Following the recent agreement for participation by Grayson County, Sherman is expanding one of its new Tax Increment Reinvestment Zones by about 10 acres.
The ordinance to enlarge the TIRZ No. 5 boundaries to include an additional tract on the west side was one of several actions the Sherman City Council recently took on its two news TIRZ areas. It also approved project and financing plans for TIRZ No. 5, amended the interlocal agreements with Grayson County for its participation in TIRZ No. 5 and TIRZ No. 6, and approved a pair of development agreements with the major developers in TIRZ No. 5.
“It should be apparent to everyone just the level of activity we have going on with respect to development and particularly commercial and retail development in these areas,” City Manager Robby Hefton said. “So we’re thankful the council was recently in favor of developing these zones. And it’s already paying huge dividends.”
Sherman’s TIRZ No. 5 is on the northwest corner of the intersection of U.S. Highway 75 and FM 1417, and TIRZ No. 6 includes the southeast and southwest corners of the intersection of Hwy. 75 and FM 691.
The TIRZ areas were put in place to promote development the city said would not occur exclusively through private investment in the foreseeable future. The TIRZ areas will generate funds for the city’s Tax Increment Financing Policy, which the city uses to fund capital projects and their maintenance and infrastructure. City staff said a portion of the increases in taxable value in the two new TIRZ areas after the current tax year will be dedicated to improvements to public infrastructure in the zones.
Hefton said the around 10 acres of land added to TIRZ No. 5 is “primed and ripe for commercial and retail development.” Following a public hearing on the addition that saw no one come forward to speak, the council approved the ordinance unanimously.
A public hearing was then held on the project and financing plans for TIRZ No. 5, but again no one from the public came forward to speak and that ordinance was also approved unanimously. The plans lay out around $3.5 million in public improvements to be funded through an allocation of the 2017 certificates of obligation issued by Sherman in March. City staff explained the city will contribute 75 percent of the maintenance and operating tax rate and the county will contribute 75 percent “of the tax rate allocated to its general fund on the zone’s increment to pay the debt service and other costs incurred by the zone.”
Hefton said the resolutions that were then considered to amend the interlocal agreements with the county relate to resolutions approved by the council on May 1.
“Really, the changes relate to designating or specifying our level of participation at 75 percent,” Hefton said of the two resolutions. “It was our plan and intention all along to participate at this level but we wanted to make it explicit in the actual interlocal agreement so that it would be clear for those that might want to pick it up and read it for some reason.”
The city’s preliminary financing plans for its two new TIRZ areas call for improvements of around $3.3 million at the Sherman Crossroads development on the city’s southside and $2.8 million at the Hwy. 75 and FM 691 zone, where the planned Shops at Grayson Creek development will be located.
The final two TIRZ-related items shifted the focus back to TIRZ No. 5 on the south side of the city for the construction of public facilities.
“These next two items relate to development agreements with developers in those areas who are already literally developing — as you’ve seen — the two medical facilities that are being developed right now,” Hefton said. “In anticipation of more growth in that area in the same realm, this first item is for Sherman Crossroads Ltd., which would actually be developing the southern about 85 acres of this 130-acre tract. And it really just applies for our mechanism to help develop the infrastructure through the mechanisms we have in place through the reinvestment zone that is now in place and thriving.”
Sherman Crossroads Ltd. is planning a mixed-use development of commercial and retail offerings it expects will complement the medical development taking place in the TIRZ. The group’s infrastructure development is expected to begin in the third quarter of this year and continue into next year. City staff said the development is expected to increase the property tax base by $30 million to $50 million during its lifetime, and significantly expand the city’s sales tax base.
The second development agreement was with Heritage Development Partners LLC, which is working on medical facilities for around 45 acres of the 130-acre tract.
“The group that is developing and controls development of these two areas just happen to be different — they’re associated, but different groups,” the city manager said.
The development agreement outlines the terms for Heritage Development Partners to work with the city on the development of the public infrastructure in the area. City staff said the proposed medical facilities development is expected to add more than $20 million to the ad valorem tax base in the city.