Tax Increment Reinvestment Zone 6 PUD #6 Preliminary Project & Financing Plan

Transcription

1 Tax Increment Reinvestment Zone 6 PUD #6 Preliminary Project & Financing Plan City of Irving, Texas September 20, 2016 Prepared by TXP, Inc South 1st Street, Suite 105 Austin, Texas (512) phone Specialized Public Finance Inc Greenville Ave., Suite 465 Dallas, Texas (214) phone

2 Table of Contents Executive Summary... 1 Section 1 Project Plan... 2 Overview... 2 Existing Tax Increment Financing Districts in the City of Irving... 2 Description of the Zone... 3 Existing Zoning and Land Use Guidelines Applicable to TIF Taxing Jurisdictions Applicable to TIF Proposed Changes in Master Plans, Zoning Ordinances, and Building Codes... 9 Relocation of Displaced Persons... 9 Section 2 Project Plan Improvements Eligible Project Costs Summary of Project Costs Section 3 Financing Plan Compliance & Reporting Public Sector Entities Participating in TIF General Financial Policies & Guidelines Financial Forecast Assumptions Development Scenarios & Ad Valorem Tax Revenue Financial Forecast Summary Results Financial & Economic Feasibility Conclusion Appendix 1 Property Accounts in TIF Appendix 2 Detailed Project Costs by Tract Appendix 3 Tax Revenue Scenarios Legal Disclaimer City of Irving, Texas Irving PUD Tax Increment Reinvestment Zone #6 September 2016

3 List of Figures Figure 1: Proposed TIF 6 Geographic Boundary... 4 Figure 2: Proposed TIF 6 Ownership Map... 4 Figure 3: Current Land Use in TIF Figure 4: Partial Parcel in TIF 6 Geographic Boundary... 5 Figure 5: PUD #6 Geographic by Tract... 6 Figure 6: Irving PUD #6 Adopted Land Use... 7 Figure 7: Irving Flood Control District, Section I Boundary... 8 Figure 8: Traffic Survey Zones that Overlap TIF List of Tables Table 1: Existing Tax Increment Reinvestment Zones in the City of Irving (Appraised Value)... 2 Table 2: Existing Land Use & Real Property Value (2016) of the Proposed TIF Table 3: Taxable Real Property Values of the Proposed TIF Table 4: Land Use & Build Out Potential by PUD #6 Tract... 7 Table 5: Taxable Real Property Value by PUD #6 Tract... 8 Table 6: Summary of Major Public Infrastructure Costs by Project Category Table 7: Summary of Infrastructure Improvements Estimated Costs Table 8: Population & Employment Forecast for Traffic Survey Zones Table 9: Development Scenario Comparison Table 10: Detailed Development Scenarios by Tract Table 11: TIF 6 Tax Revenue Summary Projections Table A1.1: TIF 6 DCAD Real Property Account Numbers Table A2.1: Water Infrastructure Improvements Estimated Costs Table A2.2: Sewer Infrastructure Improvements Estimated Costs Table A2.3: Drainage Infrastructure Improvements Estimated Costs Table A2.4: Transportation Infrastructure Improvements Estimated Costs Table A2.5: Parks Infrastructure Improvements Estimated Costs Table A2.6: Gas Infrastructure Improvements Estimated Costs Table A2.7: Electrical Infrastructure Improvements Estimated Costs Table A3.1: Scenario 1 (Baseline) Build Out Forecast Table A3.2: Scenario 1 (Baseline) TIF 6 Total Incremental Taxable Real Property Value by Participating Entity Table A3.3: Scenario 1 (Baseline) TIF 6 Tax Revenue Increment Projections Table A3.4: Scenario 2 (Developer Build Out) Build Out Forecast Table A3.5: Scenario 2 (Developer Build Out) TIF 6 Total Incremental Taxable Real Property Value by Participating Entity Table A3.6: Scenario 2 (Developer Build Out) TIF 6 Tax Revenue Increment Projections City of Irving, Texas Irving PUD Tax Increment Reinvestment Zone #6 September 2016

4 Table A3.7: Scenario 3 (Blended Forecast) Build Out Forecast Table A3.8: Scenario 3 (Blended Forecast) TIF 6 Total Incremental Taxable Real Property Value by Participating Entity Table A3.9: Scenario 3 (Blended Forecast) TIF 6 Tax Revenue Incremental Projections City of Irving, Texas Irving PUD Tax Increment Reinvestment Zone #6 September 2016

5 Executive Summary Background The City of Irving, Texas is considering implementing a tax increment reinvestment zone to fund the long term redevelopment around the former Texas Stadium site. The City of Irving has already adopted land use and zoning regulations for this area (Irving Planned Unit Development #6). The PUD is divided into eight tracts with 452 acres of buildable land. The area is served by several major freeways, including State Highway 183, State Highway 114, Loop 12, and Spur 482 as well as new DART Rail stations. Given the size and scope of the infrastructure required to achieve the development outlined in the Planned Unit Development #6 plan, tax increment financing is the most appropriate funding strategy to implement the plan. Project & Financing Plan The total public infrastructure and enhancement costs are estimated to be $77,217,508. The financial plan assumes TIF 6 is designed for a 25-year term. The TIF 6 base year would be 2016 with a starting taxable value of $66.6 million. The collection period for tax increment revenues would begin on January 1, 2017 and end on December 31, In addition to the City of Irving, it is anticipated that Dallas County and the Irving Flood Control District, Section I will participate in the projects. A public improvement district (PID) might also be implemented, when appropriate, to pay for infrastructure and ongoing maintenance. The development scenarios project that the total property value within the zone is estimated to grow between $1.6 billion and $5.4 billion by 2041, creating a total of $68.8 million to $332.3 million in potential nominal TIF revenue. Using a 5.0 percent discount rate, this translates into $26.8 million to $107.1 million in current tax revenue. These values do not include the proceeds that the City of Irving could contribute from the sale of the stadium site to provide initial funding of the project plan. Conclusions The TIF 6 zone is a unique asset that will significantly influence Irving s economic future. The City is committed to ensuring the redevelopment of this area will maximize the value of the site and create a long-term asset for the city. The PUD #6 plan calls for an intense blend of corporate headquarters, an international business district, retail, and services, with a mix of residential buildings in a walkable urban environment, accessible to the region and the globe. To achieve these results, a number of public sector entities will have to combine resources to build and enhance the area s infrastructure. 1

