HARLINGEN — The $14.8 million convention center will mark the first time the city has pulled property tax revenue from its three main business zones to fund a project.
City leaders have taken $1.96 million from Harlingen’s three tax increment financing reinvestment zones to buy the land on which to build the 143,000-square-foot convention center and an attached 150-room upscale hotel.
Tuesday, city commissioners met with boards overseeing the three zones to take $601,312 from Zone 1, $1 million from Zone 2 and $367,162 from Zone 3.
The convention center is by far the biggest project the city has partially funded with money pulled from the zones since their creation in 2006.
In January, officials placed the convention center at the top of a list of 94 street and utility projects to be considered for funding through property tax revenues generated within the three zones.
According to City Manager Dan Serna, the convention center has become the top “priority” project within the three tax zones.
Now, it appears nearly all of the other projects on the list will wait for the tax zones to generate further revenue to help fund them.
In 2006, the city created the three zones from which to generate property tax revenue earmarked for economic development.
Tax increment reinvestment zones are public financing tools used to fund economic development projects in which properties’ assessed values are frozen based on the theory their values will increase. The increased property taxes collected make up the increment.
Since about 2010, the city has taken about $625,000 from Zone 3 to fund two projects to help develop the Harlingen Heights and Harlingen Corners business areas, Finance Director Elvia Treviño said yesterday.
Treviño said about $380,000 has been spent on an “ongoing” project to improve the Harlingen Corners shopping center area.
In 2012, officials used about $228,000 to improve Teege, Brazil and Bass Pro West roads as part of a project to develop the Harlingen Heights district, Serna said.
The convention center becomes the first project for which the city has pulled property tax revenue from all three zones.
In January, commissioners and the zones’ board members sought a legal opinion from Dallas-based tax attorney Pete Smith as they discussed taking property tax revenue from the three zones to help fund the convention center in Zone 3.
According to Smith, tax law allows the city to help fund the project through the three zones because the convention center would benefit the city’s overall economy.
Smith added property tax revenue generated within the three zones could be used to buy land for the project.
Serna said the city will use $1.96 million to fund most of the $2.7 million purchase of 8 acres off Teege and Brazil roads, where the convention center and hotel will be built.
The Harlingen Community Improvement Board will fund the remaining $800,000.
City leaders have not projected the speed in which property tax revenue within the three zones will generate another $1.96 million.
“That depends a lot on development — how fast the areas grow,” Serna said.
But this year, the three zones will generate a total of about $304,000, Serna said.
Serna said Zone 1 will generate $70,000, Zone 2 $104,000 and Zone 3 $130,000.
The city plans to borrow $13.5 million in taxable certificates of obligation to build the convention center.
Over a 20-year period, the city will use $9.7 million generated through the Community Improvement Board’s sales tax and $3.8 million in hotel-motel occupancy tax revenue to pay back the debt.