LG Council Votes to Establish Tax Reinvestment Zone, Mersiovsky Criticizes City Moves

The La Grange City Council held their first vote to establish a Tax Increment Reinvestment Zone (TIRZ) at their meeting Monday, Nov. 24. The Council will need to vote once more to officially establish the zone.

The TIRZ will allow the City to dedicate a portion of the property tax revenue generated within the zone for projects aimed at incentivizing development, such as infrastructure improvements. The City hired the consulting firm Pettit and Ayala to set up the TIRZ. The zone encompasses approximately 686 acres in two non-contiguous tracts. The northern tract stretches from the SH 71 bypass to north of the hospital, taking in a large portion of land around the Fayette County Fairgrounds. The southern tract covers much of the downtown area.

The TIRZ would be set up for a term of 30 years. According to figures presented at Monday’s meeting, the total property value within the zone currently stands at approximately $78,714,261. Pettit and Ayala, in conjunction with City staff, projected the taxable increment real property value to increase to $175,650,000 over the life of the TIRZ.

City Manager Jack Thompson said he’s aware of one developer interested in building homes within the zone. According to documents presented at the meeting Monday, Thompson also anticipates 75,000 sq. ft. of retail development, a 30,000 sq. ft. medical office, 380,000 sq. ft. of industrial development by 2045, 100 units of multifamily housing by 2035, a 20room hotel by 2032, 20 units of townhomes and a 5,000 sq. ft. “quick serve” restaurant.

“Sales-generating development is projected to produce $17,500,000 in annual taxable sales value (2025 value),” according to one of the documents presented at the meeting. The terms of the TIRZ establish this year as the “base” tax year. The amount of property taxes generated within the TIRZ this year will continue to flow into the City’s general fund in subsequent years. But as property values rise in future years, 75 percent of the “incremental” increase will go into a separate tax increment fund (TIF).

Developers can apply for funding from the TIF to pay for infrastructure improvements like streets, utilities, parks and trails, or pedestrian improvements. A TIRZ board of directors composed of the Mayor and four council members would review funding applications and decide how the funds would be spent.

“It incentivizes developers to increase the quality of development and speed to market,” Hall said.

In addition, Thompson said the TIRZ will allow the City to require development standards above and beyond what is stipulated in the City’s building code.

“The state prohibits us from telling people what kind of exterior things they can put on their house,” Thompson said. “Like, we can’t enforce masonry standards anymore. That kind of stuff is out the window. But if we put money into a project, that changes the game. We can require development standards and other things.”

The City had asked the Fayette County Commissioners Court to participate in the TIRZ. Hall and Thompson pitched the idea to the Commissioners Court a few weeks ago. The Court took no action on the proposal. Several commissioners expressed concerns about the amount of County participation and representation on the board. Initially, the City proposed the County dedicate 75 percent of its incremental tax revenue and get two seats on the board. Thompson said the City has amended its proposal to the County with a 50 percent contribution and some additional representation. He said the City does not need the County to participate in order to move forward. However, County participation would result in much higher funding since the County has a higher property tax rate.

Council voted 7-0 to approve the first reading of an ordinance establishing the TIRZ. Councilwoman Katie Gross was absent from the meeting.

Also at Monday’s meeting, local businessman Calvin Mersiovsky spoke critically about some recent City decisions during the public participation period.

“Why are we wanting to destroy the fairgrounds?” Mersiovsky asked. “Why did we buy Fayette Electric (the former headquarters)? Why did we buy Prause’s (Meat Market)? Why did we push out the guy at the old telephone building (on Mode Ln.) so that we could fund somebody to come and put in a daycare?

“I think it’s dangerous to subsidize retail business,” Mersiovsky added. “That takes care of itself. If the need is there, that’s how capitalism works. If there’s a need, they will come. If there’s a need to build houses, they will build them.

“There’s just so many things that like, we’re going ‘boom, boom, boom,’” he added. “We’ve got to buy this, we’ve got to buy this, we’ve got to buy this. We’re going to build a fourth theater. Nothing against Fayette Community Theater, I think they’re great. Now we have four theaters, zero swimming pools.

“Take a deep breath and say, ‘Do we have a city manager, or do we have an economic development guy?’” Mersiovsky said.

No one from the Council or City staff responded to Mersiovsky.