city of dallas approach to mall redevelopment · dallas tif program. 11. increment sharing • tod...

City of DallasApproach to Mall RedevelopmentGreater Dallas Planning CouncilAugust 8, 2019

Kevin Spath, AICP, HDFPAssistant Director City of Dallas | DallasCityNews.netOffice of Economic Development1500 Marilla StreetDallas, TX 75201O: 214-670-1691 | C: [email protected]

http://www.dallascitynews.net/

mailto:[email protected]

Office of Economic Development Overview 2

DirectorCourtney Pogue

Assistant DirectorJiroko Rosales

Finance and Compliance

Assistant DirectorAvis Chaisson

Community Development

Assistant DirectorRobin Bentley

Business Development

Assistant DirectorKevin Spath

Area Development

Background• The Office of Economic Development (OED) is guided by

Strategic Engagement (City’s economic development plan adopted by City Council in 2005 and updated in 2013)

• In 2018, began the process to create a new economic development strategic plan.

• New plan is anticipated to be finalized later this year.

• Once adopted by City Council, all policies, programs, and tools will be revised to align with the new plan.

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“Economic Vibrancy”

Economic Development Toolbox

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• Primary programs• Public/Private Partnership (PPP) Program (grants/loans, tax abatements)• Tax Increment Financing (TIF) Program

• Supplementary programs• Public Improvement Districts (PID)• New Markets Tax Credits (NMTC)• City of Dallas (EB-5) Regional Center• Property Assessed Clean Energy (PACE)• Opportunity Zones• Small Business Programs (grants/loans)• South Dallas/Fair Park Opportunity Fund• Dallas Film Commission Partnership Grants• Low Income Housing Tax Credits (LIHTC)• Dallas Housing Finance Corporation (DHFC)• HUD Section 108 Loan Program• State programs (TEF; Enterprise Zones; Skills Development Fund)• NCTCOG programs• Other initiatives (workforce development; healthy food, resiliency, etc.)

Public/Private Partnership Program

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• Chapter 380 Loans and Grants• Chapter 380 of the Local Government Code authorizes municipalities to offer

incentives designed to promote economic development. Specifically, it provides for offering loans and grants of city funds or services to promote state and local economic development and to stimulate business and commercial activity.

• Tax Abatements• Several statutes authorize the City to enter into agreements to abate all or a portion

of the new taxes created after the date of the agreement. Abatements can last no longer than 10 years and may be granted in any of the following areas:

1. Tax Abatement Reinvestment Zones (Chapter 312 Texas Tax Code)2. Neighborhood Empowerment Zones (Chapter 378 Texas Local Govt Code)3. Tax Increment Reinvestment Zones (Chapter 311 Texas Tax Code)*4. Texas Enterprise Zones (Chapter 2303 Texas Government Code)

*Tax abatements within Tax Increment Reinvestment Zones require approval of the TIF board of directors as well as approval of the governing bodies of all taxing jurisdictions contributing tax increment to the district.

Tax Increment Financing Program

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• Chapter 311 of the Texas Tax Code allows creation of Tax Increment Reinvestment Zones to collect tax increment above a base year for reinvestment to benefit the zone.

Office of Economic Development Overview

Highlights (2018 and YTD 2019)• $1.3 billion private investment leveraged by $87 million City investment

(reimbursements; grants; estimated taxes foregone with abatements)

• Leverage: $15 private for every $1 City

• Jobs to be created: 5,474

• Jobs to be retained: 3,414

• Significant projects:• Red Bird Mall redevelopment- $157,000,000• Amazon e-commerce - $131,000,000 (1,500 jobs)• Nokia Global HQ- $83,000,000 (2,000+ jobs)• Vistaprint - $74,000,000 (600 jobs)• Home Depot - $134,000,000 (500 jobs)• Chime Solutions – (1,000 jobs)

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Dallas TIF Program

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• The City of Dallas has been in the TIF business since1988.

• There are currently 19 active TIF districts (the firsttwo districts State-Thomas and Cityplace Area havesunset).

• As of 2019, overall property values have grown363% ($12.5 billion) cumulatively over the total of thebase values for the TIF districts.


Dallas TIF Program

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• Most TIF districts are ‘pay as you go.’ Developer fundsimprovements and receives payment(s) upon completion ofobligations set forth in development agreement and subject toavailability of TIF increment

• Only two TIF districts have sold TIF bonds – Cityplace Area(after a healthy income stream was established) and DowntownConnection (at inception – enhanced by City General Fund)

• Sales tax revenue not included in Dallas TIFs

• In order to make projects feasible and further neighborhoodrevitalization, more creative structuring and layering of othersources is often needed


Dallas TIF Program

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• 1988-1999: 7 TIF districts created (in/near downtown core)(State-Thomas; Cityplace Area; Oak Cliff Gateway; Cedars; CityCenter; Farmers Market; Sports Arena)

• 2005-2010: 12 TIF districts created (most adjacent near existingor planned DART stations)

• 2014: Mall Area Redevelopment TIF District (first non-contiguousboundary)

• 2017: University TIF District (also non-contiguous boundary)


Dallas TIF Program

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Increment Sharing

• TOD TIF District (2008) was the first TIF district in Dallas to setboundaries to allow for increment sharing from areas withstronger market conditions to areas with weaker marketconditions.

• Downtown Connection TIF District, Sports Arena TIF District,Mall Area Redevelopment TIF District, and University TIFDistrict also have similar increment sharing provisions.

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Mall Area Redevelopment TIF District (2014)

• Two non-contiguous sub-districts:• the Montfort-IH 635 Sub-District in Valley View Center Mall area• the Westmoreland-IH 20 Sub-District in Southwest Center Mall

area

• City participation: 0% in 2015; 90% from 2016 through 2042; 75% in2043; and 55% in 2044.

