MIDTOWN REDEVELOPMENT AUTHORITY HOUSTON, TEXAS

TWENTY YEARS OF URBAN REDEVELOPMENT DECEMBER 31, 2014

To: The Residents and Stakeholders of Midtown

As we recognize our twentieth year, this report details the growth of Midtown since its creation by describing some of our projects and our plan for the future. It also provides an easy-to-read summary of the finances of the Authority and the Tax Increment Redevelopment Zone No. 2 (“TIRZ #2” or the “Zone”) for the fiscal year ending June 30, 2014 and the budget for fiscal year 2015.

Midtown seeks to be an example of a sustainable urban community. Both residents and visitors benefit from Midtown’s urban, mixed-use environment, enhanced with pedestrian-oriented sidewalks, decorative street lighting and streets designed for easy traffic flow whether on foot, on bicycles or in vehicles.

Midtown uses one-third of its tax increment revenue to induce and develop affordable housing. The Authority has developed an affordable housing strategy that focuses on land assembly and affordable housing development to encourage mixed use, transit-oriented affordable housing development.

Our efforts reflect the collaboration and financial participation of the City of Houston, Harris County, the Houston Independent School District and the Houston Community College System along with the direction of State Senator Rodney Ellis and State Representative Garnet Coleman – Midtown’s partners in the leadership, funding and participation in the Zone. If you have any questions or concerns, please contact me.

Sincerely,

Matt Thibodeaux Executive Director 410 Pierce Street, Suite 355, Houston, TX 77002 Phone: 713-526-7577

Midtown Redevelopment Authority Phone 713.526.7577 Fax 713.526.7519 410 Pierce St, Suite 355, Houston, TX 77002 www.houstonmidtown.com MIDTOWN REDEVELOPMENT AUTHORITY BOARD OF DIRECTORS

Position I William J. Taylor, III Assistant Secretary Appointed by State Senator Rodney Ellis Position II Douglas A. Erwing Appointed by State Representative Garnet Coleman Position III Robert D. Sellingsloh Chairman Appointed by the City of Houston Position IV Pamela Castleman Secretary Appointed by the City of Houston Position V Al Odom Appointed by the City of Houston Position VI Abe S. Goren Appointed by the City of Houston Position VII Caton M. Fenz Appointed by the City of Houston Position VIII James Dinkins1 Appointed by Houston Independent School District Position IX Jeremy Ratcliff Appointed by Harris County

1Mr. Dinkins' appointment was approved by the Houston City Council on January 7, 2015

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 4 TABLE OF CONTENTS

Midtown Profile ...... 6

Demographic and Economic Profile ...... 8

Continuing Its Mission ...... 11

Recognition ...... 14

Financial Highlights ...... 17

Budget Overview ...... 20

Capital Budget and Capital Improvement Plan...... 22

Debt Summary ...... 23

Next Steps ...... 24

Midtown—Final Thoughts ...... 26

Appendix A—Project List Midtown TIRZ #2 ...... 28

5 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 MIDTOWN PROFILE

History. At the turn of the twentieth century, creation of Tax Increment Reinvestment Zone #2 (the the Midtown area was flourishing as the second “Zone” or “Midtown”). The City Council responded, residential neighborhood for the city of Houston (the and the Zone was created by City of Houston “City”). At that time, the area was a neighborhood Ordinance No. 94-1345 and took effect on January 1, of single-family Victorian style homes known as 1995. Southside Place. The homes were built on small lots of approximately 5,000 square feet. Increasing In early 1995 by Resolution 95-96, the City commercial development in the area caused Midtown Council authorized the creation of the Midtown residents to relocate to new suburbs that were being Redevelopment Authority (the “Authority”), a not- developed along the fringes of Houston causing the for-profit local government corporation, to manage neighborhood to decline. During the 1970s, the area initiatives of the Zone. In addition to the City, certain became known as “Little Saigon,” the home to new other governmental entities have partnered with Vietnamese immigrants who began the revitalization Midtown by committing to share their tax increment of the area. The area saw revenues with the Zone. Midtown’s stakeholders are a steep decline in the the City of Houston, Harris County (the “County”), the 1980s as a result of Houston Independent School District (“HISD”) the crash in oil prices. and the Houston Community Houston’s population College District or grew less than one I-45 system (“HCC”). percent during that 59 8 decade, and the area The Authority’s that includes Midtown 8 nine-member Board 290 was the only district is composed of in the state of Texas a representative to lose population. of the County, a By the early 1990s, representative of 610 Midtown experienced HISD, the state significant blight 10 senator in whose The 10 and a lack of Galleria Midtown district the Zone development. From is located or his Med 8 1992 to 1994, a Center designee, the state private group of 8 Reliant Stadium 610 representative in property owners whose district the worked to secure Zone is located or petitions from over 288 59 I-45 his designee and five 700 additional representatives from 8 property owners the City. seeking the

