RESOLUTION NO. 1$- ZS 3

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS,

APPROVING THE 2017 TAX INCREMENT REINVESTMENT ZONE NUNMBER TWO

WESTPARK TIRZ) ANNUAL REPORT; AND DECLARING AN EFFECTIVE DATE.

WHEREAS, the City of Denton recognizes the importance of its role in local economicdevelopment initiatives and programs; and

WHEREAS, the City has established Tax Increment Reinvestment Zone Number TwoWestpark TIRZ) and established a Board of Directors for the District to promote development

or redevelopment in the Industrial area pursuant to Ordinance No. 2012- 366, authorized by the

City Council on December 18, 2012, as provided by the Tax Increment Financing Act, Chapter311 of the Texas Tax Code, as amended; and

WHEREAS, on February 5, 2013, the City Council adopted Ordinance 2013- 033

accepting an Agreement with Denton County to participate in TIRZ Number Two; and

WHEREAS, the Tax Increment Financing Act specifies that the governing body of a cityshall submit an annual report on the financial status of the district to the Chief Executive Officer

of each taxing unit that levies taxes on real property in a reinvestment zone, and a copy of thereport shall be forwarded to the State Comptroller; and

WHEREAS, on February 14, 2018, the Westpark TIRZ District Board reviewed andrecommended approval of the 2017 Annual Report for Tax Increment Financing Reinvestment

Zone Number two to the City Council; NOW, THEREFORE,

THE CITY COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:

SECTION__ 1. That the 2017 Annual Report for Tax Increment Reinvestment Zone

Number Two ( Westpark TIRZ), City of Denton, Texas, as of December 31, 2017, a copy ofwhich is attached here to ( Exhibit A), and is hereby accepted.

SECTION 2. That the City Manager or his designee is hereby authorized to submit the2017 Annual Report for Tax Increment Financing Reinvestment Zone Number One to the ChiefExecutive Officer of each taxing jurisdiction that levies tax on real property in the District; andto the State Comptroller, as required by state law.

SECTION 3. That this resolution shall take effect immediately from and after its passagein accordance with the provisions of the Charter of the City of Denton, and it is accordingly soresolved.

PASSED AND APPROVED this the °°',"m

day of '' " ___ , 2018.

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CHRIS WATTS, MAYOR

ATTEST:

JENNIFER WALTERS, CITY SECRETARY

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APPROVED AS TO LEGAL FORM:

AARON LEAL, CITY ATTORNEY

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EXHIBIT A

Tax Increment Reinvestment Zone Number Two

Westpark TIRZ)

2017 Annual Report

City of DentonEconomic Development Department

215 E. McKinney StreetDenton, Texas 76201

940- 349- 7776

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January 1, 2017 to December 31, 2017

Table of Contents

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MissionStatement ...... ............ *.... »*,...... ........ ..M..........,,..,.. ,,,,,,.,,, w,. ,,. ...,..... .........,... 2

Backgroundand Purpose ......................................».»,..»...................m..,,.....,.......,, w.................., 2

Participating Jurisdictions ...................................... ......... ......., ...,..,, .,.,,.,,, .,......, .,...,.......:

DistrictHistory and Accomplishments.... .,. .. ........ ........ ......... .......«« »«,.»..».,...,.........3

Summaryof TIRZ Board Meetings ........ ........ .,... ..,».,... ......., y ......., .. y..».......,,..,,,,,. 4

Budgetand Project Status .... ......... ....,...........,. .,.,,.... m ..,,.... ...».... ....... ......... . m .,.,., u,,.. 5

ProjectDefinitions ....... ..............a.....,.......... ......... ,..,..... . .,.,, .......... .. ,.,.,.,.,........... .,,......,...6

Revenues.......................................................................... ........... .........,. w.<,,.,.,,...,........,...........6

Expenditures...................................................................................................,,.,,.,.,...,,............ 7

2017 Work Program .................................................................. .....» ......,.. ,..,.... .....,... 8

Appendices............................................................ ,,,,,,,...,......... ........, »....... .,....,,,...,... . ..10

Appendix A: TIRZ Two Balance Sheet ............. d.. ...,..... ....,..,. ,...,..., ,,,,..,..,...,..... ..,,.,..11

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Tax Increment Reinvestment Zone Number Two 2017 Annual Report 1

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The missian of the Tax Increment Reinvestment Zane ( TIRZ) Number Two is ta pravide a

saurce of funding for public infrastructure improvements ta encaurage and accelerate necessary

development within the largest industrially zaned area within the City.

