What happened: Within the past two years, the City of Midland has created three Tax Increment Reinvestment Zones (TIRZ) to support development in downtown, along the 191 corridor, and around the Scharbauer Sports Complex.

Why it matters: TIRZ districts allow cities to set aside future increases in property tax revenue to fund infrastructure improvements within a specific area. The goal is to attract private development and generate more tax revenue over time beyond the initial investment. TIRZs typically last up to 30 years. During that time, the district reinvests its funds in projects like roads, utilities, public spaces, and business incentives. While TIRZs offer potential economic growth, they also raise questions about long-term budget impacts and public accountability.

Zoom out: There are currently 711 active TIRZ districts across Texas as of 2024.

Pro:

  • TIRZs help stimulate development that may not occur without upfront public investment.

  • Every public dollar spent is intended to leverage multiple private dollars in return through new development.

  • TIRZs earmark only new revenue growth without diverting existing tax dollars from current city services.

  • Projects often pay for themselves as property values rise, generating new tax revenue that can fund future improvements. This creates a cycle where public investment helps attract private development, which then grows the city’s tax base.

  • TIRZ board meetings are open to the public, and the city council must approve any funding recommendations.

  • Counterpoint: There’s no guarantee the projected private investment will materialize or that the public improvements will deliver the economic boost expected. TIRZ depends on accurate forecasting, market conditions, and sound decision-making at every step.

Con:

  • TIRZ sets aside future tax revenue for use inside the zone only, making those funds unavailable for general city services.

  • The city could accomplish similar outcomes using the regular budgeting process without creating special districts.

  • If development inside the TIRZ simply replaces development that would have occurred elsewhere in the city, the zone doesn’t create new economic growth; it only moves it. This risks concentrating growth in one area while leaving other parts of the city behind.

  • If property values fail to rise as expected, the city risks being left with incomplete or underfunded projects.

  • Economic downturns can derail projected revenues.

  • Counterpoint: The city can reduce many of these risks through careful planning, cost-benefit analysis, and public oversight. The fact that these risks exist doesn’t mean TIRZs are inherently flawed. Instead, their success depends on the discipline and transparency with which they’re managed.

The other side: In a TIRZ, property owners are part of a self-financing district where the extra tax revenue created by rising property values is reinvested to improve the area and potentially increase their property values, too. This structure creates a financial incentive for property owners to support TIRZ projects that deliver measurable returns. If future improvements no longer offer material gains, property owners have reason to request that the district be sunset, avoiding unnecessary taxation.

What to ask:

  • What are the specific goals of the TIRZ? For example, how much private investment, how many jobs, or what improvements does the city hope to achieve?

  • Is there a clear plan to end the TIRZ once the district meets its goals?

  • What safeguards are in place to make sure the TIRZ doesn’t grow beyond its original purpose?

  • How will the city balance the needs of the TIRZ with priorities in the rest of the community?

The bottom line: TIRZs are one tool in a city’s economic development toolbox. While they can drive growth without immediate tax hikes, they also carry long-term fiscal risks and trade-offs. For Midland’s TIRZs to succeed, we all must collectively weigh the potential returns against the costs, risks, and governance controls. A disciplined cost-benefit approach, grounded in transparency and clear goals, will be essential to ensuring that Midland’s TIRZs deliver lasting value for the entire community.