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 6 The Zone Today. Originally, the area known today Tax Increment Reinvestment Zones. Tax as Midtown included approximately 617 acres of land. Increment Reinvestment Zones (“TIRZ”) generally, In 1999 and 2009, additional acreage was annexed, and Midtown specifically, seek to redevelop land, and the area now includes 771 acres including certain build public infrastructure and to acquire, improve or parts of the Museum District. Midtown is located maintain other public projects and, in Midtown, fund between the central business district of the City and affordable housing. These projects are funded by a the Texas Medical Center, the two largest employment financing tool called tax increment financing (“TIF”). centers in the City. Midtown is home to a diverse In 1995, the appraised value of property in Midtown group of residents and businesses including significant within the original boundaries was frozen. The frozen educational and cultural institutions. The area is value is called “the Base Year Value.” The tax revenue generally bound by U.S. Highway 59 on the south, collected on the Base Year Value is collected and State Highway 288 on the east, Interstate (IH) 45 on distributed to each partner (i.e., taxing authority) based the north, and Texas Spur 527 and Bagby Street on on its respective tax rate and the Base Year Value. The the west. value of the property in the Zone may increase due to new construction, new or improved development The purpose of the Zone is to promote the or improvements to property and is referred to revitalization and redevelopment of Midtown by as "Incremental Property Value." The tax revenue managing the investment of the tax increment revenue collected on any increase in property value in excess through the use of tax increment financing to improve of the Base Year Value is pledged and allocated infrastructure and public spaces in Midtown. The to Midtown. The additional revenue generated Authority is also directed by Texas law to support by the Incremental Property Value is managed by affordable housing in the City by dedicating one-third the Authority pursuant to a tri-party agreement, a of its increment to affordable housing initiatives within project plan and a budget approved by the City of the City limits proper. Houston. There are no changes or exceptions to the appraised value other than those provided by law. GROWTH IN INCREMENTAL PROPERTY VALUE Using this tool as a financing mechanism merely allocates a portion of the tax revenue $1,800,000,000 to redevelop and improve Growth In Taxable Value Base Year Value $1,600,000,000 the Zone.

$1,400,000,000 The graph portrays the incremental growth in the $1,200,000,000 appraised property value $1,000,000,000 within the Midtown TIRZ compared to the frozen base. $800,000,000 The lower portion of the bar

$600,000,000 represents the base year value. The slight increase $400,000,000 in the base year value represents the annexation $200,000,000 of 154 acres into the Zone

$0 that includes portions of the 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Cultural District. Source: Equi-Tax Inc., Houston, Texas

7 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 DEMOGRAPHIC AND ECONOMIC PROFILE

MIDTOWN POPULATION GROWTH 1990–2019 (EST.) Since the creation of the

12,000 Zone, Midtown has realized a steady growth in population 11,000 of approximately 4.7% per 10,000 year. The U.S. Census Bureau 10,382 9,000 predicts that the population 9,314 will grow by another 11.5% 8,000 8,464 by 2019. 7,000 Younger adults, ages 25-44, 6,000 are the largest portion of the 5,000 5,436 demographic base. The 2010 4,000 U.S. Census reported 4,614 households in Midtown. 3,000 3,222 Households with one person 2,000 make up 58.4% of Midtown’s 1,000 residents; households with 2 or more residents represent 0 1990 2000 2010 2014 2019 (est.) 41.6%. All households with children make up Source: For 1990, the population is based on Midtown's Records. The additional data source is 7% of the households. the U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2014 and 2019. Esri Residents identify the converted Census 2000 data into 2010 geography. October 2014 geographic proximity to the Downtown and Medical Center work locations, efficient mass transportation and living within walking distance of restaurants and entertainment venues as reasons for living in Midtown. Students studying at nearby higher education institutions also choose to reside in Midtown. The median age of residents is 33.5 years. Midtown residents are employed in a variety of occupations. Sales, professional and technical positions represent the largest portions of the jobs listed in the census.

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 8 Other economic data includes the following:

MIDTOWN POPULATION BY AGE GROUP

65 and above 5%

55–64 10%

45–54 14%

35–44 17% Age Group 25–34 33%

15–24 15%

0–14 6%

0 5% 10% 15% 20% 25% 30% 35% Percentage of Population

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2014. Esri converted Census 2000 data into 2010 geography.

2014 EMPLOYMENT BY INDUSTRY1

600

500 492 495 400

300 328 337 320 282 200 264 265 221 205 207 212 191 100 Employed Population 105 0

Sales Other

Construction Manufacturing Hospitality / Food Agriculture /Finance Mining /InsuranceProfessionalEducation / Tech / Library Office / Administration Building / Maint. Repair Entertainment & Sports Transportation / Moving Health Practice & Support

1The “Other” category includes public administration, law enforcement, utilities and personal care.

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2014. Esri converted Census 2000 data into 2010 geography.

9 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 Median Household Income ...... $ 74,188

Average Household Income ...... $ 93,111

Median Home Value ...... $ 298,611

Average Home Value ...... $ 335,994

Per Capita Income ...... $ 53,256

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2014. Esri converted Census 2000 data into 2010 geography.

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 10 CONTINUING ITS MISSION

Midtown continues to implement its plan to enhance As of December 2014, the Authority has completed and improve public infrastructure in the Zone. The or planned 93 projects totaling approximately $206.2 Authority invests the Zone's tax increment revenue million in infrastructure. The "Infrastructure Developer to provide public infrastructure improvements and Agreements" identified below are those projects where public right-of-way enhancements to foster economic the Authority has reimbursed private developers for development while maintaining a commitment to public improvements to support private development, creating a sustainable urban environment. such as sewer, wastewater and drainage projects. "Affordable Housing" includes land purchased for To help foster further economic development and Midtown's Land Bank. The Land Bank Program revitalization, the Authority has focused its efforts accounts for approximately $31 million of the in several core areas: mobility, infrastructure and Affordable Housing costs. See Appendix A—Project pedestrian improvements, parks and open spaces, List for more detailed information. parking facilities, support of cultural infrastructure, (together classified as “Capital Improvements”) and affordable housing.

