TIF #2 Board of Directors Minutes - 06/20/2013REINVESTMENT ZONE #2
TAX INCREMENT FINANCING BOARD
MINUTES
June 20, 2013
Members:
Ben Filer, Chairman
Ann Bishop
John Luig
Jerry Taylor
Absent:
Jim Chandler
Michael Smith, Council liaison
Guests:
Pat Beatty, Overland Property Group, LLC via conference call
Richard Boyd, Corlett, Probst & Boyd
John Hirschi
Andy Lee, Andy Lee & Company
Staff :
Kevin Hugman, Assistant City Manager
Miles Risley, City Attorney
Davis Powell, City Engineer
Lin Barnett, MPO Director
Karen Gagne, Planning Administrator
Marty Odom, Planner III
1. Call to Order and Introductions
Chairman Filer called the meeting to order at 3:30 pm in the Council Conference Room
in the Municipal Auditorium, and provided a welcome to all members and guests.
2. Review and Approval of February 8, 2012 Minutes
Chairman Filer called for a motion to approve the minutes from the February 8, 2012
meeting; XXX introduced a motion approving the February 2012 TIF#2 meeting
minutes, motion was seconded by XXX. The minutes were unanimously approved.
3. Status Report: Financial & Project Update
TIF #2 BOARD JUNE 20, 2013 PAGE 2
Ms. Gagne discussed the financial spreadsheets which indicated the initial projections
compared with the actual increments. She stated the increments exceeded the
projections every year beginning with 2007 and, in 2013, increments from the taxing
entities were double the amount of the projection. Mr. Filer stated this was an
exceptional increment compared with other TIF boards with which he had served. Ms.
Gagne commented on this being the perfect model for a TIF district from the base year
then growing each year thereafter. Ms. Gagne stated it was difficult to project the future
and she was not sure there would be substantial increases each year for 12 more
years. She stated the prediction is a slow, steady growth. This year there is just under
$385,000 for the annual increment, or $1.7 million total since 2007.
The projected growth debt service shows any new projects taking on the debt service in
addition to the annual increment. For FY2013, the taxes received from the City and the
County equaled $384,000. This is the first year from the TIF board's recommendation
in 2012 to participate in the realignment project which was identified in the plan. An
annual commitment of $150,000 will be committed each year as the TIF contribution to
the realignment project. With this commitment, it was not enough to offset the
expenditure debt to the 46 Sales Tax Corporation. Projections indicate it is not
anticipated additional revenues above the debt service until 2014. The 2014 projection
is a small number, $13,700. In 2020 and 2021, there will be a healthier amount of
$90,000 to $105,000, based on current development.
Ms. Gagne commented on the changes being made after the demolition of the industrial
warehouse, now known as Highland Town Square. The project developers (Schaaf and
Clark) are actively pursuing development for that site which will increase the additive to
the increment. There are other parcels of land in the TIF district that are being
considered for development in addition to several upgrades and renovations of existing
businesses. She stated there should be a healthy increment but within the next 12
years it could plateau.
Mr. Taylor inquired about the projections including the new businesses known to the
City. Ms. Gagne stated the boundary was originally drawn conservatively because any
potential new development valuation would be taken out of the City's general fund
revenues. Wichita Square is not in the TIF district and it includes the new Chik-fil-A in
addition the new Raisin' Cane, Sam's and Home Depot and not in the zone. Mr. Taylor
asked who the buyer was for the triangle parcel next to Mazzio's; Mr. Hugman stated it
has not been sold. The triangle parcel on the other side next to the cleaners was
recently sold. Ms. Gagne stated it was a long process getting the alignment to the point
of construction and then finished. She noted the realigned Lawrence/Rhea Road is now
functioning well from a traffic and business perspective.
Ms. Gagne stated the next project identified on the priority list is Maplewood Phase III
followed by the McGrath/Quail Creek Drainage Improvements. At this point, funds in the
TIF zone are tapped out for repayment to the existing Maplewood Drainage Irrigation
and Improvement Project and the Realignment Project.
TIF #2 BOARD JUNE 20, 2013 PAGE 3
4. Consider Reimbursement of up to $177,600 to OPG Maplewood Partners, LLC.,
and related entities for cost of constructing a 2-lane Extension at Regent Drive
North/Maplewood (approximately 47 ft. x 462.77 ft. of road), subject to
requirements established by the TIF #2 Board the City of Wichita Falls.