6 Section 1 Project Plan Overview The City of Irving, Texas is considering implementing a tax increment reinvestment zone (TIRZ) to fund the long term redevelopment around the former Texas Stadium site. The proposed new zone would be named TIF District 6 Irving PUD #6 (TIF 6). This document is designed to meet the legal requirements of designating a TIRZ and to provide guidance for the TIF Board that would be established to manage TIF 6. The statutes governing tax increment financing (TIF) are located in Chapter 311 of the State of Texas Tax Code. Note, the terms tax increment financing zone and tax increment reinvestment zone are commonly used interchangeably to describe the geographic area, board, and funding tools. In 2015, the City of Irving adopted land use and zoning regulations drafted by Fregonese Associates (Ordinance # ). The Irving Planned Unit Development #6 1 (PUD #6) should facilitate development; provide clarity on the City s intentions; and provide regulatory certainty to all property owners, today and in the future. The policy guidelines contained in the PUD #6 document serve as the overarching land use framework for the proposed TIF 6 including the maximum development potential of the area and related infrastructure. Existing Tax Increment Financing Districts in the City of Irving The City of Irving has already established five TIFs. According to state law, a city may not create a new TIF if more than 30.0 percent of the property in the proposed new reinvestment zone is used for residential purposes. In addition, the total appraised value of taxable real property in the proposed reinvestment zone and in the existing reinvestment zones may not exceed 25.0 percent of the total appraised value of taxable real property within the city and its industrial districts. The proposed TIF complies with these two rules. Table 1: Existing Tax Increment Reinvestment Zones in the City of Irving (Appraised Value) Tax Increment Reinvestment Zone 2016 Certified TIF 1 Las Colinas $3,148,680,982 TIF 2 Irving Boulevard $236,924,510 TIF 3 Bridges Of Las Colinas $111,048,630 TIF 4 Campion Hollows $36,474,326 TIF 5 - Parkside $75,236,666 TIF 6 - PUD #6 Proposed $66,629,929 TIF Total $3,674,995,043 City of Irving Total Real Property $17,084,182,270 TIFs as a % of City of Irving 21.5% Source: Dallas Central Appraisal District, City of Irving, TXP 1 2

7 Description of the Zone The proposed TIF 6 boundary matches the Irving Planned Unit Development #6 adopted boundary. The TIF 6 geographic area covers acres of land. The area is served by several major freeways, including State Highway 183, State Highway 114, Loop 12, and Spur 482. The Dallas Central Appraisal District indicates there are 56 unique real property accounts within the proposed TIF. Three land owners control the majority of the property within the TIF: City of Irving, University of Dallas, and Village Walk RE LLC. The City of Irving s primary land holding in the TIF is the stadium site. This vacant site is 76.3 acres in size. Irving has entered into a memorandum of understanding with OliverMcMillan related to potential development of the city-owned land located at State Highway 114, Loop 12, and State Highway 183. This property is non-taxable until sold to a private developer. The University of Dallas controls a number of parcels west of Loop 12 and north and south of State Highway 114. These properties are not subject to property tax. These sites are vacant. In 2015, Village Walk Texas, LLC, assembled a 256-acre site located at State Highway 114, Spur 482, and Loop 12 in Irving, Texas. The land owner has prepared conceptual plans for an upscale mixed use development known as Village Walk Texas. This property was previously used for Texas Stadium parking and the now vacant former Central Freight facility. The Central Freight facility is pending demolition. In 2015, the taxable value of TIF 6 was $49.5 million. Based on 2016 tax data from the Dallas Central Appraisal District, the taxable value of TIF 6 increased approximately 50.0 percent between 2015 and The baseline value for TIF 6 would use 2016 values. Table 2: Existing Land Use & Real Property Value (2016) of the Proposed TIF 6 Land Use Parcel Count Acreage Improvement Value Land Value Market Value City Taxable Value Commercial $10,780,330 $43,214,960 $48,276,319 $48,276,319 Vacant $0 $18,152,400 $18,152,400 $18,152,400 Tax Exempt $91,880 $26,249,270 $26,341,150 $0 Unassigned $0 $201,210 $201,210 $201,210 Right of Way $0 $0 $0 $0 Total $10,872,210 $87,817,840 $92,971,079 $66,629,929 Source: Dallas Central Appraisal District Table 3: Taxable Real Property Values of the Proposed TIF 6 Year Proposed TIF 6 $51,706,200 $51,840,900 $51,099,780 $49,499,550 $66,629,929 Source: Dallas Central Appraisal District 3

8 Figure 1: Proposed TIF 6 Geographic Boundary Source: TXP Figure 2: Proposed TIF 6 Ownership Map Source: TXP 4

9 Figure 3: Current Land Use in TIF 6 Source: Dallas Central Appraisal District Figure 4: Partial Parcel in TIF 6 Geographic Boundary Source: Irving Planned Unit Development #6 Plan 5

10 Existing Zoning and Land Use Guidelines Applicable to TIF 6 The eight tracts in PUD #6 are approximately 716 acres in total, with 452 acres of buildable land. The Irving PUD #6 land use designations include Transit-Oriented Mixed Use Community, Transit-Oriented Mixed Use Office, Mixed Use Village, and Flex-Work. Each designation is defined in the adopted PUD #6 plan, which also includes a list of the principal uses for each designation. Each tract within the PUD has standards that include land use designations, urban design standards, height requirements, floor area ratio, transportation improvements, and principal uses allowed. Based on the long-term build-out conforming to the land use standards and regulations contained within the PUD #6 plan, it is anticipated that development of the sites would be able to sustain over 10,000 residential units and 20,500 jobs in approximately 12.7 million square feet of employment space. Figure 5: PUD #6 Geographic by Tract Source: Irving Planned Unit Development #6 Plan 6

