Trophy Club council discusses future of Reinvestment Zone No. 1, no action taken

April, a town staff member, gave the Town Council an overview of the Town of Trophy Club’s tax increment reinvestment zone (TIRZ) No. 1, saying “A TERS or tax increment reinvestment zone is a financing tool used to encourage new investment and redevelopment in specific areas.”

The presentation traced the zone’s creation and key documents: a February 2007 resolution establishing tax abatement guidelines, ordinance 2013-23 formally creating Reinvestment Zone No. 1, a project and financing plan adopted in 2014, and amendments under ordinance 2016-24. April said the zone became effective Aug. 19, 2013, and is scheduled to expire on the earlier of Dec. 31, 2034, or when all project costs and obligations — including any tax-increment bonds and interest — have been paid in full.

The nut of the council’s discussion was whether to keep the TIRZ in place as a dedicated incentive fund, expand its boundaries to cover more of the small area plan, or dissolve it and fold the tax increment into the town’s general funds. April explained how the tool works: the captured increase in appraised value above a base year flows to a TIRZ fund for projects inside the zone and “can only be used for approved projects in the TIRS plan.”

April described two developer reimbursement agreements tied to the zone: the Breadwinners tract (the site of Hutchins Barbecue) received 22.5% of total incremental revenue up to a cap of $592,667.89 plus third‑party interest; the HG Supply tract received 12.5% up to $407,332.11 plus interest. Together those agreements represented 35% of the TIRZ revenue. April said the agreements were structured as 20‑year commitments with annual reimbursements each December and that final obligations were met in December 2024, with total disbursements slightly exceeding $1,000,000.

On balances, April said the TIRZ fund had an approximate remaining balance of $70,000 as of Dec. 31, 2024. She also noted the town’s Economic Development Corporation (EDC) fund balance was approximately $2,500,000 as of Sept. 30, 2024. Several council members said those numbers shaped their views: Council member Dennis argued the EDC’s larger, more flexible fund reduced the need for a separate TIRZ, while Council member Jeff and others said even a small dedicated TIRZ balance signals to developers that the town can offer incentives.

Council member Brandon asked how potential state legislation could affect the town’s financing options. Council member Jeff cautioned that House Bill 19 — which council members discussed as a proposal to restrict certificates of obligation for capital projects — was stalled in committee but could push the town toward pay‑as‑you‑go financing if enacted. Jeff and April noted a TIRZ can be structured to support pay‑as‑you‑go approaches and thus provide an alternate mechanism for funding public improvements.

Debate also covered governance and administration of the TIRZ. Dennis recommended co‑seating the TIRZ board with the Town Council to simplify oversight and paperwork. Several council members said they favored folding the board into either the council or the EDC rather than keeping a separate panel; others asked staff to prepare options and financial projections if boundary changes were under consideration.

No ordinance or resolution was proposed or adopted at the meeting. Mayor and council members confirmed they were “not taking action tonight” and that the discussion was intended to inform staff recommendations. April and council members asked staff to prepare boundary options, projections, and a draft agenda item for a future meeting so the council could make a formal decision.

Background: April noted that the zone includes the area around Trophywood Drive and State Highway 114 and that the boundary can be expanded only with approval of the TIRZ board and the town council. She reiterated that when an increment is captured it can be used for infrastructure, utilities, incentives and administrative costs tied to projects inside the zone, and that, absent redevelopment, growth of the fund would be incremental and tied to routine assessment increases.

Council members also emphasized process questions: several said they wanted staff to run projections that showed the revenue and expense tradeoffs of keeping, expanding, or dissolving the TIRZ and to present options for whether the board should be co‑seated with the council or the EDC. The session closed with no vote; staff will return with materials for a future meeting.