Midland City Council voted last August to cast a one-year sunset provision on a long-winded, and relatively unproductive, Tax Increment Reinvestment Zone (TIRZ). Established in March 2001, the TIRZ was created by the City of Midland in an effort to use taxpayer subsidizes to revitalize its downtown district.
The TIRZ receives funding from property taxes inside its borders and is governed by an unelected board overseen by city officials. Due to underutilized funds, the council eventually voted to sunset the program, with the intention of returning those dollars to taxpayers.
Between its establishment in 2001 and August 2014, the TIRZ board approved approximately $1.3 million in revitalization incentives—one of those projects was the Wall Street Lofts. However, since October 2014, the beginning of the entity’s one-year sunset, the board approved $4.6 million in incentives – over three times the amount utilized over a thirteen year period. In April alone, about $730,000 was allocated to downtown projects including the Vaughn Building ($400k), Midland Food Truck Park and Farmers’ Market ($175k), Subway Redevelopment ($90k), SHK Advertising Firm ($30.8k), and First United Methodist Church ($25k).
Aside from the reinvestment zone, Midland has employed an array of other taxpayer-funded subsidizes to encourage economic development such as the Midland Development Corporation, Chapter 380/381 Economic Development Agreements, Hotel/Motel Taxes, and SBA Loans. Among other projects being “incentivized” by public tax dollars is the Santa Rita Hotel, which was unanimously approved by City Council in April 2015.
The hotel is estimated to cost Midland residents approximately $9.75 million, between the Midland Development Corp., City of Midland, and the TIRZ. Another project currently being discussed by the city is a full renovation of the Midland Center, a convention center attached to the Chamber of Commerce office downtown. During the budget meetings in April and May, the City Council discussed paying for the renovation with $10 million in hotel/motel taxes and likely issuing debt for the remaining $19 million.
The council made a prudent decision when voting in favor of the sunset provision. It benefits taxpayers because it reinforces accountability by making the TIRZ board justify continuing operations as opposed to continuing in perpetuity. All too often, TIRZ boards use tax revenue as a never-ending slush fund for projects that don’t fall in the already vague realm of “economic development.” While TIRZs with a specific initiative and timeline may have merit in terms of accomplishing redevelopment objectives, allowing an unelected board of a city subsidiary to go unchecked is not a responsible use of taxpayer dollars.