Agenda_Item_2(c)_AEDC — original pdf

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Downtown Commission Update Austin Economic Development Corporation April 21, 2021 AEDC Roles AEDC is working with EDD, HPD, and Finance to support several future objectives… Implement the South Central Waterfront TIRZ Design and develop the Cultural Trust Manage the public pipeline assets Negotiate future real estate transactions Austin EDC Overview | 2 AEDC Formation: Progress Oct.-Nov. 2020 Dec. ‘20-Jan. ’21 February 2021 March 2021 AEDC Board Activity Council votes to create AEDC Dec. 14: First Board meeting Jan. Board meeting Board meeting Board meeting Management QBL retained to launch organization Obtain copies of other Master Contract agreements Ongoing Interlocal Agreement (ILA) negotiations Final ILA negotiations Executive Search RFP prepared for executive search firm RFP released Negotiations & Selection of Korn Ferry as firm First job postings released Legal RFP prepared for Legal RFP RFP released; Winstead retained as counsel; Creative Bond Negotiations Creative Bond Negotiations & Administrative set-up Bond negotiations; Banking RFP; Board support Stakeholder meetings held in Dec, Feb and March. Public (ULI) Meetings held in Jan, Feb. Austin EDC Overview | 3 AEDC Formation: Interlocal Agreement Initial Projects • Cultural Trust • South Central Waterfront • Public & Private Pipeline • Management of AIDC (as staff to Council) Funding • Transfer of EDD Funds and AIDC balance • Creative Space Bond • Iconic Venue Fund Annual Oversight • Annual Contract • Budget • Real Estate Reporting • Inclusive Growth and DE&I Reporting Austin EDC Overview | 4 AEDC Next Steps: Engagement AEDC will transition from general stakeholder meetings to targeted committees and public discussions: AEDC Stakeholders Cultural Trust Advisory Committee (CTAC) Joint Music and Arts Commission South Central Waterfront Advisory Committee (SCWAB) AEDC Real Estate Committee Austin EDC Overview | 5 AEDC Next Steps: Board Onboarding ONBOARDING PROCESS BOARD NOMINEES March 25 | Council approved Board nominations. New AEDC Board members received onboarding materials and orientation. April 12| First full AEDC Board meeting. Rosie Truelove (Chair) Diana Maldonado Sylnovia Holt-Rabb Jeremy Martin Kellee Coleman David Steinwedell Ed Van Eenoo Carl Settles Stephen Levy Sharmila Mukherjee Emmett Beliveau Tamara Atkinson Bradford Patterson Molly Beth Malcolm Xavier Peña Awais Azhar Suchitra Gururaj Matias Segura Cathy McHorse Char Hu Veronica Briseño (Acting CEO) Austin EDC Overview | 6 South Central Waterfront HR&A Advisors, Inc. PANYNJ Advertising | 7 Key Steps for TIRZ Designation & Implementation Step 1 Step 2 Step 3 City Council Forms TIRZ • • Prepare preliminary financing plan • Accept but-for analysis • Host public hearing on TIRZ Approve ordinance establishing TIRZ Board of Directors Freeze tax increment base City Council Votes on Final Project & Financing Plans • Finance to review/approve final Financing Plan • Housing & Planning to review/approve final Regulating Plan • AEDC to approve final Project Plan and explore partnership(s) with other taxing units via Real Estate Committee City Council & TIRZ Board Implement Plans • Contracts with AEDC to administer TIRZ • AEDC & TIRZ Board • negotiate development agreements Bonds issuance to fund infrastructure & affordable housing (requires City Council approval) Austin EDC South Central Waterfront | 8 TIF Summary Designating the TIRZ district enables City Council to… Freeze the tax increment base in the current year Establish the TIRZ Board and delegate implementation to AEDC Direct drafting of final project plan, including timing of investments Authorize AEDC to negotiate agreements with developers on behalf of TIRZ Board* *Final agreements likely require approval of City Council Austin EDC South Central Waterfront | 9 DEPICTION OF TIRZ INCREMENT CAPTURE TIF Summary Finance and CMR are currently investigating