Author: Theresa Caballero
TIF’s made simple. There is a lot of confusion over the TIF’s. What are the TIF’s and what ramifications do they have on our tax bills? TIF is short for Tax Increment Finance District. Last year the mayor told city council he wanted it to create two TIF districts, TIIF #2 and TIF #3. One TIF district encompasses South Central El Paso around the Thomason Hospital area called the “BHI” TIF and the other is called the Downtown TIF which covers downtown and then stretches up along the far west side of the city along Interstate 10. FINANCES: The TIF’s work under the assumption that property values will increase not decrease. Any tax monies generated by an increase in property values will be handed over to the municipality (the city) for the project in that TIF district. In plain English, it is a Robin Hood type of financing. The other taxing entities, the Community College, the El Paso Independent School District (EPISD), El Paso County, Thomason Hospital and the El Paso Community College, will fork over its tax dollars drawn from those districts to the City of El Paso.
STATE LAW: TIFS are legislated by State law. State law says that all taxing entities in the state of Texas may “OPT OUT” of TIF’s. The “OPT OUT” provision applies to all taxing entities in every county of Texas EXCEPT for El Paso County. For example in San Antonio, if a TIF is created, the other taxing entities in San Antonio can say, “ we do not want to be a part of the TIF. We do not want to lose our tax dollars.” However, in El Paso, this option does not exist. Once a TIF is created, the other taxing entities, whether they want to or not, are in. A taxing entity may not want to be in a TIF because it does not agree with the TIF project or because it has determined that it cannot AFFORD to begin a TIF; it cannot afford to lose its tax dollars to the city.
Eminent domain laws are broader under the TIF statute. For example, under the TIF’s a city may condemn property of a private homeowner, seize it and sell it to a PRIVATE interest for development.
TAX RAMIFICATION IN EL PASO: Dan Wever, President of the El Paso Independent School District Board of Trustees, has been very vocal in his opposition to both TIF’s. Of all the taxing entities, EPISD stands to lose the most. Wever has stated that the appraised value of the property in TIF 3, the 30 year TIF, is currently $812,475,804. That amount generates $12,768,870 of tax revenue for the school district. Under TIF 3 that amount would be frozen, and EPSID would only get $12,768,870 every year for the next 30 years regardless of any increases in appraised value because the taxes generated by an increase in property values would go into the TIF 3 fund. Historically, the increase in property values in El Paso has been 3.3 percent per year. Using that rate of increase, EPISD stands to lose $275,870,041 over the life of TIF 3. Wever stated that EPISD would lose a like amount in state funding as well. And that is just the loss in TIF 3. TIF 2 would add even more. EPISD has only a penny and a half left that it can tax property owners. According to Wever, EPISD is at the end of its rope. “If we are forced to join these TIFs we might just as well use the rope to hang ourselves because we will have failed to protect the children’s money.”
On Friday, January 25, 2002, Dan Wever called the talk show on 600 AM to talk to Mayor Caballero who was a guest. He told the mayor that EPISD could not afford to be a part of the TIF’s. He told the mayor that if the mayor were to study how school districts received their funding, he would know why the legislature allowed every other school district in Texas the option not to participate in TIF’s. The mayor’s response to Wever was, “Mr. Wever, I think the first thing I told you was that we’re going to try and help you get a legislative fix in 2003.” Wever replied, “But mayor, I can’t gamble with the children’s money on your saying that your gonna go to Austin and get those East Texas hill people to do something that’s going to help.” The mayor told Wever that the whole object of the TIF’s was to help the schools. Wever wasn’t buying that.
Mayor Caballero’s reference to “a legislative fix in 2003” was obviously a reference to his buddy State Sen. Eliot Shapleigh’s plan to implement a state income tax for public school funding.
Dan Wever was correct in questioning the mayor’s statement about getting a legislative fix for EPSID. There is no guarantee that any changes will be made in the way public schools will be financed. Wever, as president of EPISD’s board of Trustees, should not be “gambling with the children’s money.” He owes it to the children and every taxpayer in El Paso to do everything possible to keep the city from usurping millions of dollars of EPISD’s money. Contrary to what the mayor told Wever, the TIF’s will badly hurt EPISD, not help it.
The mayor has since told the other taxing entities that he will allow them to “opt out.” The problem with that is that state law, as written for El Paso, does not allow opting out. There is no exception to that provision either. The mayor cannot go above state law.
The mayor knows this.
MYTH: “I do not live in the TIF’s, therefore they do not affect me.” This is false. The TIF’s affect everyone in the whole city. If the taxing entities are forced to give up their tax dollars to the city, they will be left with no recourse but to raise their taxes city wide to make up for the lost dollars.
EPSID and the other taxing entities in ten months, have failed to protect themselves and us by filing a law suit against the city. Every day that passes without a law suit being filed, is a day the city gets closer to collecting those monies. Tax bills come due in January 2003 and the city is licking its chops.
EPISD and the other taxing entities have everything to gain by filing a lawsuit against the city. El Pasoans need to call their representatives on the boards of the different taxing entities and demand that lawsuits be filed OR El Pasoans need to be prepared for another round of tax hikes from everyone. Having coffee with the mayor and explaining to him these vital facts changes nothing. Slapping the mayor with multiple lawsuits will. It takes the matter out of a corrupt city hall and puts it into the courts where there may be some protection.