PROJECT LIST SUMMARY MIDTOWN TIRZ #2 Midtown Redevelopment Authority as of December 2014

Number of Projects Projects to be Total Project Completed Scheduled Costs

Infrastructure Developer Agreements 37 — $ 9,138,103

Public Improvements 29 5 88,352,758

Affordable Housing 16 2 49,816,154

Scheduled Infrastructure Projects — 12 58,964,767

TOTAL 82 19 $ 206,271,782

Source: Midtown Redevelopment Authority, December 2014. See Appendix A to this Report

11 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 Parks and Open Spaces. The Authority has and a subterranean parking garage for approximately developed a Parks and Open Space Master Plan 400 cars. Finally, the Authority will commence to increase community gathering opportunities and construction of its Entry Plaza project consisting of enhance quality of life in Midtown. The continued plazas, public squares and landscaping in the public development of new green spaces and the right-of-way that will create community open spaces redevelopment of existing green spaces is vital for and provide connectivity and mixed uses along its the creation of a cohesive and vibrant community. Zone corridors. The development of these plazas and Parks and plazas help foster social interactions that public squares will complement cultural arts facilities define the public realm and urban culture. Recently, and offer unique identity branding in Midtown. Midtown completed several park projects and has plans for future improvements in targeted areas. The Mobility, Infrastructure and Pedestrian recently completed improvements at Baldwin Park Improvements. The Authority has invested and and Glover Park added several new amenities and will continue to invest significant capital in mobility, received the Parks and Natural Areas Award from infrastructure and pedestrian improvements to create the Houston-Galveston Area Council. Baldwin Park comfortable and safe corridors that accommodate received upgraded lighting, a rebuilt jogging trail, new growing mobility needs while improving pedestrian playground equipment, and landscaping upgrades. accessibility. Enhanced streetscapes and amenities Glover Park received a dog run, landscaping with such as benches, planters and pedestrian lighting lawn space, seating, an exercise platform, and encourage use by pedestrians and help to create a cultural exhibits. safe pedestrian environment. The improvements can also encourage additional development by focusing on Other areas of Midtown are receiving park upgrades targeted streets and nodes that complement planned as well. Bagby Park, located at Bagby and Gray private development. Street, will add a new level of liveliness to this signature intersection in Midtown through the The Bagby Street Reconstruction project was construction of a performance space with iconic recently completed in partnership with the City of “Midtown” signage, a new water feature, a dog run, Houston and received Silver Certification as the and a food kiosk. Together with its partners, the first Greenroads® project in the state of Texas. The Authority is moving forward with the construction of project included the reconstruction of Bagby Street Midtown Park at Main and McGowen Streets. This from St. Joseph Parkway to Tuam Street and Pierce park, commonly referred to as “the SuperBlock,” Street from Baldwin Street to Brazos Street. The will be a signature space for Midtown. It will include project blended Low Impact Development (LID) a great lawn with a 2,400 square foot pavilion for techniques and environmentally-friendly elements into concerts, entertainment and other public events, food a sustainable roadway construction project. and beverage installations from kiosks to restaurants

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 12 The Brazos Street Reconstruction project is the Parking Facilities. There is a significant need next step in the Complete Streets Program and will for parking facilities in Midtown due to its location enhance what has been accomplished on Bagby between Downtown and the Medical Center, access Street. This Project will include concrete pavements, to mass transit, and the mixed-use development of public utility upgrades (water, storm, sanitary), retail, residential, cultural and entertainment venues enhanced intersections, wider sidewalks, landscaping, that attract visitors to the area. The City’s parking street furniture, brick pavers, accessibility ramps and requirements also present physical and financial other pedestrian-related infrastructure. The Brazos challenges to private development of new buildings Street project will provide an enhanced pedestrian and adaptive reuse of existing buildings in Midtown. To environment and an improved vehicular connection for help satisfy parking demand, the Authority will construct northbound traffic through Midtown. parking facilities in strategic locations to mitigate Caroline Street Reconstruction project is a parking requirements and encourage development. The Included in the strategic plan for parking facilities will be partnership between the Authority and HCC. It the new Midtown Park Parking Garage that will provide is partially funded through a Texas Department parking space for approximately 400 vehicles. of Transportation ("TxDOT") grant. It includes complete roadway reconstruction with new concrete pavement and public utility upgrades from Pierce Affordable Housing.In fulfilling its obligation to Street to Holman Street. Additionally, the project provide affordable housing, the Authority has adopted includes sidewalk improvements with landscape and an affordable housing strategy consisting of two pedestrian enhancements as well as improvements phases: (1) land assembly within a targeted area of the to the City’s designated bicycle route. The Complete City limits to create a diversified inventory of property Streets Program seeks to accommodate all modes and (2) development of affordable housing units of transportation including automobiles, pedestrians (single-family, duplex/triplex and low- to mid-density and bicycles to create a seamless walkable multi-family developments) on such land. In 2014, the community. The project aims to balance the needs of Authority acquired approximately 360,000 square feet transportation, pedestrians, local businesses and on- of additional land for its land assembly program. Since street parking. its creation, Midtown has assembled a total amount of property totaling 3.3 million square feet at a cost of The Holman Street Pedestrian Enhancement approximately $31.1 million. is a partnership between the Authority and HCC and is partially funded through a Federal Transit Public & Cultural Facilities. The Authority has Administration ("FTA") grant. Together these partners supported the development and redevelopment of will construct wider sidewalks, landscaping, street public and cultural facilities to serve as destination furniture and other pedestrian-related infrastructure anchors and activity generators to increase community to improve access for HCC students and other gathering opportunities. Midtown was designated a pedestrians to the METRORail station and other transit Texas Cultural Arts and Entertainment District in 2012 services on Holman Street. and has added support of cultural institutions to its mission. To date, contributions have been made to the The Main Street Enhancement project includes landscaping, street furniture, and other pedestrian- Asia Society Texas Center, Buffalo Soldiers National related infrastructure to better serve the residents Museum, Houston Museum of African American and businesses in the area and facilitate additional Culture, and the Midtown Arts Theatre Center development along this rail corridor. Houston. Midtown anticipates continuing to provide selective grants to new, existing and emerging cultural facilities in the Zone that will strengthen the Cultural District as a true destination within Houston.