Ms. Gagne stated the TIF Board has received a request for a multifamily apartment
complex in conjunction with application for low-income tax credits from the Texas Dept.
of Housing and Community Affairs. This project would be located at Regent North with
access from McNiel fronting on the proposed Maplewood Phase III extension. Andy
Lee, representative for the Overland Properties Group, LLC. (OPG) and the land
owners; John Hirschi, representative for the land owners; and, Mr. Richard Boyd,
engineer and surveyor were present at the meeting.
Ms. Gagne stated the applicants have provided information clarifying the extent the low-
income housing tax credit would provide funds back to the zone if they receive approval
from the State in July. Their request was for a reimbursement of $177,000 covering the
construction costs of the 2-lane road extension of Regent North along with the full
length of the frontage tract, and a Development Agreement with the City for a forward
commitment paying the upfront costs then a later reimbursement by the TIF Board.
Mr. Pat Beatty, partner, Overland Property Group, LLC., joined the meeting via a
conference call.
Mr. Lee gave a brief history of the benefits of low income housing tax credits to the City.
He stated the $177,000 would assist with the funding for the underwriting application.
This request would reimburse the projected construction costs for the road from
Maplewood extending west including water extension lines and the 70 ft. right-of-way.
Ms. Bishop asked what the proposed monthly rents would be; Mr. Lee stated there
would be two and three bedroom units. A three bedroom apartment would lease for
$550 a month and a two bedroom, $515. She asked Ms. Gagne if the money was
available; she replied that as of this meeting date, the money was not there.
Ms. Gagne stated there are concerns for the timing concern this project and the
drought. Jim Dockery, Director of Finance, informed Ms. Gagne there are not funds in
the Stormwater Drainage fund; TIF#2 borrowed money from that fund for irrigation and
drainage improvements for the Maplewood project. She continued by stating there are
not funds in 4B currently and the TIF fund does not have money. Other sources of funds
this board has used in the past to help move forward the projects identified in the plan
known to have a greater public benefit for the entire community.
Ms. Gagne stated staff met earlier in the week concerning this private development
project. When the TIF #2 district was created it was established for public benefit
projects for the TIF zone and the entire community. There are concerns regarding what
potential additional commitment would be provided.
TIF #2 BOARD JUNE 20, 2013 PAGE 4
Mr. Powell stated his concerns were this proposal is for only the construction of a
portion of the road, not the completion of the road XXX as recommended in the
Thoroughfare PIanXXX. There is no interconnectivity between Lawrence Road to
McNeil. Chairman Filer noted the proposal for the road is for the area in front of this
project and not beyond. Mr. Luig asked what the distance was from the applicants
proposed ending [of the street] to the existing part not developed behind Wal-Mart. Mr.
Powell stated it was approximately 800 ft.
Ms. Bishop stated TIF #2 gave money for the development of a road east of Lawrence
onto the property across the canal next to Cavender's. Ms. Gagne stated this board
made the recommendation that proposal be considered by City Council approximately
three years ago — staff did not recommend funding. She stated there were legal
concerns with that project because there was no forward commitment with the proposal.
Mr. Risley added there is a contract that has been negotiated but not executed because
it is waiting for Council approval. The current increment has not been spent, it is a
cred itXXX.
Mr. Lee asked what fund was the recipient of the sale of property for $268,000 from the
Kohl's tract. The money came out of the bond proceeds to pay for the construction of
the road. Mr. Hugman stated the money has not been received. Chairman Filer asked
when the money is received could it be placed back into the TIF #2 funds. Mr. Risley
stated TIF has jurisdiction over funds that are the tax increment attributable to the
increase in the value not to the direct sale or this parcel.
Chairman Filer stated this Board is concerned only with the money from the tax
increase. Any money that is encumbered by TIF #2 must be paid off by the end of the
program for this district which is 2026. He continued by stating the entire extension from
Lawrence Road to McNiel will eventually come before this board for TIF funds as we
continue defining the projects for this district. He stated he was hesitant about approving
the encumbrance of future funds based on the present circumstances. The board
encumbered funds for the Maplewood Extension (Part II) and it appears the TIF district
will be able to return those funds. There were funds to help the property owners who
were isolated from the sewer main as a result of channelizing the storm water drainage
canal. Chairman Filer stated he was cautious about the funds until money is being
generated. The account currently has $2019 which Ms. Gagne confirmed and stated
this amount was based on a nominal 3 to 5% growth. Mr. Lee commented on the
projections stating there was a drop in overall paying the TIF when Strategic Realty and
the warehouse were demolished. Mr. Lee mentioned additional funds for TIF would be
received with the new developments including a steak house plus two other
developments. He stated the 14 acres of his property owners with limited uses because
of the transfer station and cell tower. Those were financial issues that came up but we
were able to overcome those issues. This housing development is a unique
opportunity. There will be 7 acres for retail development that would be excellent for a
dollar store or a number of other uses. There are an additional four acres not in contract
with this group but are tied up with the same developer and that site could be developed
into multifamily housing which would provide more value to the TIF fund. Mr. Luig
TIF #2 BOARD JUNE 20, 2013 PAGE 5
questioned the north part of the tract where Mr. Lee mentioned a possible site for a
dollar store. He assumed the property owners were retaining that tract. Mr. Lee stated
if the right deal is presented to them, things may change especially if there is a road
already constructed.
