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2018-12-04 TIRZ PacketM E M O R A N D U M November 28, 2018 TO: Board of Directors, Tax Increment Reinvestment Zone Number One, City of Southlake, Texas FROM: Sharen Jackson, Chief Financial Officer SUBJECT: Agenda Item Comments – TIRZ Board of Directors Meeting, December 4, 2018, 5:00 p.m. The TIRZ Board of Directors Meeting is scheduled for Tuesday, December 4, 2018 at 5:00 p.m. in the City Council Chambers at the Town Hall Building. The meeting is intended to inform you of the financial status of the reinvestment zone, present the annual report to the Board of Directors, and to take care of annual administrative items relating to the Board. Also, this is an opportunity to receive an update regarding the status of the Town Square development. Agenda Item No. 2, Approval of the minutes from the August 7, 2018 Tax Increment Reinvestment Zone Number One Board of Directors meeting – A copy of the meeting minutes is included in your packet for review. If you have corrections to the meeting minutes, please advise me in advance of the meeting, or you may make changes as part of the motion during consideration of this item at the meeting. Agenda Item No. 3, Approval of recommendation to the Southlake City Council for the adoption of the amended Bylaws of Tax Increment Reinvestment Zone Number One – If you recall, on August 7, 2018 the board approved the Amended Project and Financing Plan to (1) Extend the life of the zone for an additional 20 years; and (2) Amend the project and financing plan to include project costs related to public buildings and facilities (including Carroll ISD facilities located within the zone), public parks, general infrastructure, technology infrastructure, operations and maintenance. The extension included the City and Carroll ISD as the only participating entities. The reduction of participating entities necessitates a bylaw amendment to reduce the number of board members. The amendment removes representatives from non- participating entities from the board. A copy of the proposed bylaws is included in your packet for review. Agenda Item No. 4, Approval of Recommendation to the City Council for the appointment of the Chair for Tax Increment Reinvestment Zone Number One, City of Southlake, Texas, for 2019 – Section 311.009(f) of the Tax Increment Financing Act (the “Act”) states the following: “Each year the governing body of the municipality shall appoint one member of the board to serve as chairman for a term of one year that City of Southlake, Texas Board of Directors, Tax Increment Reinvestment Zone Number One, City of Southlake, Texas January 18, 2018 Page 2 of 2 begins on January 1 of the following year.” The City Council is to select the Chair, based on a recommendation from the TIRZ Board of Directors. The City Council is scheduled to consider a resolution to meet this requirement on the January 15, 2019, City Council meeting agenda. Agenda Item No. 5, Election of Vice-Chair for Tax Increment Reinvestment Zone Number One, City of Southlake, Texas, for 2019 – The Board is asked to consider the election of a Vice-Chair at this meeting. The Bylaws stipulate that this term is for one (1) year. This appointment is made by the TIRZ Board and not by the City Council. The duties of this office include those assigned by the Board, and to serve as Chair due to absence or inability to act. Agenda Item No. 6, Approval of the 2018 Annual Report for Tax Increment Reinvestment Zone Number One, City of Southlake, Texas – Included in your packet is the TIRZ FY 2018 Annual Report. Section 311.006 of the Tax Increment Financing Act establishes an annual report requirement for the TIRZ, and a copy of this report must be forwarded to the Office of the State Attorney General and to the chief executive officer of each taxing unit that levies taxes within the zone. Agenda Item No. 7, Briefing on Southlake Town Square Projects – This is a standing agenda item that provides Cooper & Stebbins and RPAI the opportunity to brief the Board of Directors on the Town Square projects and other items of interest. As always, we appreciate your commitment and service to the community. If you have questions or comments on the meeting agenda or any of the packet materials in advance of the meeting, please do not hesitate to contact me at (817) 748-8042. TIRZ Meeting Minutes, August 7, 2018 Page 1 TAX INCREMENT REINVESTMENT ZONE NUMBER ONE BOARD OF DIRECTORS MEETING MINUTES AUGUST 7, 2018 LOCATION: Southlake Town Hall, City Council Chambers 1400 Main Street, Southlake, Texas 76092 MEMBERS PRESENT: Chair John Huffman, Vice Chairman Shawn McCaskill, Laura Hill, Randy Williamson, Shahid Shafi, Chad Patton, Christopher Archer, and Scott Rule MEMBERS ABSENT: Rebecca Barksdale, Todd Carlton, Mark McClendon, and Scott Wrehe STAFF PRESENT: Assistant City Manager and Director of Economic Development & Tourism Alison Ortowski, Deputy Director of Marketing and Communications Pilar Schank, Chief Financial Officer Sharen Jackson, Director of Public Works Rob Cohen, and City Secretary Carol Borges. 