NOTE: Greenroads® is a registered trademark of the Greenroads Foundation. The Greenroads Rating System was developed by the Greenroads Foundation, which is an independent non-profit corporation that advances sustainability education and initiatives for transportation infrastructure. The foundation manages the certification process for sustainable roadway and bridge construction in the U.S. and internationally. For more information on the Greenroads Foundation and its rating system see: www.greenroads.org.

13 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 RECOGNITION

Bagby Street Reconstruction. Bagby Street is a one-way major collector street in Midtown linking IH-45 in downtown Houston to southbound US Highway 59. Prior to its reconstruction, it was a fast-moving street primarily used by automobiles to bypass Downtown traffic. Today, it is a vibrant corridor that effectively balances the needs of automobiles and pedestrians by providing a BAGBY STREET AWARDS roadway that incorporates traffic calming measures to slow traffic speed and reduce ambient road noise levels. Street The transformation of Bagby Street crossing distances were reduced by 45%, making the street into a vibrant, aesthetically unique safer for pedestrians, without compromising vehicle access. pedestrian corridor has been recognized It has become a people-focused community center and by several organizations. In addition to destination place with an energetic mixed-use environment the Greenroads Silver Certification, the including residential and retail properties, restaurants, Bagby Street Reconstruction project has nightlife and entertainment. received the following awards: In addition to accommodating traffic needs while 2014 American Public Works Association simultaneously improving pedestrian accessibility, the (Texas Chapter)—Public Works Projects of project incorporated innovative LID techniques to sustain the Year in Transportation ($5 million—$25 and protect the environment. Rain gardens capture 33% of million category); rainwater for secondary use, provide water quality treatment of stormwater runoff, reduce total runoff volume, and 2014 Making Cities Livable decrease potable water demands for irrigation. The use of (International) —Healthy Cities specialized fly ash concrete in the pavement reconstruction for All Award for Active Mobility/ prevents 300 tons of carbon dioxide from entering the air. Complete Streets; Beneath the street surface are new stabilizing materials that 2014 Congress for the New Urbanism will extend the useful life of the street and reduce long-term (National)—Best Street of the Year; maintenance needs, thus saving taxpayer dollars. 2014 American Society of Landscape For its design and construction sustainability efforts, Architects (Texas)—Presidential Award of the Bagby Street Reconstruction project received Silver Excellence in Design and Implementation; Certification as the first Greenroads Project in the State of Texas. At the time of its certification in October 2013, 2014 American Society of Landscape the Bagby Street Reconstruction project had achieved the Architects—Merit Award for highest score of all eight of the then-certified Greenroads Communication; projects. 2014 American Council of Engineering Companies (National)—Engineering Excellence Honor Award; 2014 American Council of Engineering Companies (Texas)—Engineering Excellence Gold Award in the Special Projects Category.

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 14 To receive this certification, the Authority established communities. A wide range of tract sizes provide for and accomplished the following goals: a variety of affordable housing opportunities. Many lots, ranging from 3,500 square feet to 5,700 square „ Reduced pedestrian crossing distances from feet, are ideal locations for single-family affordable 42 feet to 24 feet; home ownership. By providing affordable single family homes, those seeking to make a long-term „ Reduced lanes from 4 lanes to 2 lanes without commitment to the community are able to enjoy reducing the level of service below standards; the urban lifestyle experience without sacrificing „ Increased tree growth in the area by 42%; the benefits of home ownership. A number of the larger tracts provide the opportunity for multi-family „ Added 28,700 square feet of pedestrian affordable rental housing. Affordable rental housing areas; is important to providing access to the City’s core „ Increased seating and social gathering areas for students attending nearby universities and by 38%; colleges as well as citizens requiring social services. Senior citizens living on fixed-incomes also desire „ Created a 12% decrease in surface affordable rental housing that allows them to remain in temperature through the increase of a tree neighborhoods where they have vested interests. canopy in the area; „ Increased lighting levels by five times the original level; „ Conserved water from stormwater runoff and removed dangerous particulates that accumulated in the water; „ Increased private development by $25 million since the announcement of the project.

Midtown is committed to environmentally sustainable, safe, modern urban living and has started planning a strategy for the Greenroads Certification of Brazos Street so that it performs at even higher standards than Bagby Street. Brazos Street, which is Bagby Street’s companion couplet roadway, flows northbound through Midtown into Downtown Houston. The fiscal year 2015 portion of this project, The term "Affordable Housing" encompasses much in the amount of $1,122,000 is being funded with more than the cost of a lease payment or mortgage. bonds issued in fiscal year 2014. Affordable housing also includes construction costs, operation and maintenance expense, energy Affordable Housing.The Tax Increment Financing consumption, access to mass transit and other Act requires that one-third of the Tax Increment important factors that allow families to save money revenue be used to provide affordable housing within and invest in better education and other discretionary the city limits. The Authority has assembled property items that provide a higher quality of life. within the City limits for sustainable affordable housing to serve major workplaces and provide access to Midtown, in partnership with Project Row House amenities within the City’s core. As of September Community Development Corporation (CDC), recently 2014, the Authority had acquired 345 lots totaling over completed the development of 30 affordable housing three million square feet of land. rental units that boost energy efficiencies and allow residents to save on overall living expenses. Located The Authority has acquired vacant and blighted in the historic Third Ward, these affordable housing property as a strategy to return the property to units are conveniently located within one block of productive reuse and to preserve and protect existing the new Southeast METRORail Line. The location

