Chapter 2: Public-Private Partnerships through Tax Increment Reinvestment Zone Financing in the City of Houston, Texas

Public-private partnerships (PPPs) are compacts formed between public and private sector organizations as innovative methods of public service delivery. Funds to support their operations come from taxation on business entities or special property assessment fees levied on property owners for various kinds of improvement activities and services within a geographical boundary (Ewoh, 2007; Ewoh 2011). Within these collaborative arrangements, a unit of government or a city may be authorized by a state to enact legislation to allow private corporations as well as nonprofit organizations build and manage projects while safeguarding the public interest and ensuring efficient public service delivery.

During conditions of fiscal crises, urban economic development scholars have contended that PPPs offer governments an opportunity to collaborate with private corporations in achieving public goals and objectives (Ewoh, 2007; Ewoh 2011; England et al., 2017; Koven & Lyons, 2003). Using an exploratory method of inquiry to examine these scholars’ assertions, the purpose of this analysis was to explore utilization of the tax increment financing (TIF) provision under the state of Texas Tax Code Chapter 311 to pay for infrastructure and other improvements in a designated geographic unit known as a tax increment reinvestment zone (TIRZ). The question raised for this analysis was: Why should a government unit or a municipality deploy TIRZ or TIF to accomplish its PPPs projects? The answers to this question are considered in this exploratory inquiry. The analysis starts with a brief historical review of PPPs at the three levels of government in the United States. This is followed by an examination of TIRZ processes in Houston, Texas, with emphasis on governance structure, financing, and promotion strategies. In the concluding section, the chapter offers some recommendations on how to implement successful PPPs using the tax increment reinvestment zone financing mechanism.