Williamson County Approves Taxing District To Spur Development

WILLIAMSON COUNTY, TEXAS — The Williamson County Commissioners Court on Tuesday approved an agreement with Georgetown for construction of a 164-acre master planned development dubbed Wolf Lakes Village.

The so-called TIRZ (tax increment reinvestment zone agreement calls for development of the project in the northwest quadrant of Interstate 35 and University Drive/SH 29. A TIRZ is a political subdivision of a municipality or county created to implement tax increment financing.

The project includes office, retail, entertainment, hotels, and 2,400 housing units totaling 5.3 million square feet of development phased over several years, county officials said in a press advisory. The City of Georgetown approved the final project and financing plan on Nov. 27.

According to the agreement, Williamson County will participate at 50 percent of new valuation with a cap of $30 million over the course of 20 years. The city will participate in the reinvestment zone at 70 percent of new valuation with a cap of $100 million in reimbursement over 30 years, officials explained. Reimbursements can begin after 150,000 square feet of commercial development has been permitted.

“This is a unique development, as it is provides the opportunity for employment centers instead of retail and residential alone," Precinct 3 Commissioner Valerie Covey said in a prepared statement. "In fact, there is a restriction on the amount of residential in this project. We want to encourage this type of development because of the jobs that it would create. That is what makes this development unique and why I can support the TIRZ agreement with the City of Georgetown for Wolf Lakes Village.”

Georgetown officials have framed Wolf Lakes Village as a vehicle to provide employment, with a design that includes a regional employment center with more than 725,000 square feet of corporate office space employing 4,500 workers. This type of corporate office space will generate a significantly higher tax value compared to traditional retail development patterns, county officials noted.

The developer estimates the complete development to be valued at $1.7 billion by 2050, versus $460 million if developed as a traditional shopping center. According to the agreement, county dollars will be used specifically for road and drainage infrastructure, county officials stressed, and neither the county nor the city will be issuing debt for this project.

What is a TIF district?

Tax increment financing works on the premise of a specially designated district where the property value of all the real estate withing its boundaries are designated as the "base value." This, in turn, is the amount that generates revenue through the city's normal property tax process. Anything over and above that — derived through an increase in value of existing real estate and new development during the life of the district — goes into a separate fund earmarked exclusively for economic development.

In theory, the setup allows for economic development to pay for itself. But, as CityLab explains, it doesn't always work out this way in practice.

Given the structure of the TIF district, a city can use this second pot of money to lure private investors with loans and subsidies for commercial projects. The money also can be used to make public projects more attractive. There are times when private entities pour in money into a TIF district even before revenue is generated, given an anticipation of revenue spurred by economic development.

The main idea behind a TIF is that such districts can spark new private-public partnerships and new economic activity in a region that might not otherwise experience this sort of activity. But some critics of the process posit the structure as a funneling of money out of the taxpayers' pockets into a special fund that operates in an opaque manner, according to the CityLab analysis.

“On average, [TIF] may be moving development from one part of the city to another, and changing the timing of the development, but there’s not more development than would have otherwise been made,” David Merriman, a professor at the University of Illinois at Chicago, told the site. Merriman authored a report for the Lincoln Institute of Land Policy largely critical of such taxing districts.

In his analysis of existing TIF districts, Merriman found that while TIFs might “capture” some tax revenue above the capped “base value” the revenue may have been generated through natural appreciation in property values even if the TIF hadn’t been created, as CityLab noted. This is money that taxpayers might have otherwise paid directly towards an overlapping school district, or for public services, according to the report. "And while TIF is not a direct tax increase, it may lead to higher rates or service cuts elsewhere, if the city plans on bringing in the same general property tax revenue as before TIF," the report noted.

Approval of the Georgetown TIF district came on the same day county officials approved a tax breaks package for tech giant Apple Inc. as an inducement for local expansion via a new corporate campus. The agreement calls for Apple — which posted $265.6 billion in revenue for 2018 — to get rebates on 65 percent of its property taxes for the next 15 years in exchange for its development of a new campus within county boundaries.

Among the taxing entities within the Apple-designated tax-abated acreage are the Williamson County ESD (Emergency Service District) #1; Williamson County; Williamson County Road & Bridge; Round Rock ISD; Austin Community College; and Upper Brushy Creek WCID (Water Control and Improvement District).

Related story: Williamson County OKs Apple Inc. Expansion Incentives Package.

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