Allow Flexible Incentives for Local Governments

Tax Increment Reinvestment Zone (TIRZ)
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Action

Create a political subdivision to eliminate blight, encourage commercial and residential development, and improve overall quality of life for residents.  The subdivision does not create a new tax but instead establishes a “base tax value” for a designated zone.   Once that base tax value established,  additional ad valorem property taxes can only be used for infrastructure, facade programs, or any type of public improvement to the zone.  A TIRZ can be created by a City or County or can be established through a petition signed by property owners who own at least 50% of the appraised value of property in the area (a "petition" TIRZ).

Created By

City, County

Implement In

City, County

Examples

Houston, TX

Resources:

TIRZ Benefits

Neighborhood Empowerment Zone (NEZ)
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Action

Create a neighborhood empowerment zone to incentivize investment (through waived fees or reduced fees) to encourage equitable housing and economic development and improve the public safety and quality of social services for residents. Offering financial incentives would make mixed-use project types more viable and attractive to community investors, particularly those providing senior housing and diverse, accessible housing types.

Created By

City, County

Implement In

City

Housing Trust Fund
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Action

Establish a trust to receive ongoing public funding to support the preservation and production of affordable housing.  Funds can be used for: acquisition, new construction, rehabilitation, emergency repairs, housing-related services, adaptive re-use, accessibility modifications, rental assistance and foreclosure prevention. Funds can also be used to encourage mixed-income and mixed-use developments if a portion addresses the needs of lower income households.

Created By

City, County

380 Agreement - Municipal
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Action

Allow reimbursement to developers for infrastructure improvements up to an agreed-upon amount to stimulate desired development in urban areas.   Chapter 380 of the Local Government Code authorizes municipalities to offer incentives designed to promote economic development, such as commercial and retail projects. Specifically, it allows the municipality to offer loans and grants of city funds or services to developers at little or no cost to promote local economic development and to stimulate business and commercial activity.

To provide a grant or loan, a City must establish a program to implement the incentives. Before proceeding, Cities must review their City charters or local policies that may restrict a City's ability provide a loan or grant.

Created By

City

Implement In

City

381 Agreement - County
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Action

Allow reimbursement to developers for infrastructure improvements up to an agreed-upon amount to stimulate desired development in rural areas. Chapter 381 of the Local Government Code allows Counties to provide incentives encouraging developers to build in their jurisdictions. A County may administer and develop a program to make loans and grants of public money to promote state or local economic development and to stimulate, encourage, and develop business location and commercial activity in the county.

The County may develop and administer a program for entering into a tax abatement agreement. This tool allows Counties to negotiate directly with developers and businesses.

Created By

County

Implement In

County

Tax Abatements
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Action

Allow tax abatement to developers for residential, commercial, or industrial projects within designated reinvestment zones.  A tax abatement is an agreement between a local government and a property owner to partially exempt them from part of the taxes owed on a property in return for improvements to the property. Abatements are governed by Tax Code, Chapter 312. Local taxing units can use abatements to attract development to their jurisdictions.

Created By

City, County

Implement In

City, County

State Historic Preservation Tax Credit
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Action

Identify historic properties and assist in application for tax credit through the Texas Historic Preservation Tax Credit Program established in 2015.  Credit is worth 25% of eligible rehabilitation costs and is available for buildings listed in the National Register of Historic Places, as well as Recorded Texas Historic Landmarks and Texas State Antiquities Landmarks.   May be combined with Federal Historic Preservation Tax.

Created By

State

Implement In

City, County

Encourage Property Owner Incentives

Low Income Housing Tax Credit: 9% LIHTC, 4% LIHTC
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Action

Advertise Texas Department of Housing and Community Affairs tax credits for the acquisition, rehabilitation, or construction of rental housing targeted to low-income households. Credit gives developers a dollar-for-dollar reduction in their federal tax liability in exchange for providing financing for affordable rental units and they receive tax credits paid in annual allotments, generally over 10 a year period. There are two types:

  • 9% credits are typically reserved for new construction and provide equity for roughly 70% of the project costs. Tax credits are highly competitive, and cannot be used with tax exempt bonds.
  • 4% credits may be used for rehabilitation or new construction, provide equity for roughly 30% of project costs, and can be combined with the use of tax exempt bonds (bonds must meet 50% test -- more than half of cost of land and buildings funded through tax-exempt bonds).

Created By

City, County, State

Implement In

City, County

Tax-Exempt Bond
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Action

Target funding in areas and for housing types that meet Targeted Housing Needs established by the community. Texas State Affordable Housing Corporation (TSAHC) is a 501(c)(3) nonprofit organization that was created by the Texas Legislature in 1994 to serve as a self-sustaining, statewide affordable housing provider.

TSAHC has issued more than $730 million in multifamily tax-exempt bonds to help build or preserve affordable rental housing in Texas. These bonds are issued everywhere in Texas.

Created By

State

Implement In

City, County

Community Development Block Grant (CDBG) Program
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Action

The Community Block Grant Program is a federal program that provides flexible resources to states and local jurisdictions to implement activities that 1) benefit low- and moderate-income persons, 2) prevent or eliminate slums or blight, or 3) address community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community for which other funding is not available. While CDBG is a flexible program that can be used for infrastructure, workforce training, and other uses, many communities have used CDBG funding to help meet housing needs by establishing programs ranging from workforce housing development, to housing rehabilitation, to code enforcement.

CDBG appropriation is allocated between States and local jurisdictions called "non-entitlement" and "entitlement" communities, respectively. Entitlement communities receieve CDBG funding directly through the U.S. Department of Housing and Urban Development. Non-entitlement communities must apply for CDBG funding through the Texas Department of Agriculture.

Created By

City, County, State

Implement In

City, County

Section 108 Loan Program
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Action

Section 108 Loan Guarantee Program is the loan guarantee provision of the CDBG Program and provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and large-scale physical development projects.

Funds can be used by a designated public entity for eligible projects, or alternatively, can be loaned to a third party developer.

Created By

City, County, State

Implement In

City, County

HOME Investment Partnership Program
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Action

The HOME Investment Partnership Program is a federal block grant program specifically dedicated to meeting low-to-moderate income communities' housing needs. Cities have used HOME funds to establish homeownership development programs, rental development and preservation, home repair programs that assist people with roof repair or major system needs, weatherization, disability adaptation, and other types of housing assistance. HOME funds cannot be used for infrastructure or other alternative uses.

Created By

County, State

Implement In

City, County

Promote Special Needs Assistance

HUD - Section 202; Elderly - Loan
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Action

Allow developers to acquire capital advances to finance the construction, rehabilitation or acquisition of structures that will serve as supportive housing for very low-income elderly persons, including the frail elderly. Provides rent subsidies for the projects to help make them affordable. (Hobby P. 106)

Created By

State, Developer

HUD- Section 811; Disabled - Loan
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Action

Through the Section 811 Supportive Housing for Persons with Disabilities program, HUD provides funding to develop and subsidize rental housing with the availability of supportive services for very low-income adults with disabilities. (Hobby P. 106)

Created By

State, Developer