Transportation Reinvestment Zones

(click here for the following’s source)

The demand for transportation infrastructure has far outpaced the resources of federal, state and local governments. The Texas Legislature has established innovative methods of developing and financing transportation projects. One such tool used by local entities to advance transportation projects is a transportation reinvestment zone (TRZ).

The local governing body designates a zone in which it will promote a transportation project. Once the zone is created, a base year is established and the incremental increase in property tax revenue collected inside the zone is used to finance a project in the zone.

Eligibility and Program Details

Both cities and counties have the authority to set up a TRZ.

The city or county must make the following determinations in order to set up a zone:

  • The proposed zone must be deemed underdeveloped
  • The area of the TRZ will 1) promote public safety; 2) facilitate the improvement, development, or redevelopment of property; 3) facilitate the movement of traffic; and 4) enhance the local entity’s ability to sponsor transportation projects.

Many local governments are familiar with tax increment reinvestment zones and tax increment financing (TIRZ/TIF), but the TRZ is a recently-created tool that allows for a broader range of transportation projects. A TRZ also does not require a local entity to create a board.

Process Overview

The following are the steps for establishing a TRZ:

  1. Identify Project/Needs
  2. Research for zone formation
  3. Define Boundaries
  4. Public Hearing
  5. Passage of Ordinance or Order
  6. Establish Base Year for Tax Collection
  7. Determination of Tax Increment through feasibility study for financing portion of project
  8. Establish funding mechanism

Contact Us

Please call TxDOT’s Innovative Financing/Debt Management Office at (512) 463-5369.

More Information

Background

Below you will find some information (culled from this sourcethat we here at Reconnect Austin found most poignant:

Charge 1: “Recommend ways to maximize the contribution of alternative transportation modes and evaluate what impacts they have on congestion and air quality. Identify statutory barriers to reducing transportation’s impact on air quality and preventing any restrictions on or loss of federal funds due to air quality.”

  1. “There is a cost associated with congestion: the economy suffers and the state stands to lose federal funds for highways if they do not reach attainment status. Since 1982, the cost of congestion has grown at 8% per year, more than double the rate of growth of the economy. Continued growth at this rate will bring the cost of congestion to over 4% of Gross Domestic Product in less than twenty years.”
  2. “The transportation sector accounts for nearly a third of Greenhouse Gas (GHG) emissions in the United States, of which carbon dioxide (CO2) represents the vast majority. This makes transportation the second highest source of GHG next to electricity generation. About 25% of GHG is caused by light and heavy duty gasoline vehicles, which are also the fastest growing source of GHG in the United States.”
  3. Transportation Control Measures (TCMs) are strategies used to manage traffic congestion and reduce vehicle emissions. The Congestion Mitigation and Air Quality program is one source of funds for TCMs. Examples of TCMs include: Improved public transit; Traffic flow improvements and high-occupancy vehicle lanes; Bicycle/pedestrian facilities; Trip-reduction ordinances; Programs to limit or restrict vehicle use in downtown areas or other areas of emission concentration particularly during periods of peak use; Programs to control extended idling of vehicles.”
  4. On a state and local level, Texas has been actively exploring a multi-modal approach to address the public’s transportation need. Texas Department of Transportation (TxDOT) administers the Transportation Enhancement Program for the Federal Highway Administration of the United States Department of Transportation. The Transportation Enhancement Program offers funding opportunities to help expand transportation choices. Transportation enhancement activities have been eligible for funding under the Surface Transportation Program. This federal program provides funding for transportation related activities that promote the environment through aesthetic enhancement associated with transportation.”

Charge 2: “Review and make recommendations relating to the Texas Department of Transportation’s organizational structure and working relationship with local governments, Metropolitan Planning Organizations, Regional Tolling Authorities and Regional Mobility Authorities.”

  1. “The Texas Department of Transportation (TxDOT) has been given the task of delivering a modern transportation system that will meet the demands of a rapidly growing population. The agency must work with many other entities to be able to accomplish this and has worked hard to team with their transportation partners. However, TxDOT faces a lack of public confidence. The recommendations of the Sunset Commission and the TxDOT Restructuring Council suggest that significant changes need to be made at the agency in order for TxDOT to be successful. The changes made in the upcoming months, and even years, need to be closely monitored.”

Charge 4: “Examine the public policy implications of Comprehensive Development Agreements (CDAs) and recommend whether they should be reauthorized to construct specific roadways.”

  1. “The Legislative Study Committee on Private Participation in Toll Projects concluded that Texas does not have the public-sector funding necessary to build and maintain the type of highway system essential to the growing population.4 The Committee’s report recommended that the legislature consider allowing privately-funded comprehensive development agreements as one of the options for the financing of public roadways.”
  2. “The Senate Committee on Transportation and Homeland Security recommends that the Texas Department of Transportation (TxDOT) and Regional Mobility Authorities (RMAs) have limited, project specific, public-private partnership authority for specific transportation projects. That authority should be granted to TxDOT and RMAs through individual pieces of legislation that identifies specific projects. The project specific bills should be authored by legislators whose districts are in close proximity to the recommended projects and ideally, these bills should have the support of the local legislative delegation.”

Charge 5: “Explore the policy implications of transportation reinvestment zones funded by state sales and use taxes as an alternative to public financing of transportation projects “

  1. “Transportation Reinvestment Zones (TRZs) are a tool for generating transportation project funding by capturing and leveraging the economic growth that results from a project.1 As development occurs, property values in the area surrounding the project increase. A Transportation Reinvestment Zone allows a city or county to designate an area around a project and to capture the increase in ad valorem tax revenues resulting from an increase in property values for use in connection with the financing of the project.2 The economic growth attributable to the project is used to support the funding of this project.”
  2. “The statutory purposes for which a TRZ may be formed are to: Promote public safety; Facilitate development and redevelopment of property; Facilitate the movement of traffic; and Enhance a local entity’s ability to sponsor a pass-through project.”
  3. “Additional funding tools for the enhancement of transportation infrastructure in Texas should continue to be explored, including both the Transportation Reinvestment Zones and the examined Transportation Finance Zones. Flexibility in financing road projects and mechanisms that leverage local support will continue to be vital in road planning and construction.”

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