Mr. Lee asked what the estimated cost would be to construct the road.XXXX. Mr.
Powell replied he has reviewed several versions concerning the type of facility XXXX do
a 4 year plan XXX review the Thoroughfare Plan to connect those two XXX and
widening the other section between the transfer station and Wal-Mart and a short piece
of North Regent XXX $3.5 or 4 million which would include channel improvements. A
decision would need to be made whether to widened the channel or take part of the
Wal-Mart parking lot. If it included the 38 ft. structure currently there then the estimated
cost is $1 to 2.5 million to connect that XXX depending on the amount of drainage
improvement involved. Mr. Lee stated it would take the life of the TIF to accomplish the
Maplewood Extension completely and it would require a substantial amount of property
assessment. Mr. Lee stated the tract east of Lowe's has potential and is accessible.
There is an opportunity at the State level for this year's round.
Chairman Filer asked about the Thoroughfare Plan requirements. Mr. Powell stated a
48 ft. width road is required from Lawrence to McNiel; however, it currently is 38 ft. from
Lawrence to west side of the transfer station. Chairman Filer stated if the road is
constructed with less than the proposed width, it would be a monumental mistake. Mr.
Powell indicated if that occurred, traffic and potential development would dictate the
need for a wider road. It might be more advantageous to connect it to the 38 ft. getting
some mobility or construct the 48 ft. road. This decision would be for management to
determine, weighing factors for both current and future needs.
Mr. Taylor stated if we review the construction of Lawrence Road from the beginning
and the experience of widening it because of the bottleneck traffic. If a wider road is not
originally constructed, it would not be prudent. He stated he did not have a problem
with Mr. Lee's request; however, the timing is not advantageous for the TIF Board. He
stated he totally supports affordable housing and it is unfortunate about the request
being presented to the TIF Board when there is no money available. Chairman Filer
supported his comments echoing the construction of the wider road.
Ms. Bishop asked where the Maplewood Extension ranked in the Transportation Dept.
priorities. Mr. Barnett stated in the 2012-13 Prioritized Project List 84 projects were
listed. The Maplewood Extension Phase III from Lawrence to McNiel - construction of a
4-lane street ranked third. This project is extremely important to the overall
transportation network. The actual traffic counts for this project were not as high as the
Lawrence -Call Field -Rhea Road intersection but it is a crucial project for our area. He
stressed the wider road should be constructed to avoid another Lawrence -Rhea Road
mishap. To questioning Mr. Barnett responded, the first priority is an upgrade of State
Highway 79 at Professional Drive, a TxDOT project, and the second, McNiel Avenue
from Southwest Parkway to Kell Freeway to Seymour Highway, reconstruction of the
street with drainage improvements. Mr. Powell added both of those projects are in the
TIF #2 BOARD JUNE 20, 2013 PAGE 6
design phase. TxDOT opened the bid for the State Highway 79 project and it has
proceeded to the Texas Highway Commission to be awarded. He stressed acquiring
the right-of-way now before the road is built. It is cost prohibitive to try to obtain the
right-of-way after the road is constructed then widen it another 15 to 20 ft. There are no
engineering concerns regarding this construction. There are drainage issues which will
be taken care of during the design process. The future alignment details should be a
part of the development phase.
Mr. Luig mentioned the number 4 project after this one is the Wenonah Extension south
of Kell Freeway. Mr. Barnett stated this proposed roadway was part of a 2-part study
done in 2010 called the West Mobility Study. Half the study was devoted to reviewing
north -south connectors for traffic to move through the Lawrence -Call Field area; the
other half, the realignment of the Lawrence -Rhea intersection. It was discovered
through this study that there were not many north -south connectors to move traffic from
the southern part of Wichita Falls into the retail corridor. He noted that Maplewood
extension from Lawrence to McNiel through Regent would help with the north -south
connection.
