Developers in Lewisville and Flower Mound are looking for help in paying for millions of dollars worth of public improvements.

Their mixed-use projects—one in Castle Hills and the other in Flower Mound’s Lakeside Village—will tap into a type of financing that uses the growth in property values to fund public infrastructure, which includes things such as roads and water lines.

This type of financing is called a tax increment reinvestment zone, or TIRZ. A TIRZ is unique to the state of Texas and allows cities to use property tax revenue to reimburse developers for building public infrastructure in undeveloped areas.

A TIRZ does not create any new taxes. Instead, it redirects some of the property tax revenue being generated as a project increases in value over time.

It is especially effective in areas anticipating a lot of growth. About $3 billion worth of new development is expected with these two new projects.

TIRZ for Castle Hills

In December, the city of Lewisville and Denton County approved a TIRZ for 708 acres along SH 121. The undeveloped land is part of Castle Hills, a 2,800-acre master-planned community that has been constructed in phases since 1996.

Under the agreement, developer Bright Realty would receive up to $88.7 million over 20 years for public improvements.

Since the beginning of the development, Bright Realty has largely relied on the selling of bonds to fund public infrastructure, said Eric Stanley, president and chief operating officer of Bright Realty.

“Since 1996 we have had a public-private partnership with Lewisville where they issue bonds for us, but the debt isn’t the city of Lewisville’s obligation,” he said. “The debt is the responsibility of the people who live in the Denton County Fresh Water Supply districts that make up Castle Hills.”

However, the city of Lewisville is planning to annex Castle Hills as early as 2021, and when it does, issuing bonds to build infrastructure will not be an option as Lewisville residents would have to assume the bond debt, which could raise the city’s tax rate.

Lewisville Mayor Pro Tem Brandon Jones said the TIRZ essentially allows the developer to install streets, sewer and other infrastructure without raising the tax rate once the project becomes a part of the city. Right now, Castle Hills is outside the city limits in Lewisville’s extraterritorial jurisdiction, or ETJ—land outside city limits that the city is legally allowed to incorporate.

“The TIRZ is an invaluable tool that will allow the city of Lewisville to annex Castle Hills in its entirety by 2021,” Jones said. “Without the TIRZ, we would likely have to leave out the undeveloped portions of Castle Hills.”

Lewisville Chief Financial Officer Brenda Martin said TIRZ funds can be used only to build public infrastructure and to pay back debt.

Stanley said except for the 708 acres near SH 121 that make up the TIRZ zone, Castle Hills is for the most part built out.

“We are going to build multiuse projects in this area—uses that aren’t currently there—like hotels, Class A office buildings and other similar uses,” Stanley said.

The $1.5 billion development would include a corporate campus where SH 121 and SH 121 Business meet. Known as the Crown Centre, the project would have water features, covered parking, three lakes, a walking trail and extensive landscaping.

Nearby at SH 121 and west of Josey Lane, Bright Realty plans to build The Realm at Castle Hills, a mixed-use center with condominiums, apartments, retailers, restaurants and office space.

Build-out for the developments could occur quickly with the first residential portion filled by 2022, commercial by 2025 and the Class A office space by 2034.

Lakeside Village feasibility

In Flower Mound, developer Realty Capital is requesting $20.5 million through a TIRZ for Lakeside Village, a $1.5 billion mixed-use development on 35 acres along Lake Grapevine.

The development, which will be located west of Lakeside Parkway, will include a mix of retail; restaurants; offices; possibly three hotels; and residential areas, which would come in the form of villas, lofts over retail and up to five towers.

Andrea Roy, Flower Mound Economic Development Director, said the money would cover infrastructure costs and public amenities for the development.

She added the TIRZ could be used to fund a fine arts center in the development.

In December, Roy said the Town Council was presented with the results of a feasibility study that analyzed if a TIRZ would make sense for the town. It looked at different percentages of tax revenue that the town could dedicate to the TIRZ.

Roy said the town is not open to dedicating 100 percent of its property taxes from Lakeside Village to the TIRZ fund.

“The town recognizes that with the amount of residential that is planned for that area, they will need services from the town,” she said. “And that’s going to cost money, so we need to have some additional revenue coming in to cover that.”

Roy said, however, all of the scenarios ran in the study allude to the TIRZ being a viable option.

“And no matter what scenario you run, when you are looking at $1.5 billion in value, it covers the cost that [Realty Capital is] looking for,” Roy said.

On Jan. 31, which was after this newspaper’s press deadline, Flower Mound Town Council was expected to give staff direction on whether to proceed with the TIRZ. If staffers get the OK, they will also consult with Tarrant County officials about participating in the TIRZ.

Realty Capital has said it plans to go forward on the development with or without the TIRZ. If the TIRZ is not approved, the project would be built in phases and take longer to construct, officials said.

Roy said having a TIRZ for Lakeside Village comes with benefits.

“It would get us additional revenue sooner because it would add value to the town quicker,” she said. “And it would also add additional amenities for the residents like public parking and an amphitheater … Everyone can enjoy the benefits of that.”