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Introduction and Update Austin Economic Development Corporation Ju ly 2021 Council Direction Leading to AEDC Creation HR&A Advisors, Inc. PANYNJ Advertising | 2 Council investigated the creation of an EDC since 2014 A series of resolutions identified the need to first investigate and then create a real estate focused entity that could assist with inclusive growth outcomes and the preservation of existing cultural spaces as well as the development of new affordable spaces.  20141211-122: Directed the CM to explore the feasibility of an EDC  20160303-019: Music & Creative Ecosystem Omnibus  Included the coordination of the preservation and creation of affordable cultural and music space by a specialty entity that could also negotiate in public/private projects and be integrated into public projects.  20170216-040: Directing the CM to bring forward proposals for the EDC  20180215-082: Use an EDC to create a Cultural Trust  Directed using the Cultural Asset Mapping Project (CAMP) as a guide for broad inclusion  Cultural Trust to be integrated into an EDC  Investigation of code revisions, retail incentives and other real estate mechanisms to assist as needed  20190808-072: Authorizing the creation of the EDC (see next slide) Austin EDC Overview | 3 In August 2020, Council Directed Staff to Create EDC ”to complement the City's vision and programming for inclusive economic development through the formation of public-private partnerships and facilitation of resulting projects that generate additional resources or revenues for the City”….  City Council directs the City Manager to initiate the necessary processes to authorize the Creation of an economic development entity, identify potential funding sources, solicit stakeholder feedback on the entity’s governance and operational structure, and, if necessary, contract with a subject matter expert to develop an implementation plan.  City Council directs the City Manager to structure the entity broadly enough to manage a range of projects, which could include affordable housing development, public-private Partnerships with private-led development such as the South Central Waterfront that could provide community benefits, and shall include a Cultural Trust to support acquisition and preservation of creative space.  City Council directs the City Manager to bring forward a recommendation for funding needs to implement this direction for consideration during the Fiscal Year 2020 budget deliberations. Austin EDC Overview | 4 EDD spent 2020 -2021 exploring how to best follow Council direction EDD contracted with QBL Real Estate in November of 2020 to pursue four work streams… Stakeholder Meetings Benchmarking Initial Proposal, Budget & Structure Presentation to Council Austin EDC Overview | 5 Research & Stakeholder Engagement HR&A Advisors, Inc. PANYNJ Advertising | 6 Stakeholder Meetings Meetings December 2020 – January 2021 to understand precedent work and stakeholders Follow-up meetings February 2021 – April 2021 to delve into structures, governance and project-specific details Topics of Discussion  Structure  Governance  Funding  Powers  Projects  Examples from other cities  Places of Agreement: In the next several slides, we indicate items on which a majority of interviewees agreed as suggestions for consideration by Council. Austin EDC Overview | 7 Interview Summary: Places of Agreement Areas in which stakeholders agreed on structure, governance, funding and powers  Formation of an outside entity accountable to Council  Blended funding model focused on real estate and contract services:  Real estate fees through management, leases, sales and transactions  Contract fees from the City to perform certain services that save the City from hiring additional staff  Philanthropic donations, Investment management and conduit financing (bond) management  Focus on maximizing the ability of the EDC to act as a public real estate developer  Direct transfer of real estate from the City  Sale, lease, management of public real estate  Act as a developer, leading and funding inclusive growth  Lead Public/Private negotiations at the pace of the private market  Expedite public approvals and ”be more nimble than the City”  Managing large-scale development districts and projects on behalf of the City. Austin EDC Overview | 8 Conclusions of Interviews and Research  A “Family” of organizations is most able to fulfill all Council purposes with appropriate oversight for critical decisions.  A new AEDC combined with existing AIDC and contracted with EDD management  Critical governance decisions should be city-controlled  Financing and bonding should be approved by City (as part of AIDC)  Board should be mixed (public employees and private citizens) appointed by Council  Annual budget, contract and projects approved by Council  To insure long-term sustainability, the AEDC should focus on real estate, revenue bond projects and contracts for services on behalf of the City  Coordinate Inclusive Growth amongst departments and organizations, including projects such as:  Cultural Trust  International investment fund  South Central Waterfront  Utilize upcoming transit investments as a nexus for creating affordability and cultural programs  Support for real estate transactions and infrastructure projects of the City  Promote and support affordable housing, workforce housing, homelessness, affordable commercial space, workforce development, MWBE, and equitable financial programs.  Provide immediate staff support on other priority projects, in particular negotiations, as directed by Council and staff. Austin EDC Overview | 9 Subsequent Council Legislation and Direction HR&A Advisors, Inc. PANYNJ Advertising | 10 Subsequent Council legislation during the formation process A series of resolutions further clarified Council’s direction as to the nature and purpose of the AEDC.  20190808-072: Authorizing the creation of the AEDC, as well as major projects to undertake (SCW, Trust)  20200326-091: Explore expanding uses of existing resources to assist COVID-impacted organizations  20200521-095: Accelerate the creation of AEDC to assist live music.  