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Home My WebLink AboutIR 9260 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9260 To the Mayor and Members of the City Council Date: June 15, 2010 "�T•��° Page 1 of 1 SUBJECT: AMENDED AND RESTATED ECONOMIC DEVELOPMENT PROGRAM AGREEMENTS WITH RADIOSHACK The June 15 City Council agenda will contain a M&C for City Council consideration of proposed amendments to the Economic Development Program Agreement between the City and Radio Shack. The agenda will also include, for City Council consideration, a M&C to enter into a new Economic Development Agreement for economic development grants based on new sales tax revenues to be generated by TE Electronics LP, a company controlled by Radio Shack that will provide a new revenue stream to the City. Both the amendment and the new Agreement make payment of all economic development grants contingent on RadioShack's maintaining its corporate headquarters in the City, a condition that is not provided in the current Agreement. The proposed City Council actions is one part of an overall proposal that allows for the retention of Radio Shack, a Fortune 500 Corporate Headquarters with over 1,100 jobs with an estimated annual payroll of $94.0 million, in the Central Business District. The complete proposal includes not only the amended and new Economic Development Program Agreements to be considered by the City Council, but also the amendment of existing Tax Increment Finance District (TIF) Development Agreements and the approval and execution of a new 5-year lease by Radio Shack at the Tarrant County College (TCC) Campus. The Tax Increment Finance District #6 (Riverfront TIF) Board held a meeting on June 9, 2010 to review a presentation and consider the approval on proposed amendments to the existing Riverfront TIF Development Agreements with Radio Shack. The following amendments were approved unanimously by the TIF Board: • the elimination of both the existing TIF obligation of $13,258,369 (as of December 2009) and the on-going 6% annual interest that accrues through the expiration of the TIF District in November 2036; • a new capped reimbursement of $10.76 million without interest to Radio Shack for expenditures related to the construction of public infrastructure within the TIF boundaries; • Radio Shack entering into a new 5-year lease with Tarrant County College (TCC), which begins June 2011; • the elimination of all future obligations to Radio Shack when the $10.76 million cap is reached or June 2016, whichever occurs first; • provides that any incentives within the overall Radio Shack retention proposal count toward the new lowered TIF cap amount (including TIF payments and economic development incentives on real property, personal property and sales taxes); • the requirement that Radio Shack maintain its Corporate Headquarters at the TCC campus for the term of the lease; • a provision providing for the repayment of TIF increment to the TIF District by Radio Shack if the term of the lease is not fulfilled. After discussion on the presentation, the TIF Board unanimously approved the proposed amendments to the TIF agreements. Attached for your information is the presentation provided to the TIF Board. If you have any questions, please contact Jay Chapa, Housing & Economic Development Director, at 817- 392-5804. A. Fi sse E. , City Manager attachment: Presentation ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS Amended and Restated Development Agreements with RadioShack FORTWORTU Jay Chapa, Director Housing and Economic Development Department June 9, 2010 Background • In 2004 the City entered into a 30-year term Chapter 380 agreement as part of a retention incentive so that RadioShack would build its new campus downtown • In 2002 TIF 6 (Riverfront) was created to participate in the project by providing funding for public infrastructure • Tarrant County, Tarrant County College, Tarrant Hospital District and Tarrant Regional Water District participate in the TIF since the City's increment is part of the 380 agreement • Original TIF reimbursement was $12.3 million + 6% annual interest 1 Original Development Agreements No. 1 Total Commitment • Executed 10/13/2004 $12,271,579 • Utility improvements • $6,332,069 Total Payments to Date No. 2 • $2,762,219 • Executed 7/15/2005 • Public improvements Current Balance (with interest) associated with traffic • $13,258,369 improvements and public plaza • $5,939,510 Public Improvements First Development Agreement Total Water and Sanitary Sewer Costs $2,074,365 Total Electrical Costs $2,853,604 Total Gas Distribution Costs $646,506 Total Telephone Relocation Costs $456,066 Contingency for Utility Budget(5%) $301,527 Total TIF Utility Improvements $6,332,069 2 Public Improvements Second Development Agreement Total Traffic-Related Improvement Costs $2,847,620 Contingency for Traffic Budget(5%) $142,881 Total Traffic-Related Improvements $3,000,501 Public Plaza-Related Improvement Costs $2,799,056 Contingency for Public Plaza Budget(5%) $139,953 Total TIF Public Plaza-Related $2,939,009 Improvements Total TIF Traffic and Public Plaza $5,939,510 Improvements TIF 6 (Riverfront) Boundary r. 3 Public Improvements Traffic, Roadway, Signals, Sidewalks i�itr r x JII Public)Plaza II Current Situation • RadioShack leases approximately 40% of TCC Downtown Campus until June 2011 • In 2009, RadioShack began search in multiple cities for new headquarters location • Negotiations with RadioShack to extend lease at current location for 5 years with amended terms to both TIF and 380 Agreements is being proposed • Current employment is 1,139 jobs with $94 million payroll 4 RadioShack Profile Total Employees 1,139 Tarrant County Residents 860 Fort Worth Residents 434 Central City Residents 138 Business Personal Property $19,900,530 Real Property $81,302,624 Proposed TIF Amendment • Entity participation would remain at current levels: — Tarrant County(100%) — Tarrant Regional Water District(100%) — Tarrant County Hospital District(100%) — Tarrant County College District(80%) • Repayment provision if RadioShack does not meet lease terms • All Incentive obligations (including TIF) to RadioShack end when $10.76 million is reached from all sources • $4,047,367 estimated TIF payments over lease term • No interest accrual on obligation n , 5 Estimated Revenue Forecast Sources 2010-11 2011-12 2012.13 2013-14 2014-15 2015-16 Total Year 1 Year 2 Year 3 Year 4 Year 5 TIF 6(Riverfront) 1,360,242 515,665 526,330 537,207 548,303 559,620 4,047,367 Point of Sale 380 - 150,000 153,000 156,060 159,181 162,365 780,606 Personal Property 380(City) 282,616 173,400 176,868 180,405 184,013 187,694 1,184,997 Real Property 380(City) 1,064,400 708,900 723,078 737,540 752,290 767,336 4,753,544 Total to RadioShack 2,707,258 1,547,965 1,579,276 1,611,212 1,643,788 1,677,015 10,766,514 Accrual to RadioShack $2,707,258 $4,255,223 $5,834,499 $7,445,711 $9,089,499 $10,766,514 Impacts from RadioShack Leaving • TIF current obligation of$13,258,369 (as of December 31, 2009) plus 6% annual interest continues • Any future revenue stream collected by the TIF, regardless of its new location, is obligated to RadioShack for payment of outstanding debt even after no longer in Fort Worth • 1,139 jobs leave Fort Worth - $94 million annual payroll lost • TCC does not collect $26 million in lease payments • Fort Worth ISD loses $7.0 million in property taxes • City loses $1.056 million in taxes • RadioShack collects $2.2 million from existing TIF and Chapter 380 agreements for payments pending 6 Benefits of Proposal • $13,258,369 TIF commitment (as of December 2009) plus growing 6% annual interest eliminated • Total obligation from all sources capped at $10.76 million with no interest • Any future revenue stream collected by the TIF beyond payment obligation will be available for other TIF projects • Estimate that TIF will collect $570,000 after commitment completed during lease term • Current TIF agreement amended to include pay back to TIF if lease terms not fulfilled by RadioShack • 1,139 jobs stay in Fort Worth, maintaining a $94 million payroll Benefits of Proposal Continued • TCC collects $26 million in lease payments • Fort Worth ISD collects $7.0 million in property taxes during lease term • City collects $1.056 million in taxes during lease term • Crime Control District collects $473,000 during lease term • The Transportation Authority (The T) collects $473,000 during lease term 7 Summary of Benefits Public Entity Amount(5 year lease) TIF 6(Riverfront) $570,812 After final payment Tarrant County College $26,000,000 Lease payments Fort Worth ISD $7,000,000 Property taxes City of Fort Worth $1,056,000 Taxes CCPD $473,000 Transportation Authority(the T) $473,000 TOTAL $35,572,812 Employee Payroll (5 year lease) $470 million RadioShack Benefit $10.76 million All funds outlined are either generated by tax increment from RadioShack or by lease payments paid by RadioShack. RadioShack's departure would result in all categories becoming;0.00 except for RadioShack's benefit,which would become$2.2 million,which is what is currently owed under the existing agreements for the past two years. Recommendation / Next Steps • TIF Board approve resolution adopting amendments to development agreements between the TIF 6 Board of Directors and RadioShack • City Council considers approval of amendment to existing 380 agreement and approval of new Point of Sale 380 agreement 8 c� Questions? ORT WORTu