1. What is Tax Increment Financing (TIF)?
TIF is a financing tool used to attract development or redevelopment to areas that are currently not benefiting from private-sector investment. The area in which TIF is being used is known as a Tax Increment Reinvestment Zone (TIRZ). TIRZ act as economic stimuli to surrounding areas. TIF can be used to finance new and/or enhanced public improvements and infrastructure. These improvements and infrastructure, in turn, attract additional private investment in surrounding areas.
The City of San Antonio's highest priority use of TIF is the revitalization of inner-city neighborhoods and commercial districts, particularly in those areas located inside Loop 410 and south of Highway 90.
Our guidelines and practices are in accordance with regulations as defined by Chapter 311 of the Texas Tax Code, the Tax Increment Financing Act.
2. How many TIRZ does the City have?
The City of San Antonio TIF Unit administers 19 active Tax Increment Reinvestment Zones. View more information about each zone in the TIRZ Maps & Information pages.
3. How does TIF work?
TIF allows future tax revenue to pay for the construction of public infrastructure improvements. Any increment that is created over the base property value at the start of a TIRZ is collected in the TIF fund throughout its life and used for eligible project costs in the TIRZ development. Tax increment is a relatively small amount of money; for example, the City's share is $0.58 per $1,000 of value. Increment does not include any existing value - only the new value that is created as a result of the Zone. So the longer a Zone can collect increment, the better. But in order to collect increment, development has to take place first to create the increment. A finance plan is created to show how new development or redevelopment will generate new tax revenue ("tax increment"), and to what extent that tax increment can pay for the public infrastructure that is required to support the new development.
Since zones are created with defined life spans - maximum 25 years - development has to take place fairly quickly. A successful use of TIF depends on bringing a developer who is ready to build a project that meets City standards to a part of town that needs investment. That is why the creation of a TIRZ is an important planning process in itself.
4. How much increment can a TIRZ expect to generate?
Every Zone is different, but a useful rule of thumb is to expect that for every $1,000,000 of value a project creates above the Zone's base value, the TIRZ fund will be able to collect about $8,800 per year. A number of variables will ultimately influence that calculation; the number of taxing entities that are participating in the Zone, their level of participation, changes in tax rates, collection rates, and most importantly, the phasing of the public and private improvements themselves. TIF works best where it is possible to create substantial property value. If values are growing quickly prior to the Designation of a Zone, the TIF incentive will be underutilized. If values are low and declining or growing slowly, compared to the rest of the City, then the TIF incentive can be maximized.
5. What are eligible project costs?
Tax increment collected in a TIRZ can only be used in certain ways as specified by Texas statute. These uses, known as "eligible project costs," include
Eligible project costs do not include the costs of private improvements, like the construction costs of individual houses, unless the costs are associated with an affordable housing project. Each TIRZ creates a Finance Plan that explains in detail the specific costs associated with that Zone, per phase of development.
6. How are TIF funds managed?
Each TIRZ is managed by a board that oversees the funds generated through the TIF mechanism. Board members are appointed by City Council and help to make decisions about how money is spent. TIRZ board members are responsible for helping to create or amend the TIRZ Project and Finance Plans; the guiding documents of the TIRZ, and approving contractual agreements and reimbursement requests from developers and other participating taxing entities. To be eligible for appointment to the board, an individual must; 1) be at least 18 years of age; and 2) own real property in the zone or be an employee or agent of a person that owns real property in the zone.
For more information on how to become a TIRZ board member or view board vacancies, please visit the Boards and Commissions page for the Office of the City Clerk.
7. How can a developer benefit from the TIRZ?
Developers who wish to benefit from this incentive can petition the City to create a TIRZ. These are known as "Developer" or "Petition-initiated" TIRZ. To do this, the developer must own at least 50% of property in a given area. A property developer can also benefit if their property is already located in a pre-existing City-initiated TIRZ.
TIRZ developers can access TIF funds through TIRZ board approval for reimbursements on eligible project costs. In previous projects approval of future TIF fund reimbursements have also assisted developers in securing financing for their projects.
8. What is the reimbursement process like?
Developers first submit their invoices and appropriate documentation to the TIF unit for review. Upon staff approval, a TIRZ board meeting will be scheduled to obtain board approval. Developers reimbursements are processed pending the availability of funds and after all other priority payments have been issued.
9. How do I know if I am eligible to participate in this incentive?
The City and TIRZ board determine eligibility based on the economic impact of individual development projects, and the developer's financial and development capacity.
In reviewing development capacity, the TIRZ board evaluates the following:
The proposed project plan is evaluated by ensuring the plan addresses key areas of importance to the City and TIRZ boards, including:
Financial capacity is evaluated by exploring the proposer's access to potential sources and uses of financing including both public and private dollars as well as potential incentives.
Other factors that are reviewed include the:
10. How can I get more information?
View the most recent City of San Antonio TIF program policy and implementation manual here.
For more information about the TIF program contact the TIF Economic Development Manager, Nancy Sheppard.