15 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 NORTHLINE TRANSIT CENTER/HCC is consistent with the White House’s initiative to create affordable housing within reach of public MELBOURNE/NORTH LINDALE transportation, thereby reducing transportation costs for occupants and also creating a more sustainable LINDALE PARK environment with improved air quality from the decreased overall carbon footprint. CAVALCADE

The Authority has previously collaborated with New Hope MOODY PARK Housing CDC and Reward Third Ward CDC to develop over 300 affordable rental units, and partnered with Guiding Light FULTON/NORTH CENTRAL CDC and EPIC Homes to develop single-family affordable homes. QUITMAN/NEAR NORTHSIDE As the Authority continues to focus on development of sustainable affordable housing with community partners, the land acquisition BURNETT TRANSIT CENTER/ and redevelopment efforts will further focus on acquiring land along CASA DE AMIGOS the expanded mass transit lines in the City’s Third Ward and facilitating development projects that lie in close proximity to public transportation UH-DOWNTOWN corridors, libraries, schools, recreational facilities and hike and bike PRESTON trails. To maximize its use of land assembly holdings, the Authority will consider future partnerships with private developers of mixed income residential housing that align with the community dynamics and current market demands. MAIN STREET SQUARE BELL DOWNTOWN TRANSIT CENTER MCGOWEN MIDTOWN STATIONS ENSEMBLE/HCC

WHEELER TRANSIT CENTER

MUSEUM DISTRICT

HERMANN PARK/RICE U MEMORIAL HERMANN HOSPITAL/ HOUSTON ZOO DRYDEN/TMC

TMC TRANSIT CENTER

SMITH LANDS

RELIANT PARK LEGEND

FANNIN SOUTH LEGENDRail Station

Rail StationFuture Rail Station

Future RailMidtwon Station Station

MidtwonTransit Station Center

Transit CenterPark & Ride

Park & Ride

METRORail Red Line 2015 | MIDTOWN REDEVELOPMENT AUTHORITY 16 FINANCIAL HIGHLIGHTS FOR THE FISCAL YEAR ENDING JUNE 30, 2014

The Midtown Redevelopment Authority was created Infrastructure and Project Fund. The purpose of the by the City of Houston on June 28, 1995 with the sole fund is to distinguish those capital projects funded with objective of redeveloping Midtown. Because Midtown tax increment revenue and other sources of revenue is a legally separate entity for which the City appoints from those projects funded with bond proceeds that the majority of the board members, Midtown is defined are reported in the Capital Projects Fund. as a “component unit” of the City of Houston (the “primary government”) by the Government Accounting Financial Statements. The Statement of Net Standards Board (“GASB”). The primary government Position includes all assets and liabilities using is financially accountable for its component units the accrual basis of accounting. The Statement and must report their financial position in the City’s of Activities presents the operating results of Comprehensive Annual Financial Report. The fiscal year the Authority. for both the City and Midtown is July 1 of the then- current year through June 30 of the following year. Revenues. The primary source of income for the Authority is the tax increment revenue that it receives Authority Funds. The broadest category used to from the City as collecting agent from its partners. account for the Authority’s operations and services In 2014 the Authority received $18,812,088 in tax is referred to as a fund. The Authority uses five funds increment revenue. Investment and other income to account for its operations. In fiscal year 2014, totaled $580,675. Total revenue was $19,392,773 the Authority's Board approved a new fund, the after adjustments.

CHART OF ACCOUNTS

General Fund Infrastructure Capital Affordable Debt Service The general operating and Project Projects Fund Housing Fund Fund accounting for all Fund Accounts for the Accounts for the Accounts for the activities except Accounts for the construction of accumulation of accumulation of those required to be construction and improvements and financial resources financial resources accounted for in other projects funded with for the payment of for the payment of funds due to various improvements to projects funded with bond proceeds. affordable housing principal and interest legal requirements. of its bonds including tax increment revenue. projects. The Tax Increment Financing the debt service Act requires that reserve fund. at least 1/3 of the proceeds of its contract revenue bonds and 1/3 of the Contract Tax Increments be used for affordable housing.

17 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 Other Sources of Funds. The Authority issued purpose. The Fund Balance of each of the Funds is bonds in the amount of $19,086,306 in fiscal year classified as follows: 2014 to fund various capital projects, affordable housing and the debt service reserve fund. Of that „ Nonspendable—Resources or assets amount, $5,646,683 remained available at the that cannot be spent because they are beginning of fiscal year 2015 to fund capital projects in a nonspendable form such as land, that are in progress or soon to be undertaken. property, supplies and equipment or because they are legally unavailable. The Expenses. Total expenses for the fiscal year Nonspendable category is the largest fund 2014 were $28,308,084. Expenses occur in three balance category because the assets of the categories. They are classified as current expenses, Affordable Housing Fund are included in this debt service, and capital outlay. category in the amount of $31,106,157 as well as certain assets of the General Fund totaling $7,132,462. The nonspendable assets for all EXPENSES FISCAL YEAR 2014 funds total $38,238,619. „ Restricted—Assets with constraints placed on them either by creditors, by law or by its bond indenture. 9 Assets of the Debt Service Fund totaling $15,737,329 35 compose the largest portion of the Restricted category. Debt Service „ Committed—Assets or Capital Outlay resources that can be used % Current Expenses only for specific purposes based on actions taken by 56 the Authority or the City. „ Assigned—Assets constrained by the Authority’s intent to use the assets for a specific purpose. This classification includes any remaining fund balance for all Fund Balance. Each of the Authority’s Funds funds except for the General Fund. shows the difference between the fund’s assets and its liabilities as the Fund Balance. The Fund Balance „ Unassigned—This classification is used is further divided into five categories based on only for the General Fund, and includes any constraints on how the funds may be spent and the remaining positive fund balance that is not reason for the constraint. used to offset negative fund balances in the other four funds. The unassigned fund balance The total fund balance is the difference between the in the amount of $2,780,802 is available to assets and liabilities for all funds of the Authority. the Authority for appropriation to other uses It includes all fixed assets as well as cash and in fiscal year 2015. Furthermore, $833,949 of unspent bond and loan proceeds. The Total Fund deferred Revenue was subsequently received Balance for the fiscal year ending June 30, 2014 was and is included in this category, increasing the $79,282,482. However, the Total Fund Balance does Unassigned Fund Balance to $3,614,751. not represent cash available to the Authority for any

