Participation in a tax increment reinvestment zone, or TIRZ, surrounding the proposed Dallas Stars arena could create more than $185 million in additional revenue for Plano ISD.
PISD trustees approved participating in Tax Reinvestment Zone No. 6, which includes commercial properties but not single-family residential properties near the proposed arena, in August. A TIRZ is an economic development tool that allows a portion of taxes collected in a specified area to be directed into a fund that pays for projects in that same area, according to the state comptroller's website.
Johnny Hill, PISD’s deputy superintendent for business, employee services and technology, told Community Impact in late October that the overall development of the $3 billion mixed-use project could generate $188 million in additional property tax revenue for the district over nearly 20 years. Plano City Council approved the district’s participation in the TIRZ Oct. 12.
The details
By participating, PISD is expected to contribute funds to the TIRZ. The district’s overall contributions are capped at $250 million, but PISD is expected to give 50% of additional maintenance and operations tax revenue within the tax zone each year, which comes from the rising property values there. Hill said the $250 million contribution will take money that otherwise would have gone back to the state through recapture and allow it to be used for local economic development.
Hill said the district plans to hit the $250 million cap after 18 years, but the TIRZ is set to last 25 years. He added that the district is expected to generate $438 million in additional property tax revenue over the 18-year period because of expected growth in the property values within the TIRZ boundary, which creates additional tax value. The new revenue would cover PISD's $250 million contribution and generate an additional $188 million in new property tax revenue, according to the district’s website.
“We think over the course of 18 years [the impact will] be over $7 billion,” Hill said of the development's total economic impact. “It's going to continue to do major, major dividends back into our local economy, which is basically going back to our local school district.”
The $250 million contributed will be offset by a reduction in recapture payments sent to the state, per the website. Hill said PISD is one of around 200 school districts that pay Tier 1 Recapture. Because the state guarantees these districts a set level of funding, any money paid into the TIRZ will be offset by a reduced recapture payment.
However, if state law were to change in a way that would impact PISD’s contribution, the agreement with the city allows district officials to adjust the contribution or no longer contribute to the TIRZ, Hill said.
“If we're negatively impacted, we need to be able to either reduce our contribution or do away with our contribution,” he said.
The impact
The additional $188 million will create $21.3 million for maintenance and operations and $166.7 million for school bond payments. PISD will collect a full interest and sinking component of the tax rate since the contribution only earmarks revenues that would have been collected for maintenance and operations, Hill said.
“That's value that we can put back into our classrooms right between now and the 18 years,” Hill said.
Additionally, district officials anticipate being able to use the arena for graduation and other PISD events. It could also create hands-on learning, internship and career exploration opportunities, per the district’s website.
What else
TIRZ participation is separate from any budget deficits, which are driven by declining enrollment, inflation and underfunded mandates, district officials said. Hill said the district deals with underfunded mandates for several programs, including special education, transportation and safety and security.
District officials consider an underfunded mandate to be something the state requires districts to implement, but does not provide full funding for, Hill said.
For more information about the TIRZ and PISD’s participation, visit the district’s website.