Chairman Filer stated the TIF Board does not appear to have any money available for
this project until approximately 2019. Mr. Luig asked the same question Mr. Lee
presented about the money for the sale of the triangle parcel. Chairman Filer stated
that was not a concern of this Board because the money will not be allocated to the TIF
account. The only money coming into the TIF account is generated from the increment.
Mr. Hugman stated that would be a question for the 4B Sales Tax Corporation because
they are making the debt service on the bonds.
Ms. Gagne inquired about a forward commitment for this project to make it a benefit to
the community and would there be any potential for the full dedication of the right-of-
way to the eastern edge of the property, including the canal and the end of Trade Drive.
Mr. Hirschi stated that would be worth exploring. Ms. Gagne asked if the property
owners would entertain paving a portion of the roadway along with the dedication. Mr.
Hirschi commented there would need to be some leeway since this property is a key
investment. It is a long piece of road to be constructed and there is not much frontage
on the eastern half of the road. Ms. Gagne stated there was developable land on the
south of the large tract, east of this project. Obviously fill has been moved in north of
the drainage canal and to what extent it can be developed. Mr. Lee asked if the right-of-
way would be 70 ft. Mr. Hugman commented there is an additional 315 ft. from the
edge of their tract. He continued by stating Mr. Lee called out 462 ft. on the frontage
and by the survey it appears there is another 315 ft. to eastern edge. Mr. Powell stated
it does not go to the transfer station property; the 462 ft. is halfway with another 315 ft.
strip to the east of it before Trade Drive/Maplewood. Chairman Filer inquired about
ownership of the 315 ft. strip. Mr. Powell replied it is not part of the parcel being
discussed; it may be owned by Hirschi Properties. Mr. Hugman stated there is 480 ft. to
the edge of the existing right-of-way. Mr. Powell stated the 480 ft. is from North Regent
up to the culvert then from there is another approximately 480 ft. to the end of
Maplewood where it terminates.
TIF #2 BOARD JUNE 20, 2013 PAGE 7
Mr. Luig/Taylor inquired if the road were constructed as suggested would it be a minor
arterial. Mr. Powell replied the existing Maplewood east of Lawrence is a 90 ft. minor
arterial. In the future that is what is desired for Maplewood to McNiel. Mr. Powell noted
some of the traffic will exit at Lawrence then at McNiel as Maplewood would 7-in". He
stated he did believe the Thoroughfare Plan was correct in that area. Mr. Powell stated
if Maplewood was extended to McNiel he felt it would warrant a traffic signal as it
develops and as traffic increases.
Mr. Risley stated he researched the prior commitment that has not yet been funded.
City Council can only fund projects for which there is money. The TIF fund is City
money; they are not funds that live on their own from a separate entity such as the 4A
Wichita Falls Development Corporation and 4B Sales Tax Corporation. When City
Council makes a commitment, it must do so with presently existing funds or funds
expected to arrive in the upcoming year. Chairman Filer stated TIF #2 is not in the
position to approve a request for funding at this time. Mr. Risley stated if you approved
a request and a contract was executed, it must be contingent upon the arrival of the
funds in the future and the funds could not be transferred until they arrive in an amount
that would exceed the presently existing commitments. He posed an alternative which
would be to issue bonds. He stated that TIF backed bonds although TIF, by nature of its
contingent funding, tends to get higher interest rates than standard municipal bonds.
Chairman Filer stated his recommendation is the TIF Board take the position that it
cannot fund this project. Mr. Taylor made a motion to deny approval for the
reimbursement of up to $177,600 to OPG Maplewood Partners, LLC., and related
entities for the cost of constructing a 2-lane extension at Regent Drive North/Maplewood
(approximately 47 ft. x 462.77 ft. of road). Mr. Luig seconded the motion. The vote was
unanimous in favor of the denial of the project.
Mr. Lee stated when the TIF was started an industrial district was converted into an
income producing area for the City with the benefits going to the citizens, TIF fund, and
City's general fund. He stated affordable housing is critical for Wichita Falls. Chairman
Filer commented that no one would disagree regarding the need for affordable housing.
XXXX 4A XXXXXX serious discussion with Mr. Dockery. Mr. Lee thanked the Board for
their time and consideration.
The Board adjourned at 4:13 p.m.
Ben Filer, Chairman
Date