1. CALL TO ORDER The meeting was called to order by Chair John Huffman at 4:30pm. Mayor Hill introduced Mayor for a Day recipient Sofia Greenberg who observed the proceedings from the dais. 2. CONSIDERATION: APPROVAL OF THE MINUTES FROM THE JANUARY 23, 2018 TAX INCREMENT REINVESTMENT ZONE NUMBER ONE BOARD OF DIRECTORS MEETING. A motion was made to approve the minutes from the January 23, 2018 Tax Increment Reinvestment Zone Number One Board of Directors meeting. Motion: McCaskill Second: Patton Ayes: Huffman, McCaskill, Hill, Williamson, Shafi, Patton, Archer, Rule Approved: 8-0 3. CONSIDERATION: APPROVAL OF SOUTHLAKE TIRZ #1 AMENDED PROJECT AND FINANCING PLAN Chief Financial Officer Sharen Jackson presented Item 3 and answered questions from the Board. A motion was made to approve the Southlake TIRZ #1 Amended Project and Financial Plan. TIRZ Meeting Minutes, August 7, 2018 Page 2 Motion: McCaskill Second: Patton Ayes: Huffman, McCaskill, Hill, Williamson, Shafi, Patton, Archer, Rule Approved: 8-0 (roll call vote) 4. DISCUSSION: PROPOSED FISCAL YEAR 2019 TAX INCREMENT REINVESTMENT ZONE NUMBER ONE BUDGET OVERVIEW AND REVISED BUDGET FIGURES FOR FISCAL YEAR 2018. Chief Financial Officer Sharen Jackson presented Item 4 and answered questions from the Board. No action taken. 5. DISCUSSION: TAX INCREMENT REINVESTMENT ZONE NUMBER ONE PROJECT STATUS UPDATE. Cooper & Company President Frank Bliss and RPAI General Manager David Ayer presented Item 5 and answered questions from the Board. No action taken. 6. ADJOURNMENT The meeting was adjourned by Chair John Huffman at 5:01pm. MINUTES APPROVED ON THIS, THE ____ DAY OF __________________, 20____. ______________________________ John Huffman, Chairman ATTEST: ______________________________ Carol Ann Borges, TRMC City Secretary L:\Meetings\TIRZ\TIF\TIRZ Bylaws\Bylaws amendment 2018.redline.docx Page 1 Bylaws of Tax Increment Reinvestment Zone Number One, The City of Southlake, Texas Article 1: Powers and Purpose Section 1: Financing Development or Redevelopment in the Zone. In order to implement the purposes for which Tax Increment Financing Reinvestment Zone Number One, City of Southlake, Texas (the "Zone") was formed, as set forth in Ordinance No. 682, dated, September 23, 1997 and 682-A, dated, December 2, 1997, creating the Zone, the City of Southlake, Texas (the "City") may issue obligations to finance all or part of the cost of implementing the "project plan" for the Zone as defined in the Tax Increment Financing Act of the Tax Code, Chapter 311, Vernon's Texas Codes Annotated (the "Act"). Section 2: Books and Records, Approval of Programs and Financial Statements. The Board of Directors shall keep correct and complete books and records of accounts and shall also keep minutes of its proceedings and the proceedings of committees having any of the authority of the Board of Directors. All books and records of the Zone may be inspected by any director or his agent or attorney for any proper purpose at any reasonable time; and at all times the City Council, the City Auditor and the Finance Director of the City of Southlake, Texas, will have access to the books and records of the Zone. The City Council must approve all programs and expenditures for the Zone and annually review any financial statements of the Zone. Article II: Board of Directors Section 1: Powers, Number, and Term of Office. The property and affairs of the Zone shall be managed and controlled by the City Council of the City of Southlake, Texas (the "City Council"), subject to the restrictions imposed by l aw, the ordinance creating the Zone, and these Bylaws. It is the intention of the City Council that the Board shall function only in an advisory or study capacity with respect to the Zone and shall exercise only those powers, advisory in nature, which are either granted