The Tax Increment Finance Zone board Monday adopted a new formula for funding downtown projects, over the objections of the first developer it will affect.
The TIF board recommended an $80,000 incentive for the Mirada apartment complex, half the amount it had recommended to Waco City Council in May.
The council last month kicked the application back to the TIF board, saying it wanted it to be reviewed against new criteria developed by the Downtown Development Corp. board.
Mirada developer Michael Wray protested that the TIF board was changing its rules in midstream for a project he had applied for in December.
At that time, the standard TIF contribution was 15 percent of the project’s value. The TIF board in May recommended only 10 percent based on a preliminary version of the criteria. Then, Wray found out Friday that it was only eligible for 5 percent, based on scoring from the Downtown Development Corp board.
“We’ve never seen the scoring matrix, and we don’t know how you arrived at it,” he said. “It was a work in progress until 30 to 45 seconds ago. . . . We still don’t know exactly where we stand. . . . We’re a little frustrated.”
The TIF board approved the 5 percent recommendation, which will go before the council July 16. Wray said he will take his case to the council for more money.
“All I’m asking for is to be judged by the criteria that were in place when we submitted our application,” Wray said in an interview after the meeting.
Wray said he was counting on the TIF funding in the financial calculations for the project, but he said his group, WLD Holdings, has invested too much in the property to back out now.
The 24-unit complex at 701 S. Sixth St. is projected to cost $1.8 million, though only $1.6 million is counted toward the TIF formula.
The TIF Zone uses a portion of property tax revenue generated from downtown properties to help assist downtown development.
The fund has grown with downtown, and TIF and city officials have looked for a system to prioritize TIF spending.
The Downtown Development Corp., which was formed to implement the community’s Imagine Waco Plan for Greater Downtown, has developed such a system during recent months.
The new criteria give more weight — and more TIF funding — to projects that enrich downtown’s tax base and advance the Imagine Waco vision.
Entertainment and residential uses get extra points, as do projects that enhance connections to the river, rescue historic buildings or help turn around blighted parts of downtown.
Downtown Development Corp. executive director Megan Henderson said the Mirada project didn’t score highly on advancing the Imagine Waco goals.
But she said the fact that it got enough points for a 5 percent contribution meant it was deemed worthy of public support.
“It’s a good, solid residential project that’s consistent with the plan, but I don’t think the board found standout components that made them want to give it extra consideration,” she said.
Henderson said that under the TIF board’s new direction, a match of 10 percent to 15 percent is reserved for projects that make an outstanding contribution to downtown development.
TIF board members agreed that in the future, scoring with the new criteria should be available well before the TIF meetings to ensure that process is transparent.
Wray said he considers the new process “dysfunctional.” He told the board that it will discourage development in downtown, where he said decayed infrastructure makes it more expensive to develop.
“When you pick winners and losers in market areas, it’s going to have the opposite effect you are intending,” he said. “Land prices are going to go down and sales are going to be affected. . . . There’s going to be a string of unintended consequences.”
Also Monday, the TIF board approved about $58,000, or about 10 percent of the improvement costs, for the renovation of the Waco Labor Temple at 700 Franklin Ave.
Developer Jerry Dyer Jr., who also is building the Franklin Place complex next door, plans to create six lofts for rent on the second and third floors. The first floor would be renovated for the Labor Temple, which serves as headquarters for various local unions.
Labor Temple official Nolene Sykora said the building, constructed in 1901, is the last labor temple in Texas, and the deal with Dyer helps preserve it for the future.
Dyer had asked for a 13 percent match but said he still intends to go forward with the project.