Neighborhood Empowerment Zones:Purpose of Tool:
A Neighborhood Empowerment Zone (NEZ) is a designated area where municipalities can offer economic incentives that promote investment and redevelopment. According to the Texas Local Government Code (Chapter 378), an NEZ must be created for at least one (1) of the following purposes: the creation and rehabilitation of affordable housing (including manufactured housing); economic development opportunities; or an increase in the quality of social services, education, or public safety.
Benefits of Using Tool:
An NEZ is beneficial in revitalizing areas within a municipality that are in need of physical, economic, and social rehabilitation. An NEZ has greater flexibility and power to remove unwanted elements from the area and promote new housing, business, and social services than a local government has in and of itself. Specifically, within an NEZ, a municipality may waive or adopt fees for construction of new buildings, including inspection and impact fees; enter into agreements, not to exceed 10 years, for refunds of municipal sales tax for sales made within the zone; abate municipal property taxes, subject to a time limit; and set performance standards to encourage the use of alternative building materials that will benefit the environment through reduced maintenance needs and/or energy consumption.
Steps Involved to Use Tool:
To form an NEZ within Texas, a municipality must adopt a resolution stating the purpose of the zone, a description of its boundaries, and a finding by the government that the NEZ will benefit the public health, safety, and welfare of the community.
Special Requirements to Use Tool:
Any tax abatements in the NEZ must conform to the guidelines of Title 2, Subtitle B, Chapter 312 of the Texas Tax Code, the Property Redevelopment and Tax Abatement Act. Individual municipalities may have additional eligibility requirements to establish NEZs and/or additional requirements for NEZs to qualify for particular incentives.
Specials Resources Needed to Use Tool:
No specific resources are needed to use this tool , although it is beneficial for local governments to have a qualified staff member or to establish a committee to review and negotiate tax abatement and refund agreements. The staff member is typically part of an economic development department, and committees generally include members focused on economic development within the community. In addition to staff and committee review, conducting a simple economic impact analysis is also beneficial in communicating the short-term and long-term benefits of the project, and it can help local governments determine the appropriate level of investment to offer for any given project. Economic impact analyses provide estimates of job creation for specific types of businesses. Job creation is presented in direct jobs, indirect and induced. Economic impact analyses can also provide estimates of additional tax revenue generated by the above-referenced jobs.
Communities / Agencies that Have Used Tool:
The City of Fort Worth has an active NEZ program aimed at improving the central city. The goal of the program is to encourage private investment in housing, businesses, and services. The City has already designated 15 NEZs districts. New and rehabilitated developments in these districts are eligible for incentives such as municipal property tax abatements, fee waivers, and release of City liens. In addition to State of Texas criteria, new NEZs in Fort Worth must meet the following criteria:
In addition, the NEZs, if included as an “Urban Village” in the 2002 Fort Worth Comprehensive Plan, must be zoned mixed-use. Furthermore, a strategic plan outlining the goals and objectives of the NEZ must be developed.
The Woodhaven Neighborhood Empowerment Zone is a Fort Worth NEZ that is part of the Woodhaven Redevelopment Plan, an effort by the city to revitalize the neighborhood. In 2007, Universal Hospice and Palliative Care Center relocated to the neighborhood. It was drawn by the incentives of the NEZ, which include tax abatements and the waiver of up-front development fees, such as those for building permits. The relocation of this center to the Woodhaven community provides new employment for area residents as well as health and social services for the community. Another NEZ in Fort Worth, the Berry/University NEZ, is adjacent to Texas Christian University (TCU) in southern Fort Worth. In concert with other redevelopment efforts, the NEZ has helped the Berry/University area become an urban village for residents of the surrounding community as well as TCU students. One example of a development to take advantage of NEZ incentives is GrandMarc at Westberry Place, a private apartment complex for TCU students that was built in 2006. The luxury apartment complex also features first-floor retail. Contact:
Sarah Odle - Administrative Assistant
Fort Worth Housing Department
Metrics to Use to Monitor Tool Effectiveness:
The aim of NEZs is to enhance economic development and quality of life. As each NEZ is unique and addresses different needs, there are no standard metrics to gauge how NEZs accomplish these goals.
List of Resources to Obtain Additional Info:
- Texas Local Government Code, Chapter 378. Neighborhood Empowerment Zone (PDF)
- City of Fort Worth, Texas – Housing – Neighborhood Empowerment Zone (NEZ): http://www.fortworthgov.org/housing/info/default.aspx?id=5422&linkidentifier=id&itemid=5422
- Woodhaven Community Development (WCD) 2007 Annual Report: http://www.woodhavencommunity.com/pdf/WCD_annual_report_3-12.pdf
- “Street Smarts” by Mark Wright – TCU Magazine: http://www.magazine.tcu.edu/articles/2007-03-CV.asp?issueid=200703