to the Board pursuant to the Act or delegated to the Board by the City Council. As set forth in the ordinance creating the Zone, the Board shall consist of no less than seven and no greater than 12 members. The City Council shall appoint a total of eight members, with one member being nominated by Carroll Independent School District (“CISD”), and the remaining seven members at all times being the Mayor and Places 1 through 6 of the City Council. The positions occupied by the Mayor and Places 1 through 6 may sometimes hereafter be referred to as the “Council Directors.” CISD shall appoint one member; provided, however, that if CISD waives its right to appoint a member to the Board, as evidenced by written resolution duly adopted by the governing body of CISD, the City Council may appoint a member in its stead. L:\Meetings\TIRZ\TIF\TIRZ Bylaws\Bylaws amendment 2018.redline.docx Page 2 Each member shall serve for a term of three years, or until the member's successor is duly appointed and qualified, or in the case of the Council Directors, when the member’s successor becomes qualified to serve on City Council. Any member appointed by the City may be removed from office by the City Council in accordance with the City Charter and applicable ordinances. In the event of a vacancy caused by the resignation, death, or removal for any reason, of a member, the governing body of the respective taxing unit which made such appointment shall be responsible for filling the vacancy in accordance with these bylaws, the Act, and the ordinance creating the Zone. Section 2: Meetings of Directors. The Board of Directors shall hold their meetings within a public building in the city, so as to allow the community to attend such meetings. The Board shall determine an appropriate meeting schedule. Section 3: Regular Meetings. The Board shall hold regular meetings at such times and places as shall be designated, from time to time, by minute order of the Board. The secretary shall give notice to each director of each meeting by e-mail. Notice of all regular and special meetings of the Board and any committees thereof shall be posted in accordance with the provisions of the Texas Open Meetings Act, Chapter 551 of the Texas Government Code. There shall be at least one Regular Meeting held each year during the fourth quarter of the calendar year. Section 4: Special or Emergency Meetings. Special or Emergency Meetings of the Board of Directors shall be held whenever called by the chairman, by the secretary, by a majority of the directors then in office or upon advice of or request by the City Council. The secretary shall give notice to each director of each Special Meeting by e-mail. Notice of all Special Meetings shall state the purpose which shall be the only business conducted. L:\Meetings\TIRZ\TIF\TIRZ Bylaws\Bylaws amendment 2018.redline.docx Page 3 Section 5: Quorum. A majority of the directors holding current appointments shall constitute a quorum for the consideration of matters pertaining to the purposes of the Zone. The act of a majority, in other words a quorum, at a meeting shall constitute an act of the Board of Directors, unless law requires the act of a greater number. Section 6: Conduct of Business. At the meetings of the Board of Directors, matters pertaining to the purposes of the Zone shall be considered in such order as from time to time the Board may determine. At all meetings o f the Board, the Chairman shall preside and in the absence of the Chairman, the Vice-Chairman shall exercise the power of the Chairman. If both Chairman and Vice-Chairman are absent, those present shall elect someone to serve as Chairman. The City Secretary of the City of Southlake shall serve as Secretary of the Board, and shall act as secretary of all meetings of the Board, but in the absence of the City Secretary, the Deputy City Secretary may act as Secretary of the meeting. In the event of the absen ce of the City Secretary and Deputy City Secretary, the presiding officer may appoint any one person to act as Secretary of the meeting. City staff shall provide notice of meetings and prepare meeting agendas. Within 30 days following each meeting of the Board, the secretary shall submit a copy of the minutes of the meeting to the Chairman of the Board. Section 7: Compensation of Directors. Directors shall not receive any salary or compensation for their services, whether as an officer or just a member, except that they shall be reimbursed