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 18 The Fund Balance Chart represents the Total Fund The Financial Statements and Supplementary Balance as it is allocated to each category in all funds. Information for the Year Ended June 30, 2014 were prepared using Generally Accepted Accounting Principles ("GAAP") and audited by independent FUND BALANCE BY CATEGORY auditors. The financial statements received an unmodified opinion, meaning that the statement did not include any material 4 misstatement of information 8 and were fairly presented. 5 Although the financial information presented in this Unassigned report comes from an audited Assigned source, it is presented in 48 Committed a condensed, unaudited, % Restricted non-GAAP format. Citizens 35 Nonspendable and investors who would like more detailed financial information should refer to the Financial Statements and Supplementary Information presented on the Authority’s website at www. houstonmidtown.org.

19 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 BUDGET OVERVIEW

The Annual Budget for the Zone is prepared on a the budget year. Midtown receives its tax increment modified accrual basis. Modified accrual accounting revenue from the City, as the collection agent for its recognizes revenues when they become measurable partners, by the end of the preceding fiscal year and and available. Measurable means that the dollar value applies the revenue to expenses in the next fiscal year. of the revenue is known. Available means that it is Other revenue is collected within the fiscal year and collectible within the current period, or soon enough used to pay expenses in the same fiscal year. after the end of the current period to pay liabilities for

BUDGETED REVENUE & OTHER SOURCES OF FUNDS FISCAL YEAR 2015 (In Thousands)

REVENUE AMOUNT, $

Tax Increment Revenue Received 2014 18,812 Other Revenue 503 TOTAL REVENUE 19,315

OTHER SOURCES OF FUNDS AMOUNT, $

FTA Grant—Holman Street1 2,000 Loan—Developer Agreement1 11,510 Fund Balance—Capital Project Fund2 5,646 TOTAL OTHER SOURCES OF FUNDS 19,156 TOTAL 38,471

1 This Source of Financing is available to fund a specific capital project. 2 This money is unspent bond proceeds to be used only for capital projects.

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 20 Sources of Funds. The Authority received Tax Budgeted Expenses. The Authority uses its Increment revenue in the amount of $17,978,139 money to pay for the following items: the cost of in fiscal year 2014. The revenues are classified administration and support, the Municipal Service in the fund balance in the categories identified Costs Agreement, and other administrative costs as “Reserved”, “Committed” or “Assigned.” The defined as “Administration and Management Authority has budgeted miscellaneous revenue Services”, Debt Service, and Capital Expenses and interest income during fiscal year 2015 to be including general capital improvements and affordable $503,285. housing. Expenses are budgeted to be $36.544 million. Due to timing differences between the receipt Midtown has entered into a Development Agreement and disbursement of funds, certain expenses will be to fund certain aspects of the Midtown Park project. paid from fund balances. Such amounts, drawn over the next several fiscal years, will not exceed $18 million. This report assumes Further Information. The Budget is an annual that $11.51 million will be drawn in Fiscal Year 2015. financial plan. Tax Increment Revenue projections The City advised Midtown that it had been awarded are provided by the City of Houston. Interest income a Federal Transportation Authority (FTA) grant in the is based on reasonable assumptions made by the amount of $2,000,000 to fund the Academic Walk on staff of the Authority in consultation with its Financial Holman Street near the HCC. Total sources of funds Advisors. Expenses are also based on reasonable for fiscal year 2015 are budgeted to be $38.47 million. assumptions provided by the staff of the Authority using certain timing and work progress assumptions. The Authority anticipates receiving $19.87 million in The City Council has delegated to the Authority Board tax increment revenue in June of fiscal year 2015 to the responsibility for making certain adjustments to fund operating expenses and certain capital projects the Budget. in the fiscal year beginning July 1, 2015 (fiscal year 2016). These revenues are not shown in the chart of Budgeted Revenue & Other Sources of Funds.

BUDGETED EXPENSES FISCAL YEAR 2015 (In Thousands) AMOUNT, $

Administration & Management Services 2,271 Debt Service 10,008 Capital Expenses 20,485 Affordable Housing 3,780 TOTAL 36,544

21 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 CAPITAL BUDGET AND CAPITAL IMPROVEMENT PLAN

The costs of capital projects and capital improvements The Capital Budget identifies those categories of are, in total, the largest expenses of the Zone. Capital expenses and the expenses that will occur in fiscal Projects are those projects that cost more than year 2015. The Capital Budget for fiscal year 2015 $5,000 and generally have a useful life expectancy totals $24.265 million. greater than five years. The purchase of land is always capitalized. The sources of funding for capital projects The Capital Improvement Plan (“CIP”) is a five-year projection of the project categories and the respective includes tax increment revenue and bonds, notes and loans incurred by the Authority as well as grants and expenses that the Authority will incur in completing other private funding. projects over the five-year period commencing in fiscal year 2015 and ending with fiscal year 2019. The five- Each year the Authority prepares both a capital budget year CIP totals $93.992 million. and a capital improvement plan. Some projects are completed within the fiscal year. Other project construction occurs over two to three years.

