The funds were used for critical maintenance and plumbing improvements to the historic building.
“When you’re talking about historical [buildings] and keeping things to that original form, it tends to cost more money,” Lindblad said.
The funds were available due to the city’s tax increment reinvestment zone, or TIRZ.
A TIRZ is an economic development tool that is used to direct a portion of taxes collected in a specific geographic area into a reserve that is earmarked for projects in that same area, Assistant City Manager Barry Shelton explained.
A closer look
The city has seen steady growth in collections for both zones, with the collections reaching a new high in 2023.
The TIRZ zones collected nearly $9.5 million combined in 2023, according to unaudited numbers from the city of McKinney. The funds collected are reserved for eligible projects and can be considered for approval by the TIRZ board, which includes the members of City Council as well as a representative from the Collin County Commissioners Court and one other member of the community.
Funds collected in TIRZ 1 can be used for infrastructure and historical preservation projects, including renovation and maintenance projects on historic buildings, that contribute to the revitalization of the downtown area.
TIRZ 2 funds can be used for infrastructure and development projects at McKinney National Airport, according to city documents.In a nutshell
The city’s two TIRZ districts were each established in East McKinney in 2010. Since then, millions of dollars in city taxes have been reserved and designated to be reinvested in projects related to infrastructure and historic preservation in that area.
The funds collected by each zone are derived from the property and sales taxes the city collects annually. Each zone collects and uses funds from tax generated only in their defined geographic areas.
The amount collected by the zones annually is determined by comparing the amount of taxes collected in the year each was established with the amount of tax collected in the current year. The differences between these values are the increments that are designated to the TIRZ funds, rather than transferred to the city’s general fund, Shelton said.
Collin County also contributes to McKinney’s TIRZ funds, designating 50% of the county’s annual tax increment in each zone to them.
“It serves as a savings account for projects within that zone,” Shelton said. “Essentially you’re saying this is an area that needs reinvestment, and we’re going to use this mechanism to do so because otherwise that same reinvestment ... would have to come from the general fund.”
What they're saying
City officials do not have a predetermined plan for how the funds will be used, so requests are considered as funds accrue and eligible projects arise, Shelton said.
A $2.8 million funding request was unanimously approved at a Nov. 7 TIRZ 2 board meeting to construct an additional lane for taxiing aircraft at the airport. The constructed lane will allow planes to access a portion of the property that is expected to see three hangars added, McKinney National Airport Director Ken Carley said.
The planned hangars are expected to generate about $530,000 annually to the city in land rents and other services, he said.
“We really try to do projects that have a return on investment,” Carley said.
Other projects at the airport that have used TIRZ 2 funds include a 190-acre land purchase in 2018 and the creation of planning documents for the east side of the airport in 2022.
Funding requests for improvements to four downtown properties totaling about $72,000 were granted from TIRZ 1 collections in 2022. A full list of funding requests granted in 2023 was not yet available as of early January. Common requests for project funding in TIRZ 1 are for the addition of fire sprinklers and other critical maintenance on downtown buildings, Shelton said.
“Small businesses don’t have an open-ended pocketbook,” Lindblad said. “So when the city is willing to help the small-business person, it’s greatly appreciated.”
Quote of note
“We would have less value on the ground and it would stunt the growth of the district if we didn’t have the TIRZ," Assistant City Manager Barry Shelton said.
The impact
The lifespan of the zones when they were originally established was 30 years, with the endings set for 2040. At its inception, the zones were expected to collect between $157 million and $179 million over 30 years, according to city documents.
In mid-2022, council members unanimously elected to extend the lifespan of both zones by an additional 15 years, allowing for $15.5 million in debt for the construction of McKinney’s new City Hall to be leveraged on TIRZ 1, Shelton said.
“The more value you add or retain in the TIRZ district, the better it is for the TIRZ district,” Shelton said. “If you spend $25,000 to build a building that’s a couple million dollars, it’s on the tax rolls, [and a portion of] that money goes back into the TIRZ.”
