Real estate market values have recovered, and the previous Galveston City Council’s implied deal to provide tax relief in exchange for a temporary 6-cent tax increase should be honored.

Revenues exist to provide at least 2 cents per $100 of assessed value in tax relief if just Tax Increment Reinvestment Zone 11 is brought onto the tax rolls instead of being allowed to continue.

The developer wants the deal expanded, but the new plans deviate from contractual promises. Ending TIRZ 11 would annually convey more than $500,000 to the city’s coffers.

Another Galveston tax increment deal allows the owners of high-end historical properties to fix the property’s value for a specified period of time in return for restoration at financial levels that are, realistically, available only to millionaires.

No such tax increment deal is available for the middle-class homebuilder who takes a local blighted property and sinks $50,000 into it. That person has to pay taxes in full — year in and year out.

No credible financial study was ever done to prove these tax increment deals would, or do, provide justifiable financial benefits to the Galveston taxpayer. Still, it is not hard to figure out who benefits most from these deals. The idea that they are needed for economic development purposes is unsupportable.

We are reminded on a yearly basis that Galveston has more jobs per capita than most any other city of similar size. Economic growth is Galveston’s challenge, not economic development.

Down the coast sits Port Aransas. Port Aransas has many attractive developments yet, unlike in Galveston, no developers were allowed access to such deals.

Port Aransas told the developers they had to fund the required infrastructure themselves. If the developers didn’t like the terms, they could take their business elsewhere — no hard feelings. In some cases the developers even installed the roads at their own expense. Both economic development and economic growth occurred in Port Aransas without any such deals.

Clear-thinking individuals should wonder why Galveston’s leaders have created these tax increment zones. Galveston sits one hour from the fourth largest city in America, has a rich history, and is a top tourist destination. Yet Galveston is so undesirable that we have to tempt developers while Port Aransas dictates to them?

Guest column

Norman Pappous is a member of the Galveston City Council.

(20) comments

Ellen Morrison

And correct me if I'm wrong, but didn't George Mitchell always make it a point of pride to not get these kickbacks? Tillman Fertitta, too?

Granted, they operate(d) on a grand scale, but that mindset is a healthy one - for the city, residents and developers alike.

Nice article, Norman.

Curtiss Brown

Here comes your requested correction.
George Mitchell was the developer in Zone #10

Curtiss Brown

Norman, I think it is great that you are publicly commenting on TIRZ #11. We need high level discussion community-wide on these issues. I am assuming, because I really don't know, that you have already received the recommendation of the RDA. As the RDA is the group set up to evaluate the how a TIRZ (or other project) fits city-wide in the spectrum of public involvement. You didn't mention what the recommendation is but I am sure you have it.
It did annoy me a tad when you referred obliquely to the Tax Zones as 'Tax relief' they are not tax relief.
I find other pieces of your contribution to be a little confusing, but as I said it is important that we discuss these thing.

Norman Pappous

City council has not been given RDA's recommendations. I don't know why but I understand the delay is something administrative.

I never called TIRZ "Tax relief". I think I said that by closing them you could provide tax relief with the resulting revenues to the city.....

Curtiss Brown

Good point. The tax cap will give relief to current taxpayers by forcing the rate down if evaluations go up too fast.
So, you won't be able to utilize the entire value of the property for taxes, you will have to lower the taxes on the Zone after it is extinguished.
And you won't be getting the taxes from the County and the Navigation District any more either.
So taxes will be forced down so you get less city taxes
And the county taxes will go to them so you get less there too.
Now all of Galveston will see a slight decrease in the tax rate, which I am sure they will be glad to see.
But you are really undoing a pretty good deal for the city and it's infrastructure.

Norman Pappous

Yo9u're right, you don't get the entire tax valuation for the city's general fund, but you will get about two cents. As for the infrastructure deal... not really. The infrastructure the developer is installing is so far above the quality (read: expensive) of what a normal Galveston neighborhood gets that closing it can in no way financially harm local taxpayers.

GW Cornelius

This from someone that is supposed to know how it works. Norm talks a good game but has no idea what he is talking about.

Norman Pappous

Road runner - come out from behind your monicker and debate me in public. Let the voters decide.

George Croix

Anonymous cheap shots are just a vowel away from their true worth.

Curtiss Brown

I now understand that the RDA has considered the plan for TIRZ #11 and has recommended the plan presented. I have not seen the actual recommendation language yet, but evidently the plan was accepted.

I think it is important to know what the RDA is thinking on this.

Bill Broussard

issleshire:
You said: " I am assuming, because I really don't know, that you have already received the recommendation of the RDA. As the RDA is the group set up to evaluate the how a TIRZ (or other project) fits city-wide in the spectrum of public involvement."

Then you said:

"I now understand that the RDA has considered the plan for TIRZ #11 and has recommended the plan presented. I have not seen the actual recommendation language yet, but evidently the plan was accepted.

I think it is important to know what the RDA is thinking on this."

I'm left with why in the world would you attack the RDA as having little to no rights over the TIRZ for several years: in print, at City Hall, behind their backs, etc. and suddenly the RDA has governing authority and ulimatel wisdome?

Could it be that you are speaking about the new RDA: The group put together when crazy Louis decided he could disband the old RDA and fill the new RDA up with development freaks?