11 Figure 6: Irving PUD #6 Adopted Land Use Source: Irving Planned Unit Development #6 Plan Table 4: Land Use & Build Out Potential by PUD #6 Tract Tract Land Use Acres Residential Units Non-Residential SF A-1 Transit-Oriented Mixed Use Sector ,000 2,100,000 A-2 Transit-Oriented Mixed Use Sector ,750 1,075,000 A-3 Transit-Oriented Mixed Use Sector ,750 1,500,000 B & C Flex-Work ,200,000 D Flex-Work 77 1,500 3,500,000 E Transit-Oriented Mixed Use Office ,000 F Mixed Use Village ,120,000 G Transit-Oriented Mixed Use Office ,000 H Transit-Oriented Mixed Use Office Total ,049 12,771,000 Source: Irving Planned Unit Development #6 Plan 7

12 Table 5: Taxable Real Property Value by PUD #6 Tract Year A $20,616,330 $20,616,330 $20,616,940 $20,616,940 $37,011,200 B $15,412,990 $15,620,690 $14,856,610 $13,256,380 $15,733,020 C $4,272,728 $4,172,728 $4,196,118 $4,196,118 $4,644,338 D $0 $0 $0 $0 $0 E $3,901,580 $3,928,580 $3,928,580 $3,928,580 $6,928,550 F $579,140 $579,140 $578,100 $578,100 $578,100 G $865,570 $865,570 $865,570 $865,570 $865,570 H $338,890 $338,890 $338,890 $338,890 $562,340 Total $45,987,228 $46,121,928 $45,380,808 $43,780,578 $66,629,929 Source: Dallas Central Appraisal District Taxing Jurisdictions Applicable to TIF 6 The proposed TIF 6 is located within Dallas County, Dallas County Community College District, Irving Independent School District, and Parkland Hospital District. A portion of TIF 6 overlaps the Irving Flood Control District, Section I. Figure 7: Irving Flood Control District, Section I Boundary Source: TXP 8

13 Proposed Changes in Master Plans, Zoning Ordinances, and Building Codes There are no anticipated changes to the PUD #6 master planning guidelines and zoning ordinances. Relocation of Displaced Persons This plan currently does not call for nor anticipate the displacement and relocation of persons for the proposed projects. 9

14 Section 2 Project Plan Improvements TIF 6 will provide support for catalytic infrastructure and economic development projects that will facilitate the redevelopment of properties within the zone. A significant amount of public infrastructure investment is required prior to or in conjunction with private sector development activity. The anticipated project costs are divided into five major categories. Additional infrastructure and enhancement projects may be added to the list as future development projects and related opportunities present themselves. Therefore, it is anticipated that the majority of these expenses will occur within 10 years of the TIF being established. Eligible Project Costs 1. Infrastructure Improvements This category includes water, sanitary sewer and storm water improvements, roadway and street intersection enhancements, public transportation, relocation of aboveground utilities, public sidewalks, etc. 2. Streetscape Enhancements This category includes gateway features, linear parks, corridor landscaping, public plazas, etc. 3. Economic Development Grants It is anticipated that economic development loans or grants might be made to assist in implementing the project plan. The City, with advisement from the TIF Board shall have the authority to establish and administer economic development programs, including but not limited to grants and loans, authorized under Chapter 380 of the Texas Local Government Code. Should such loans or grants be made, it will be done with the intent to fulfill the public purposes of developing and diversifying the economy, eliminating unemployment or underemployment, and developing or expanding transportation, business, and commercial activity in the TIF 4. Non-Project Costs It is not possible to quantify other non-project costs at this time, other than to say that they are anticipated. However, these costs should not exceed TIF 6 revenue less other costs delineated in the project plan. Consultants, engineers, surveyors, and other costs incurred not related to the other categories and other unforeseen costs are included in this category. 10

15 5. Administration & Implementation Administration costs, including reasonable charges for time spent by City of Irving employees, will be eligible for reimbursement as project costs. Administration costs are estimated at $100,000 per year. Summary of Project Costs The total estimated cost of TIF 6 public infrastructure investment in the district is $77,217,508 ($2016). The following tables summarize the anticipated project costs, location within TIF 6, and type of investment. See Appendix 2 for detailed tables by tract. As described in Section 3 Financing Plan, TIF 6 could generate approximately $107.1 million in incremental tax revenue (Scenario 2). This would provide TIF 6 roughly $29.9 million in financial resources beyond what is required for the major public infrastructure projects. These financial resources could be used for any project category outlined above. TXP has not allocated these funds to a category because it is not possible to determine the level of assistance landowners will request for additional public infrastructure (ex. internal streets). Table 6: Summary of Major Public Infrastructure Costs by Project Category Category Estimated Costs ($2016) Infrastructure Improvements $60,447,508 Streetscape Enhancements $14,270,000 Economic Development Grants Non-Project Costs TBD TBD Administration & Implementation $2,500,000 Total $77,217,508 Source: TXP Table 7: Summary of Infrastructure Improvements Estimated Costs Investment Total Cost $ Millions $ Millions A B & C D E F G H Water $9.2 $1.2 $0.5 $5.3 $0.8 $0.2 $0.2 $1.0 Sewer $4.2 $1.7 $0.5 $1.6 $0.0 $0.3 $0.0 $0.0 Drainage $18.0 $16.1 $0.0 $0.0 $0.0 $1.7 $0.2 $0.0 Transportation $28.1 $16.0 $0.0 $7.7 $4.3 $0.0 $0.0 $0.1 Parks $14.3 $4.3 $1.8 $1.6 $1.7 $0.8 $0.7 $3.5 Gas $0.2 $0.0 $0.0 $0.2 $0.0 $0.0 $0.0 $0.0 Electrical $0.7 $0.5 $0.0 $0.2 $0.0 $0.0 $0.0 $0.0 Total $74.7 $39.9 $2.8 $16.6 $6.8 $3.0 $1.1 $4.5 Source: City of Irving 11

