, and the city had even solicited such applications from non-profits, including Gethsemane. To deny the request because non-profits will not pay property taxes on the improvements is a straw man argument. City Council has a long record of approving use of TIRZ funds where there would be no direct increase in property tax revenue from the grant.

The City has taken millions of dollars from TIRZ funds for street improvements downtown. There is nothing wrong or illegal about this, but I will note that the City does not pay property taxes. Most recently, over the TIRZ Board’s unanimous objection, the city took money from TIRZ that could have been used for grants to private businesses, to hire a new employee, and purchase equipment for street maintenance on Chadbourne Street. In the TIRZ Board’s view, this was something that the regular City budget should be responsible for, not the TIRZ fund. Again, there is no direct return on investment in the form of increased property tax revenue by doing this.

The rationale for using TIRZ money for public improvement projects is that general improvements work to the benefit of the community as a whole, and this investment will encourage private investment in the future. That rationale also applies to non-profit organizations like Gethsemane as well.

In my view, Council has lost sight of the purpose of a TIRZ fund. Its purpose is not to simply receive a return on investment by increasing property tax revenue. That may be a benefit of a TIRZ, but that is not its purpose. It is an urban renewal tool to help cities revitalize economically depressed areas of the city. We have been successful in doing so downtown. We have not been as successful in the North part of the city. The TIRZ Board continues to struggle with that challenge, but the recent actions of the City Council make that more and more difficult.

If Council insists on applying a return-on-investment metric to the criteria for receiving TIRZ grants, that should apply to every application for funds we review. Those would be a complex set of criteria and would be difficult to measure at the time of an application. I expect we would find that almost no one who has received a grant since the TIRZ was formed would meet that sort of criteria.

What the citizens deserve is a consistent set of rules that do not change arbitrarily depending on who is sitting on the TIRZ Board and who is sitting on City Council. I believe the TIRZ board was right to consider the application under the existing rules and defer to a later discussion on whether that rule should continue into the future. By not doing the same, the City Council acted unjustly towards its citizens.

Jon Mark Hogg is a former City Council Member and current Chair of the City of San Angelo’s TIRZ Board. The views expressed here are his own and do not reflect the opinions or views of any other TIRZ Board member, city employee or person.