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- Economic Development and Housing Committee
- October 3, 2005
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- On February 23, 2005, City Council approved Criteria for Evaluating
Potential TIF Districts to assist in evaluating proposals beyond the
minimum requirements under Chapter 311.
- Since that time, five new TIF Districts have been authorized: Vickery Meadow, Design District,
Southwestern Medical, Downtown Connection and Deep Ellum.
- The City now has 12 TIF Districts in total. The previously established TIF
Districts include State-Thomas, Cityplace, Oak Cliff Gateway, Cedars,
City Center, Farmers Market and Sports Arena.
- Today we will be discussing two proposed new TIF Districts:
- Grand Park South and
- Skillman Corridor.
- Staff has evaluated the proposed districts and finds that each meets the
requirements of Chapter 311 and the City’s Criteria for Evaluating
Potential TIF Districts.
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- While the proportion of property contained in TIF Districts is nearing
the City policy cap of 5% of the tax base, even with the creation of
these two TIF Districts, the policy allows creation of new TIF Districts
with property values currently less than $200 million.
- There is interest in creating a few additional TIF Districts however, no
other proposed districts are currently ready for review.
- The purpose of this briefing is to review the main components of the
Grand Park South and Skillman Corridor TIF District proposals and
receive input from the Economic Development and Housing Committee on
these proposals.
- Subject to a favorable review, on October 12, 2005, City Council will
consider calling public hearings for the creation of the Grand Park
South and Skillman Corridor TIF Districts.
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- Other cities have used TIFs to gain a competitive edge, examples
include:
- Houston – Uptown Galleria area
- Fort Worth – Cabela’s
- Fort Worth – Radio Shack
- Frisco – Stonebriar Mall
- Grapevine – Grapevine Mills Mall
- Creating a TIF for a purely blighted area without a catalyst project
will not work, unless a developer is ready to invest money for a
significant project within the first three years after creation of a TIF
District.
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- Staff has been working with the SouthFair CDC for the past year to craft
a proposal to assist in revitalizing the neighborhood south of Fair Park
- Based on staff feedback to the developer, the initial TIF proposal
evolved in the following ways:
- Added density to the proposed development plan to take advantage of
proximity to downtown and DART Light Rail station
- Added improvements to major corridors and entry ways including MLK,
Malcolm X and Grand
- Added improvements to the Malcolm X viaduct to improve pedestrian
connections to Deep Ellum
- Added Design Guideline commitment
- Neighborhood hiring
- Added funding for historic façade improvements for homes on Park Row.
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- SouthFair CDC submitted a TIF preliminary plan based on these revisions.
- Staff reviewed the plan and found it to conform with the TIF guidelines.
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- The proposed TIF District contains approximately 333 acres.
- The proposed TIF District encompasses the neighborhood to the west of
Fair Park bounded by Collum, MLK, Good Latimer and the DART maintenance
facility.
- The potential TIF District would provide incentives to encourage the
creation of a mixed-income neighborhood with supporting retail
development and improved pedestrian connections to Deep Ellum and Fair
Park.
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- The neighborhood currently contains a large proportion of vacant land,
underutilized commercial property, scattered single-family housing and a
some deteriorated multi-family housing.
- Historic South Boulevard is excluded from the TIF District.
- Much of the infrastructure in the area is inadequate, and amenities such
as parks and schools are limited.
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- Revenues for this TIF District are estimated to be collected in 25
years.
- The estimated 2005 base real property value of the zone is approximately
$46 million.
- Initial development during the first three years of the TIF would
include approximately 152 town homes and zero lot-line residential as
well as a sports complex.
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- Over an 25-year period, projected development includes approximately
290,000 square feet of retail, 274,000 square feet of office and 1,755
residential units.
- Additional taxable value attributed to new private investment is
projected to be over $294 million during the 25 year period.
- This TIF District helps implement part of the Fair Park Gateway Concept
Revitalization Plan involving SouthFair CDC, private partners, and the
City.
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- The TIF investment in public infrastructure will encourage private
redevelopment at a higher capacity and with additional public benefits
that would not otherwise occur.