16 Section 3 Financing Plan Tax increment financing is a tool used by local governments to publicly finance needed infrastructure and other improvements within a defined area. These improvements usually are undertaken to promote the viability of existing businesses and to attract new commercial enterprises to the area. The statutes governing tax increment financing are located in Chapter 311 of the Tax Code. The costs of improvements in the defined zone are repaid by the contribution of future property tax revenues by each taxing unit that levies taxes against the property. Specifically, each taxing unit can choose to dedicate all, a portion, or none of the tax revenue that is attributable to the increase in property values due to the improvements within the reinvestment zone. The additional incremental tax revenue that is received from the affected properties is referred to as the tax increment. Each taxing unit determines what percentage of its tax increment, if any, it will commit to repayment of the cost of financing the public improvements. Given the costs outlined in the project plan, it is appropriate for the City of Irving to implement a tax increment reinvestment zone to help pay for these expenses. While cities and municipalities can allocate a portion of sales tax revenue to a TIF, this financing plan assumes the City of Irving only contributes incremental property tax revenue. As part of the process when creating a reinvestment zone for tax increment financing purposes, the City of Irving will create a TIF Board for the reinvestment zone. Based on state law and in conjunction with the City of Irving, the TIF Board may periodically recommend amendments and changes to the financial policies of the TIF. The financial plan assumes TIF 6 is designed for a twenty-five (25) year term. The TIF 6 base year is The collection period for tax increment revenues shall begin on January 1, 2017 and end on December 31, Note, TIF tax revenue is typically collected the following calendar year based on an accounting of which property owners actually made payments to the tax office. Compliance & Reporting The TIF Board policies shall comply with all federal, state, and local laws, rules and regulations. The TIF Board will submit project status reports and financial reports as required by state law. 12

17 Public Sector Entities Participating in TIF 6 All project costs will be paid through the contribution of incremental property taxes. Dallas County Community College District, Irving Independent School District, and Parkland Hospital District will not contribute any incremental revenue to the TIF. This plan assumes that the City of Irving will likely contribute 50.0 percent of its maintenance and operations (M&O) ad valorem tax rate for 25 years. For 2015, the ad valorem M&O tax rate was $ This plan assumes that Dallas County will participate in the TIF for 20 years. Based on the Dallas County Tax Increment Policy, it is likely that TIF would be eligible for roughly 55.0 percent of the annual tax increment. For 2015, the Dallas County total ad valorem tax rate was $ Dallas County would initially contribute 0.0 percent of the increment for years 1 to 5 to allow the TIF to achieve a minimum threshold increment level and then at a rate of 55.0 percent for years 6 to 25 (20 years) to capture the most productive years of the TIF. This plan assumes that the Irving Flood Control District, Section I will participate at 50.0 percent of its maintenance and operations ad valorem tax rate for 25 years. For 2015, the Irving Flood Control District, Section I ad valorem M&O tax rate was $ The tax revenue projections take into account what percent of new development occurs within the Irving Flood Control District boundaries. General Financial Policies & Guidelines TIF 6 will use a combination of methods to pay for or reimburse the costs outlined in the project plan. Because each development agreement is unique, the nature and extent of support from TIF 6 will evolve over time. A past agreement creates no obligation for TIF 6 to enter into a similar agreement in the future. Revenue from Sale of Public Land within TIF 6 The City of Irving may reinvest money generated from the sale of publically owned lands within TIF 6 (ex. stadium site). The City could be reimbursed from TIF 6 over its duration. Because TIFs do not have an immediate source of revenue, the unique opportunity created by the sale of the stadium site should be fully leveraged by the TIF Board. Tract D will likely develop more quickly than other large sites in TIF 6. The availability of upfront funding is a distinct advantage to initiate development in the TIF. Grants from the City of Irving The City of Irving could directly fund infrastructure projects (ex. water department). The City of Irving would be reimbursed by the TIF. This funding option does not generate extra money for the TIF, but rather it creates upfront resources to develop the infrastructure. 13

18 Reimburse Developers and Landowners The TIF Board will recommend guidelines and policies for consideration by the City Council for developer funded and built infrastructure improvements outlined in the project plan. Reimbursement payments are made based on available TIF increment. Any public improvement infrastructure costs incurred by a developer shall be paid solely from TIF 6 revenues and shall never constitute a debt, indebtedness, or a pledge of the faith and credit or taxing power of the City of Irving or participating entities. The City may also consider issuing debt after tax revenues of the TIF have met established financial criteria of the City, at the City s sole discretion. Prior to recommending approval by the City of Irving of a formal agreement, the TIF Board will consider the following criteria: o Evaluate the amount of tax increment generated by the immediate area impacted by the improvement, upgrade, or enhancement (i.e., does the surrounding area generate enough increment to pay for infrastructure upgrade or is it subsidized by the larger TIF district) o Consider developer contribution (if any) of land for public use needs and/or financial contributions from the developer o Prioritize public improvement needs within the TIF Debt Financing The City of Irving and TIF Board may use bonds or other debt obligations to aid in the funding of projects within TIF 6. The financial projections that follow do not, by themselves, create a marketable basis for debt financing. Therefore, any debt to be issued to pay for public infrastructure prior to the collection of actual TIF 6 revenues is likely to require credit support from the City of Irving. The bonding capacity and credit-worthiness of TIF 6 should be a function of its performance. Economic Development Grants Economic development loans or grants might be made to assist in implementing the project plan. The City with recommendations and input from the TIF Board shall have the authority to establish and administer economic development programs, including but not limited to grants and loans, authorized under Chapter 380 of the Texas Local Government Code. 14

