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Tax Increment Reinvestment Zone

The close relationship between Frisco ISD and the City of Frisco has resulted in several public-private partnerships that benefit students, residents and taxpayers. The school district’s contributions toward the construction of City-owned facilities, such as Toyota Stadium and the Ford Center, are made possible through what’s known as a Tax Increment Reinvestment Zone (TIRZ).

A TIRZ is a special taxing district used by many local governments to spur economic development. A TIRZ captures any growth in property tax value, from the time the TIRZ is created to present day, and puts the tax revenue generated from that change in value into a separate fund, which can be used on projects that promote future growth.

In 1997, Frisco ISD joined the City of Frisco, Collin County and Collin College in forming a TIRZ on 713 acres of property at the northeast corner of what would become the Dallas North Tollway and Sam Rayburn Tollway. The boundaries of the original TIRZ were Warren Parkway on the north, Sam Rayburn Tollway/Texas State Highway 121 on the south, Preston Road on the east and Dallas North Tollway on the west. In 1997, the property was worth $16.1 million. Today, the land is home to Stonebriar Centre, Dr Pepper Ballpark, Dr Pepper Arena and many other commercial properties. In 2017, the property was worth $1.46 billion. There are some multi-family residential properties in the TIRZ, but no single-family homes. Frisco ISD's tax revenue from the TIRZ in 2017 was $17.23 million.

tirz-maps

2001 - Dr Pepper Ballpark
Partners: City of Frisco, FISD, Collin County, Collin College, and in association with Hick Sports Group and Mandalay Entertainment

  • Catalyst for retail/commercial growth within zone

  • FISD investment: $15 million; actual investment amortized over 24 years: approximately $21 million

  • FISD return for inclusion in the TIRZ: $20 million per year and going up

2003 - Toyota Stadium
Partners: City of Frisco, FISD, Frisco Economic Development Corporation, Frisco Community Development Corporation, Collin County and Hunt Sports Group

  • 93-acre complex with 20,000 seat stadium and 17 additional fields

  • An additional primary football field for FISD

  • Adjacent fields for FISD soccer and sub-varsity football

  • FISD investment: $15 million; actual investment amortized over 20 years: approximately $22 million

  • FISD cost avoidance: $41 million total

    • Stand-alone stadium cost: $18.5 million

    • Interest over 20 years: $7.5 million

    • Land costs: $10 million

    • Annual operating costs over 20 years: $5 million

2008 - Expansion of Dr Pepper Arena and StarCenter into a multi-purpose facility
Partners: City of Frisco, FISD and Hicks Sports Group

  • FISD investment: $15 million; actual investment amortized over 25 years: approximately $22 million

  • FISD has priority use for special events such as graduation

  • FISD has 20 additional days per year of usage, paying only pre-agreed “direct costs”

  • No parking costs for any FISD event

  • Additional 1,000 space parking garage serves as catalyst for further growth/development

2013 - Ford Center
Partners: City of Frisco, FISD, Frisco Economic Development Corporation, Frisco Community Development Corporation and Dallas Cowboys

  • Multipurpose, 12,000-seat indoor stadium and two outdoor fields

  • Venue for football and soccer games and special events such as graduation and convocation, as well other FISD athletic, academic and fine arts events and competitions

  • FISD investment: $30 million to the project or $1.2 million annually for 25 years

  • FISD cost avoidance: approximately $60 million total

    • Stand-alone stadium cost: $27-$30 million (for facility comparable to Memorial Stadium)

    • Interest over 20 years: approximately $21 million

    • Annual operating costs: $250-300,000

2016 - Toyota Stadium improvements
Partners: City of Frisco, FISD, Frisco Economic Development Corporation, Frisco Community Development Corporation and Hunt Sports Group

  • 100,000 square feet of renovated space, including the National Soccer Hall of Fame Museum

  • New locker rooms with separate field-level tunnel entrances, which is more conducive to football

  • New high-definition video boards and a new audio system

  • FISD investment: $4 million or $270,000 annually for 22 years

In addition, unlike any other TIRZ in the state, 100 percent of the annual revenue generated by Frisco ISD’s combined tax rate, after paying the school district’s agreed-upon portion of partnership debt, is returned to FISD to help finance the construction of new schools.That mechanism has allowed Frisco ISD to maintain a relatively low debt service tax rate while building to keep up with fast growth.

Frisco ISD has utilized revenue from the TIRZ to help fund projects that allow students to play and perform in world-class professional stadiums at a much lower cost than if the facilities were owned and operated by the school district. In addition, unlike any other TIRZ in the state, 100 percent of the annual revenue generated by Frisco ISD’s combined tax rate, after paying the school district’s agreed-upon portion of partnership debt, is returned to FISD to help finance the construction of new schools. That mechanism has allowed Frisco ISD to maintain a relatively low debt service tax rate while building to keep up with fast growth.

The partnerships made possible through the TIRZ have also allowed Frisco ISD to avoid issuing debt to build its own facilities. Toyota Stadium and the Ford Center have been described as among the best in the country and were built at a fraction of the cost of similar stadiums without public and private partners. Some school districts have spent as much as $70 million on new stadium construction and pay to maintain the facility. By comparison, Frisco ISD has invested $19 million in Toyota Stadium and $30 million for the Ford Center. Stadium tenants FC Dallas and the Dallas Cowboys are responsible for ongoing maintenance and operations costs. Beyond those investments, the school district only pays for the costs associated with hosting events, such as ticket takers, police, EMS and utilities.

FISD also benefits from property value growth around the new development. For example, the area around The Star will have an estimated property value of $1.5 billion at build-out. Based on a debt tax rate of 0.42 cents, this will generate about $6 million in annual revenue for Frisco ISD to utilize to pay down debt. That is particularly impressive considering the District’s annual TIRZ payment to the City of Frisco for the Ford Center is approximately $2 million.

Frisco TIRZ No. 1 is so advantageous to Frisco ISD that the state of Texas actually changed the law after it was created to prevent other school districts from taking advantage of the same benefits. That’s because the TIRZ removes a portion of the District’s property wealth from the equalized state funding formula, which determines how much school districts receive from the state for day-to-day operations. Because the property value isn’t factored into that calculation, the revenue it generates is not subject to recapture by the state for distribution to property-poor districts across Texas, which is commonly referred to as Robin Hood. As a result, FISD has contributed less under recapture over the years.

If Frisco ISD had chosen not to participate in the TIRZ, FISD would generate revenue on that property value just like the rest of the taxable property in the District’s boundaries. However, because the state’s funding formula works in such a way that adding taxable value does not add available revenue for maintenance and operations (M&O), that means that without the TIRZ, FISD would receive additional M&O revenue, but the District’s state aid would decrease by a proportional amount. Additionally, because that value would be subject to recapture by the state, Frisco ISD would actually experience a net loss in M&O revenue.

On the interest and sinking (I&S) portion of the tax rate, not participating in the TIRZ would mean Frisco ISD’s I&S tax rate would need to be higher to accommodate debt payments, since 100 percent of the annual revenue generated by Frisco ISD’s combined tax rate, after paying the school district’s agreed-upon portion of partnership debt, is returned to FISD to pay debt.

Lastly, if FISD was not part of the TIRZ, it would not enjoy the benefits described above, and the overall impact to the economic growth and prosperity of the community would be negative.

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