2.A.3 - Austin Economic Development Corporation presentation to Historic Landmark Commission in Nov. 2020 — original pdf

Backup

Austin Economic Development Corporation Stakeholder Update and Discussion on Governance Background  Resolutions 20141211-122 and 20170216-040 the Austin City Council directed the City Manager to “deliver a feasibility study” and “bring forward…specific proposals” related to the creation of an economic development entity with the capacity to “create or support development of affordable housing, redevelopment, revitalization and other priority projects and goals of the City.”     As staff began working with an external consultant to prepare recommendations and working documents for the creation of an entity, Council provided additional direction to align the development of the economic development entity with the intent and creation of an “Austin Cultural Trust” through resolutions 20180215-082 and 20190808-072. In May of this year, Council further directed the City Manager to expedite a review of existing entities and resources that could be centralized to support the timely execution of recovery efforts that could secure or retain creative culture and community benefits in resolutions 20200521-095 and 20200521-096. The Economic Development Department (EDD) staff and consultant presented recommendations for creation of a holistic economic development entity for discussion during the Council Work Session on August 25th. As outlined in the memo provided with the report to Mayor and Council on July 31, 2020. Through Resolution 20201001-055 Council approved the legal documents needed for the creation of the Austin Economic Development Corporation (AEDC) and simultaneously approved staff’s recommendations to appoint the first six places as an interim board. 2 Public Real Estate Developer As Cities grow to scale, some create a public developer  Why? A public developer can… Speed approvals, but with the direct oversight of the City  Move at the pace of the market   Reduce the burdens of government with new funding sources  Own and operate real estate to generate cash  Accept charitable donations Accept investment dollars Blend the best of public and private deal-making   Generate more money for COA from under-performing real estate   Of the 17 cities that participated in the Peer Cities Conference about the strategic use of real estate to accomplish public policy, 100% agreed that the best strategy for doing so was to create an EDC that had real estate powers to advance projects that a municipality could not on its own. 3 Organizational Structure (1): Family of Organizations  An autonomous family of organizations is the best solution New Entity: Existing Entity: Austin Economic Development Corporation (AEDC) Austin Industrial Development Corporation (AIDC) Partner/Manager: COA Economic Development Department Donor Advised Fund: Existing Foundation  A family is what we saw in all similar nat’l benchmarks Atlanta, Philadelphia, NYC  The new AEDC would encompass the following existing entities: Austin Industrial Development Corporation Austin Regeneration Fund South Central Waterfront Advisory Board  The new AEDC would take on roles for the following areas (no new entities): Management of South Central Waterfront (no new LDC) Support Homelessness work and real estate per Resolution 20190808-077 (no new LDC) Cultural Trust: Run as a program of AEDC (no new entity)            4 Organizational Structure (2): Powers & Controls  Austin Economic Development Corporation (Outside Entity) A new Local Government Corporation with federal charitable status - 501(c)3 A board which is appointed by City Council (see next slide) Obligated by contract for performance, autonomous entity in its operation Can accept charitable donations Can manage private investment dollars Can own and operate real estate (Must obtain TX real estate broker’s license)  Austin Industrial Development Corporation (Conduit Entity) An existing Development Corporation formed by Council in 2015 as a financing conduit Development Corporation authorized by Section 501 (TX LGC) Board is composed of the City Council, who must approve any financing The CFO of AEDC serves as the President of AIDC  City of Austin Economic Development Department (City of Austin) AEDC reports to EDD via contract, but is a separate and autonomous entity Oversight and management of AEDC via an ILA Director of EDD should serve as the initial Interim President of AEDC 5              Organizational Chart: 3-Year Stabilized View Purple roles can be initially outsourced. Orange roles not compensated by the organization itself. City of Austin Board of Directors President & CEO Admin Chief Financial Officer General Counsel Chief Operating Officer Chief of Staff (GovCo & PR) IIF Manager Budget Analyst Transactions Manager Asset Management Planner 6 Governance: AEDC Board The composition of the Board shall consist of the President and representatives that hold a strong background, understanding and familiarity of the nominating organization and the community the nominating organization serves. Further, each representative shall possess demonstrable skills and experience in the areas of industry, public/private partnerships, infrastructure or transportation, real estate development or construction, urban/regional planning, *historic preservation*, finance, creative and music industry, minority and women- owned businesses (MWBE), and/or workforce. Place 1 Director, Economic Development Department (Public/Private) Place 2 Director, City Neighborhood Housing & Community Development Department (Housing) Place 3 Chief Equity Officer, City of Austin (Equity) Place 4 City Chief Financial Officer (Finance) Place 5 City of Austin Arts Commission (Arts) Place 6 City of Austin Music Commission (Music) Place 7 Board, Ethnic or Multi-Ethnic Chamber of Commerce (WMBE Business) Place 8 Board, local area chamber of commerce (Industry) Place 9 Board, local area urban land use and planning organization (Urban/Regional Planning) Place 