City Council Work Session Agenda

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  Work Session Item 3.c.       
Meeting Date: 12/14/2020  
Item Title:    Expand Boundaries of TIF#3 and Approval of a Project and Financing Plan for the Zone
Submitted By: Matt Watson
Strategic Focus Areas: Sound Governance and Finances

At the April 3, 2018 Regular Meeting, Council passed an ordinance creating a Tax Increment Financing Reinvestment Zone #3 (TIF Zone #3). TIF Zone # 3 seeks to capture property tax value added by the Wilbow / Riverset development of the Wyrick Farm to pay for public improvements at Wyrick Farms and the area surrounding the medical district that is now home to the Veterans Affairs (VA) hospital.

At the April 3 meeting, Council designate TIF Zone #3 with an initial boundary encompassing Wyrick Farms and nearby properties with the intent on passing a second ordinance at a future date to add the hospital area to the TIF zone after that area hit a probable low taxable value. This two-step process of setting the TIF zone boundary was designed to avoid burdening the TIF fund with a reduced value and revenue. With the VA Hospital now established as a tax-exempt property, Council may move forward with expanding the boundaries for tax year 2021 to include the VA hospital and surrounding areas and consider approval of a Project and Financing Plan based on recommendations made by the TIF Zone #3 Board of Directors.
  1. Approve an ordinance expanding the boundaries of TIF Zone #3 to include the VA Hospital area and establish a Project and Financing Plan for the Zone.
  2. Do not approve an ordinance expanding the boundaries of TIF Zone #3 to include the VA Hospital area and establish a Project and Financing Plan for the Zone.
Unless otherwise directed by Council, this item will be scheduled for formal consideration at the January 5, 2020 Regular Meeting and staff will move forward with notifying the public of a hearing on this matter as required by Chapter 311 of the Texas Tax Code.
During a City Council retreat on Friday, December 15, 2017, Council unanimously reaffirmed their support to create a Tax Increment Financing (TIF) zone in the area surrounding the Baylor Medical Center at Garland facility, despite the fact that the hospital announced that it would close on February 28, 2018. Staff then began working with a consultant to establish a preliminary financing plan for the proposed zone, as well as drafted an ordinance for Council consideration.

On April 3, 2020, Council approved the ordinance creating TIF Zone #3 and subsequently established a Board of Directors for the TIF Zone. The initial boundaries of the TIF Zone encompassed the Wilbow / Wyrick Farms and surrounding businesses located generally at Buckingham and Shiloh Road. However, Council had attentions to expand the boundaries once the fate of the Baylor Medical Center at Garland Facility was determined and the area hit a probable low taxable value. This strategy would ensure that the incremental increases in taxable values associated with the Wilbow / Wyrick Farms development would be captured for future use in the Zone while not burdening the TIF fund with reduced values and revenue associated with the Baylor Garland closure.

On April 3, 2020, the U.S. Department of Veterans Affairs (VA) acquired the former Baylor Hospital facility to increase its capacity to care for Veterans. This acquisition will make this property exempt from property taxes in 2021 and staff believes that Council could now expand the boundaries of the TIF Zone without hampering revenue growth within the TIF Zone.

On November 18, 2020, the Board of Directors for TIF Zone #3 meet to discuss expanding the boundaries and to create a Project and Financing Plan. A Project and Financing Plan is required by law in order to allow the City to utilize TIF funds on projects within the zone and is the primary responsibility of the Board of Directors for the TIF Zone.

The Board unanimously approved recommending to Council the expansion of the boundaries of the Zone to include the VA hospital and surrounding properties. In addition, a listing of projects was approved by the Board to be included in the Project and Financing Plan and staff was instructed to complete the required schedules outlined in Chapter 311 of the Tax Code for Council to formally consider.

A Catalyst Area Study is currently being conducted in the area that will provide the City with additional information to develop an overall strategy in the area and will more than likely yield additional opportunities to utilize the revenue generated within the TIF Zone on new projects. This study is scheduled to be completed in the spring of 2021. Therefore, the Board wanted to ensure tha the Project and Financing Plan was not too specific on projects to be completed in the area but still meet the requirements outlined in the tax code. This strategy would allow for the framework for the formal document to be in place while allowing the Board / Council to make timely adjustments to the Plan at a future date.

Therefore, the below categories were ultimately decided on and were generated from the Preliminary Project and Financing Plan approved by Council on April 3, 2018.
Description Amount
Wilbow Development Agreement Reimbursement $3,100,000
Trail Study $150,000
Trail Design and Construction $3,321,120
Screening Wall Replacement $760,000
Public Infrastructure Improvements $10,168,880
Land Acquisition $5,000,000
Total $22,500,000

The draft Project and Financing Plan is attached to this agenda item for Council review.
TIF's are utilized to encourage economic development and reinvestment. When redevelopment occurs in a TIF, property values typically increase. The incremental growth in property taxes can be set aside for reinvestment in the zone by way of public projects designed to enhance the zone for additional new investment and development.
Draft Project and Finance Plan


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