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Home My WebLink AboutTIF1 2007-10-02 AgendasREINVESTMENT ZONE NUMBER 1, CITY OF NORTH RICHLAND HILLS BOARD OF DIRECTORS MEETING TUESDAY, OCTOBER 2, 2007 CITY HALL PRE-COUNCIL ROOM 4:00 P.M. AGENDA 1. Call to Order 2. Approval of June 21, 2005 Board Minutes 3. Appointment of Vice-Chairman and Secretary (TIF #1 2007-01) 4. Consider Financial Status of TIF No. 1 (TIF #1 2007-02) 5. Discuss the feasibility of defeasance (payoff) of outstanding debt and impact on TIF No. 1 District. (TIF #1 2007-03) 6. Adjournment MINUTES OF THE TIF BOARD MEETING FOR REINVESTMENT ZONE #1 OF THE CITY OF NORTH RICHLAND HILLS, TEXAS BOARD OF DIRECTORS MEETING - PRE-COUNCIL ROOM AT CITY HALL TUESDAY, JUNE 21, 2005 - 4:00 P.M. Present: Oscar Trevino, Chairman Tim Welch JoAnnJohnson David Whitson John Lewis Jane Sanford Drenda Witt Others Present: Absent: Larry J. Cunningham Richard Torres Bo Bass Karen Bostic Alicia Richardson Larry Koonce Nancy Bielik Drew Corn Kelly Hancock Dr. Larry Darlage Mayor Council Member Council Member Council Member Council Member Administrator, Northeast SubCourthouse, Precinct #3 Tarrant County Hospital District City Manager Assistant City Manager Assistant City Manager Managing Director of Administrative/Fiscal Services Assistant City Secretary Director of Finance Council Member Budget Director Birdville ISD Tarrant County College 1. CALL TO ORDER Mayor Trevino called the meeting to order at 4:00 p.m. 2. APPROVAL OF APRIL 8, 2003 BOARD MINUTES Drenda Witt moved to approve the minutes with the correction of Glenn Whitley's title from Administrator to Commissioner. Councilman Whitson seconded the motion. Motion to approve carried 6-0. CONTINUATION OF MINUTES 3. DISCUSS 2004 ANNUAL REPORT Finance Director Larry Koonce provided an overview of TIF No. 1 Executive Summary. Mr. Koonce advised board if current values held steady and property owners pay taxes on the TIF No. 1 properties the bonds could be paid off in the year 2008. He also indicated that over 100,000 square feet of the 300,000 square foot business center is currently being leased. Tenants of the center include ATI Career Training Center, Express Telephone, Imagistics, Sliver Leaf Resorts, Walter Mortgage Company, ECAP (Training for Teacher Certification), Pancho's and Subway. The number of jobs created is 625. Jane Sanford moved to accept the 2004 Annual Report. Drenda Witt seconded the motion. Motion to approve carried 6-0. 4. ADJOURNMENT Mayor Trevino adjourned the meeting at 4:06 p.m. - -r -vo. ~ Subject: Appointment of Vice-Chair and Secretary Board Meeting Date: 10/02/2007 Agenda Number: 2007-01 Due to recent changes with the board members of the North Richland Hills City Council, Tarrant County, Tarrant County Hospital District, Tarrant County College, and Birdville I.S.D., it is necessary to elect officers to serve as Vice-Chair and Secretary. At the September 24, 2007 North Richland Hills City Council meeting, Mayor Oscar Trevino was reappointed to serve as Chairman. Recommendation: To appoint the Vice-Chair and Secretary. - -r -vo. ~ Subject: Consider the Financial Status of TIF No. 1 Board Meeting Date: 10/02/2007 Agenda Number: 2007-02 Larry Koonce, Director of Finance City of North Richland Hills will present the attached executive summary, annual report and comparison of the original financing plan with the actual results to date. The figures for fiscal year ending September 30, 2007 are preliminary estimates and will be updated when finalized. The annual report will be submitted to the State Comptroller before December 31, 2007 and distributed to the Board and taxing entities. In fiscal year 2007, the TIF No. 1 received taxes in the amount of $216,838 from property owners. For the