01.18.06 TIRZ MinutesThe Gates of Prosper TIRZ Meeting
January 18, 2006 9:30 am
Blue Star Land Offices, 8000 Warren Parkway, Frisco, Texas
Attendees: Stephen Jones, Joe Hickman, Ray Smith, Doug Mousel, and Karen Gandy
AGENDA
1. Recap December 14, 2005 meeting. (RS)
2. Review and discuss TIRZ Timeline and Economic Feasibility Study. (KG)
3. Receive report from Blue Star on alternative means of increasing values within
TIRZ. (JH)
4. Review and discuss TIRZ boundary description and receive TIRZ Boundary
Exhibit and property tax account numbers from Blue Star. (JH)
5. Discuss Preliminary Project Plan regarding possibly eliminating certain projects
and the associated costs. (DM)
6. Discuss Preliminary Finance Plan regarding schedule of construction and
associated values. (SJ & JH)
7. Discuss Deal Points. (ALL)
I
The Gates of Prosper TIRZ Meeting
December 14, 2005, 9:00 am
Blue Star Land Offices, Warren Parkway, Frisco, Texas
Attendees: Stephen Jones, Joe Hickman, Ray Smith, Doug Mousel, and Karen Gandy
Town is committed to partnering with Blue Star Land in providing public infrastructure
improvements to serve The Gates of Prosper project.
2. Town agrees to designate the =E500-acre area as a Tax Increment Reinvestment Zone
("TIRZ").
3. Town agrees to issue TIF-supported certificate of obligation bonds to fund reimbursement of
public infrastructure improvements. Each series would be issued only after the values were
already "on the ground."
4. Town understands that Blue Star's 10/28/05 proposal provides for $75.7M public
infrastructure improvements within the TIRZ categorized as Basic Infrastructure ($45.6M),
Regional Improvements ($5.5M), and Infrastructure Enhancements and Amenities ($24.6M).
Blue Star's proposal assumes reimbursements of $51 M from the Town and Collin County.
Town agrees to 100% participation through the incremental increase in real property tax
value and agrees to petition Collin County Commissioners to participate in the TIRZ with
50% of their incremental increase in real property tax value. Blue Star agrees to fund the
remaining $24.7M of improvements.
5. Town expects Blue Star to dedicate a site for Prosper Town Hall.
6. Based on Blue Star's projected $509M in construction value, Town's financial advisors at
First Southwest find that the incremental increase in real property values will support $30M
of debt service for public infrastructure improvements. A financial analysis completed by the
Town's First Southwest advisors indicates that values would have to nearly double (i.e.,
$910,889,980) to support $40M in debt service and would more than double (i.e.,
$1,032,235,896) to support $51M in debt service.
7. Town is willing to explore other means of reimbursing the other $21M ($SIM - $30M)
requested by Blue Star. Two ways were identified: 1) Blue Star could construct additional
value or 2) the TIRZ boundary could be expanded to include other properties (perhaps
properties to the west along the Dallas North Tollway). As these properties develop, the
incremental increase in real property value would then be added to the TIRZ.
8. Town is aware that sales tax rebate agreements with individual anchors and tenants are likely
as negotiations move forward. Town agrees to commit a reasonable portion of its sales tax
revenues (not to exceed 50%) to attract those anchors and tenants.
9. All financial agreements shall be performance -based and all criterions shall be met before
reimbursement occurs.
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Karen Gandy
From: Karen Gandy [karen_gandy@prospertx.gov]
Sent: Tuesday, January 17, 2006 5:59 PM
To: 'Ray Smith'
Subject: RE: Draft Agenda for Wednesday's TIRZ Meeting
Importance: High
See responses below.
From: Ray Smith [mailto:jrsmith@centurybank.com]
Sent: Tuesday, January 17, 2006 4:47 PM
To: karen_gandy@prosperbc.gov
Subject: RE: Draft Agenda for Wednesday's TIRZ Meeting
Karen,
On item 8. you state Town agrees........ not to exceed 50%. 50% of what? Rate of reimbursement would not
exceed 50% [i.e., For retailer recruitment, it would be 50% of $ of sales tax. Like in the current proposal,
Blue Star requested 75% of the first $3.61VI annually as reimbursement for infrastructure costs.]
Does this include EDC? Not as written.
Are they thinking the Town is 1 % and not 1.5%? No, Blue Star's current Finance Pia shows Sales Tax
reimbursement coning from the T owns 1.5%; cone from EDC. However, given Mike's position in Executive
Session on the CTX reimbursement breakdown, I guess EDC could expect to pick up 25% of the tab and the
Town --- 75%.
Also, I believe it should be understood this will have a cap on it. I agree!!!!!!! In talking with Mark Stein, he shared
that other cities with similar projects may have reimbursed in the $50M range, but that amount would be inclusive
of infrastructure costs, retailer recruitment, etal. He wasn't aware of a developer coming back to the trough for
more —given the projections he has seen to date.
