Developers of the Pecan District in Pflugerville have the opportunity to receive up to $45 million in tax reimbursements following a final vote by Pflugerville City Council.
Council on Dec. 11 authorized extending the boundaries of the city’s lone tax increment reinvestment zone, or TIRZ, to include the Pecan District—Pflugerville’s first mixed-use developement. A TIRZ is an economic development tool used to fund public infrastructure in a development using property taxes generated in the TIRZ boundaries.
Per terms of the deal, the development must construct a certain amount of infrastructure improvements inside the development’s 45-acre site and along West Pecan Street in order to receive the possible full reimbursement of $45 million by 2025.
According to city documents, infrastructure improvements reimbursable by the TIRZ include parking garages, underground utility infrastructure, roadway infrastructure, and open space improvements including a plaza, festival street, playground, amphitheater and landscaping.
“The developer takes the risk and fronts the funds or borrows the funds with their own equity and builds and constructs the project, and only until the tax increment is there to provide the debt service… can the bonds or cash be used to reimburse the developers expenses,” Pflugerville Assistant City Manager Trey Fletcher told Community Impact Newspaper.
Fletcher stated at the Nov. 27 Pflugerville City Council meeting that the city will continue to see revenues from sales taxes, administrative fees, operations fees, development and permit fees, impact fees and utility revenues during the duration of the TIRZ deal.
Developers will also pay Pflugerville $250 “per door” to cover the cost of operational costs of city services that will need to be provided to the residential areas of the development, such as firefighting.
Since the ordinance’s first reading on Nov. 27, the Pflugerville Community Development Corp. provided for an economic impact study on the Pecan District, according to Pflugerville Planning Director Emily Barron. That economic impact study found that the mixed-use development represents a net benefit of $43.2 million to the city throughout its first five phases. Per Barron, that number considers revenue collected from sales tax and utility collections.
City staff will return in the spring with a development agreement in hand for council approval, per Fletcher.