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Twenty Years of Urban Redevelopment December 31, 2014

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Twenty Years of Urban Redevelopment December 31, 2014 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.
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