year ending September 30, 2007, outstanding principal and interest on the Certificates totaled $577,745. Principal, interest and associated payments totaled $66,842 for fiscal year 2007, and the end of the year cash balance is estimated to be $728,000. Cash balances in the TIF are sufficient to pay off the outstanding bonds in 2008. After the presentation of financial status of TIF No. 1, we recommend the Board take action as to the acceptance of the report. INFORMAL REPORT TO BOARD OF DIRECTORS Date: October 2, 2007 Subject: Tax Increment Reinvestment Zone No. 1 Executive Summary, Board Meeting, October 2, 2007 Attached for your information is "Tax Increment Reinvestment Zone No. 1, Preliminary Financial Estimates, For the Year Ended September 30, 2007". TIF No. 1 was created by the City of North Richland Hills in 1998. The TIF was created to provide public drainage improvements around the 300,000 square foot Richland Plaza Shopping Center. The shopping center had declined to the point that nearly all tenants had vacated, and total values were a little over $1 million. It was believed that unless public drainage improvements were made to divert flooding from the Richland Plaza parking lot to Mackey Creek, the development was destined to further decay and decline. At the time the TIF No. 1 was created, the City of NRH, Birdville Independent School District, Tarrant County, Tarrant County College, and Tarrant County Hospital District all agreed to participate at 100% for the life of the TIF. Certificates of Obligation were sold in the amount of $850,000 for the TIF portion of the $1.3 million public drainage project (the balance was paid by the City of NRH). The TIF debt has a maturity of twenty years to 2018, with aten-year call option in 2008. The TIF plan provides for the retirement of all outstanding debt at the call date if sufficient revenues are collected over the ten-year period. The Certificates were issued in 1998 and the public drainage improvements were completed in fiscal year 2000. In fiscal year 2007, the TIF No. 1 received taxes in the amount of $216,838 from property owners. For the year ending September 30, 2007, outstanding principal and interest on the Certificates totaled $577,745. Principal, interest and associated payments totaled $66,842 for fiscal year 2007, and the end of the year cash balance is estimated to be $728,000. Also attached to this executive summary is a "Comparison of Original Plan to Actual Development". The comparison shows that at the end of fiscal year 2007 cumulative revenues (property taxes and interest earnings) are 114% of the original plan. The comparison shows that improvement value (Captured Valuation) is greater than originally estimated. The $7.8 million Improved value as of January 2007 (fiscal year 2008) $2.4 million higher than originally estimated. Cash balances in the TIF are sufficient to pay off the outstanding bonds in 2008. A discussion of the payoff is included as an item on the October 2"d Board meeting agenda. Nearly 260,000 square feet or 86% of The Hills, a 300,000 square foot business center, is currently being leased. Tenants of the center include ATI Career Training Center who has added another 36,500 square feet for its automotive training center. Silverleaf Resorts has added 27,000 square feet, and anticipates adding another 200 employees by the end of 2007. Other tenants include LetsTalk.com, ECAP (training for teacher certification), Walter Mortgage Company, Winfree Academy Charter School and Crossroads Church. The current employee count for the center is now at 737 which is an increase of 123 since last year. Respectfully submitted, 1 _~-~;_. ~~, f` ; ~- ~ t _._ ~._ Larry Koonce Director of Finance Attachments: TIRZ No.1 Preliminary Annual