CAPITAL BUDGET CAPITAL IMPROVEMENT PLAN FISCAL YEAR 2015 FISCAL YEARS 2015 – 2019 (In Thousands) (In Thousands) AMOUNT, $ AMOUNT, $

Parks & Open Spaces1 1,515 Parks & Open Spaces 18,719 Mobility, Infrastructure & Mobility, Infrastructure & Pedestrian Improvement 6,885 Pedestrian Improvement 43,995 Parking Facilities 11,530 Parking Facilities 13,800 Affordable Housing 3,780 Affordable Housing 14,900 Cultural Arts 455 Cultural Arts 1,777 Other 100 Other 801 TOTAL 24,265 TOTAL 93,992

1 The Authority expects this category to greatly increase in fiscal year 2016 once Midtown Park is under construction.

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 22 DEBT SUMMARY

As of June 30, 2014 the following amount of debt Bond Ratings. At the end of fiscal year 2014, the was outstanding: Authority’s long-term bonds had an underlying rating of "A-" from Standard and Poor’s Rating Services and “A3” from Moody’s Investors Service, Inc. Contract Revenue Bonds $ 75,635,000 These ratings reflect the views of the rating agencies and may change from time to time. Certain bonds Short-Term Loans 6,170,401 have been insured by BUILD AMERICA MUTUAL Total Debt Outstanding $ 81,805,401 ASSURANCE COMPANY (“BAM”) and carry a higher rating.

Subsequent Event: Contract Revenue Contract Revenue Bond Security Pledge. Bond Refunding. In January 2015, the Authority Contract Revenue Bonds (the “Bonds”) are repaid sold $13,705,000 of Tax Increment Contract Revenue from the tax increment transferred to the Authority Refunding Bonds (the “Refunding Bonds”) to replace from its partners. The Bonds have a lien on the first the outstanding Series 2005 Contract Revenue tax increment revenues received by the Authority Bonds. The rating on these and all other uninsured each year. Contract Revenue Bonds was upgraded to “A” by Standard and Poor’s Rating Services. The final Debt Capacity. The City of Houston established a maturity of the Refunding Bonds occurs in 2025. maximum outstanding debt capacity of $79,500,000 The refunding generated present value savings of for the Bonds. As of June 30, 2014 the Authority had $1,520,987 over the ten-year life of the Refunding $3,865,000 of available debt capacity. Bonds. The refunding also resulted in the release of $192,154 from the Debt Service Reserve Fund. Debt Repayment. No other expenses of the Authority may be paid from the contract revenue until Further Information. Bondholders, investors the annual debt service is funded fully. All currently and citizens may obtain more detailed information outstanding long-term debt will be repaid no later about the Authority’s debt and financial position by than January 1, 2033 pursuant to the debt service accessing the website www.emma.msrb.org and schedule. completing the Quick Search menu by inserting the words “Midtown Redevelopment Authority”. Short-Term Loan Security Pledge. The Short- Term Loans are payable from any source of funds including the sale of the property that was financed with the loans and other revenues.

23 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 NEXT STEPS

THE MIDTOWN PARK facilities and a public parking garage that has the potential to transform the surrounding area and attract In 1999, the Midtown Redevelopment Authority began new development along the Main Street corridor. working with developers to assemble a six-acre tract The public park, retail space and parking garage of land located in the heart of Midtown. This site, are being developed by Midtown. The private multi- known as Midtown Park, is located on Main Street, family residential development is being developed by adjacent to the McGowen Street Station, and will Camden Properties. become a premier urban parkspace in the heart of Midtown. Midtown realized the potential for significant Midtown Park will consist of an urban parkspace with development surrounding the McGowen Street restaurant pads and an underground parking garage METRORail Station and sought to partner with a providing approximately 400 underground parking developer to create a vibrant mixed-use development spaces. The garage will address significant existing that preserved much needed urban greenspace. The parking demand as well as support future retail and six-acre site will soon be jointly developed by Midtown commercial developments. The half-acre retail plaza and Camden Properties into a dynamic mixed-use will be located adjacent to McGowen Street and property including a public park, retail and residential will provide visual access to Main Street and Travis

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 24 Street. It will include an upscale restaurant, a food „ Gardens that represent the various and beverage kiosk, and public space next to the rail native ecological areas prevalent in the station. The larger greenspace, accommodating a Houston area. variety of uses and providing open space as well as Midtown will create a new non-profit organization recreational amenities will be located on the 2.5-acre site south of the multi-family development. Midtown to operate and manage Midtown Park. A Board of Directors will be recruited. Operating and maintenance Park space will offer the following amenities: agreements will be created to ensure that Midtown „ An art walk that unifies the north and south Park is managed to the highest standards. portions of Midtown Park; Midtown is funding the land purchase and the park with „ A great lawn that will welcome up to 3,000 tax increment revenues and an $18 million development guests for special gatherings and events; agreement. A capital campaign will soon be launched to fund the remaining project costs needed to complete „ A playground serving the needs of multiple groups welcoming both children and adults; the park. Revenue from the parking garage and restaurant pads will subsidize the park operations. „ A dynamic and interactive water feature; Successful parks are a key component of sustainable „ A dog run offering interaction for dogs and infrastructure and a healthy vibrant quality of life. dog owners; This upcoming development will enhance the quality of life for current Midtown resident and business „ A wetland stream and trail for environmental education; owners by providing new outdoor activity space. It will also become a destination to attract visitors from „ A large berm overlooking the park and surrounding communities. providing a scenic view to the City skyline;

