Creative Economic Development Tools

Transcription

1 Creative Economic Development Tools Texas Downtown Association November 5,

2 Creative TIRZ Tools TIRZ Program 380 Grants City of Colleyville - Boulevard 26 TIRZ & Whole Foods TIRZ No Bid Land Transfer City of Cedar Park Cedar Park Center & Hicks Holdings, LLC TIRZ/PID Financing City of Irving Bridges of Las Colinas and Champion Hollows CO 2

3 TIRZ Program 380 Grants 3

4 TIRZ Program 380 Grants How do you fund an economic development initiative in a TIRZ that has no public infrastructure needs? TIRZ Program 380 Grant Chapter 380 was added to the TIRZ statute in

5 Chapter 311 Grants Sec POWERS AND DUTIES OF BOARD OF DIRECTORS Subject to the approval of the governing body the TIF Board may establish economic development grants; aggregate grant amount not to exceed the amount of the tax increment produced by the municipality and paid into the tax increment fund; and approval required may be granted in an ordinance approving a project plan or reinvestment zone financing plan or approving an amendment to a project plan or reinvestment zone financing plan. 5

6 TIRZ Essentials Chapter 311 outlines the various procedures for creating and amending a TIF. Two main documents: Creation ordinance; and TIF Project and Financing Plan Creation ordinance establishes four key elements: Boundary; Term; TIF Board; and Preliminary Project and Financing Plan Upon TIF creation the Final Project and Financing Plan is approved by the TIF Board and then the City Council by separate ordinance 6

7 Colleyville TIRZ FY2012 Taxable Value of TIF was slightly more than the original projections for the final value of the zone Total projected value of incremental increased value 2018: $246,667,800 (Dec. 1998) Total incremental value in 2012: $252,826,814 Funds would exceed all projected outstanding obligations by the end of FY

8 Vacant Parcels 1998 vs

9 Colleyville TIRZ History * * Reflects only 74% of the ISD revenue 9

10 Reason to Amend TIRZ Create a TIF grants category to provide increased flexibility and foster economic development Expand the boundary to fund additional infrastructure projects Retain TCC participation through the originally planned end date of 2030 Potentially add additional County participation for public infrastructure projects Continue ISD participation in the projects outlined in the initial project and financing plan 10

11 Options Option A Amend and Expand TIF Boundary with Grants Category Possible boundary expansion, if desired Possible County participation, beyond cap, if benefit is determined TIF continues with County College and City participation 74% GCISD continues funding original projects, not new projects ISD total contribution to original projects is increased through City reduction via grants category 11

12 TIRZ Amendment Snapshot 12

13 Whole Foods Grant 13

14 TIRZ No Bid Land Transfer 14

15 TIRZ No Bid Land Transfer How do you sell land to a developer without bidding? TIRZ Must be part of the TIRZ Project Plan and Financing Plan 15

16 Statutory Control Chapter 272 of the Local Government Code controls how that property may be sold or transferred. Chapter 272 states that the sale of real property owned by a city must be accomplished through advertisement of the property and acceptance of competitive bids. There are certain exceptions if the real property fits into any of 8 categories: #6 - city land that is located in a reinvestment zone that has been designated as provided by law and that the city desires to have developed under a project plan adopted by the city for the zone; 16

17 Cedar Park Center 17

18 Development Option 18

19 Cedar Park Center 19

20 Project Plan 20

21 Additional Incentives 21

22 TIRZ/PID Financing 22

23 TIRZ/PID Financing How do you provide upfront financing for public infrastructure for a private development? PID creates a new revenue source TIRZ captures future value to reduce PID assessment Issuance bonds backed by assessments on property owners (either revenue bonds or certificates of obligation) 23

24 Project Summaries The Bridges at Las Colinas 399 lots lots lots Priced at $450,000 and $490,000 Value of approximately $203 million when completed Ranchview Land 122 lots Priced at $400,000 Value of approximately $50 million when completed 24

25 The Bridges at Las Colinas 25

26 Developer Request Lack of availability of debt for horizontal development projects nationally Previous TIF reimbursement structures were no longer feasible due to lack of available capital to fund up front infrastructure Developer requested creation of a TIF/PID to publicly finance public infrastructure improvements Fund $8.2M (The Bridges at Las Colinas) and $3M (Ranchview Land) of public infrastructure 26

27 Developer Request Tax Increment Financing (TIF) Tool to fund needed improvement within a reinvestment zone; Taxing entities contribute ad valorem taxes received from incremental value increases on property within the zone. Public Improvement Districts (PID) PID s are a development tool that allocates costs according to the benefits received; Through petition of the property owners, the PID Act enables any city to levy and collect special assessments on property; and PID assessments are: a first and prior lien against the property; superior to all other liens and claims, except ad valorem taxes; and a personal liability of and charge against the owner of the property. 27

28 Developer Request An overlapping PID and TIF were be formed over the entire Project. Bonds were be sold in Q to fund project infrastructure. The PID assessments are be capable of paying 100% of the annual debt service on the bonds. Incremental property taxes generated within the TIF would be used to reduce the annual PID assessment obligation. A maintenance and operations PID will be formed to maintain parks and amenities in the Project. 28

29 PID Assessment Property owners will be responsible for 100% of annual debt service in the event that there is no TIF revenue in any given year. TIF revenue is used to reduce the PID assessment annually. Property owners are responsible for remaining annual debt service net of any TIF revenue. A - B = C A = Annual Debt Service of Bonds B = TIF Revenue C = PID Assessment Net of TIF Revenue 29

30 Options Analysis - Bridges Horizontal Development The Bridges at Las Colinas Option A 30 Year City of Irving PID/TIF Revenue 75% TIF Option B 20 Year City of Irving CO Bonds with 50% TIF 30

31 Option A PID/TIRZ Revenue Bonds 31

32 Option B CO Bond with PID/TIRZ 32

33 Conclusions - Bridges CO for public infrastructure; CO yields same amount of public infrastructure as Option A; Infrastructure has a dedicated and binding (tax lien) revenue stream for 100% repayment (PID); Infrastructure generates immediate economic impact through new taxable value (new homes); TIF at 50% of M&O is the City s contribution to the infrastructure ($6,542,185); 33

34 Questions Open for questions/comments 34