Tax increment financing originated as a taol for governments ta publicly finance neededimprovements and enhance infrastructure within a deiined area in order to stimulate private

development and redevelopment. A TIRZ is a defined area where public infrastructure

improvements are deemed necessary ta promate develapment. The costs of the improvements tothe area are repaid by the contributian of future tax revenues. Specifically, each taxing entity

may choose to dedicate all, a partion, or none of the tax revenue that is attributable to theincrease in property values. The additianal tax revenue that is received fram the affected

properties is referred to as the tax increment. An ad valorem valuation base is established the

first year, and the revenue from the increased valuation from subsequent years is allocated into a

TIRZ fund to support development projects.

On December 17, 2012, the City Cauncil adopied Ordinance No. 2012- 366 designating anddescribing the baundaries of Tax Increment Reinvestment Zone Number Twa for an industrialdistrict of Dentan, Texas; establishing the duration af the Zone; establishing a Tax IncrementFund; and establishing a Baard af Directars for the Tax Increment Reinvestment Zone. The

City' s secand TIRZ consists of appraximately 800 acres and is lacated north af Airport Raad. This industrial area ( Westpark) lacks the public infrastructure necessary ta encaurage

development.

The Westpark TIRZ took effect on January 1, 2013, and will terminate on December 31, 2036, orthe date when all project casts are paid and any debt is retired, whichever cames first. It is

estimated that the TIRZ would generate approximately $ 14. 3 million over a 25 year period for

infrastructure improvements. The City and Denton County will contribute $ 10 million and $ 4. 2

millian inta the TIRZ fund, respectively. According ta the Finance Plan, the City wauld retain43. 9 million and the County wauld retain $ 18. 8 million af real and business persanal praperty

revenue over the life af the TIRZ.

Tax Increment Reinvestment Zane Number Two 2017 Annual Repart 2

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Inceptivn ° cal wa,s 1. 6$.975 fe thc C:"ity araci.?. c 2F FIf rr dh " c aaraty

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This is the fifth year of the Westpark TIRZ. During calendar year 2017, $ 160, 711 was collected

for the City' s portion based on the last supplemental valuation of the calendar year from theDenton Central Appraisal District (DCAD). The City' s and County' s cantribution in the TIRZfund for 2017 was $ 160, 711 and $ 59, 918, respectively. An additional $37 in interest was earnedfor the period, bringing the total 2017 contribution to $220, 666.

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Tax Increment Reinvestment Zone Number Two 2017 Annual Report

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The twelve members of the Economic Development Partnership Board;

One member shall be appointed by the governing body of Denton County; and

One member shall be appointed by the " Developer," Rayzor Investments;

LLP.

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The Board member attendance is presented below. Phillip Baker, with Rayzor Investments, wasalso a guest at the meeting.

Table 2: oard e ber Attendance

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Zone Number Two to City Cauncil2. Received reports on the following:

a. 2017 Value of TI Number Two

b. A proposed Second Amendment to the Reimbursement Agreement between the

City of Denton, the Board of Directors of the TIRZ Number Two, the City afDenton, Texas, and Westray Group, LP.

c. Approved the minutes of September 21, 2016 meeting.