Report FY 2007 Comparison of Original TIF No. 1 Plan to Actual Development ISSUED BY THE CITY MANAGER NORTH RICHLAND HILLS, TEXAS ~ City of North Richland Hills Tax Increment Reinvestment Zone No. 1 Report to Board Estimated Year Ended September 30, 2007~unaudited) Amount & Source of Revenue in the Tax Increment Fund FY 2007: Property Tax Revenues $ 216,838 Interest Income $ 29,575 Total Revenues in Fiscal Year 2007 $ 246,413 Amount and Purpose of Expenditures of t he Fund FY 2007: Principal, Interest, Issuance & Paying Agent Payments on Certificate Indebtedness $ 66,842 Total Fund Expenditures in Fiscal Year 2007 $ 66,842 Principal & Interest due on outstanding indebtedness as of September 30, 2007: Principal Outstanding $ 475,559 Interest Outstanding $ 102,186 Total Principal & Interest Outstanding 9-30- 2007 $ 577,745 Captured Appraised Value shared by the Municipality & Other Taxing Entities and total amount of tax increments received Taxing Unit 1998 Base Year Appraised Value Taxable Value 2006 Captured Appraised Value 2006 Tax Rate/$100 FY 2007 Revenue Received FY 2007 City of North Richland Hills $1,152,929 $8,949,277 $7,796,348 $0.570000 $44,439 Birdville I.S.D. $1,152,929 $8,949,277 $7,796,348 $1.565000 $122,013 Tarrant County $1,152,929 $8,949,277 $7,796,348 $0.271500 $21,167 Tarrant County Hospital District $1,152,929 $8,949,277 $7,796,348 $0.235397 $18,352 Tarrant County College $1,152,929 $8,949,277 $7,796,348 $0.139380 $10,867 $216,838 This report submitted by ~~'~ G,.. j.~,., I-~,~,-~-i,~ _~__--- Larry Koonce Director of Finance City of North Richland Hills, Texas K:acct\tifs\TIF1 Report to Board Oct 2007.x1s City of North Richland Hills Tax Increment Reinvestment Zone No. 1 Comparison of Original Plan to Actual Development FY 2007 Original Financing Plan 1998 Fiscal Captured Tax Interest Total Certificate Cumulative Year Valuation Revenues Earnings Revenues Debt Coverage 1999 $ 2,500,000 $ 65,678 $ 30,863 $ 96,541 $ 96,541 $ - 2000 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 81,998 $ 59,209 2001 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 79,813 $ 120,603 2002 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 77,628 $ 184,182 2003 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 75,443 $ 249,946 2004 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 73,257 $ 317,896 2005 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 71,072 $ 388,031 2006 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 68,887 $ 460,351 2007 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 66,702 $ 534,856 2008 $ 5,375,000 $ 141,207 $ - $ 141,207 $ 489,516 2 $ 186,547 Financing Plan As of September 30, 2007 (After Nine Years) Fiscal Captured Year Valuation Interest Property Tax Earnings 8~ Total Revenues Other Revenues Certificate Cumulative Debt Coverage 1999 $ - $ - $ 54,620 $ 54,620 $ 98,259 $ (43,639) 2000 $ - $ - $ 47,253 $ 47,253 $ 82,228 $ (78,614) 2001 $ 5,975,103 $ 164,558 $ 9,917 $ 174,475 $ 79,954 $ 15,907 2002 $ 6,566,861 $ 180,921 $ 160 $ 181,081 $ 77,768 $ 119,220 2003 $ 6,533,845 $ 184,991 $ 1,682 $ 186,673 $ 75,583 $ 230,310 2004 $ 5,564,867 $ 157,634 $ 2,730 $ 160,364 $ 73,398 $ 317,276 2005 $ 5,564,867 $ 157,723 $ 8,963 $ 166,686 $ 71,214 $ 412,748 2006 $ 6,342,189 $ 179,755 $ 22,358 $ 202,113 $ 66,521 $ 548,340 2007 $ 7,796,348 $ 216,838 $ 29,575 $ 246,413 $ 66,842 $ 727,911 2008 $ 7,808,790 $ - $ 13,855 $ 13,855 $ 504,913 1 $ 236,853 1 The $850,000 Certificates of Obligation sold in 1998 for drainage improvements were twenty-year obligations maturing in 2018. The plan provides for the redemption of outstanding bonds on the call date in 2008 if funds are available. Sufficient cash balances are available to pay off the bonds in February of 2008. K:acct/tifs/TIF1 