Directing the exploration of the use of city-owned property as well as a public pipeline of assets.  20200521-096: Accelerate the AEDC with a focus on assisting Red River District and exploring the use of TDR programs and regulatory changes to support music venues.  20201001-055: Creation of the AEDC  20201203-046: Repurposing HOT funds to create the Iconic Venue Fund and assigning up to $15M of those funds to AEDC to manage as a part of the Cultural Trust. Directing the expansion of the authorized use of those funds to cover “Iconic” music venues, cultural spaces, restaurants and businesses through an interpretation of an expansion of the visitor information center, as authorized by the State of Texas. Austin EDC Overview | 11 Start-Up of AEDC | Governance Development HR&A Advisors, Inc. PANYNJ Advertising | 12 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 Chief Operating Officer General Counsel Chief Transactions Officer Chief of Staff (GovCo & PR) IIF Manager Budget Analyst Admin Transactions Manager Asset Management Planner Austin EDC Overview | 13 Board Development and Onboarding March 25 | Council Action for Board nominations. April 12| Orientation and First AEDC full Board meeting. May| Deep Dives and Committee Development Subject Matter for Board Seat Nominating Body Focus Term Director, Economic Development Department Director, City Neighborhood Housing & Planning Department Chief Equity Officer, City of Austin City Chief Financial Officer City of Austin Arts Commission City of Austin Music Commission City of Austin Historic Preservation Board, local Continuum of Care organization Board, Downtown development Board, Ethnic or Multi-Ethnic Chamber of Commerce Board, local area chamber of commerce Board, local area urban land use and planning organization Board, local real estate and construction planning organization Board, local area transportation planning organization Board, local workforce development board Board, local community college Representative of a local university of higher education Board, local independent school district Board, local senior services organization Board, local early childhood education organization President/CEO Austin EDC Standing Standing Standing Standing Standing Standing Standing Austin ECHO Downtown Austin Alliance MECA Greater Austin Chamber of Commerce Urban Land Institute Austin Real Estate Council of Austin Cap Metro Workforce Solutions: Cap Area Austin Community College University of Texas Austin Independent School District AustinUp United Way Standing Public/Private Housing Equity Finance Arts Music Preservation Homelessness Downtown MWBE Business Industry Urban/Regional Planning Real Estate Development/Construction Infrastructure/Transportation Workforce Development Vocational and Workforce Education Higher Education K-12 Education Senior Services Early Childcare/Child Education Ex-Officio Officer On-going On-going On-going On-going 2022 Renewal 2022 Renewal 2022 Renewal 2022 Renewal 2022 Renewal 2023 Renewal 2023 Renewal 2023 Renewal 2023 Renewal 2023 Renewal 2024 Renewal 2024 Renewal 2024 Renewal 2024 Renewal 2024 Renewal 2024 Renewal On-going Overview | 14 AEDC Board Austin EDC Overview | 15 Transition of Governance Executive Committee President Rosie Truelove, COA Housing and Planning Vice President Xavier Pena, Downtown Austin Alliance Sylnovia Holt-Rabb, COA Economic Development Secretary Treasurer Ed Van Eenoo, COA Finance Office David Steinwedell, Urban Land Institute Kellee Coleman, COA Equity Office Sharmila Mukherjee, CapMetro Transition Milestones 1st Term Board Renewal Start November 2021 Recruit CEO CEO Seated Annual Report to COA New Board Orientation Start July 2021 October 2021 February 2022 March 2022 Transition of Executive Committee April 2022 Austin EDC Overview | 16 Start-Up of AEDC | Interlocal and Priority Project Development HR&A Advisors, Inc. PANYNJ Advertising | 17 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 | 18 AEDC Focus and Roles AEDC is working with the City of Austin 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 | 19 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 | 20 Priority Project | South Central Waterfront HR&A Advisors, Inc. PANYNJ Advertising | 21 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 | 22 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 | 23 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 | 24 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 | 25 Priority Project | Cultural Trust HR&A Advisors, Inc. PANYNJ Advertising | 26 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 | 27 Cultural Trust Goals – First Initiative 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 and facilities manager to save City money • • Spaces would be owned by the City as permanent cultural infrastructure but made available for use to organizations under an appropriate use agreement, lease, license, operating agreement or other. Leverage existing funds using AIDC or private debt • Prioritize support for organizations based on Diversity, Equity, and Inclusion principles • Spaces would be made available to organizations at affordable rates o Organizations would have to provide an equity match for purchase o Organizations would have to demonstrate capability to make payments Austin EDC Cultural Trust | 28 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-Apr 2021 Issue an RFP Spring 2021 *Discussions with banks, philanthropy, impact capital, and City capital sources Austin EDC Cultural Trust | 29 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 | 30 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 | 31 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 | 32 Priority Project | Public and Private Pipeline HR&A Advisors, Inc. PANYNJ Advertising | 33 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 South Central Waterfront | 34 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 | 35 Next Steps HR&A Advisors, Inc. PANYNJ Advertising | 36 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| 37 Questions? HR&A Advisors, Inc. PANYNJ Advertising | 38