- Preliminary estimates for TIF public improvements total $16.3 million
(in 2006 dollars) for:
- Environmental Remediation & Demolition
- Water, Wastewater & Storm
- Historic Façade Restoration
- Paving, Streetscape & Utility Burial
- Open Spaces & Portals
- Administration
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- Total new taxes generated by the proposed TIF exceed the amount of taxes
forgone:
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- The City contribution to the TIF fund is estimated at $14.5 million
(2006 dollars) over the life of the TIF.
- The City is expected to breakeven (direct monetary benefits exceeding
public funds invested) six years after TIF expiration.
- Financial assumptions include City participation at 90% for 25 years and
County participation at 55% for 20 years.
- Financial benefits to all taxing jurisdictions from anticipated
increases in real property, business personal property, and sales taxes
is positive throughout the life of the TIF – net $67 million.
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- Pro Formas for initial projects are reasonable and TIF assistance needed
for development to occur.
- A minimum of $15 million in new investment will occur within the first 3
years – the proposal estimates $15.7 million in new private investment
during this period.
- A total of 70 out of 100 possible financial criteria points has been
met.
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- TIF projects will provide for 20% affordable housing
- Urban Design Guidelines will be developed.
- The developer has agreed to preferential hiring of neighborhood
residents for new jobs created.
- The TIF will enhance core assets of the City – Fair Park.
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- The TIF provides direct benefits to distressed areas:
- CDBG eligible census tract (20% or more of households below the
poverty level)
- Physical blight and deteriorated conditions in a portion of the area.
- Adds green space with pocket parks and pedestrian connections.
- The developer has agreed to comply with Fair Share Guidelines for
private investment.
- A total of 100 out of 100 possible policy criteria points has been met.
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- The TIF Proposal scored 170 out of 200 possible points. This exceeds the
minimum 140 points needed for a Staff recommendation.
- On October 12, 2005, City Council will consider calling a public hearing
for October 26, 2005 to consider the creation of the Grand Park South
TIF District.
- Following the public hearing, City Council will consider an ordinance
creating the TIF District, approving the Preliminary Plan, and
establishing the TIF Board of Directors (with appointments to be filled
at a later date).
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- Staff has been working with the area residents to develop a preliminary
TIF Plan.
- Neighborhood residents presented a petition to initiate a TIF District
in the area. Unfortunately, the
primary development project for the proposed petition-initiated TIF
District was unable to move forward.
- Based on the initial TIF proposal staff developed a new City-initiated
TIF District for the area that:
- Expanded the boundaries of the proposed TIF District to include
property in the Skillman Corridor from Medallion Center to just north
of LBJ and some other property with related concerns
- Allocated 40% of the TIF District budget to provides incentives for a
Lake Highlands Town Center project
- Allocated 60% of the TIF District budget to help revitalize the entire
Skillman Corridor
- Other standard city requirements such as provisions for affordable
housing, neighborhood hiring and Design Guidelines were also included
in the plan.
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- The Skillman Corridor TIF District represents the City's effort to
provide a model for redeveloping urban corridors to take full advantage
of the expanding DART Light Rail system.
- Much of the property in the Skillman Corridor during the same time
period and is structurally obsolete.
- The current mixture of housing in the corridor does not seem to be
sustainable – approximately 70% of all housing is renter occupied.
- Staff reviewed the plan and found it to conform with the TIF guidelines.
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- The present conditions in the area include empty retail shops and
dilapidated buildings and inadequate public infrastructure.
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- It is estimated that there will be adequate revenue from the TIF
District to collect the needed increment over 20 years although the TIF
District will be set up for 30 years in case of shortfalls in the
captured increment (the capture of TIF funds would be delayed for 2
years allowing the City to collect 100% of revenue for the general
fund). During this initial 2 year period, the City’s general fund is
projected to collect $392,000.
- The estimated 2005 base real property value of the zone is approximately
$341 million.
- Initial development in the first three years of the TIF would include
618,000 square feet of residential and 343,540 square feet of retail
space. The estimated additional taxable value is $34.5 million.
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- Over a 30-year period, projected development includes 740,000 square
feet of retail development, 6.4 million square feet of residential
development including condos, town homes, single-family homes and
upgraded apartments.