19 Financial Forecast Assumptions As part of Fregonese Associates developing the Irving Planned Unit Development #6, the consulting team held numerous conversations with land owners in the TIF as well as regional real estate professionals. Land owners such as Village Walk RE LLC and potential developers such as OliverMcMillan conducted their own feasibility studies with third-party consulting firms. Fregonese Associates compiled and analyzed all of this information when creating the build out assumptions for the PUD over 10,000 residential units and 20,500 jobs in approximately 12.7 million square feet of commercial space. Unless the City of Irving changes the PUD ordinance, this serves as the likely development potential of TIF 6. Despite the differences in the large land owners plans for their particular site, the forecasts used similar inputs and assumptions. To simplify the forecast scenarios, common development assumptions were used across the TIF. While the actual inputs will vary project by project, using consistent inputs is reasonable and appropriate given the size and duration of the TIF. The key factors influencing the financial feasibility of the TIF, development scenarios, and revenues projections include the following: Existing Properties The 2016 base taxable property value of TIF 6 is $66,629,929. To be conservative, any appreciation of this property is excluded from the TIF tax revenue calculations. In addition, the taxable values per residential unit and commercial square feet take into account property values. Real Property Only taxable real property values are included in the tax increment calculations. By law, business personal property values are excluded from TIF calculations. Inflation & Appreciation Rate The inflation rate used for construction costs and the value of improvements is 3.0 percent per year. Net Present Value The net present values of the tax increment were calculated at a discount rate of 5.0 percent. Tax Rate While tax rates do change over time, the 2015 tax rates were used for all participating entities and held constant for the duration of the TIF. Residential Unit Size The average size of a residential unit is 850 square feet. Taxable Value per Residential Unit The average taxable value per residential unit is $120,000 starting in 2016 and increases 3.0 percent per year. 15

20 Square Feet per Worker The average commercial space per worker is 634 square feet. Taxable Value per Commercial Square Foot The average taxable value per commercial square foot is $135 starting in 2016 and increases 3.0 percent per year. Timeline for New Major Developments Given the level of infrastructure required to facilitate development, no new major project will start until Tract A-3 This site is current occupied by FedEx. This plan assumes that the FedEx site remains in its current use. The PUD #6 plan indicates this site could support 3,750 residential units and 1.5 million square feet of commercial space. Because this site is 35 acres, this site redeveloping over the next 25 years would have a material impact on the financial projections. Other City of Irving Tax Revenue New developments within the TIF should generate a substantial amount of additional tax revenue for the City of Irving (ex. sales tax and hotel occupancy tax). Because these revenues are not available to the TIF as a funding source, these values have not been calculated. The input assumptions were also validated and compared against information from the Dallas County Appraisal District, North Central Texas Council of Governments (NCTCOG), U.S. Census Bureau, U.S. Energy Information Administration, and Texas State Data Center. Development Scenarios & Ad Valorem Tax Revenue Demand for real estate over time is directly connected to the performance of a regional economy, as net new job creation and household formation creates the need for new commercial and residential space. For analysis, three development scenarios are included in this document, all of which assume a 25-year horizon: Scenario 1 (Baseline) This forecast represents the baseline growth potential of the TIF. The NCTCOG North Central Texas 2040 Demographic Forecast was the basis of this scenario. For the 2040 Forecast, the 12 counties were divided into 242 forecast districts and 5,252 Traffic Survey Zones (TSZ)s. As described in the table below, the NCTCOG forecast projects a similar level of residential growth but about one third the level of employment growth. 16

21 Table 8: Population & Employment Forecast for Traffic Survey Zones Tract Net Change Population 819 9,339 8,520 Households 347 3,301 2,954 Employment 6,349 13,660 6,349 Source: North Central Texas Council of Governments Figure 8: Traffic Survey Zones that Overlap TIF 6 Source: North Central Texas Council of Governments Scenario 2 (Developer Build Out) This forecast uses the same basic cost assumptions as the baseline forecast. However, this forecast incorporates additional data provided by large land owners and developers within TIF 6. Scenario 2 assumes Tracts A and D fully develop within 10 years. Scenario 3 (Blended Forecast) Is based on a blend of the NCTCOG and developer forecast models. Overall, this scenario has been adjusted downward to reflect it taking longer to absorb this much new developable land. This scenario assumes Tract D develops before Tract A. The University of Dallas and other sites gradually develop over the next over 20 years. 17

22 Table 9: Development Scenario Comparison Year Residential Units Employment Non Residential Squire Feet Hotel Rooms PUD #6 Master Plan 10,049 20,500 12,771,000 N.A. Scenario 1 (Baseline) 2,600 6,434 4,078,953 N.A. Scenario 2 (Developer Build Out) 5,850 22,492 14,259,859 1,050 Scenario 3 (Blended Forecast) 5,850 22,492 14,259,859 1,050 Source: Irving Planned Unit Development #6 Plan, North Central Texas Council of Governments, Land Owners Table 10: Detailed Development Scenarios by Tract PUD #6 Build Out Potential Updated Plans Provided by Landowners Tract Acres Residential Units Non- Residential SF A ,000 2,100,000 A ,750 1,075,000 Residential Units Non- Residential SF Hotel Rooms 3,350 6,225, A ,750 1,500,000 Current FedEx Site B & C ,200,000 D 77 1,500 3,500,000 1,500 2,500, E ,000 F ,120,000 G ,000 H Total ,049 12,771,000 Source: Irving Planned Unit Development #6 Plan and Land Owners Financial Forecast Summary Results The 2016 base taxable property value of TIF 6 is $66,629,929. Development projections indicate that the total property value within the zone is estimated to grow between $1.6 billion and $5.4 billion by 2041, creating a total of between $68.8 million and $332.3 million in potential TIF revenue. Using a 5.0 percent discount rate, this translates into $26.8 million to $144.9 million in nominal tax revenue. See Appendix 3 for detailed tables by scenario. The total estimated cost of public TIF 6 investment in the district is $77,217,508 ($2016). TXP believes Scenario 3 represents the most likely development pattern for this area. Assuming the necessary infrastructure is built, TIF 6 should have sufficient incremental revenue to complete all of the projects outlined in the project plan. 18

23 Table 11: TIF 6 Tax Revenue Summary Projections Scenario City of Irving Dallas County Flood Control District, Section I Participation Rate 50% 55% 50% Portion of Tax Rate M&O M&O + I&S M&O 2015 Tax Rate $ $ $ Total Scenario 1 Total $39,732,912 $22,668,862 $6,443,347 $68,845,121 Net Present Value $15,620,496 $8,846,028 $2,304,491 $26,771,016 Scenario 2 Total $179,686,836 $99,788,409 $52,795,972 $332,271,217 Net Present Value $78,799,466 $42,533,432 $23,596,800 $144,929,699 Scenario 3 Total $148,923,724 $84,160,105 $35,204,764 $268,288,594 Net Present Value $60,423,575 $33,598,107 $13,088,952 $107,110,634 Source: TXP Financial & Economic Feasibility Based on the project plan, anticipated tax revenue, third-party market demand projections, and public sector entities likely to participate in TIF 6, the plan is economically and financially feasible. The financial policies and guidelines also help ensure the feasibility of the plan by making sure funds are not committed unless there is a positive indication the TIF can repay the costs incurred. 19

