One of Sherman’s reinvestment zones may soon grow a little larger. The Sherman City Council will consider expanding the boundary of Texas Reinvestment Zone no. 3 when it meets at 5 p.m. Tuesday at City Hall.

The expansion of the TIRZ will likely serve as a precursor to the redevelopment of the former Community Specialty Hospital on Gallagher Drive.

TIRZ no. 3 was created in 2006 as a way to support growth along the Sherman Commons development. TIRZs assist projects in their designated areas by collecting a sales tax over the base value and setting it aside for projects specifically in the zone. As value in the zone increases, so does the funding that goes into future projects.

During the annual council budget retreat, city officials proposed expanding the TIRZ to include new land that could be improved, including the hospital, as the TIRZ funding was mostly going unused.

In July, representatives for Covenant Development said they are considering redeveloping the former hospital, with plans that include a combination of residential and office uses.

City officials at the time said the aging hospital building would require asbestos abatement, which can be costly and require special environmental and health consideration.

The city plans to contribute 100 percent of its property tax rate increment in the expansion toward the TIRZ, which has an estimated revenue of about $200,000 per year. City officials said this is expected to increase by about #75,000 per year once redevelopment takes place.

In a separate item, the council will consider updating the project and financing plans for the project to reflect the inclusion of the hospital demolition. Meeting documents indicated that the cost, including plans, would be about $400,000 that will be paid through the increment.

In other matters, the council is expected to receive a report on a recently conducted impact fee study. The fee, if imposed would charge new developments a one-time fee based on the expected impact on city infrastructure, including water, sewer and roadways.

Michael Hutchins is the local government reporter for the Herald Democrat. He can be reached at