• County participation: 55% from 2020 through 2039.

• The TIF District expires on December 31, 2044 or when budget hasbeen collected.

• Increment sharing between sub-districts: 10% of the annual taxincrement generated by the Montfort-IH 635 Sub-District (less paymentof annual administrative expenses) transferred to the Westmoreland-IH20 Sub-District

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Mall Area Redevelopment TIF District

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Mall Area Redevelopment TIF District

• Originally (40-50 years ago), these malls were created withcomplex configurations of super-blocks, private land ownership,and reciprocal easement agreements that bound multiple ownerstogether.

• Over the last 10-15 years, as market conditions have changeddrastically, these inflexible configurations have heavily burdenedeach mall and have significantly hindered market adaptation.

• As a result, these mall areas are challenged by ever-increasingobsolescence (economic and physical), and, without publicparticipation, revitalization and redevelopment of these areas isextremely difficult.

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Montfort-IH 635 Sub-District

• is recommended by and consistent with the Galleria-Valley View Area Plan adopted by City Council in May 2013,

• serves as a long-term funding tool to help implement the shared vision for the area, and

• leverages other implementation tools (PD 887 form-based zoning and Thoroughfare Plan amendment) approved by City Council in June 2013.

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Vision for the Valley View Center Mall area:

• higher density mixed use development with vibrant retail, office, and entertainment uses, as well as mixed income housing choices;

• integrated network of walkable streets and open spaces,

• break down the super blocks into pedestrian-scale developable parcels

• community-scale central park with the potential to serve as a regional destination that will also support local residents, workers, and visitors, making up for a severe lack of open space in the area.

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Illustrative Vision for the Galleria-Valley View Area

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Westmoreland-IH 20 Sub-District

• is recommended by and consistent with theULI Advisory Services Panel reportsponsored by the City in 2009, and

• serves as a long-term funding tool to helpimplement many of the report’srecommendations over time.

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Vision for the Southwest Center Mall area:

• higher density mixed use redevelopment with residential, retail, office,entertainment, and community uses,

• area-wide rezoning and thoroughfare plan amendments consistent with thevision,

• coordination with TxDOT to improve freeway access,

• City support in helping to close funding gaps and push forward projectsthat might not otherwise succeed,

• City support in land assembly and developer recruitment, and

• continued City assistance with public infrastructure improvements in the area(network of new internal streets, new streetscape on existing perimeter streets,new central open space, etc.).

Item Cost Percent of Total Budget

Land Acquisition $21,770,664 14%

Site development/ infrastructure

$23,235,998 15%

New Construction Costs $20,591,824 13%

Rehabilitation/Adaptive Reuse Construction Costs

$47,441,803 30%

Tenant Improvements $14,514,800 9%

Soft Costs $16,302,768 10%

Hard and Soft Cost Contingency

$10,481,286 7%

Developer Fee $2,834,735 2%

Total Project Costs $157,173,878 100%20

Reimagine Red Bird Project Budget

Economic and Neighborhood Vitality

June 13, 2018 City Council

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Economic and Neighborhood Vitality

• City to provide up to $22,000,000 in gap financing for the construction of infrastructure for the project. Funds allocated from the following sources:

• $8,012,200 in 2017 General Obligation Bonds from Proposition I (Economic Development and Housing) awarded as a conditional grant;

• $1,743,282 in 2012 General Obligation Bonds from Proposition 1 (Street and Transportation Improvements), awarded as a conditional grant;

• $244,518 in 2006 General Obligation Bonds from Proposition 1 (Street and Transportation Improvements), awarded as a conditional grant;

• $12,000,000 in Public/Private Partnership Program (PPP) Funds to be awarded as a Chapter 380 interest-only loan with 15-year term and 2% interest rate.

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June 13, 2018 City Council

• As additional security for the City, the City also awarded Developer taxincrement funds from the Mall Area Redevelopment TIF District in the amountnot to exceed $15,600,000 (which is equal to the total amount of all principaland interest due under the Chapter 380 loan agreement).

• Developer assigned all TIF increment payments back to the City. As assignedincrement is paid to the City of Dallas, it will be used to pay down the loan.

• If the amount of TIF increment collected prior to the maturity date of the loan isinsufficient to pay all amounts due under the note, City has the right to collectpayment pursuant to the payment guarantee and/or execute its securityinterest under its lien.

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ReImagine Red Bird Project

B C B - CCategory TIF Budget** Allocated TIF Balance

Public Infrastructure Improvements; Environmental Remediation & Demolition; Grants for Economic Development $264,229,113 $0 $264,229,113Set Aside for Land Acquisition for Sub-District-Wide Central Open Space*** $72,659,277 $0 $72,659,277Set Aside for Sub-District-Wide Infrastructure Improvements $24,219,759 $0 $24,219,759

Public Infrastructure Improvements; Environmental Remediation & Demolition; Parks, Open Space, Trails, Gateways; Grants for Economic Development $72,665,022 $15,600,000 $57,065,022

Administration and Implementation* $7,684,059 $438,322 $7,245,737

Total Project Costs $441,457,229 $16,038,322 $425,418,908

*** For land acquisition and associated costs; not for design, construction, maintenance, or operating/programming costs.

* TIF Administration costs are pending until collection of sufficient tax increment to reimburse the City. TIF Administration costs shown are expended through FY 2016-2017. ** TIF Budget shown above is in current dollars (updated yearly); TIF Project Plan and Reinvestment Zone Financing Plan shows the budget in net present value.

Mall Area Redevelopment TIF DistrictProjected Increment Revenue to Retire TIF Fund Obligations



city of dallas approach to mall redevelopment · dallas tif program. 11. increment sharing • tod...

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