24 Conclusion The TIF 6 zone is a unique asset that will significantly influence Irving s economic future. The City is committed to ensuring the redevelopment of this area will be designed and completed to maximize the value of the site and create a long-term asset for the city. The PUD #6 plan calls for an intense blend of corporate headquarters, an international business district, retail, and services, with a mix of residential buildings in a walkable urban environment, accessible to the region and the globe. To achieve these results, a number of public sector entities will have to combine resources to build and enhance the area s infrastructure. Over the next 25 years, TIF 6 could generate between $68.8 million and $332.3 million in nominal incremental tax revenue. Using a 5.0 percent discount rate, the proposed TIF could generate between $26.8 million and $144.9 million. The TIF should generate sufficient revenue to pay for most, if not all, of the infrastructure outlined in the project plan. These projections are based on the best available datasets and information related to market conditions in the region. Given the high visibility of this project, for example, the substantial commitment of a few large developers could have a significantly positive impact on both the level and timing of future growth. Moreover, the financial projections make no allowance for positive spillover to the value of other properties in area as a result of new development (beyond inflation), which easily could occur. At the same time, a slowdown in development as a result of a weaker national economy, negative changes in key drivers of regional economy such as oil and gas exploration, or other unforeseen issues could materially reduce the volume of construction put in place, and resulting tax revenue, over the next 25 years. 20

25 Appendix 1 Property Accounts in TIF 6 Table A1.1: TIF 6 DCAD Real Property Account Numbers Account Number Account Number A1R A02R A02R A A (Partial) A A A02R A A A A RIGHT OF WAY Source: Dallas Central Appraisal District 21

26 Appendix 2 Detailed Project Costs by Tract Table A2.1: Water Infrastructure Improvements Estimated Costs Tract Impacted by Investment Investment Total Cost A B & C D E F G H Water/Sewer Master Plan Study $50,000 X X X X X X X Upgrade Kroger Water Tank to 2M GAL $4,000,000 X X X X X X X Remove 48" Water Line East of Loop 12 $300,000 X 48" Water Line/stadium site off-site $3,845,000 X Signature Bridge Water and Sewer Adjustments $1,000,000 X Total $9,195,000 Source: City of Irving Table A2.2: Sewer Infrastructure Improvements Estimated Costs Tract Impacted by Investment Investment Total Cost A B & C D E F G H District-wide Sewer upgrades $4,200,000 X X X X Total $4,200,000 Source: City of Irving Table A2.3: Drainage Infrastructure Improvements Estimated Costs Tract Impacted by Investment Investment Total Cost A B & C D E F G H Parallel levees Box Culverts $14,000,000 X West Levee Tie- In/Engineering/Corps $1,400,000 X Corps study 408 Permit/decertification $2,100,000 X X X Sump Storage $540,000 X Total $18,040,000 Source: City of Irving 22

27 Table A2.4: Transportation Infrastructure Improvements Estimated Costs Tract Impacted by Investment Investment Total Cost A B & C D E F G H DART Orange Line LRT station $15,000,000 X X West Spine Road Stadium Site $3,500,000 X East Spine Road Village Walk Site $5,018,508 X Repairs to Tom Braniff - Northgate to Texas Plaza $1,600,000 X Repairs to Tom Braniff - SH183 to Texas Plaza $2,500,000 X Street Lights Tom Braniff - SH183 - Trinity River $120,000 X X X X Signalization 2 intersections Texas Loop 12 $370,000 X X Total $28,108,508 Source: City of Irving Table A2.5: Parks Infrastructure Improvements Estimated Costs Tract Impacted by Investment Investment Total Cost A B & C D E F G H Campion Trail 2-miles within Project Limits $7,177,500 X X X X X X X Campion Trail Connection (2 levee crossings) $270,000 X X X X X X X Campion Trail 4 miles to connect to north and south sections $6,822,500 X X X X X X X Total $14,270,000 Source: City of Irving Table A2.6: Gas Infrastructure Improvements Estimated Costs Tract Impacted by Investment Investment Total Cost A B & C D E F G H Stadium site off-site gas line 6" $204,000 X Total $204,000 Source: City of Irving 23

28 Table A2.7: Electrical Infrastructure Improvements Estimated Costs Tract Impacted by Investment Investment Total Cost A B & C D E F G H Relocate ONCOR Crossing at SH183 $200,000 X Relocate/Underground ONCOR Feed across SH114 to Village Walk site $500,000 X Total $700,000 Source: City of Irving 24

29 Appendix 3 Tax Revenue Scenarios Table A3.1: Scenario 1 (Baseline) Build Out Forecast TIF Zone Year Calendar Year Units Residential Taxable Value Square Feet Commercial Taxable Value TIF 6 Total Taxable Value $0 0 $0 $ $0 0 $0 $ $0 0 $0 $ $0 0 $0 $ $15,958, ,407 $28,171,418 $44,130, $32,875, ,814 $58,033,120 $90,908, $50,792, ,221 $89,661,171 $140,453, $69,754, ,628 $123,134,674 $192,889, $89,808, ,035 $158,535,893 $248,344, $111,003,840 1,112,442 $195,950,364 $306,954, $133,389,614 1,297,849 $235,467,021 $368,856, $157,018,631 1,483,256 $277,178,321 $434,196, ,063 $181,945,339 1,668,663 $321,180,380 $503,125, ,182 $208,226,332 1,854,070 $367,573,101 $575,799, ,300 $235,920,434 2,039,477 $416,460,324 $652,380, ,418 $265,088,779 2,224,884 $467,949,964 $733,038, ,536 $295,794,896 2,410,290 $522,154,168 $817,949, ,654 $328,104,800 2,595,697 $579,189,470 $907,294, ,772 $362,087,083 2,781,104 $639,176,950 $1,001,264, ,891 $397,813,008 2,966,511 $702,242,410 $1,100,055, ,009 $435,356,611 3,151,918 $768,516,537 $1,203,873, ,127 $474,794,798 3,337,325 $838,135,094 $1,312,929, ,245 $516,207,456 3,522,732 $911,239,099 $1,427,446, ,363 $559,677,557 3,708,139 $987,975,023 $1,547,652, ,481 $605,291,278 3,893,546 $1,068,494,988 $1,673,786, ,600 $653,138,112 4,078,953 $1,152,956,973 $1,806,095,085 Source: TXP 25