Ray
-----Original Message -----
From: Karen Gandy[ma ilto:karen_gandy@prospertx.gov]
Sent: Monday, January 16, 2006 5:24 PM
To: Ray Smith; "J. Ray Smith II \(Business Fax\)"
Subject: Draft Agenda for Wednesday's TIRZ Meeting
Importance: High
Ray,
Any word from Blue Star yet? Here's my attempt at a meeting agenda. I've listed you as recapping the
last meeting so I attached my meeting notes from the meeting for you. Doug said that he hasn't heard any
change in position from Mike or the Council on the issue of sales tax usage. Doug's not ready to give in
to the use of sales tax yet to fund the infrastructure improvements yet. I'm willing to fight the fight if we are
properly armed with reasonable and reliable information from other projects. I think that Mark Stein can
supply that info or at least help me find it.
Karen P. Gandy, Executive Director
Prosper Economic Development Corporation
121 W. Broadway Street
P. O. Box 1060
Prosper, TX. 75078
1/17/2006
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Date Due
Tax Increment Reinvestment Zone Schedule
Action Necessary
Responsible Date
ASAP —
Hire consultant to complete Economic Feasibility Study
Town, EDC & Blue
before
Star
January
13,2006
Complete major deal points: what improvements will be made (by phase),
Blue Star, Town
ASAP —
before
by whom, at what cost, completed by what date, when reimbursement will
Representatives
January
occur and by what funding source.
(Doug, Ray and
13, 2006
Karen)
After deal
Submit official petition to Town requesting tax increment reinvestment
Blue Star Land
structure is
zone, including revised preliminary reinvestment project and financing
finalized
plans
No later
Prepare letter of agreement documenting major deal points and authorize
Town Council and
than
staff to proceed with notice requirements, etc. as set forth in state statutes.
Blue Star
January
16, 2006
Prepare and send letter declaring Town's intent to designate a TIRZ and
60 days
Town staff
prior to
include a copy of the financing plan to each taxing unit that levies taxes on
Public
real property within the zone.
Hearing
No later
The notice must contain a description of the proposed boundaries of the
Blue Star Land
than
zone, tentative plans for the zone's development, and an estimate of the
(Kimley-Horn)
January
general impact of the zone on property values and tax revenues.
26, 2006
45 days
Designate a representative to meet with the Town to discuss the project
PISD, CCCCD,
prior to
plans fifteen (15) days after receipt of notice.
Collin County
Public
Hearing
Town calls a meeting of these representatives, subject to Open Meetings
Town Staff and
Act requirements, to discuss: the boundaries of the development, the tax
Town Council
No later
increment that each taxing unit will contribute to the tax increment fund,
than
any proposed retention of a portion of its tax increment by a taxing unit, the
February
exclusion of particular property parcels from the zone, the board of
10, 2006
directors of the zone, and tax collection within the zone.
The board shall consist of nine members. The board is composed of one
appointee from each school district or county levying property taxes in the
zone that has approved payment of all or part of the tax increment. The
remaining members are appointed by the governing body of the
municipality. Further, the local state senator and representative in whose
districts the zone is located (or their designated substitutes) are each
members of the board.
Make formal presentation (subject to the rules of the Open Meetings Act) Town
to the governing body of each county and school district levying real Representatives
property taxes within the proposed zone. Joint presentations are permitted
with the consent of all participants.
At least 7
days prior
to Public
Hearing
No later
than
March 20,
2006
Prior to
Public
Hearing
Delivered
to Town
no later
than
March 22,
2006
March 28,
2006
60 days
after the
original
notice to
taxing
units
April 11,
2006
Publish notice of the Public Hearing on the TIRZ in a general circulation
newspaper in the Town (i.e., The Dallas Moming News, Collin County
section)
Prepare ordinance creating the reinvestment zone, including finding that
development of the area would not occur in the foreseeable future solely
through private investment plus other mandatory provisions set forth in the
Tax Code Section 311.004, including:
a) A description of the boundaries of the zone with sufficient detail to
identify the territory within the zone. The ordinance need not identify
specific parcels of real property.
b) A designation of the board of directors for the zone and an indication of
the number of directors of the board.
c) A provision that the zone takes effect immediately on passage of the
ordinance.
d) An indication of a date for termination of the zone.
e) A name for the zone as provided under Tax Code Section 311.004(5).
f) A provision establishing a tax increment fund for the zone.
g) A stated finding that improvements within the zone will significantly
enhance the value of the taxable property within the zone and be of
general benefit to the Town and that the area meets the criteria for
designation of a reinvestment zone under Tax Code Section 311.005.
h) When designating a reinvestment zone pursuant to a petition of
property owners, the Town specifies in its ordinance that the
reinvestment zone is designated pursuant to Tax Code Section
311.005(a)(5).
Include appointments to the Board of Directors of the TIRZ (initiated by
petition of property owners).
Town
Representatives
Town
Representatives/
ED legal staff
Conduct public hearing on the creation of the reinvestment zone. Any Public input
interested person is permitted to speak at the hearing and voice objection
to the inclusion of property within a proposed zone.
After the public hearing, the Town Council evaluates the proposed benefits Town Council
of the zone. Adopts an ordinance designating a contiguous area within the
Town as a reinvestment zone for tax increment financing purposes.