The new RDA fits in your groove so it should have decision power whereas the old RDA didn't fit and everything from casting doubt on the legitimacy of member's birth to staging a riot and revolt by now dismissed City staff was ok with you. You were always the first to say the RDA was way beyond its power when it was the old RDA.

You're verbiage about RDA rights and power is totally disingenuous

Curtiss Brown

Ha! It certainly would appear that way to someone who wasn't watching close.
This RDA has not (yet) descended into the second-guessing, minutia sorting, micro-managing, project destroying (Lowes) and contractual re-visioning mess that was the old RDA. I have always said the mission of the RDA was to be an Island-wide interpreter of the future for economic development. Its mission is a meta-mission, not one peering over grainy invoices for addition errors.
As long as there is a chance I will laud the RDA when it moves in the right direction and assumes the task that is so large and avoids the task that is so small and petty as the last bunch.

Bill Broussard

My point exactly! As long as we know you've appointed yourself judge, executioner or cheerleader to any RDA actions, I think we all can listen to your opinion a little more thoughtfully know from whence it springs.

The last RDA may have been burdensome, may have been detailed and may have been oppositional, in some cases, to letting a developer keep tax money instead of sharing it with the taxpayer. But I think you know I think the degree to which they were off course does not warrant the violence (that is what disbanding the RDA was), assaults and public defamation they endured from you and others.

In another world, I suspect that you might be the first one to warn folks that defamation and assault by ganging up and disassembling a public appointed office only leaves the community of good people thinking that volunteering for public office is the last thing they want to do.

I don't think we differ too much on economic development although you are more learned than I. We differ in that I would rather have a smart, detailed protagonist watching over developer and City relations any day than one who is both a lousy Mayor, a liar and now part of your gang when it comes to assassinations.

In methods, we differ and if you ever run for office and win, I can promise you that while we may disagree, I will not energize a full scale revolution and slander campaign against you for the simple reason that if I stuck out at you, I would also strike out at the people who elected you.

What you and Louis and Robb did is as close to immoral as I've seen anyone come. The only difference between ya'll is that you stopped once RDA heads rolled while Rosen and Robb kept it up.

Steve Fouga

Wow, this sounds like a really good debate among insiders and I don't understand much of it.

What will closing TIRZ 11 mean to the typical Galvestonian? A 2-cent tax reduction? Sounds good! What is the downside?

[whistling]

Curtiss Brown

The downside is development comes to a halt.

Steve Fouga

Isleshire, do you mean development on this particular project comes to a halt, or all development does, or what? Do you mean that closing it would be bad in this particular instance, or that it would set a bad precedent?

Isn't there a time limit on a TIRZ?

Curtiss Brown

The East Beach situation is really complex. Originally, when it was still just raw land and nothing going on for 150 million years, a development plan was presented to the City for two separate developments. The purpose of putting the plans together and giving them to the city was to see how, very up front in the process, the water and sewer demands of the project could marry with the City's system. No water and sewer, no projects. Complicating things was the physical reality that one project was sitting ahead (in terms of water and sewer lines) of the other project. So the first physical project TIRZ 11 had to pay for the oversized (larger than they needed) lines that would support the other project (TIRZ 13). They worked that out, but there was a built in flaw that wasn't discovered until recently. The City had sized the water and sewer needs to what was proposed to be built in the first phase, not the entire project plan. So when TIRZ 11 wants to build out the rest of their development plan (corporately not the limited TIRZ portion) there isn't enough water and sewer capacity to support the project. Thus the TIRZ 11 plan to expand their zone and cut the time the zone is to exist.
So we are limited to the present inplace capacity. If TIRZ 11 comes to an end, so does the prospect of future development.
Some have suggested that the City could do the capacity with the taxes it would get from a closed zone. But to do so would mean moving some other city priorities off the city's infrastructure plans to make room under the budget expansion cay. It's kinda like whack-a-mole.

Steve Fouga

Thanks for the explanation. I guess you had to be there...
[smile]

Curtiss Brown

You forget, Partner, that there have been three RDAs. One, the first one, that was blown apart by a power relationship significantly different from citizen to policy makers.

You can take what I say any way you want. I have nothing to do with Marie Robb. But I am not an elected official hounding good people off of their duly appointed posts for political purposes. So don't paint me with the muck in that ugly can.

What was done to those honest city workers, what was subsequently done to the men and women who served as volunteers on the different TIRZ boards. And what was done to valid contracts made by our city, our city officials in agreement on a development project agreed to in open and honest efforts; all to invent a political place to stand. To spread suspicion, dread and paranoia throughout our community on a simple and plainly understood, mutually beneficial economic development project.
I'm one guy. One guy who knows the law, the process, the contractual options and the alternatives. You can take what I say or leave it, I don't care. But I won't let you get away with misrepresenting the facts.

kent hytken

It is time for the TIRZ 11 to be terminated. The original intention of the TIRZ helped facilitate an incentive for development and reimbursement of the initial development of cost for public improvements. After completion of public improvements, any future city and county tax payment should be for the City of Galveston and not the TIRZ. As one of the original 2 developers of Beachtown Galveston, I must say that the purpose of the TIRZ should only benefit front end public improvements and cease to exist after or 5 years, and should not be prolonged for 30 years that reallocates tax revenues owed to the City and County of Galveston and not the developer.

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