DALLAS - The El Paso City Council yesterday approved creation of Texas' first transportation reinvestment zone that could attract an estimated $1 billion in state funds for road projects.

Comparable to a tax-increment financing zone, the TRZ is a new method of financing transportation projects under a bill approved by the 2007 Legislature. The city will be able to leverage tax revenue from business development in the zone.

With backing from Mayor John Cook, the proposal won easy passage by a six-vote margin.

TRZs are under consideration in other cities and counties, but El Paso is the first to adopt the plan. Under the bill authored by Rep. Mike Krusee, R-Round Rock, a transportation reinvestment zone must include a mass-transit rail or high-speed bus line to qualify for funding.

El Paso, in concert with the newly created Camino Real Regional Mobility Authority, is planning a bus plan along with tolling on new roadways. The RMA authorized under 2007 state legislation covers only the city, unlike others that include one or more counties.

The El Paso TRZ is expected to raise about $70 million, which would qualify the zone for $1 billion of state road construction funding. The zone is made up of residential and commercial development bordering Interstate 10 and Loop 375. Local funds raised through tolling and tax diversion beginning in 2010 are expected to be about $216 million.

City taxes on properties in the zone will remain at the 2008 level, and any additional tax revenue will go toward new roads. In outlining the plan, city staff pointed out that the TRZ does not increase taxes and increases the commercial viability of vacant and occupied properties.

The zone is part of El Paso's comprehensive mobility plan, approved by the City Council last spring. In order to establish 2008 as the base tax year for the values in the zone, the council needed to approve the TRZ this month. A public hearing on the plan was held in November.

South Texas' Hidalgo County, in conjunction with the Hidalgo County Regional Mobility Authority, is another government planning a transportation zone around the so-called Hidalgo Loop.

Growth along the Loop will be projected and the increased ad valorem tax generated by the new growth will be estimated. The tax revenue estimates will be used by the HCRMA to sell bonds. The TRZ will remain in place until the bonds on the Loop are paid off.

With a population of more than 600,000, El Paso is continuing to grow through the expansion of the Ft. Bliss Army Post, the largest in area in the nation. Through the base realignment and closure process, Ft. Bliss is expected to add about 20,000 troops, employees, and family members as the post takes on the duties of others that have closed.

To adapt to the growth, the city and El Paso County have embarked on an aggressive transportation program as the school districts have sought to expand the available classroom space.

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