30 Table A3.2: Scenario 1 (Baseline) TIF 6 Total Incremental Taxable Real Property Value by Participating Entity TIF Zone Year Calendar Year City of Irving Dallas County Flood Control District, Section I $0 $0 $ $0 $0 $ $0 $0 $ $0 $0 $ $44,130,232 $44,130,232 $ $90,908,278 $90,908,278 $ $140,453,290 $140,453,290 $ $192,889,184 $192,889,184 $ $248,344,825 $248,344,825 $ $306,954,203 $306,954,203 $ $368,856,634 $368,856,634 $26,346, $434,196,953 $434,196,953 $54,274, $503,125,719 $503,125,719 $83,854, $575,799,434 $575,799,434 $115,159, $652,380,758 $652,380,758 $148,268, $733,038,743 $733,038,743 $183,259, $817,949,064 $817,949,064 $220,217, $907,294,270 $907,294,270 $259,226, $1,001,264,033 $1,001,264,033 $300,379, $1,100,055,418 $1,100,055,418 $343,767, $1,203,873,148 $1,203,873,148 $389,488, $1,312,929,892 $1,312,929,892 $437,643, $1,427,446,555 $1,427,446,555 $488,336, $1,547,652,581 $1,547,652,581 $541,678, $1,673,786,266 $1,673,786,266 $597,780, $1,806,095,085 $1,806,095,085 $656,761,849 Source: TXP 26

31 Table A3.3: Scenario 1 (Baseline) TIF 6 Tax Revenue Increment Projections TIF Zone Year Calendar Year City of Irving Dallas County Flood Control District, Section I Participation Rate 50% 55% 50% Portion of Tax Rate M&O M&O + I&S M&O 2015 Tax Rate $ $ $ Total $0 $0 $0 $ $0 NA $0 $ $0 NA $0 $ $0 NA $0 $ $102,603 NA $0 $102, $211,362 NA $0 $211, $326,554 $187,793 $0 $514, $448,467 $257,902 $0 $706, $577,402 $332,049 $0 $909, $713,669 $410,413 $0 $1,124, $857,592 $493,180 $35,028 $1,385, $1,009,508 $580,543 $72,158 $1,662, $1,169,767 $672,704 $111,484 $1,953, $1,338,734 $769,873 $153,105 $2,261, $1,516,785 $872,266 $197,123 $2,586, $1,704,315 $980,109 $243,644 $2,928, $1,901,732 $1,093,639 $292,779 $3,288, $2,109,459 $1,213,098 $344,642 $3,667, $2,327,939 $1,338,740 $399,354 $4,066, $2,557,629 $1,470,829 $457,039 $4,485, $2,799,005 $1,609,639 $517,825 $4,926, $3,052,562 $1,755,453 $581,847 $5,389, $3,318,813 $1,908,567 $649,244 $5,876, $3,598,292 $2,069,289 $720,161 $6,387, $3,891,553 $2,237,936 $794,750 $6,924, $4,199,171 $2,414,839 $873,165 $7,487,175 Total $39,732,912 $22,668,862 $6,443,347 $68,845,121 5% $15,620,496 $8,846,028 $2,304,491 $26,771,016 Source: TXP 27

32 Table A3.4: Scenario 2 (Developer Build Out) Build Out Forecast TIF Zone Year Residential Calendar Year Units Taxable Value Square Feet Commercial Taxable Value TIF 6 Total Taxable Value $0 0 $0 $ $0 0 $0 $ $6,365,400 1,800,000 $257,798,700 $264,164, $104,901,792 2,840,000 $418,951,532 $523,853, ,050 $276,875,167 3,680,000 $559,152,777 $836,027, ,300 $319,959,645 4,520,000 $707,389,040 $1,027,348, ,250 $465,680,396 6,720,000 $1,083,244,243 $1,548,924, ,500 $516,547,023 8,310,000 $1,379,733,996 $1,896,281, ,300 $653,653,362 9,075,000 $1,551,951,696 $2,205,605, ,150 $806,349,828 10,065,000 $1,772,893,183 $2,579,243, ,300 $854,730,817 11,275,000 $2,045,608,719 $2,900,339, ,350 $888,678,145 11,525,000 $2,153,694,874 $3,042,373, ,400 $923,893,055 11,775,000 $2,266,425,150 $3,190,318, ,450 $960,421,049 12,025,000 $2,383,980,917 $3,344,401, ,500 $998,309,218 12,275,000 $2,506,550,248 $3,504,859, ,550 $1,037,606,299 12,525,000 $2,634,328,156 $3,671,934, ,600 $1,078,362,727 12,775,000 $2,767,516,843 $3,845,879, ,650 $1,120,630,695 13,025,000 $2,906,325,955 $4,026,956, ,700 $1,164,464,214 13,275,000 $3,050,972,850 $4,215,437, ,750 $1,209,919,177 13,525,000 $3,201,682,865 $4,411,602, ,800 $1,257,053,419 13,775,000 $3,358,689,605 $4,615,743, ,850 $1,305,926,789 14,025,000 $3,522,235,235 $4,828,162, ,850 $1,345,104,593 14,025,000 $3,627,902,292 $4,973,006, ,850 $1,385,457,731 14,025,000 $3,736,739,361 $5,122,197, ,850 $1,427,021,463 14,025,000 $3,848,841,541 $5,275,863, ,850 $1,469,832,107 14,025,000 $3,964,306,788 $5,434,138,894 Source: TXP 28

