Council creates TIRZ to prepare for Castle Hills annexation

A full map of the potential new Castle Hills TIRZ zone. (Image courtesy City of Lewisville)

At its regular meeting Dec. 3, Lewisville City Council established a tax increment reinvestment zone, or TIRZ, in Castle Hills, with current City Council members appointed as the majority of the board of directors.

In one night, Council heard a presentation during their workshop session about the TIRZ, held a public hearing and passed the motion to create it and its board of directors. Council members appointed themselves as five of the seven directors for the new TIRZ.

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. These districts have a combined $65.3 million in outstanding debt and $226.3 million in authorized project costs between them. Making these areas a TIRZ, a designated zone that essentially mortgages property taxes for public improvements, would keep the debt for future public improvements isolated to those areas.

During the workshop session, Lewisville finance director Brenda Martin presented more information to Council on the TIRZ. Martin stressed that creating this zone would not result in any tax increase.

During public hearings, Steve Southwell objected to the creation of the TIRZ. He said he understands and supports TIRZ zones where necessary, but he argued that in this case, the city was subsidizing the development to make it cheaper. He also expressed surprise that Council was holding a workshop, public hearing and agenda item on this TIRZ all in one throw.

“Let’s not have the citizens of Lewisville subsidize that by letting our tax dollars for Lewisville proper flow to services to feed that area ‘cause that area is not paying their fair share of taxes,” Southwell said. “I hope that at the very least you will table this until we can do a better sales job and figure out what is our actual benefit here.”

Southwell is the publisher of The Lewisville Texan Journal, but this story was not subject to his approval before publication.

City Council members unanimously voted to appoint themselves as five of the seven TIRZ directors. TIRZ directors will serve two-year terms, with some of the initial appointments set as one-year terms so not everyone on the board will be up for reappointment every year. Council members Brandon Jones and Brent Daniels, the two who are up for re-election next May, took the one-year terms. Council member Bob Troyer will serve as the board’s chair. The other two members will be appointed by Denton County.

The TIRZ board of directors are subject solely to appointment by City Council. According to background information, city staff recommended Council members appoint themselves as directors due to their familiarity with the annexation process.

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.

During public hearings, Council also unanimously approved a zoning change to Old Town Mixed Use 2 for a vacant lot located at the northeast corner of Elm and Milton streets. 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 also unanimously approved an ordinance and three associated variances for a property, located on the north and south sides of McCartt Drive off Business 121, to comply with a private drainage agreement. The property is intended for residential use, where 31 single-family detached lots are planned to be built.

During regular hearings, Council unanimously approved an ordinance to allow a new building to use 100 percent cementuous fiber for its exterior rather than brick veneer. Located on the northside of West College Street, the property is planned to demolish the existing residence and build a new craftsman-style home. With this approved variance, the owner plans to match the aesthetics of the existing neighborhood.

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.