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Table 3: TIRZ Pro Costs

Tax Incrernent Reinvestment Zone Number Two 2017 Annual Report F a€, 5

i° i l M° u~ bvt M r: includes the construction and reconstruction of paving improvements

capable of handling heavy truck traffc and that provide common turning radius for semi trailersand may consist af, but are not limited to, primary and secondary major arterial thoraughfaresand collector streets that will provide improved access within the industrial park, to State

highways, and Interstate 35.

t l u ti < c l) w ii a ; includes the extension of water and wastewater lines along the right-of-

ways af the streets within the District. Water and wastewater lines will be built to adequatelyaccommodate the District at build-aut and its anticipated industrial users.

A number of properties in the district are situated in the flaodplain. Adequate stormwater

drainage will be built ta accommodate the maximum use of the land and comply with the

drainage standards in the Denton Development Code.

IM I i 1 ' i aj. ui;: may include grants, loans and services for public and private development. Eligible TIRZ project costs are not limited to public uses and may also include projects thatstimulate economic development. Chapter 380 of the Local Government Code grants

rnunicipalities in Texas the authority to offer grants and loans of public funds to stimulateeconomic development.

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Tax Increment Reinvestment Zone Number Two 2017 Annual Report

Table 5: Coun v Certified and S

Tc 1' eczr 2QP4 - Cidy use.s S'up l neaad # I d c crP d 12/ 23lI4 asaciC us tiy us s b'up t rr2erad # ZU cicztec L/ 3il/ LU[ J. Tax Year 2016 and 2017 include interest earned through 12/ 31,

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Tax Increment Reinvestment Zone Number Two 2017 Annual Report 7

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The First Amendment to the Reimbursement Agreement was made in arder to accommodate

WinCo Foods, a company that acquired approximately 77 acres in the Westpark Tax IncrementReinvestment Zane Number Two.

WinCo Foads agreed ta execute Phase I of the Reimbursement Agreement and was awarded an

econamic incentive to reimburse the impravements. The 800, 000 square foot distribution facilityis located on the west side of Western Boulevard, north of Airport Road. WinCo Foods is aregional retailer with multiple distribution facilities acrass the United States. The project

received a Certificate of Occupancy in January 2017 and will eventually create 165 jobs with anannual payroll of around $ 7. 2 million.

The terms of the grant agreement ends when full reimbursement has occurred, and include the

following forms of reimbursement: up to $ 1 million for water lines, utilizing the City' s Water

Development Plan Line Fund; up to $ 865, 000 in reimbursement for the sewer lines, utilizing the

City' s Wastewater Development Plan Line Fund; 100% of the Sales and Use Tax for

construction materials, furniture, fixtures, and equipment for the construction of the project;

100% of the tax increment collected in the TIRZ Number Two fund associated directly with theproject, until full reimbursement occurs. The contribution includes the City' s 40% contribution

to the TIRZ fund annually. The City' s remaining 60°/a af ad valorem revenue will also beutilized until full reimbursement accurs. It is anticipated that full reimbursement will occur in

approximately four years. The frst year after full reimbursement, the secand term of the grantagreement shall commence, and will include the following: a 60% rebate of the City' s ad

valorem revenue for a periad of faur years for an estimated total incentive of $1. 7 million.

Instructions for reimbursement for this first multiple tax taal grant and TIRZ reimbursement

were developed in 2017, which has helped to clarify and streamline the incentive paymentprocess, Reimbursements far the utility Development Plan Line Fund and sales and use tax grantfor construction were processed this year. WinCo foods received a Certificate of Occupancy

CO) on January 1$, 2017. Accarding ta the incentive Agreement, the ad valorem and TIRZgrants will commence the frst year following receipt by grantee of a CO for the facility, so theTIRZ Two grant will initiate in 201$.

The board also received a report on a Second Amendment to the Reimbursement Agreement

between the City af Denton, the Board of Directors of the Tax Increment Reinvestment ZoneNumber Twa and Westray Group, LP. The proposed amendment would madify phases II and IIIfor public improvements; provide the most current probable construction costs; and add an

Tax Increment Reinvestment Zane Number Two 2017 Annual Report Page 8

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