Tax Increment Reinvestment Zones
Overview
A Tax Increment Reinvestment Zone (TIRZ) is an economic development financing tool under Chapter 311 of the Texas Tax Code that enables cities and counties to promote development and redevelopment in specific areas. Over time, as new development happens and property values increase, the extra tax revenue generated from that increase, the tax increment, is set aside in a fund used only to be reinvested in infrastructure and improvement projects.
There are prohibitions for TIRZ, they include the following:
• No more than 30% of the property can be used for residential purposes at the time the TIRZ is created.
• There’s a limit on how much of a city’s total appraised value (AV) can be included inside TIRZ zones.
• If a city has more than 100,000 people, no more than 25% of all property value in the city can be inside TIRZs. Austin’s own policy does not to go above 10%.
How Does a TIRZ Work and What Is a TIF?
Tax Increment Financing (TIF) is a tool Texas cities and counties use to fund improvements that support long‑term economic growth. To do this, they create a Tax Increment Reinvestment Zone (TIRZ) — a special area where the city wants to support new growth. When a TIRZ is created, the City calculates how much all the property in that area is worth at that time, with the support of financial experts. This number becomes the base value and stays the same for future tax calculations. As development occurs and values rise, the additional tax revenue created above that baseline (the tax increment) is reinvested back into the zone.
- Base Year Established
The city or county documents all taxable property values within the zone at the time it’s created. This becomes the base year value, and regular taxes on that base continue flowing to standard taxing entities.
- Captured Appraised Value
As development increases property values, the difference between the current value and the base value becomes the captured appraised value. Taxes on this increment go into a dedicated fund for improvements within the zone. A TIRZ does not change how much property tax anyone owes, though property values may rise due to new investment.
- Use of Funds
TIRZ funds can be used to reimburse developers for eligible improvements, to build or upgrade public infrastructure and/or support other projects that directly benefit the TIRZ. The reinvestment helps the area grow faster, often without creating new debt.
- Duration
Each TIRZ operates for a set period of time. When the zone expires, the city gains access to the full, higher tax base created by the development. This expanded tax base lowers the voter‑approval and no‑new‑revenue tax rates, benefiting taxpayers citywide.
Eligibility Requirements
Under Texas Tax Code §311.005, an area can become a TIRZ if it meets at least one of four conditions: it has economic or social challenges, it is mostly undeveloped, it is part of a federally supported new community, or property owners have petitioned for the designation. There is also an allowance that lets a city create a TIRZ for land connected to regional mass transit or commuter rail, even if none of the other conditions apply. Before approving a TIRZ, the Council must make a “but for” finding, meaning they must decide that, without public investment, development or redevelopment in that area would not happen on its own through private investment in the near future.
Descriptions of the Four Criteria:
Economic/Social Liability Conditions
The area must be experiencing impaired growth or create a public liability due to issues that may include, but are not limited to, the following: substandard infrastructure, deteriorated buildings, lack of adequate streets and/or sidewalks, poor lot layout, unsafe and/or unsanitary conditions, tax delinquencies exceeding land value, fire risks or other risks that could potentially danger life and/or property, as well as underutilized commercial and industrial structures.
Predominantly Undeveloped Areas
Land that is mostly open and/or undeveloped, which may have outdated maps. For example, the lot lines, streets, or property layout have changed over time, so the old map isn’t useful anymore and needs to be updated. This also includes run down and deteriorating facilities and infrastructure.
Federally Assisted New Communities
Areas that are part of, or are located next to, housing or community programs that receive federal funding.
Property-Owner Petition
A zone can be created if the property owners—who together own at least half of the total appraised value in the area—ask for it. Appraised value is the estimated dollar value of a property based on what it’s worth today. It’s what a qualified expert says the property should be valued at, considering the condition, location and recent sales in the area.
Active TIRZ
Learn about the City's current active TIRZ sites: Mueller Redevelopment, Colony Park Sustainable Community, Waller Creek and Dog’s Head Development.
- Mueller Redevelopment
Mueller transformed the former 700‑acre municipal airport into a mixed‑use, mixed‑income community. Shaped by a long‑standing community vision and public input - delivering 25% of its residential units as affordable housing and 140 acres of parks and open space - it now serves as a model for walkable urban development with homes, parks, shops, and offices.
- Colony Park Sustainable Community
The Colony Park Sustainable Community is a long-term City effort to transform 208 acres in northeast Austin into a mixed-use, mixed-income neighborhood. The project will add housing, retail, office and community spaces that expand access to services and opportunities. It builds on earlier planning and is guided by strong community oversight.
- Waller Creek
Waller Creek was created by Council in June 2007, to finance the Waller Creek Tunnel project — a flood-control tunnel that's approximately 5,600 square feet — as well as surface improvements in the surrounding district. Its goals include 100-year storm flood mitigation, preventing roadway, building flooding and reducing the floodplain.
- Dog's Head Development
The Dog’s Head Development was approved by Council in July 2026 to support a transformative project on over 2,600 acres of privately owned land along the Colorado River in southeast Austin.