- Additional taxable value attributed to new private investment is
projected to be a $592 million (2006 dollars) over the 30 year period.
- Redevelopment concepts are shown below:
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- The TIF investment in public infrastructure will encourage private
redevelopment that would not otherwise occur.
- Preliminary estimates for TIF public improvements total $49.7 million
(in 2006 dollars) for:
- Environmental Remediation and Demolition
- Interior/exterior Demolition
- Street and Utility Improvements
- Water, Wastewater, Storm
- Land Acquisition
- Park/Plaza Design and Acquisition
- Administration
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- Total new taxes generated by the proposed TIF exceed the amount of taxes
forgone:
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- The City contribution to the TIF fund is estimated at $35.5 million
(2006 dollars) over the life of the TIF.
- The City would breakeven (direct monetary benefits exceeding public
funds invested) within the life of the TIF.
- Financial assumptions include City participation at 85% for 20 years,
County participation at 55% for 20 years, and $10 million in total
collections from the RISD.
- Financial benefits to all taxing jurisdictions from anticipated
increases in real property, business personal property, and sales taxes
is positive throughout the life of the TIF – net $380 million.
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- The TIF is capturing value from several projects under construction.
Staff has reviewed the key TOD project at Walnut Hill/Skillman and feels
TIF assistance is needed for development to occur.
- A minimum of $15 million in new investment will occur within the first 3
years – the proposal estimates $34.5 million in new private investment
during this period.
- A total of 85 out of 100 possible financial criteria points has been
met.
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- TIF projects will provide for 10% affordable housing.
- Urban Design Guidelines will be developed.
- Preferential hiring of neighborhood residents for new jobs created will
be incorporated in the final TIF plan.
- The TIF will enhance public investments over $10 million including:
- Linkages with one existing DART station and City investment in the
trail system.
- The TIF will enhance a core asset of the City – proximity to White Rock
Lake via the trail system.
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- The TIF provides direct benefits to distressed areas:
- Part of a CDBG eligible census tract (20% or more of households below
the poverty level)
- Physical blight and deteriorated conditions
- Adds green space or to a trail system and provides for on-going
maintenance – some green space and potential trail connections are
contemplated.
- Fair Share Guidelines for private investment will be incorporated in the
final TIF plan.
- A total of 85 out of 100 possible policy criteria points has been met.
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- The TIF Proposal scored 170 out of 200 possible points. This exceeds the
minimum 140 points needed for a Staff recommendation.
- On October 12, 2005, City Council will consider calling a public hearing
for October 26, 2005 to consider the creation of the Skillman Corridor
TIF District.
- Following the public hearing, City Council will consider an ordinance
creating the TIF District, approving the Preliminary Plan, and
establishing the TIF Board of Directors (with appointments to be filled
at a later date).
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- The Grand Park South and Skillman Corridor TIF proposals each pay back
the City’s TIF contribution within the life of the TIF.
- $446.5 million in net new revenue for all jurisdictions (including $56
million for the City) is projected during the life of the two TIFs (net
yielded after subtracting out TIF contribution). Gross totals by revenue
type:
- Real Property = $442 million
- Business Personal Property = $9.4 million
- Sales Taxes = $61 million
- Total projected new development in the two TIFs: Over 9 million square
feet of residential, over 1 million square feet of retail, and 290,000
square feet of office development.
- The initial annual windfall to the City once these two TIFs expire, in
2030 and 2035 respectively, is estimated at $14.5 million.
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- The City’s Financial Management Performance Criteria recommends limiting
the City’s overall tax base within TIF Districts to 5%.
- The City’s existing twelve TIF Districts encompass 3.9% of the total real property tax
base (2005 value). The State-Thomas TIF has met its budget cap and will
no longer collect TIF revenue (remaining construction projects will be
completed by 2007).
- If the two proposed TIF Districts (Grand Park South and Skillman
Corridor) are created, the real property tax base in TIFs will increase
to 4.5%.
- In accordance with Chapter 311 of the Texas Tax Code, cities are allowed
to designate up to 15% of the tax base within TIF Districts.
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Notes