Non-Profits Deserve Better From City

Over the last year there has been more discussion at City Council about the TIRZ than ever before. This is largely because of the opposition by the Mayor and some Council Members to the North TIRZ non-profit participation policy. While of relatively minor importance to the day to day business of the City, it has taken up a disproportionate amount of time and energy. Because of the Mayor’s obstructionist approach to anything she does not like, the controversy is not likely to end soon; at least not until there is a new Mayor and Council. The larger public is likely confused by the topic. People who do not follow city government regularly probably did not even know there was such a thing as TIRZ before now.

So what is TIRZ, what is it for, and what does it have to do with non-profits?

TIRZ stands for Tax Increment Reinvestment Zone. It is a program permitted by state law for cities and counties to use to help finance projects aimed at revitalizing a specific geographic area. The San Angelo TIRZ was created by the City Council in 2006. It encompasses most of downtown and extends up the US 87 and Chadbourne Street corridors to take in the Wal-Mart area at 29th and N. Bryant Blvd. You can see it in the map above.

Essentially what a TIRZ does is freeze in place the property taxes the City’s general fund receives on property within the TIRZ Zone. In the case of San Angelo’s TIRZ that means those values were frozen, for lack of a better word, in 2006. The increase in taxes from rising property values in the TIRZ then are diverted into a TIRZ fund. The taxing entities, in this case the City and County, can only use that TIRZ fund for certain specific types of projects for revitalization or redevelopment in that geographic zone. It can be used for public improvements, such as streets and sidewalks. But it also can be used to assist private property owners in making certain types of improvements to their property.

In San Angelo, a significant portion of this fund has gone to improve Chadbourne Street and been used or dedicated for other public improvement projects. But a lot of it is used by private business and property owners to improve their properties. These private property grants have been a significant part of the revitalization that has taken place downtown. Types of grants awarded for use on private property include facade improvements, adding fire sprinkler systems, landscaping, and retrofitting property for disability access among others. Applicants submit applications for TIRZ funding through the City of San Angelo Planning Department or with Downtown San Angelo Inc. If the application is approved by staff and the TIRZ Board it goes to City Council for final approval. TIRZ has been tremendously successful in reducing the number of empty buildings in the downtown area. At the last City Council meeting Mayor Brenda Gunter stated that before the TIRZ was created there were 147 vacant buildings in downtown and there was no activity after 5:00 p.m. Today, she said, there are only 40 empty buildings.

The problem is that the revitalization has not had the same level of success north of Loop 306 even though the largest bulk of the TIRZ fund is dedicated for use in the north. When the TIRZ was created in 2006 there was concern that the downtown area would use up all of the fund, leaving nothing for the north. So, for accounting purposes, the TIRZ was divided into North and South areas. Funding that accrued in the North TIRZ could only be spent in the north, and funding that accrued in the South TIRZ could only be spent in the south. Some exceptions to this rule are allowed, but in general this internal division has remained.

The result has been that in the South (downtown) TIRZ there are more applicants than money. In the North TIRZ there is more money than applicants. Over time the fund balance for the north has grown considerably. Today the balance is around $2 Million. The City and Downtown San Angelo have worked to increase the number of applicants in the North TIRZ. But there are differences between the north and the south that cause the number of applicants in the north to remain low. There have been various attempts in the past to do away with the North/South distinction, but those efforts have only sparked intense opposition from businesses and residents in the north and has never gained much political traction.

The large fund balance in the north was one of the reasons City Council in 2017 left the non-profit policy in place for the North TIRZ when it eliminated non-profits from participating in the South TIRZ. The policy requires a super-majority of both the TIRZ Board and the City Council to approve a non-profit grant. There has only been one attempt by a non-profit to receive a facade improvement grant. That organization was a church on Martin Luther King Jr. Blvd. The TIRZ Board approved the application. Although a majority of the City Council approved, it did not garner the two-thirds majority needed to pass.

But the project was not rejected by a minority of the Council on the merits. The application failed because the Mayor and some members of the City Council do not think non-profit entities should receive TIRZ funds at all because they are exempt from paying property taxes. By so doing, the Mayor and some Council Members refused to evaluate the application according to the required criteria the Council itself had established. The Council Members could very easily have considered the application on the merits and denied it because, in their view, it did not meet the criteria. But they did not do that. They disregarded the policy completely and would not even consider the possibility that the request might have merit.

The TIRZ Board worked with staff and came up with a recommendation to put more restrictions on non-profit applicants in an attempt to address some of the concerns raised by Council at that meeting. Last Tuesday that proposal was presented to the City Council. Aaron Vannoy, City Planning Director was barely able to finish the presentation of the proposed plan before the Mayor shot it down. The Mayor began by lecturing and haranguing staff claiming falsely that the purpose of the TIRZ program was to increase property tax revenue for the City, and that it was illegal for non-profits to participate. While she did this the City Manager sat by and said nothing in defense of staff and the hard work of the volunteers serving on the TIRZ Board.

No questions were asked about the proposal, what was the thinking behind it, and no alternatives to it were offered, discussed or considered. Her blitzkreig seemed to catch staff and even some council members off guard. The Mayor denied Evelyn Smith, the person who submitted the non-profit application that started this controversy, the opportunity to speak about it. The only thing that resulted was an ill-fated and failed attempt to hurry up and eliminate non-profits from eligibility before any opposition could form. This was despite requests from other Council Members to postpone any vote because they did not believe they had sufficient information to make an informed decision. They even asked for time for the City Attorney to research the Mayor’s claims. All of this was to no avail. The motion failed anyway on a 3-3 vote, primarily because of this bull-headed approach. Council Member Larry Miller was not present at the meeting. What will happen next is anybody’s guess.

The result is that the City continues to willfully mistreat and intentionally discriminate against non-profit organizations when it comes to TIRZ. It has arguably deprived one non-profit applicant of due process by denying it a hearing on the merits of its application under existing policy. It is questionable whether the City can legally or constitutionally prohibit non-profits from applying and participating as nothing in state law makes them ineligible. The irony is that the Mayor tries to kill non-profit participation while at the same time the City distributes hundreds of thousands of tax payer dollars to numerous non-profit organizations across the City. None of those organizations pay property taxes either. And to cap it all off, the complete failure of leadership by the one person who is supposed to represent everyone in the city only fosters anger and division.

A Mayor is not just an advocate for her position or another vote on the City Council. A Mayor is supposed to unite, lead and guide the discussion at Council meetings towards resolution, not pick a fight. City government is not about power politics or a winner takes all proposition. These are our neighbors we are talking about. The short sightedness, and unwillingness to even attempt to broker a compromise among disparate points of view, does a disservice to the Council, City staff, the TIRZ Board volunteers, and the myriad non-profit organizations that do important work in our community. They deserve better.

Jon Mark Hogg, Publisher and Editor, served as Chair of the City of San Angelo TIRZ Board

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