Report to Board Oct 2007.xlsOrig Plan vs actual ~ ~r -vo. ~ subject: Dicuss the feasibility of defeasance (payoff) of Board Meeting Date: 10/02/2007 outstanding debt and impact on TIF No. 1 District Agenda Number: 2007-03 The original TIF No. 1 Finance Plan included the issuance of certificates of obligation debt in the amount of $850,000 for drainage improvements to the TIF No. 1 property. Certificates were issued in 1998 with a 20 year maturity to be retired in 2018 with a 10 year call feature. The option to call (payoff the bonds) in ten years was considered from the creation of the district in 1998. Discussions in the early stages of the TIF have emphasized that it would be desirable to payoff the bonds in 2008 if the growth in property values produced enough tax revenues to do so. The success of the improvement of the property and the subsequent occupancy of tenants over the last ten years has brought us to the point of meeting our goals. Attached to this cover sheet are a Defeasance (payoff) Analysis and calendar of events prepared by First Southwest Company, and an estimated Distribution of Funds after payoff prepared by the City staff. David Medanich of First Southwest Company will be present at the board meeting to discuss the defeasance process and answer any questions the board may have. The approximate cash balances at payoff in February 2008 will be $740,000. The estimated payoff amount is $505,000. There will be approximately $235,000 left to distribute to the participating entities after the bonds are paid off. The prorated percentage and approximate dollar amounts are shown on the attached Distribution worksheet. By paying the debt off early, the district will save approximately $100,000 in interest expense that would have been paid over the next ten years. Upon the payoff of the debt the district, by law, will be dissolved. The taxing entities would have no further obligations regarding property tax payments and no tax bills will be issued in 2008. We would like to allow board members to have time to discuss the defeasance with their administrators and governing bodies before a final decision is made. The attached preliminary schedule requires that we give our financial advisors and bond attorneys the go ahead by December 20, 2007 and call notice to the paying agent by January 10, 2008. a~ ~' ai O o m ~ o~ ~ a - ~ o c Q' ~ o .O ~ O N C O ~ `O ~ ~ p `~ ~ ~ O O h ti ~ ~ ~ ~ O 0 _ O O N N LL f- ~ ~, ~ C ~ 1~ _ O O'~ Q1 ~ (Q ~° ~ ~ ~ to N T ~ ~ O 3 O N '~ 'Cf In C M U N ~ ~ ~ m ~ i a • ~ a~ O ~ ~ ~ ~ ~ ~ v o w o o i ~ c -a o ~ c a~ rn rn ~ H ^ y ~ ~ (~ ~ 4- ~ 0 4~ ° ~ ° Q ° , W ~ Q ~ O ~ 0 4. ~; ~ o 0 oc~ 0 0 o o00 0 0 ~ ~ c ~ O °~ ~ ° ~ ~' c o_ ~ `~ C 7 .~ o c o co ~~ ~ N u"i ~n o ~ m -- ~ V O MO M M ~ d U ~ N (f> ~ V U O 00 ~ C •-- ~ N ~ _ ~ d ~~ a ~ ~ o °' (6 , a~ . ~ ~ w o ~ ~ a ~ ~' a c o Q ~ 0 V M M 0 ~ o " ii ~° o ~ 0 O O 0 m c ~ N ~ ,~ p n ~ O N cD ~ O N N o co cfl ~~ ~ m c o ~ ~3 , Nom. ~~n~ o~~ o m U K C ~~ N O V~ N N ~ .a C ~ O ~~ ~ 'O O .~_ C O N ~ ° U .L~ C EA ~ ~ ~ ~ d t6 ~k ~ ` O ~ ~ N (0 N ~ L LL c-- D ~ 'p ~ w. ~ _ 0 ~ ~ ' L O Q f /l C N O p -6 ~ O C ~ N C 'd ~ O O O Z N Q '6 , C O O O a~ O in O~ fC O O I O tc > w ~ ~ - 4J i ~ ~' Q Q N ~ .--- . y O LL (p n O ~ N ~ N U~ ~U ~ U N ... ,.. Estimated Distribution of TIF No. 1 Funds After Payoff of Bonds Estimated Cash Balance TIF1 at Payoff February 2008 $ 740,000 Estimated Dollars Needed to Payoff Bonds (see Defeasance analysis) $ (505,000) Estimated Funds to be distributed to taxing entities $ 235,000 Estimated Amount to be distributed based on total tax contributions: BISD City of NRH Tarrant County Tarrant County Hospital District Tarrant County College 57% $ 133,950 20% $ 47,000 10% $ 23,500 8% $ 18,800 5% $ 11,750 $ 235,000