"Critics tried reining in lucrative tax incentives in Houston. Nothing worked."

INVESTIGATIVE CATEGORY

Houston Chronicle
10/24/2022

Houston Chronicle reporter Mike Morris had spent months gathering records on Houston’s network of economic development zones -- cajoling staff at two dozen agencies and officials at City Hall -- when he found a sentence, buried in a forgotten chapter of the city charter, that turned the story on its head.
To understand it all, consider the scope of Morris’ reporting, done in concert with his investigative partner John Tedesco:

Months of records requests had already shown that Houston relies on so-called Tax Increment Reinvestment Zones far more than other big Texas cities, diverting hundreds of millions of dollars into an opaque system that gives some of Houston’s most prosperous areas an unlimited fountain of public money while other neighborhoods fight for scraps. More requests for city files dating back to the 1980s would show that Houston officials knew these agencies could become engines of inequity and developed a policy to prevent that – then simply waived those rules with each zone the city council created.

A review of more than 150 bills filed in the Legislature, including records and audio tapes dating back to the 1970s campaigns to bring tax increment financing to Texas, would show that lawmakers’ attempts to limit the tool to “blighted” areas were watered down, making almost any area eligible. Library visits to dig through boxes of a past mayor’s archived papers would show that even concerted attempts by Houston’s most powerful elected official to rein in these agencies had little effect.

Gathering and reviewing thousands of pages of documents and proposals passed by the city council would reveal that the council often had expanded the zones’ boundaries and extended their lifetimes using questionable justifications that seemed contrary to the phrasing of state law.

And now, in reviewing the city charter, Morris seemed to have read a part of Houston’s governing document that city officials had not, and which put Houston’s primary justification for maintaining the status quo of its 26 development zones in doubt: Contrary to years of officials’ assertions to the contrary, dissolving these zones would let previously diverted cash back into the city budget to be spent in struggling areas.

Months of badgering later, City Hall would confirm this reading of the law, shocking some senior city officials, council members and even the administrators and attorneys who run the zones themselves.
In the wake of the paper’s reporting, city officials now say they will, in the coming months, draft a policy governing when and how existing zones should be wound down or dissolved.

For their exhaustive examination of how Houston’s tax increment reinvestment zones help entrench inequities and the impact it has caused, we are proud to nominate Mike Morris and John Tedesco for the Texas APME Freedom of Information Award.

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Submitted by Elizabeth Pudwill.