25 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 MIDTOWN—FINAL THOUGHTS

Midtown is fast becoming Houston’s first pedestrian- options and major workforce areas, educational and oriented urban community reflecting the efforts cultural centers is unrivaled; all of which make it is so of the Authority and its partners—the City, Harris crucial that efforts continue to transform the area into County, HCC and HISD. It serves a market of young a postcard neighborhood for Houston. professionals who are transforming Houston’s reputation in the national consciousness into a premier Midtown is working with its partners toward the city to live, work and play. Midtown is key to that ultimate goal of creating a diverse, livable and transformation as the residential and nightlife hub for walkable community in the heart of Houston. Houston’s young professionals. Midtown’s upcoming projects including Midtown Park and the Brazos Complete Street project will further Midtown’s location in the heart of the City is its chief this goal. Infrastructure projects and greenspace asset. It is home to three rail stations, a host of bus investments have proven to be catalysts for new stations and Texas’ first Greenroads certified street. development. The location of Midtown Park will spur It is easily accessible from three major freeways. The new development surrounding the McGowen Street Zone is directly situated between Downtown and Station that can mirror transit oriented development the Texas Medical Center, Houston’s two largest at the HCC/Ensemble Station, already a cultural employment centers. Rice University, the University destination. Infrastructure improvements like the of Houston—Downtown, Houston Community Brazos Complete Street project make the area safer College, the University of Texas-Houston Medical for pedestrians, bicyclists, transit riders and cars School, Baylor College of Medicine, and St. Thomas making a true residential community possible. University are all located within three miles of the heart of Midtown. A portion of the Museum District, The Midtown Authority looks forward to continued opportunities to work with its partners to create a Houston’s largest tourist attraction, is within the Zone’s model for sustainable urban development. boundaries. Midtown’s connectivity to transportation

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 26 27 MIDTOWN REDEVELOPMENT AUTHORITY | 2015 APPENDIX A PROJECT LIST MIDTOWN TIRZ #2 Midtown Redevelopment Authority as of December 31, 2014

DEVELOPER AGREEMENTS TOTAL PROJECT COST Multi-Family Development $7,459,325 Townhome Development $1,565,008 Retail Development $113,770 Sub Total Developer Agreements $9,138,103

PUBLIC IMPROVEMENT PROJECTS TOTAL PROJECT COST Bagby Park (Bagby & Gray Streets) – Phase I $556,298 Houston Technology Center – Phase I $3,523,641 Houston Technology Center – Phase II $2,580,500 Main Street Landscape Improvements $2,031,596 Baldwin Park – Phase I $725,601 Baldwin Park Neighborhood Streets $3,501,031 Midtown Gateways $759,925 Midtown Street Signs $147,114 Elgin – Walkable Communities FTA Project $2,014,714 Parker District Neighborhood Street Reconstruction & Utility Upgrades $2,954,843 Peggy Point Plaza $69,926 Bagby Street Study $180,000 McGowen Street Reconstruction & Utility Upgrades – FTA Project $5,003,892 Gray Street Enhanced Pathways – FTA Project $2,300,000 HCC Academic Walk/Holman Street – FTA Project $1,450,000 Caroline Street Reconstruction $8,500,000 Alabama Street Reconstruction & Utility Upgrades – FTA Project $6,000,000 Bagby Street Reconstruction & Utility Upgrades $9,598,220 Midtown Park (formerly "SuperBlock Park") $9,000,000 Buffalo Soldiers Museum $800,000 Glover Park $300,000 Bagby Park – Phase II $1,500,000 Baldwin Park – Phase II $580,000 Main Street Enhancements $5,500,000 Midtown Park Parking Garage $12,000,000

Certain of these costs are estimates and may change from time to time.

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 28 Asia House $915,000 HMAAC 700,000 3300 Main $5,000,000 Ensemble Theatre Environmental Remediation $160,457 Sub Total Public Improvement Projects $88,352,758

AFFORDABLE HOUSING PROJECTS TOTAL PROJECT COST

SEARCH Affordable Housing Grant $200,000 HHFC Grant for CDC’s Affordable Housing, Fourth Ward $400,000 Fourth Ward Affordable Housing Grant $339,363 Affordable Housing Refund to City of Houston $1,000,000 Affordable Housing Refund to Harris County each year $7,470,634 Row House CDC Affordable Housing Grant $200,000 Row House CDC Affordable Housing – Hannah Project $500,000 Row House CDC Affordable Housing – Pilot Project $4,000,000 New Hope CDC Affordable Housing Grant $300,000 Reward Third Ward CDC Affordable Housing Grant - 10 lots $500,000 Guiding Light CDC Affordable Housing Grant – 10 lots $500,000 Temenos CDC, Housing Grant of $350,000 (43 units developed) $350,000 Reward Ward Third Ward, Housing Grant of $500,000 (70 units developed) $500,000 Row House CDC Affordable Housing – Pilot Project – Ph. II (22 units developed) $2,200,000 2222 Cleburne Affordable Housing – Environmental Remediation $250,000 Affordable Housing Land Banking Program $31,106,157

Sub Total Affordable Housing $49,816,154

FUTURE PROJECTS TOTAL PROJECT COST Brazos Street Reconstruction $8,500,000 Webster Street Reconstruction $5,000,000 Almeda/Crawford Street Enhancements $8,000,000 Safe Sidewalk $1,500,000 Street Overlay $750,000 Public & Cultural Museums $5,000,000 Southeast Corridor Street Reconstruction & Utility Upgrades (Elgin/Crawford) $4,500,000 Wheeler/Richmond Pedestrian Enhancements (METRORail – University Line) $3,000,000 District Street Light Program $4,100,000 District Match for Walkable Communities FTA Projects & Future Grants $12,614,767 Future Park Land Acquisition $4,500,000 Future Park Land Development $1,500,000 Sub Total Future Projects $58,964,767 TOTALS $206,271,782

Certain of these costs are estimates and may change from time to time.

29 MIDTOWN REDEVELOPMENT AUTHORITY | 2015