City to use management district to lure businesses

LEAGUE CITY — Gov. Rick Perry has signed a bill creating a League City municipal management district that will be used as a tool to attract businesses, improve infrastructure and beautify the city.

The city will create a board, made up of the same people on the Economic Development Corp. The board is expected to meet for the first time in July.

League City has been limited in its ability to attract new business, Doug Frazior, the city’s economic development coordinator, said. The city’s only economic tools have been tax abatements and tax increment reinvestment zones.

The municipal management district, which will encompass all commercial areas throughout the city, will be able to collect revenue to pay for improvements, infrastructure upgrades and economic development incentives to lure new businesses and industries to League City, Frazior said.

The board would have the ability to fund projects two ways:

• It could levy a sales tax, which would require a citywide vote.

• It could generate money from assessments on commercial property owners who requested that through a petition.

Under the assessment option, a majority of commercial property owners would agree to pay a percentage of their property value to pay off the cost of the improvement project, Frazior said. The board is expected to use that option before seeking a sales tax election, which would have to be approved by voters.

The board would not propose a city sales tax before the economy rebounds, Frazior said.

The city’s sales tax — at 8 percent — is 0.25 percent away from the state cap. Any sales tax election called by members of an improvement district would have to be approved by the city council, Frazior said.

Raising the city’s sales tax to the maximum 8.25 percent historically has been unpopular with League City voters.

In November 2007, voters rejected a proposition that would have raised the sales tax rate by a quarter-cent, despite efforts by a group of more than 100 business owners to promote the idea.

Residents last agreed to a sales tax increase in 1987, when they voted to levy sales tax money to pay for amateur athletic facilities, Frazior said.

Funds have been used to pay for the city’s Sportsplex, 1251 Link Road, which is now paid off, he said.

While raising the sales tax has been unpopular, revenue collected from the city’s sales tax steadily increased since 2008 as League City’s retail business sectors have expanded, particularly in the Victory Lakes corridor.

If League City voters were to approve a quarter-cent sales tax today, the tax would generate $1.6 million in the first year, Frazior said.

One of the municipal management district board’s first targets likely will be the city’s Main Street corridor — a 3-mile stretch on FM 518, between Interstate 45 and FM 270.

“The area is old and needs a face-lift,” Frazior said.

The board will talk with Main Street corridor commercial property owners to discuss financing improvements, such as lighting and sidewalks, Frazior said.

There are dozens of these improvement districts, sometimes called municipal management districts, in the Houston area, including The Woodlands and Nassau Bay’s Town Center project. Some districts, like the one in the Galleria area, used funds to purchase decorative chrome street signs. Other districts have used the funds to expand roads, fix aging water and sewer systems or to purchase land to offer to potential businesses.


At A Glance

What is an improvement district?

An improvement district, otherwise known as a municipal management district, includes commercial and industrial zones and allows commercial property owners to finance facilities, infrastructure, services and economic opportunities. The funds come from three sources: property taxes, sales taxes or assessments from property owners in the district. League City will not use the property tax option. Typical improvements financed include landscaping, pedestrian and mobility improvements, lighting and signs.

SOURCE: League City

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