Houston City Council calls to reform TIRZ system

HOUSTON, Texas (KTRK) -- Houston City Council is once again examining how the city's problem-plagued Tax Income Reinvestment Zones, also known as "TIRZ," are governed.

There are 28 TIRZ in different neighborhoods throughout the city. With little government oversight, board members of independent entities are given the power to decide how a portion of captured property taxes within their defined borders should be spent.

"I think the TIRZ are already a bit opaque as it is," District E Council Member Fred Flickinger said.

The TIRZ program was first created in the 1990s, but the bodies operated largely with few rules until 2023, when the council enshrined some guidelines dictating the life cycle of a TIRZ. However, the new rules did not eliminate issues with the TIRZ.

In early 2024, three people affiliated with a Midtown TIRZ were accused of laundering $8 million in taxpayer money from the entity. The money had been earmarked for affordable housing.

The incident prompted Houston Mayor John Whitmire to expand an existing Ernst & Young audit to perform a spending analysis on the city's TIRZ. The examination's findings have yet to be made public.

On Wednesday, Houston City Council approved funding for a Fifth Ward TIRZ after having delayed it for weeks amid concerns regarding its founder, Pastor Harvey Clemons Junior.

Last month, several Pleasant Hill Village residents contacted ABC13 and the Houston City Council about conditions at the affordable senior living complex.

ABC13 found issues ranging from black mold to sewage at the rent-capped complex. It is run by Clemons' churches' community development corporation. Clemons heads the corporation as head of the church. The building was constructed with an affordable housing tax credit in the late 1990s.

In 2019, the City Council gave $3 million for repairs to the church-affiliated community development corporation running the property. Clemons told ABC13 that each dollar was spent as intended. He said he was not bringing in enough money at the rent-capped property to complete necessary repairs and implored the city to provide additional funds.

Given the building's current state of disrepair, the council moved to delay the TIRZ, concerned about Clemon's ability to act as a steward of taxpayer dollars. Several members also said they were concerned about a "conflict of interest" because the Fifth Ward TIRZ money is funneled to other community improvement organizations Clemons leads or is affiliated with.

"What's been presented to us is not really a budget. A number of the values that are presented in the document are the same values that they carry over year-to-year, and we really don't see accurate actuals in these documents. The TIRZ appears to have spent more cumulatively on administration than on capital projects, excluding the acquisition of land cost, and so you have to really wonder what in the world are they doing," At-Large Position 1 Council Member Julian Ramirez said.

Ramirez was one of five council members who voted against approving the TIRZ budget after a motion to refer the matter back to Whitmire's administration failed.

"I'm going to be voting no on this item, not because Fifth Ward doesn't need the money. It does need the money. It needs the investment. It needs good leadership in the TIRZ, which it does not have," Ramirez said.

Several council members who voted to pass the funding stressed that they agreed the Fifth Ward TIRZ is dysfunctional. However, they wanted to focus on systemic reform of the entire TIRZ system instead of withholding money in the struggling area.

"This is not just a Fifth Ward TIRZ issue; this is a City of Houston issue, and we're not gonna put it all on Fifth Ward TIRZ. We're not gonna like make them the guinea pig," Council Member Tarsha Jackson said.

Last week, Council Member Twila Carter called on the Whitmire administration to remove Clemons from his seat in the Fifth Ward TIRZ.

On Wednesday, Council Member Ramirez also highlighted a recent issue with the OST TIRZ.

"They've borrowed money through the issuance of bonds and held onto that money long enough where a percentage of that interest had to be returned to the IRS," he said.

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