Fort Worth

The TIF of the iceberg

Downtown Fort Worth viewed from the north on Feb. 21, 2014. The downtown TIF pays for free parking on nights and weekends; infrastructure and street-scape improvements for Sundance Square Plaza and also paid for asbestos removal from The Tower.
Downtown Fort Worth viewed from the north on Feb. 21, 2014. The downtown TIF pays for free parking on nights and weekends; infrastructure and street-scape improvements for Sundance Square Plaza and also paid for asbestos removal from The Tower. Star-Telegram archives

Many of Tarrant County’s swankiest hangouts — from Southlake Town Square, the trendy outdoor shopping and entertainment mecca, to downtown Fort Worth’s hopping Sundance Square Plaza — have at least one thing in common.

They all got a big boost from a TIF, or tax increment finance district, a powerful tool cities use to pour millions of dollars into high-profile developments and bet on their future.

In early December, the Fort Worth City Council agreed to create a tax increment finance district for the Stockyards that is expected to generate $40 million over 20 years. It would be used to fund public improvements, upgrade infrastructure and help some private projects in the popular tourist area, such as the $175 million Stockyards development by the Hickman family and Majestic Realty Co. of California.

One of 12 active TIFs in Fort Worth, the Stockyards plan is just the latest example of a North Texas city investing in infrastructure improvements to create growth in new areas or spur revitalization in aging ones.

Southlake Town Square; Grapevine Mills mall; Sundance Square Plaza; Fort Worth’s near south side, including the trendy Magnolia Avenue; Texas Motor Speedway; and Arlington’s thriving Entertainment District, which includes Globe Life Park and AT&T Stadium, were all assisted by these special taxing districts.

“You use TIFs to either redevelop an area that is lacking in infrastructure, has old infrastructure or has underused property and you want to bring it to life,” said Jay Chapa, economic development director for Fort Worth. “So you have an overlay that will assist the private sector when they come in there.”

In a TIF district, the city and other local taxing entities take the property value of the district at the time the TIF was created — estimated at $171.8 million for the Stockyards district, for instance — and agree to set aside tax revenue generated from that district that is over and above that initial value, called the increment.

Similar to downtown Fort Worth, where property values have increased 184 percent since 1995, or the near south side, where property values have increased by 121 percent since 1997, Fort Worth is betting that property values in the city’s historic Stockyards will increase by 370 percent by 2035 after the creation of such a district, potentially raising the appraised value of the TIF to $808 million by then.

“The Stockyards TIF is a good example — a lot of old infrastructure, a lot of decaying buildings up on top, a lot of under-utilized land,” Chapa said. “It was industrial way back when, and now it doesn’t make sense to be industrial anymore, so you have these big buildings that sit there empty or economically don’t produce a lot.”

TIFs have been used for decades to spur development across the region, but the gamble doesn’t always pay off.

Fort Worth’s Lone Star TIF was created in 2004 to lure Cabela’s, the outdoor superstore, to an area in far north Fort Worth just off of Interstate 35W.

It was expected to drive more development in that area, but the latest analysis of the city’s TIFs in 2012 shows that the Cabela TIF lost $2,020 after making its obligated payments to Cabela’s for property improvements.

Chapa said the timing has to be right for a TIF, and some areas can become too dependent on them.

“The idea is to create redevelopment and create economic development and for the TIF to be a catalyst for that,” Chapa said. “Once you have that going, it makes sense for the TIF to end versus having it go in perpetuity. At the end of the day, those taxes need to go back into the taxing entity to provide services citywide or countywide.”

Creating a TIF too soon, before the development takes off, Chapa said, can mean the money is not used in a timely fashion.

For example, Fort Worth created a TIF in 2004 to help pay for the construction of the Chisholm Trail Parkway, but that project was delayed for several years. In 2011, the City Council voted to dissolve the TIF and redistribute the collected money to the participating taxing entities.

It can also mean that the TIF loses value, like Fort Worth’s Woodhaven TIF on the east side of town.

“Typically, we don’t want to create a TIF unless you have an inkling that some development is going to occur. The worst thing you want to happen is to create at TIF and then have it just sit, or in some cases go negative, where the value goes down,” Chapa said.

But overall, the area has a good track record, with TIFs succeeding more often than not and some going well beyond expectations.

The Grapevine Mills mall TIF, started in 1996, is credited with creating an environment for growth in an area that now includes the Gaylord Texan Resort, Bass Pro Shops and Great Wolf Lodge.

“It is not only developing additional sales tax revenue for the city, but it also spurred development around the mall,” said John McGrane, director of administrative services for Grapevine.

That TIF was originally set up to pay for roads and utilities to support the mall. But the TIF created enough revenue to pay off that debt, refund tax money back to participating entities, and provide funding for additional projects and renovations at the mall.

“The idea is that the initial upfront development would spur economic growth and development, which then not only provides those additional revenue streams for the city and county, but also creates jobs in the community,” McGrane said.

A look at a few of Tarrant County’s TIFs

Downtown Fort Worth

Created: 1995

Base value: $322.4 million

2013 value: $915.4 million, 184% increase

Impact: The downtown TIF pays for free parking on nights and weekends; infrastructure and street-scape improvements for Sundance Square Plaza; and also paid for asbestos removal from The Tower.

Lancaster

Created: 2003

Base Value: $178.9 million

2013 Value: $400.2 million, 123% increase

Impact: This TIF is helping redevelop Lancaster Avenue, including the creation of Pinnacle Bank Place, a mixed-use development across the street from the T&P Lofts that will include retail, residential, office space and a parking garage.

Woodhaven

Created: 2007

Base Value: $181.8 million

2013 Value: $178.9 million, 1.6% decrease

Impact: Before the Woodhaven TIF can bring in any revenue, it first must get back up to the base value — a $2.9 million climb — and then increase in value. The TIF was created to fund infrastructure imrpovements to provide a foundation for new development.

North Tarrant Parkway

Created: 2003

Base Value: $1.6 million

2013 Value: $273.5 million, 16,893% increase

Impact: The North Tarrant Parkway TIF was created specifically for road improvements, such as the creation of North Riverside Drive, a much-needed north-south connector in the far north. The area has seen booming growth in recent years.

Speedway

Created: 1995

Base Value: $5.1 million

2013 Value: $65.3, 1,180% increase

Impact: The TIF was created to purchase the Texas Motor Speedway as a public improvement by the Sports Authority and fund public infrastructure improvements. Property values have increased as the area around the Speedway has been developed.

Fort Worth’s Southside/Medical District

Created: 1997

Base Value: $229.7 million

2013 Value: $508.3 million, 121% increase

Impact: This TIF has paid for public improvements associated with private developments, such as Seneca Investments creating a multifamily apartment complex; design and development workshops; streetscape improvements; and has spurred growth along the now-trendy Magnolia Avenue.

Grapevine Mills Mall

Created: 1996

Base Value: $7.6 million

2013 Value: $274.3 million, 3,509% increase

Impact: The TIF was created to fund infrastructure and utility work for the mall and is now helping to pay for a renovation of the mall.

Southlake Town Square

Created: 1997

Base Value: $23.4 million

2013 Value: $310.6 million, 1,227% increase

Impact: The TIF was created to help with the development of Southlake Town Square, a trendy outdoor shopping and entertainment area that has become one of the most popular retail destinations in North Texas. The TIF has paid for public infrastructure and public parks, a joint city/county facility that opened in early 2000 and parking.

Caty Hirst, 817-390-7984

Twitter: @catyhirst

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