On Dec. 23, the Decatur City Council approved covering more than half of Decatur city limits under a fresh blanket of Tax Increment Reinvestment Zone (TIRZ).
Decatur's expanded downtown TIRZ district approved Monday will span 3,417 acres of primarily undeveloped land, with a focus on funding infrastructure improvements along key Decatur roadways and downtown.
TIRZ districts are an economic development tool that allocates revenue for public improvements without imposing new taxes.
As constructed, 50 percent of new taxable value captured in Decatur's Downtown TIRZ district will be directed toward the TIRZ fund, with the other half going into the city's general fund. For example, if the taxes captured on a property increased from $100 to $110 based on value, $5 of that new value captured would be directed to public improvements within the district, while the rest would go into the fund that covers operating expenses like payroll.
Those increases of value can either come from increasing appraised value or new value added from construction on previously unused land.
The council has tinkered with the TIRZ expansion since August. Decatur City Manager Nate Mara said it's part of the council's overall goal to ease the burden of growth on current residents by "letting development pay for development."
Several Wise County cities have utilized TIRZ districts for improvements, including the City of Bridgeport, with its most recent implementation of its TIRZ fund directed to the construct a new downtown park.
The TIRZ district first originated as part of the creation of a Public Improvement District (PID) in the Paloma Trails subdivision, located near U.S. 380 and Business U.S. 380. A PID grants the city authority to levy assessments against properties in the specified district, in this case Paloma Trails, in order to fund improvements that benefit the property. A piece of the city's deal with Paloma Trails was to create a TIRZ to help offset PID assessments for buyers. Instead of just establishing a TIRZ in the direct vicinity of the development, the city looked at a more broad scope that still falls within legal requirements.
According to city documents, the district does not exceed 30 percent of current residential property and the boundaries contain less than 50 percent of the taxable value currently in the city.
Projections presented at the council's Dec. 9 meeting showed the city's TIRZ increment generating around $35 million at the end of the district's 30-year lifespan. In 2026, the district is projected to collect around $20,000.
In other infrastructure funding mechanism business, the council also approved drastic increases to the city's impact fees. The fees for new residential developments, per single family home, are as follows:
Previously, impact fees were much less or nonexistent in Decatur, with water at $856, wastewater at $1,378 and no roadway fees, for a total base of $2,234. The base fees exceed those charged by Decatur's comparison cities. For example, the highest roadway fee among comparison cities that Kimley Horn engineer Andrew Simonsen presented Monday was the $8,000 charged by the city of Aubrey, with Gainesville, Corinth and Decatur each under $4,000.
The council voted to charge 100 percent of the maximum allowable fees percent for residential, but will do some further evaluation on the fees charged for commercial, industrial and retail developments. The council preemptively set the rates at 50 percent, with plans to workshop the amount for each property type excluding residential in February 2025.