The board of one the city’s tax zones on Friday approved allocating $170 million in future property tax revenue for projects ranging from the purchase of land at Hemisfair to build a new Spurs arena to the construction of a state-of-the-art animal hospital for the San Antonio Zoo.
The board of the Midtown Tax Increment Reinvestment Zone (TIRZ), chaired by District 1 Councilwoman Sukh Kaur, voted 7-4 to fund the projects — even as some questioned whether the expenditures were appropriate use of the tax money.
The total amount approved by the board includes $60 million to buy the land for the arena, $10 million to subsidize the zoo’s $50 million animal hospital plus $55.9 million in financing costs, according to details provided by city staff.
City Council will have final approval on whether any of the projects move forward, however. With the city facing a $158 million budget deficit, Mayor Gina Ortiz Jones told the Current during a recent interview that she plans to vote against the proposed expenditures at council’s Sept. 10 meeting.
“In our city where, if you live south of Highway 90 your life expectancy is 20 years lower than if you lived north of Highway 90, I think there are better uses of our property taxes than an animal hospital at the zoo,” Jones said. “And look, I love the zoo, right? I’m thankful we have such an amazing zoo. They also, though, have a wonderful opportunity to go fundraise [for] themselves.”
At the Sept. 10 meeting, council also will decide whether to extend the Midtown TIRZ — which includes some of the most valuable real estate in the city — from its current 2041 expiration date to 2060. Jones and other critics fear the extension could further hurt the city’s bottom line by diverting tax money away from its general fund.
“I feel a certain level of responsibility to make sure that my successors … are in the best possible position,” Jones said. “For me, that means protecting property taxes today.”
The projects
The proposal the Midtown TIRZ Board’s approved Friday includes an array of projects within its boundaries, an area north of downtown that runs along Broadway and North St. Mary’s Street up to Hildebrand Avenue.
Other than the zoo’s proposed animal hospital and the arena land by, board members agreed to spend money on new greenhouses for the San Antonio Botanical Garden, a jail diversion center on the West Side and a public grant to the Brackenridge Park Conservancy.
McCombs Enterprises, operated by the deep-pocketed McCombs auto dealership family, has also requested money from the TIRZ to develop housing and commercial spaces next to the San Antonio Museum of Art.
During Friday’s meeting, Kaur noted that affordable housing wasn’t part of the current proposal, but said it’s possible that some money from the city’s upcoming bond offering — recently slashed to $450 million — could be used to fund such projects.
Even so, Jones told the Current that, based on the projects Kaur and the TIRZ board proposed, the tax zone is no longer serving its intended purpose. The zones were originally formed to fund development in blighted areas of the city, she added.
“I don’t think anyone could make an argument in good faith that the area around the Pearl is blighted,” Jones said. “It’s no longer blighted. So, I think [the TIRZ] has done a great job of setting out what it was designed to do, and I think now we need that money to come back into the general fund.”
A TIRZ works by capturing rising property tax revenue in a designated area and reinvesting it in that specific neighborhood. The MidTown TIRZ is projected to generate $200 million through 2041, or more than $580 million if council votes to extend its lifespan through 2060.
However, if the TIRZ is renewed, those tax dollars won’t flow into San Antonio’s general fund, which Jones and others warn could leave future Alamo City leaders with budget deficits like the city is struggling to manage today.
Jones added that she plans to keep pushing Spurs ownership for money for the arena project, including the land deal and surrounding infrastructure projects.
Spurs arena
Some of the most contentious debate around the MidTown TIRZ stems from its proposed use to buy downtown land to help create the Project Marvel sports and entertainment district, anchored by the Spurs’ new $1.3 million arena.
City officials, including City Manager Erik Walsh and City Attorney Andy Segovia, believe $60 million can be moved from the MidTown TIRZ to the Hemisfair TIRZ so the city can buy a 13.6-acre parcel on which to construct the NBA arena.
The city plans to buy that land, once occupied by the now-demolished Institute of Texan Cultures, from the University of Texas System.
However, experts said it’s unclear whether that maneuver will end up contested in court. Critics argue that, under state law, what’s funded by a TIRZ must be within its physical boundaries.
The City of San Antonio argues it can legally buy the land at Hemisfair, which lies outside of the Midtown TIRZ, because state law says money can be transferred from one TIRZ to another if the project is for “public assembly.”
University of Texas at Austin law professor Heather Way, who specializes in public finance, told the Current via email that although other Texas cities have transferred TIRZ money outside their designated areas for public assembly, she’s unsure whether a sports arena qualifies.
“I can’t speak to the scope of what constitutes an area of public assembly and whether this exposes San Antonio to lawsuits,” Way said.
Although District 2 Councilman Jalen McKee-Rodriguez, a member of Midtown TIRZ board, voted in favor of the other proposed projects during Friday’s gathering, he said he opposes using the tax money on the arena land purchase.
“I think the use of TIRZ dollars for an arena property for the Spurs deviates greatly from the intention of not just the reconstitution, but TIRZ as a whole and the purpose of using these public tax dollars,” he said.
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