33 Table A3.5: Scenario 2 (Developer Build Out) TIF 6 Total Incremental Taxable Real Property Value by Participating Entity TIF Zone Year Calendar Year City of Irving Dallas County Flood Control District, Section I $0 $0 $ $0 $0 $ $264,164,100 $264,164,100 $221,993, $523,853,324 $523,853,324 $331,096, $836,027,944 $836,027,944 $483,687, $1,027,348,685 $1,027,348,685 $506,023, $1,548,924,639 $1,548,924,639 $848,792, $1,896,281,019 $1,896,281,019 $1,007,082, $2,205,605,058 $2,205,605,058 $1,202,133, $2,579,243,010 $2,579,243,010 $1,455,441, $2,900,339,536 $2,900,339,536 $1,669,648, $3,042,373,019 $3,042,373,019 $1,719,737, $3,190,318,204 $3,190,318,204 $1,771,329, $3,344,401,966 $3,344,401,966 $1,824,469, $3,504,859,466 $3,504,859,466 $1,879,203, $3,671,934,455 $3,671,934,455 $1,935,579, $3,845,879,570 $3,845,879,570 $1,993,647, $4,026,956,650 $4,026,956,650 $2,053,456, $4,215,437,064 $4,215,437,064 $2,115,060, $4,411,602,041 $4,411,602,041 $2,178,512, $4,615,743,024 $4,615,743,024 $2,243,867, $4,828,162,024 $4,828,162,024 $2,311,183, $4,973,006,885 $4,973,006,885 $2,380,518, $5,122,197,091 $5,122,197,091 $2,451,934, $5,275,863,004 $5,275,863,004 $2,525,492, $5,434,138,894 $5,434,138,894 $2,601,257,355 Source: TXP 29

34 Table A3.6: Scenario 2 (Developer Build Out) TIF 6 Tax Revenue Increment Projections TIF Zone Year Calendar Year City of Irving Dallas County Flood Control District, Section I Participation Rate 50% 55% 50% Portion of Tax Rate M&O M&O + I&S M&O 2015 Tax Rate $ $ $ Total $0 $0 $0 $ $0 NA $0 $ $614,182 NA $295,140 $909, $1,217,959 NA $440,193 $1,658, $1,943,765 NA $643,062 $2,586, $2,388,586 NA $672,758 $3,061, $3,601,250 $2,070,990 $1,128,469 $6,800, $4,408,853 $2,535,423 $1,338,916 $8,283, $5,128,032 $2,949,004 $1,598,236 $9,675, $5,996,740 $3,448,577 $1,935,010 $11,380, $6,743,289 $3,877,899 $2,219,797 $12,840, $7,073,517 $4,067,805 $2,286,391 $13,427, $7,417,490 $4,265,615 $2,354,983 $14,038, $7,775,735 $4,471,633 $2,425,632 $14,673, $8,148,798 $4,686,172 $2,498,401 $15,333, $8,537,248 $4,909,560 $2,573,353 $16,020, $8,941,670 $5,142,133 $2,650,554 $16,734, $9,362,674 $5,384,242 $2,730,071 $17,476, $9,800,891 $5,636,250 $2,811,973 $18,249, $10,256,975 $5,898,533 $2,896,332 $19,051, $10,731,603 $6,171,479 $2,983,222 $19,886, $11,225,477 $6,455,494 $3,072,718 $20,753, $11,562,241 $6,649,159 $3,164,900 $21,376, $11,909,108 $6,848,634 $3,259,847 $22,017, $12,266,381 $7,054,093 $3,357,642 $22,678, $12,634,373 $7,265,715 $3,458,372 $23,358,460 Total $179,686,836 $99,788,409 $52,795,972 $332,271,217 5% $78,799,466 $42,533,432 $23,596,800 $144,929,699 Source: TXP 30

35 Table A3.7: Scenario 3 (Blended Forecast) Build Out Forecast TIF Zone Year Calendar Year Units Residential Taxable Value Square Feet Commercial Taxable Value TIF 6 Total Taxable Value $0 0 $0 $ $0 0 $0 $ $6,365, ,000 $35,805,375 $42,170, $39,338,172 1,040,000 $153,418,871 $192,757, $74,283,581 1,830,000 $278,056,952 $352,340, $111,290,311 2,620,000 $410,035,240 $521,325, ,050 $150,450,589 3,410,000 $549,681,975 $700,132, ,300 $191,860,323 4,200,000 $697,338,482 $889,198, ,550 $235,619,235 4,490,000 $767,852,685 $1,003,471, ,800 $281,831,008 4,780,000 $841,970,136 $1,123,801, ,950 $314,476,433 6,600,000 $1,197,429,494 $1,511,905, ,500 $415,270,161 7,100,000 $1,326,788,165 $1,742,058, ,550 $607,374,138 7,400,000 $1,424,335,126 $2,031,709, ,600 $634,406,564 7,700,000 $1,526,540,795 $2,160,947, ,350 $789,571,836 9,360,000 $1,911,308,376 $2,700,880, ,400 $822,606,796 10,410,000 $2,189,489,509 $3,012,096, ,000 $962,823,863 11,135,000 $2,412,234,837 $3,375,058, ,650 $1,120,630,695 12,085,000 $2,696,579,591 $3,817,210, ,700 $1,164,464,214 13,275,000 $3,050,972,850 $4,215,437, ,750 $1,209,919,177 13,525,000 $3,201,682,865 $4,411,602, ,800 $1,257,053,419 13,775,000 $3,358,689,605 $4,615,743, ,850 $1,305,926,789 14,025,000 $3,522,235,235 $4,828,162, ,850 $1,345,104,593 14,025,000 $3,627,902,292 $4,973,006, ,850 $1,385,457,731 14,025,000 $3,736,739,361 $5,122,197, ,850 $1,427,021,463 14,025,000 $3,848,841,541 $5,275,863, ,850 $1,469,832,107 14,025,000 $3,964,306,788 $5,434,138,894 Source: TXP 31