City of Conroe considers new opportunity zone to incentivize downtown residential developments

Conroe is considering a new zone that could incentivize developers to build urban residential units like brownstones or townhomes in downtown Conroe.

Conroe is considering a new zone that could incentivize developers to build urban residential units like brownstones or townhomes in downtown Conroe.

Conroe is considering incentives for residential development in the downtown area.

Conroe City Attorney Marc Winberry presented a similar development incentive plan from the city of Houston to the Conroe City Council at the May 8 workshop at the request of Council Member Jody Cjazkoski, who is a co-owner of The Woodlands-based MHW Commercial Real Estate.

The opportunity zone program targets low-income neighborhoods where cities want to add residential units and offer monetary incentives to developers to build there, intended to boost the local economy.

"The city of Houston project ... designated a geographic target area in their downtown they were targeting for new, high-density residential growth—they established a goal of 5,000 new residential units," Winberry said. "The program was administered by their downtown management on behalf of their city and funded using tax increment methodology. They provided reimbursement payments of up to $15,000 for each residential unit created by these projects, so they made certain that the new housing essentially paid for itself through increased property tax revenue."

In Conroe, the potential target area extends from I-45 to Frazier, from the North Loop 336 down to nearly the South Loop, based on the city's current focus for its downtown planning effort. The program boundaries are also set to government guidelines that identify qualifying areas using census tracts.

"This is a big triangular area right in the middle of downtown Conroe," Winberry said. "You have that large wedge that goes right through the heart of the community."

To use the program, Conroe would first need to look at tweaking the $15,000 incentive number and localize other details to fit the city's needs. However, Winberry said bills currently in the legislature could affect these types of zones: HB 390, HB 2439, and HB 4162 relate to incentives.

"The purpose [of the bills] is to unlock what was thought to be trillions of dollars in unrealized capital gains that investors around the country are holding," Winberry said. "What they wanted to do was provide an incentive to stimulate private investment in projects in these zones."

Winberry said two major projects already in the city's downtown master plan—the Dallas Street corridor and the plan to redevelop the Madeley Street corridor into mixed-use—are also in the middle of the opportunity zone.

"You put the cash incentive on top of an opportunity zone incentive and we can really open Conroe up to the development community and get some nice, urban product—brownstones, townhomes," Cjazkoski said. "Try it for a year and if it works, great, maybe you continue it, maybe you don't—but we need to do something, and with the planning and the opportunity zone it's good timing."

Winberry said he thinks the master plan and opportunity zone are complementary and can overlap, but the specific benefits are pending state review.

"The main reason of addressing this to you today is not to take away perhaps the opportunity to establish a Houston-type program here for the incentives, but to also get us to begin to beat the drum in our community about the existence of this opportunity zone in Conroe and to promote that, and hopefully be able to attract investment in the zone," Winberry said.

Cjazkoski said he has been speaking with city staff about bringing up an opportunity zone for two months.

"In downtown Conroe you hear about the lack of housing from Baby Boomers and Millennials, and we need units on the ground so we looked around and looked at what Houston had done," Cjazkoski said. "Instead of spending time recreating the wheel, we took what worked. The city of Houston implemented this program and I think right now there are five new residential towers going up with no stimulus."
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