10 Board, local area real estate and construction planning organization (Real Estate Development/Construction) Place 11 Board, local area transportation planning organization (Infrastructure/Transportation) Place 12 Board, local workforce development board (Workforce Development) Place 13 Board, local community college (Vocational and Workforce Education) Place 14 Representative of a local university of higher education (Higher Education) Place 15 Board, local independent school district (K-12 education) Place 16 Board, local Continuum of Care organization (Homelessness) Place 17 Board, local senior services organization (Senior Services) Place 18 Board, local early childhood education organization (Early Childcare/Child Education) Place 19 Board, local historic preservationist (Historic Preservation) Place 20 President/CEO (Ex-Officio Officer) 7      Governance (2): Project Structure & Approvals Real Estate and Contracts for Services  AEDC Will Propose A Contract Every Year to COA. The contract will propose real estate projects and contracts for services. Autonomy is a factor of success, as indicated by best practices  Real Estate Projects (Three Types) Lease Administration: AEDC will manage properties on behalf of the City. The City will retain title. AEDC will be paid out of proceeds from the property and will follow all City rules for procurement and disposition. The City retains title. Transaction Support: AEDC will perform a transaction (lease, sale, purchase) on direction from the City. AEDC will follow all City procurement and disposition requirements, as applicable. AEDC must comply with all Texas law and will obtain appropriate licenses and certifications including a Broker’s license. AEDC will never have any property interest. Payments to AEDC will be made from the transaction. Public Development: The transfer of property to AEDC will be done with an explicit contractual requirement to achieve a public purpose. AEDC will take title to the property. However, if AEDC does not use the property for the public purpose, the City will revert the property. If AEDC must abide by all City procurement rules, even should it determine to perform a further disposition—any such further disposition must still comply with achieving the public purpose.  Contracts for Services: COA may contract with AEDC to provide services to reduce the burdens of government. These services can be paid for directly via contract, or can be funded as offsets to rent, real estate or other payments due from AEDC to COA.  AEDC will provide a detailed annual report to COA 8 Projects: Proposed List Initial List (See Report for Details)  Major Projects South Central Waterfront Huston-Tillotson District Planning Cultural Trust International Investment Fund  Ongoing City-Wide Projects Transaction support on P3 negotiations Public Owned Sites Pipeline           Support of Affordable Housing  Support of childcare & early childhood education  Support of inclusive growth around TODs  Asset Management on public owned sites Support of Homelessness District (and emerging PID) support Colony Park, St. John’s/Home Depot, Health South, Justin TOD  Other Priority Projects as Directed by Council 9 Projects: Specific Examples Case Studies (As Examples)  South Central Waterfront Negotiation assistance for large projects Pursuing appropriate financial tools and approvals Capturing the timing of the market Value capture funding of infrastructure  Huston-Tillotson University Same expertise needed for district development Utilizes monies generated from other projects – achieving economy of scale Promotes inclusive growth and protects vulnerable communities  Cultural Trust Leveraging $12M to $100M+ Saving transaction fees from brokers & consultants (“Bringing consultant in-house”) Common management of city infrastructure, while guaranteeing permanent affordability  Policy Example: Early Childhood Education & Childcare   Inclusive Growth and Basket of Goods Model Multi-use developments versus single use facilities           10 Next Steps Timeline: Governance Development    AEDC Approved with Interim Board Seated First Round Update and Governance Discussion with Stakeholders Second Round Governance Discussion with Stakeholders October 1, 2020 Week of October 19 Week of November 9  Recommendations to Mayor and Council  Request for Council Approval  AEDC Presentations to Nominating Bodies Approval of First Board of AEDC First Board Meeting of AEDC    Hiring of President/CEO November 20 December 3 Dec. – Jan 2021 February 18, 2021 March 2021 April 2021 *While 501c3 status generally takes 3-6 months to receive approval, general practice is that charitable status can be assumed upon application and become retroactive to donations and grants. If it is desired, expedited processing is also available – QBL has experience successfully expediting 501c3 formation with the Service. Initial donations for the Cultural Trust are recommended herein to use a conduit Foundation so status will not be relevant. 11 Next Steps Governance Development: Commission Selection Criteria for Nomination(s): 1. Resident of the City of Austin; 2. 3. Individual holds a strong background, understanding and familiarity of the nominating organization and the community the nominating organization serves; Individual possess demonstrable skills and experience in the areas of industry, public/private partnerships, infrastructure or transportation, real estate development or construction, urban/regional planning, *historic preservation*, finance, creative and music industry, minority and women-owned businesses (MWBE), and/or workforce; 4. First 1-year term nominee brings start-up and/or philanthropic experience; 5. Individual understands the organization’s role in functions such as lease administration, transaction support and public development; 6. Capacity for serving roles on a working board instead of a political role:  Three year term (February 2022 Renewal)  One board meeting per month  Committee and/or working group meetings 12