Texas Senate Bill SB1433

Texas 2021 - 87th Regular

Caption

Relating to tax increment financing.

Impact

The amendments imposed by SB1433 will likely affect how municipalities engage in economic development through TIFs. By establishing caps on the allowable percentage of residential property within a proposed zone and limiting the term of reinvestment zones, the bill seeks to focus TIF resources towards areas with a stronger economic potential. These changes aim to ensure that TIFs are used effectively and do not infringe upon the tax base for essential services by overly extending these incentives.

Summary

SB1433 amends the Tax Code relating to tax increment financing (TIF) in Texas. The bill introduces various restrictions and conditions for establishing reinvestment zones, which are designated areas where property taxes can be captured to finance public improvements aimed at stimulating development. One of the key changes is that any ordinance establishing a reinvestment zone must now stipulate that the zone automatically terminates no later than ten years from its designation date. This adds a level of accountability and ensures that such funding mechanisms are not prolonged indefinitely.

Contention

There are potential points of contention arising from SB1433. Supporters argue that the bill will prevent the misuse of tax increment financing by ensuring that zones do not become permanent financial burdens on municipalities. However, critics may contend that such restrictions could hinder the ability of cities to attract investment, especially in areas with a higher percentage of residential properties or where the appraised value of certain properties may not meet the stipulated criteria laid out in the amendments. This tension indicates a balancing act between fiscal responsibility and opportunities for local economic growth.