for their actual expenses incurred in the performance of their duties hereunder. Section 8: Attendance. Board Members shall make every effort to attend all Regular and Special Meetings of the Board and/or committees. The City Council may replace any appointee of the Board or request replacement of an appointee from other taxing jurisdictions for non-attendance. Article III: Officers Section 1: Titles and Terms of Office. The officers of the Zone shall consist of a Chairman, a Vice-Chairman, a Secretary and such other officers as the Board of Directors may from time to time elect or appoint; provided, however, that the City Council shall, on an annual basis, appoint the Chairman in accordance with the Act. Terms of office for officers, other than the Chairman, shall be one year. All officers, other than the Chairman, shall be subject to removal from office, with or without cause, at any time by a vote of a majority of the entire Board. A vacancy in the office of any L:\Meetings\TIRZ\TIF\TIRZ Bylaws\Bylaws amendment 2018.redline.docx Page 4 officer, other than the Chairman, shall be filled by a vote of a majority of the Directors. Section 2: Powers and Duties of the Chairman. The Chairman shall be the Chief Executive Officer of the Board of Directors, and subject to the approval of the City Council, shall be in general charge of the properties and affairs of the Zone and shall preside at all meetings of the Board of Directors. Section 3: Powers and Duties of the Vice-Chairman. The Vice-Chairman shall be a member of the Board of Directors, shall have such powers and duties as may be assigned to him by the Board of Directors and shall exercise those powers and duties. The Vice-Chairman shall also exercise the powers of the Chairman during that officer's absence or inability to act. Any action taken by the Vice-Chairman in the performance of the duties of the Chairman shall be conclusive evidence of the absence or inability to act of the Chairman at the time that such action was taken. Section 4: Powers and Duties of the Secretary. The Secretary shall keep the minutes of all meetings of the Board in books provided for the purpose, shall have charge of such books, records, documents and instruments as the Board may direct, all of which shall at all reasonable time be open to inspection, and shall in general perform all duties incident to the office of the Secretary subject to the control of the City Council and the Board. Section 5: Staff. Additional staff functions for the Board shall be performed by the City Manager and city staff as designated by the City Manager. Article IV: Provisions Regarding Bylaws Section 1: Effective Date. These Bylaws shall become effective upon adoption by the Board and approval by the City Council. Section 2: Amendments to the Bylaws. These Bylaws may be amended by majority vote of the Board of Directors, and by a resolution approved by a majority vote of the City Council. Section 3: Interpretation of the Bylaws. These Bylaws and all the terms and provisions hereof shall be liberally construed to the purposes set forth herein. If any word, phrase., clause, sentence, paragraph, section, or other part of these L:\Meetings\TIRZ\TIF\TIRZ Bylaws\Bylaws amendment 2018.redline.docx Page 5 Bylaws, or the application thereof to any person or circumstance, shall ever be held invalid or unconstitutional by any court of competent jurisdiction, the remainder of these Bylaws and the application of such word, phrase, clause, sentence, paragraph, section or other part of these Bylaws to any other person or circumstance shall not be affected thereby. Article V: General Provisions Section 1: Notice of Waiver of Notice. Whenever any notice whatsoever required to be given under the provision of these Bylaws, said notice shall be deemed to be sufficient if given by depositing the same in a post office box in a sealed postpaid wrapper addressed to the person entitled hereto at their post office address, as it appears on the books of the Zone, and such notice shall be deemed to have been given on the day of such mailing. Attendance of a Director at a meeting shall constitute a waiver of notice for such meeting, except where a Director attends a meeting for the express purposes of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. A waiver of notice in writing signed by the person or persons entitled to said notice, whether before or after the time stated herein, shall be deemed equivalent to the giving of such notice. Section 2: Resignations. Any director or officer may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time was specified, at the time of its receipt by the City Council. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Section 3: Approval or Delegation of Power by the City Council. To the extent that these Bylaws refer to any approval by the City, such approval of delegation shall be evidenced by a certified copy of an ordinance, or resolution, duly adopted by the City Council. L:\Meetings\TIRZ\TIF\TIRZ Bylaws\Bylaws amendment 2018.redline.docx Page 6 PASSED AND APPROVED this _____ day of ____________________, 2018. _______________________________ TIRZ Board Chairman PASSED AND APPROVED this _____ day of ____________________, 2018. ______________________________ Mayor ATTEST: ______________________________ City Secretary Tax IncremenT reInvesTmenT Zone #1 annual reporT ocTober 1, 2017 – sepTember 30, 2018 FY 2018 TAX INCREMENT REINVESTMENT ZONE ANNUAL REPORT FY 2018 City of Southlake TIRZ #1 Board of Directors Laura Hill City of Southlake Shahid Shafi City of Southlake Shawn McCaskill, Vice Chair City of Southlake Chad Patton City of Southlake Randy Williamson City of Southlake John Huffman, Chair City of Southlake Christopher Archer City of Southlake Read Ballew Carroll ISD Rebecca Barksdale Tarrant County Mark McClendon Tarrant County College Dist. Scott Rule Tarrant County Hospital District WHAT IS TAX INCREMENT FINANCING? Tax Increment Financing (TIF) is a tool to finance public improvements within a defined area. The improvements should enhance the environment and attract new investment. The statutes governing tax increment financing are in Chapter 311 of the Texas Tax Code. A municipality makes an area eligible for tax increment financing by designating a “reinvestment zone”, also called a “tax increment reinvestment zone (TIRZ)” or a “tax increment financing (TIF)” zone. The City of Southlake has one active zone. Costs of selected public improvements outlined in the zone’s project and financing plan may be paid by current or future tax revenue flowing from redeveloped or appreciated real property valued in the zone. The additional tax dollars generated by growth of real property value in the zone are called the tax increment. These dollars flow to a fund for a specified number of years. Money flowing into the fund each year is spent according to an approved plan and in accordance with agreements in place with participating governmental units. A Board of Directors appointed by the participating governmental units oversees the budget of the District. ANNUAL REPORT Texas law requires the governing body of the municipality that created the reinvestment zone to submit a report to the chief executive officer of each taxing entity that levies property taxes on real property in the reinvestment zone on or before the 90th day following the end of FY 2018 TAX INCREMENT REINVESTMENT ZONE ANNUAL REPORT 2 the fiscal year of the municipality. This report must include information about: • Fund revenues • Amount and purposes of expenses • Amount of debt • Tax increment base/captured appraised value • Captured appraised value shared by the municipality and other taxing units • Other information necessary to demonstrate compliance with the tax increment financing plan. The City of Southlake has entered into participation agreements with Tarrant County, Tarrant County College, Tarrant County Hospital District, and Carroll Independent School District (CISD). SOUTHLAKE TAX INCREMENT REINVESTMENT ZONE #1 The Southlake Tax Increment Reinvestment Zone #1 was established to provide a financing mechanism to facilitate high quality development in the southeast area of the city. Created by Ordinance No. 682 in September 1997, TIRZ #1 was set to expire on December 31, 2018 or the date when all project costs were paid and all debt was retired, whichever came first. However, in August 2018, the TIRZ #1 Board and the City Council amended the Project and Financing Plan a second time to extend the life of the zone for 20 years and adjust the planned projects and associated costs. The participation of the overlapping taxing jurisdictions was also adjusted to reduce Tarrant County, Tarrant County Jr. College, and the Tarrant County Hospital District participation to zero percent. The City of Southlake’s and Carroll ISD’s participation amounts remained unchanged in the extension with participation