County leaders want special legislation passed that would allow the county to increase its hotel occupancy tax by 2 percent. The money generated from the tax increase would be used to fund an expansion and improvements at the Bell County Expo Center.
Last year the plan never gained traction because the Killeen Chamber of Commerce rejected it after polling hotels in Killeen and finding widespread opposition. In addition, the Killeen City Council expressed reluctance to support the tax because it believed the Expo Center did not draw enough hotel business to west Bell County. The council requested more empirical information to aid in the decision-making process.
The empirical information is due to be released within the next month when a feasibility study on expanding the Expo Center is complete.
Tim Stephens, executive director of the Expo Center, said the study was in its final draft and would be released soon.
While that study may help aid Killeen’s decision-making process on the tax issue, the county learned Monday it also has $29 million in leverage with the city.
Killeen leaders visited the Commissioners Court and requested county support for the creation of a new tax increment reinvestment zone, or TIRZ, in the city.
A tax increment reinvestment zone is a tool cities use to capture and apply revenue to a certain geographical area to assist with things like downtown revitalization or infrastructure improvements.
The idea is to capture new property tax revenues for a prescribed amount of time. In the scenario presented Monday, it would be 30 years.
A tax increment reinvestment zone can raise large amounts of money, particularly in an area that is about to be developed. Killeen has one such area.
Killeen wants to create a reinvestment zone that would capture parts of downtown, the industrial park and an area off Stan Schlueter Loop. A developer who plans to build high-end residential, close proximity retail, water features and prominent landscaping, has already purchased the area off the loop.
If the project, named La Cascata, comes to fruition the developer says that in seven years it would be worth more than $292 million.
Parke Patterson, a consultant out of Sugar Land working on the reinvestment zone with Killeen, said the project would provide money that could be used to help alleviate congestion on Stan Schlueter Loop and improve downtown Killeen. He characterized the TIRZ as a partnership with the county.
John Crutchfield, president of the Killeen Chamber of Commerce, asked commissioners to be partners on the project.
“We’ve certainly been partners with Killeen in the past,” said County Judge Jon Burrows, bringing up $1 million the county gave to the airport in Killeen.
Burrows then brought up the lack of cooperation last year for the hotel occupancy tax and questioned whether Killeen officials have acted as partners with county officials.
If the county agreed to forfeit future tax revenues for the reinvestment zone, it is projected that over a 30 year period it would be giving up $29 million in property tax revenue while only receiving a projected $10 million in new sales tax.
“Where is the return on our investment?” Burrows asked.
At this point it is unclear how much the county would benefit from participation in the reinvestment zone. Crutchfield said studies are still being conducted and he would have access to better projections soon.
What is clear is that Killeen’s benefit would be substantial. Some of the projects that would be funded with the reinvestment zone include $12 million in infrastructure development at La Cascata, $15 million for a new or renovated city hall and $8 million in improvements to U.S. Highway 190 and FM 2410.
“The project would change the landscape of Killeen - it’s a world-class project,” said John Fisher, commissioner in Precinct 4.
Whether the reinvestment zone helps bring an increase of 2 percent to the hotel-motel tax in the county remains to be seen.
Occupancy taxes at hotels and motels in Texas are capped at 13 percent but may be increased to 15 percent with the approval of the Legislature. Most large metropolitan areas of Texas have taxes above 13 percent.