Weeks of Prepare both a "project plan" and a reinvestment zone "financing plan".
April 10 & These plans should be consistent with preliminary plans developed by the
17, 2006 Town Council before the board was created.
Project plans must include:
a) A map showing existing uses of real property within the zone and any
proposed improvements.
b) Any proposed changes to zoning ordinances, the master plan of the
town, building codes, or other municipal ordinances.
c) A list of estimated non -project costs.
d) A statement of the method for relocating persons displaced as a result
of implementation of the plan.
Financing plans must include:
a) A detailed list of project costs of the zone, including administrative
expense.
b) A list of the kind, number, and location of all proposed public works or
public improvements within the zone.
c) An economic feasibility study.
d) The estimated amount of bond indebtedness to be incurred.
e) A timetable for incurring costs or monetary obligations.
f) The methods for financing estimated project costs and expected
sources of revenues, including the percentage of tax increment to be
derived from the property taxes of each taxing unit that levies taxes on
real property within the zone.
g) The current total appraised value of taxable real property in the zone.
h) The estimated captured appraised value of taxable real property within
the zone.
i) The estimated captured appraised value of the zone during each year
of its existence.
j) The duration of the zone. Under Tax Code Section 311.017, a tax
increment financing reinvestment zone terminates on the earlier of: the
termination date designated in the original or amended ordinance
creating the zone, or the date on which all project costs, tax increment
bonds, and interest on those bonds have been paid in full. The
financing plan may provide that the Town issue tax increment bonds or
notes, the proceeds of which pay project costs for the reinvestment
zone. These are payable from the tax increment fund and must mature
within 20 years of the date of issue. Tax increment bonds are issued by
town ordinance. A legal review of bond covenants must be obtained
from the Public Finance Section of the Attorney General's Office prior
to marketing.
TIRZ Board of
Directors
April 25, Adopt ordinance by simple majority vote approving the project plan and Town Council
2006 reinvestment zone financing plan approved by the TIRZ Board of
Directors. Voting is conducted at an open meeting. Importantly, the town's
ordinance must find that the plans are feasible and conform to the master
plan, if any, for the town.
At any
time
following
adoption
of the
zone
After
approval
of Zone by
TIRZ
Board &
Town
Council
May 13, 2006 Municipal Elections
May adopt an amendment to the project plan as provided under Section TIRZ Board
311.011 of the Tax Code. An amendment to the project plan will not bind a
school district, unless it agrees to participate, if.
a) The amendment has the effect of directly or indirectly increasing the
percentage or amount of tax increment to be contributed by the school
district.
b) The amendment requires or authorizes the town creating the zone to
_ issue additional tax increment bonds or notes
Prepare contract between the Town and other tax units with property Town ED
within the zone establishing the percentage of their increased tax revenues Counsel
which will flow to the tax increment fund and the years for which the tax
increment will be paid.
in lieu of permitting a portion of its tax increment to be paid into the tax
increment fund, a taxing unit (other than a town) may elect to offer the
owners of taxable real property in the zone an exemption from ad valorem
taxation for any increase in the property value as provided under Tax Code
Chapter 312. In any contract entered into by the tax increment zone's
board of directors with regard to bonds or other obligations, the board may
promise not to approve any such tax abatement agreement. If a taxing unit
enters into a tax abatement agreement within a tax increment reinvestment
zone, the taxes that are abated will not be considered in calculating the tax
increment of the abating taxing unit or that unit's deposit into the tax
increment fund. For zones created on or after June 1, 1999, there is no
requirement that the tax unit notify the board of directors of the zone that
the unit does not wish to contribute. A positive decision (codified by an
agreement) is necessary to secure a tax unit's contribution to a tax
increment fund.
Make recommendations to the Town Council on the implementation of tax
increment financing.
By ordinance or resolution, the town may authorize the board of directors
of the reinvestment zone to exercise any of the town's power with respect
to the administration, management, or operation of the zone or the
implementation of the project plan for the zone. However, the town may
not authorize the board of directors to issue bonds, impose taxes or fees,
exercise the power of eminent domain, or give final approval to the project
plan. Importantly, the town council must approve any acquisition of real
property.
TIRZ Board
Town Council
Must ensure that bonds have been issued for the zone, that the town has TIRZ Board
acquired property in the zone pursuant to the project plan, and/or that
construction of improvements has begun in the zone. If at least one of the
above three items has not been accomplished within the first three years
of the zone's existence, the other tax units are not required to continue
Legal
Annually
payments into the tax increment fund.
Submit an annual report to the chief executive officer of each taxing unit
that levies taxes on property within the zone. This report must include the
following items:
a) The amount and source of revenue in the tax increment fund for the
zone.
b) The amount and purpose of expenditures from the fund.
c) The amount of principal and interest due on outstanding bond debt.
d) The tax increment base and current captured appraised value retained
by the zone.
e) The captured appraised value shared by the town and other taxing
units.
f) The total amount of tax increments received.
g) Any additional information required demonstrating compliance with the
tax increment financing plan adopted by the town.
Town Staff