at 100%. The TIRZ’s base year taxable value (1997) was $23,475,366. Taxable property value appreciation in the zone since that time is captured for investment in the zone. The Project & Financing Plan approved in August 1999 and amended in August 2018 outlines the strategies used to encourage development in the zone. The Plan also includes value projections for the zone as a benchmark to track performance. Since its implementation in 1998, the TIF has generated $103,095,924 in revenue for investment, and to further the economic development goals of the zone. TIRZ #1 REVENUES In FY 2018, $9,726,030 in ad valorem taxes was collected in the zone. Coupled with interest income, the fund realized over $9.73 million in revenue for the fiscal year, a 12.9% increase above FY 2017. (See Attachment A for historical collections by entity) The captured incremental taxable value for TIRZ #1 for the 2017 tax year was $458,747,491 which was an increase of $50,249,726 over the incremental value for 2016. (See Attachment A for incremental taxable value by entity) FY 2018 TAX INCREMENT REINVESTMENT ZONE ANNUAL REPORT 3 TIRZ #1 EXPENDITURES In January 1998, the City Council entered into the first commercial developer agreement with Southlake Venture West LP and Southlake Venture East LP for Southlake Town Square, Phase I. Since that time, the Council has entered into developer agreements for additional phases of Southlake Town Square. The developer completed both public and private improvements on the site and the agreements provide for 40% reimbursement of the cost for general public infrastructure (roads, water, sewer, parking, etc.), and 100% reimbursement for the cost of public parks in Town Square. Through September 30, 2018, the developer has been reimbursed a total of $11,025,136 for eligible project costs. In addition to reimbursements made from the incremental property value in the zone, the City Council has also executed 380 Agreements with the developer, providing for reimbursement of 80% of the sales taxes collected in the Grand Avenue portion of the project. Public buildings and facilities were also included in the project and financing plan. A joint City/County facility was built and opened in early 2000, parking facilities were purchased by the City in 2008, and the plan includes a number of school facilities and operating expenses as well, to be funded with CISD and City of Southlake contributions only. For FY 2018, $7,500,218 was spent on zone operations and infrastructure. These funds were used for debt service obligations of Carroll Independent School District facilities and infrastructure improvements identified in the project and financing plan. For FY 2018, $3,258,927 was transferred to debt service to cover the annual payment on bonds outstanding. (See Attachment A for historical debt service obligation) TIRZ #1 FUND BALANCE At the conclusion of FY 2018, the fund balance was $.92 million. At the conclusion of FY 2019, it is projected that the fund balance will be $1,825,776. These funds will be necessary for future debt service payments, and may also be used to reimburse the City of Southlake for the city funds used to supplement debt service payments in prior years. FY 2018 TAX INCREMENT REINVESTMENT ZONE ANNUAL REPORT 4 ATTACHMENT A Chart 1: Comparison of revenues received by taxing entity per fiscal year Chart 2: 2017 Taxable Value Increment by taxing entity Chart 3: Comparison of revenue received to debt service obligations. *- $1,995,000 (FY 17) and $1,445,000 (FY 18) infrastructure reimbursement reduced net revenues. (2,000,000) - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 FY 1999 FY 2001 FY 2003 FY 2005 FY 2007 FY 2009 FY 2011 FY 2013 FY 2015 FY 2017 City of Southlake Tarrant County Hospital District Tarrant County College Tarrant County Carroll ISD 458,747,491 466,715,975 466,715,975 466,715,975 465,720,906 - 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 City of Southlake Tarrant County Hospital District Tarrant County College Tarrant County Carroll ISD Base Year Taxable Value Incremental Taxable VAlue - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 FY 1 9 9 9 FY 2 0 0 0 FY 2 0 0 1 FY 2 0 0 2 FY 2 0 0 3 FY 2 0 0 4 FY 2 0 0 5 FY 2 0 0 6 FY 2 0 0 7 FY 2 0 0 8 FY 2 0 0 9 FY 2 0 1 0 FY 2 0 1 1 FY 2 0 1 2 FY 2 0 1 3 FY 2 0 1 4 FY 2 0 1 5 FY 2 0 1 6 FY 2 0 1 7 * FY 2 0 1 8 * Net TIRZ Revenue TIRZ Annual Debt Service FY 2018 TAX INCREMENT REINVESTMENT ZONE ANNUAL REPORT 5