At its regular meeting tonight Dec. 3, Lewisville City Council is expected to establish a tax increment reinvestment zone (TIRZ) in Castle Hills, with current City Council members appointed as the five-person board of directors.
Castle Hills is an upscale neighborhood east of Lewisville that is currently regarded as extra-territorial jurisdiction. It is divided into eight separate public improvement districts, most of which have been developed with issued debt over the years, resulting in tax rates that vary across the different districts, but are all much higher than Lewisville’s.
Lewisville has planned to annex Castle Hills since the mid-90s, but doing so would acquire Castle Hills’ various public improvements debts. City governments have been waiting until enough of Castle Hills’ debt is paid off that Lewisville can absorb that debt without raising city tax rates, but while also providing significant tax relief to Castle Hills residents. You can read a more detailed breakdown of this planned transaction, which seems to be imminent for 2021, here.
While most districts of Castle Hills are already developed and well on their way to paying off their debts, districts 1G and 1H are not. 1H is the swath of mostly undeveloped land on the north and south of Windhaven Parkway just south of Highway 121, and 1G is several smaller plots to both the east and west.
Making these areas a TIRZ would keep the debt for future public improvements isolated to those areas.
A TIRZ is a designated zone that essentially mortgages property taxes for public improvements. Over a period of several years, relevant taxing entities accept the current property taxes as a baseline to pay for basic city services, and any increase in collected property tax in the area is captured into the TIRZ and goes back toward paying off public improvement debts in that designated area. This financing method allows the city to fund public improvements in specific areas while keeping the debt for those improvements localized – just as it would be if Castle Hills were to remain an extra-territorial jurisdiction and those plots remained individual public improvement districts.
This TIRZ will be funded by Lewisville and Denton County, with the city agreeing to contribute 100 percent of the new property tax value it collects to the TIRZ and the county contributing 80 percent. The city already has two TIRZ zones – one in Old Town and one in the Hebron Station area.
Though they are currently mostly barren now, districts 1G and 1H already have a combined $65.3 million in outstanding debt and $226.3 million in authorized project costs between them, with The Realm at Castle Hills and Castle Hills Crown Center planned for the areas. You can find a detailed outline of the TIRZ plans, including a full map of the area, in the background material.
According to background material, city staff has recommended Council appoint themselves, all five current City Council members, as the Board of Directors for this new TIRZ due to their familiarity with the Castle Hills Annexation project. Denton County will also appoint two board members. Directors will be appointed to staggered two-year terms – four of the seven will be appointed to one-year terms at first so that not everyone is up for renewal at the same time, but all appointments after that will be for two years – and appointment authority for five of the seven seats will remain with City Council.
In other items, Council will hold a public hearing on a zoning change for a now vacant lot on the northeast corner of Elm and Milton. The property is currently zoned for single-family residential, but the house was demolished in 2017 and the property owner now wants to build an office or mixed-use building on the property. Council is expected to approve the zoning change to Old Town Mixed Use 2.
Lewisville City Council meets at 7 p.m. on the first and third Mondays of the month in City Hall, 151 W. Church St. in Lewisville, often with a workshop session beforehand at 6:30 p.m. during which most discussion takes place. These meetings are open to the public.