key TIRZ questions, including: How much property tax growth would occur without TIRZ investments? (shaded in orange) If the SCW TIRZ is approved, what would be the aggregate taxable value in TIRZs? (10% limit) Austin EDC South Central Waterfront | 10 Source: https://www.austintexas.gov/edims/document.cfm?id=325495 Memo to Council TIF Examples $50M Mueller Airport AUSTIN PRECEDENTS (size of TIF investment) NATIONAL PRECEDENTS (size of TIF investment) $257M Capitol Riverfront (Washington, DC) $20M Seaholm $229M Waller Creek $48M 9th & Colorado (Denver) $168M Cortex District (St. Louis) Austin EDC South Central Waterfront | 11 Local TIF Examples | Mueller • • • TIF Approved: 2004 Total Development Cost: $1.4B TIF Investment: $50M ($212M project costs) *2020 City Audit Report Austin EDC • • • CHALLENGE: The costs to remove obsolete structures at former Robert Mueller Airport and lack of infrastructure required public funding were great enough that public investment was required to enable redevelopment. INVESTMENT: TIF funded infrastructure necessary for mixed-use redevelopment, including utilities, roadways, and landscaping. Developer contributed to both infrastructure and private improvements as part of a Master Development Agreement. DEVELOPMENT: $1.4B* in assessed value increment generated to enable repayment of TIF expenditures, driven by: • • • • • 4,900 Housing Units (25% affordable) 1.1 M SF of Office 790 K SF of Retail 1.2 M SF institutional uses 20% dedication to open space & parks South Central Waterfront | 12 Local TIF Examples | Waller Creek • • • CHALLENGE: Nearby flooding created unsafe conditions and rendered existing structures obsolete (Phase 1). Former floodplain space limited new development (Phase 2). Investment was required on public land to facilitate development in the surrounding area. INVESTMENT: Phase 1) TIF funded construction and maintenance of Waller Creek Tunnel to restore 1.5 miles of the creek. Travis County provided 50% of increment. Phase 2) TIF funded development of 35-acre “Chain of Parks” along the former floodplain. Developers, the Conservancy, and CIP shared the costs of the new parks, trail connections, and the ongoing operations. DEVELOPMENT: $1.1B* in assessed value increment that supported repayment of TIF expenditures, driven by: TIF Approved: 2007 Total Development Cost: $1.1B • • • *2020 City Audit Report Austin EDC TIF Investment: Phase I > $109M ($128M project costs), Phase II > $110M ($354M project costs) • • 1.6M SF Office 6,055 Housing Units South Central Waterfront | 13 South Central Waterfront TIF (As Considered) Precedent TIF Challenge: why subsidy required for development Investment: infrastructure costs funded by TIF Development: private investment enabled by TIF South Central Waterfront Inadequate lot layout and insufficient street layout New & upgraded streets, utilities, and open space 2.8M sf office, 3,000+ resi units, 352K sf retail Mueller Waller Creek Seaholm Obsolete structures and improvements from airport Demolition, utilities, roadways, and landscaping 4,900 units, 1.1M sf office, 1.2M institution, 790K retail Unsafe conditions and obsolete structures from flooding Phase 1: Waller Creek Tunnel Phase 2: 35-acre chain of parks 1.6M sf office and over 6,000 housing units Inadequate street layout and obsolete power plan structures Power plant repairs, public plaza, streets, and utilities 280 resi units, 143K sf office, and 48K sf retail Capital Riverfront Lack of infrastructure on former industrial waterfront Roadways, infrastructure, and waterfront open space 12.6M sf office, 15K resi units, 1,270 hotel rooms, 1M sf retail Cortex Innovation District Underutilized “blighted area” with high vacancies New office space as locus of innovation district 3.0M sf office, 700K sf retail, 1,000 resi units 9th & Colorado Austin EDC Environmental contamination, blight, lack of infrastructure Remediation, public space, parking, streetscapes 100-200K office, 235-300K sf retail, 900-1,100 units South Central Waterfront | 14 Adopted SCW Plan Scenario | Sources & Uses ESTIMATED USES ESTIMATED SOURCES Project Cost Amount Funding Sources Existing Streets & Utilities $52M Private Developers Amount $35M $60M $17M $140M $252M $115M $85M CIP Funding Utilities Reimbursement TIRZ + Other Sources* $252M TOTALS *2018 CMR analysis estimated $217M in nominal 20-yr. tax increment. South Central Waterfront | 15 New Streets & Utilities Parks & Open Space TOTALS Austin EDC How may AEDC reduce the TIRZ funding commitment? Negotiate development agreements to ensure responsible use of public funds Pursue external funding sources for public infrastructure & affordable housing Prioritize funding for catalytic investments to enhance value across district Implement cohesive district strategy that identifies priorities for each site Austin EDC South Central Waterfront | 16 TIRZ Organization Chart CITY COUNCIL Creates TIRZ Board and authorizes its powers TIRZ BOARD Board may contract with AEDC to implement plans SCWAB members may be appointed to Board AEDC SCWAB becomes committee within AEDC? SCWAB Austin EDC South Central Waterfront | 17 TIRZ Board Composition 5-15 members Taxing units can join at any time CITY OF AUSTIN Each participating taxing unit may appoint 1 member City appoints remainder (up to 15 total) 15-MEMBER BOARD EXAMPLE 1 6 11 2 7 3 8 12 13 4 9 14 5 10 15 ADDITIONAL TAXING ENTITIES Austin EDC South Central Waterfront | 18 Cultural Trust HR&A Advisors, Inc. PANYNJ Advertising | 19 Cultural Trust Goals INITIAL GOAL OF CULTURAL TRUST In 2018, the City resolved to support "a community arts stabilization trust, the "Austin Cultural Trust", that creates, through purchase and long-term lease, affordable spaces that supports artists and arts organizations, preserves historic and iconic cultural buildings and spaces for creative and cultural uses, and functions in a way that provides for cultural assets to exist in all parts of the city" - Resolution 20201001-055 In 2020, the City identified “To support acquisition and preservation of cultural spaces within the City of Austin,” as a function of AEDC. - Resolution 20201001-055 Austin EDC Cultural Trust | 20 Cultural Trust Goals – First Initiative Guided by the recommendations of the Joint Arts and Music Commission,* research into best practices, and stakeholder feedback. AEDC will propose additional measures for the Cultural Trust to address other Austin cultural needs, but this first step is targeted toward acquiring and preserving spaces. • Create a competitive RFP to fund an initial set of organizations • Use AEDC as broker, asset and facilities manager to save City money • Leverage existing funds using AIDC or private debt • Spaces would be owned by the City as permanent cultural infrastructure but made available for use to organizations under a lease, license, operating agreement or other appropriate use agreement. • Prioritize support for organizations based on Diversity, Equity, and Inclusion principles • Spaces would be made available to organizations at affordable rates *https://www.speakupaustin.org/bond-for-creative-space Austin EDC Cultural Trust | 21 Timeline RFI Issued Fall 2020 Market Research Nov 2020 Previous Cultural Work Review (CAMP, CSAP venue survey data, September Joint Arts & Music Commission Creative Space Bond update) Dec 2020 Review Past RFI and RFI Responses Jan 2021 Convene Advisory Committee + Conduct Outreach* Feb-Mar 2021 Issue an RFP Spring 2021 *Discussions with banks, philanthropy, impact capital, and City capital sources Austin EDC Cultural Trust | 22 First Initiative – Release RFP in Spring 2021 Competitive RFP funds two types of projects Goal: Acquire existing venues with associated qualified operators for long-term ownership by the City of Austin for the public benefit of enhanced access to creative and cultural facilities Goal: Provide affordable multi-use space for cultural organizations with a focus on emerging organizations as well as diversity, equity, and inclusion. Priority: Financial and Operating Capacity Priority: Policy Goal Alignment Anticipated outcome: 1-2 existing venues saved Anticipated Outcome: 4-6 organizations sharing 2 AEDC managed spaces Anticipated funding source: Iconic Venue Fund Anticipated funding source: Creative Space Bond Austin EDC Cultural Trust | 23 City of Austin/AEDC Interlocal Agreement authorization Scheduled for April 8 RFP Release Timeline Pre-Issuance City of Austin, CTAC RFP review Host public information session and conduct outreach Present to Joint Arts and Music Commission Publish notice of RFP Issue RFP Post Issuance Pre-Response Meeting Receive & Post Responses to Q&A Pre-Response Meeting #2 Responses Due AEDC Staff Evaluation Austin EDC Scheduling in Process- Anticipated Late April/Early May Anticipating approximately six weeks for responses Cultural Trust | 24 Source Anticipated Amount Hypothetical Capital Stack Potential Financing Structure Public Equity + Other* Varies Organization Equity Competitive criteria for capacity, less weighted for policy Debt Maximum loan amount based on DSCR constraint Public Equity + Other Organization Equity Debt *Potentially includes philanthropic support or other sources of funding, as available. Category 1 Austin EDC Cultural Trust | 25 Cultural Consortium • The Long Center is establishing a Cultural Consortium, pooling organizations to improve access to services and reduce costs • The initial phase of services is likely to include Professional Employer Organization (PEO) – HR/benefits management - and co-working/office space • AEDC is exploring opportunity for organizations funded through Cultural Trust to opt-in and help pilot Cultural Consortium Next Steps • AEDC is corresponding with the Long Center to obtain survey data from potential Consortium members and further refined initial service offerings Austin EDC Cultural Trust | 26 AEDC Next Steps Before RFP Release Confirm available capital sources with Council approval Coordinate with existing efforts including private donors and technical assistance nonprofits Stakeholder RFP Review by City and CTAC Engage in public communications including public info sessions, PR, and Joint arts & music commission. Austin EDC Cultural Trust | 27 Planned Follow-up RFP City-Owned Sites (Public Pipeline) AEDC is currently reviewing publicly owned sites (with a focus on City ownership) to determine if any may be made available in a subsequent RFP for cultural arts and/or music uses. Depending on responses to the initial RFP, some monies from the Bond may be leveraged to support this program. Austin EDC Cultural Trust | 28 Potential Future RFP: Cultural Space in SCW Developing two cultural venues in place of ground-floor retail space would require up to $3.0M in additional public investment. Annual Rent PSF RLV/SF Typical Size (SF) Incremental RLV Decrease by Venue Retail $50 $360 Music Venue Cultural Arts Venue $32 $131 5,000 $18 ($44) 4,500 ($1.2M) ($1.8M) Austin EDC South Central Waterfront | 29 Next Steps HR&A Advisors, Inc. PANYNJ Advertising | 30 Next Steps May action confirming Cultural Trust funding and AEDC role in SCW Council AEDC Cultural Trust Engagement South Central Waterfront May Action planned to approve ILA Next full Board meeting in March Ordinance finalization – early summer Cultural Trust RFP to be released in the next few months Seeing additional public meeting opportunities such as done with ULI. Austin EDC Overview| 31 Future Projects • SCW Cultural Venues & City-owned facilities • Public Pipeline / Asset Assessment Work • Huston Tillotson University Master Planning & Transaction Support • Looking into other areas of inclusive growth and beginning conversations: affordable housing, childcare, homelessness, and other potential districts. • We are seeking more opportunities for projects and funding Austin EDC Overview| 32 Questions? HR&A Advisors, Inc. PANYNJ Advertising | 33