EXECUTIVE SESSION -Pursuant to Section 551.072 and 551.087 of the Open Meeting Act to deliberate: (1) the purchase of real property and (2) the offer of economic incentives associated with redevelopment of property at Southwest Center Mall including the former JC Penney property

Joule Hotel Expansion project – Downtown Connection TIF District

Economic Development Committee May 17, 2010

Office of Economic Development 1 WWW.-ECODEV.ORG Purpose

- To provide an update on Downtown Connection TIF (DCTIF) activity

- To present the Joule Hotel Expansion project

- To obtain Economic Development Committee approval for execution of a development agreement, on behalf of the DCTIF, with TIF Hotel, Inc. in an amount not to exceed $20,658,550 for City Council consideration on May 26, 2010.

Office of Economic Development 2 WWW.DALLAS-ECODEV.ORG DCTIF District Overview: Background

• The Downtown Connection TIF District was created on June 8, 2005.

• The DCTIF District is located in the core of and portions of Uptown.

• The DCTIF District is a mixed-use area, primarily composed of existing office or vacant office structures, surface parking lots, and undeveloped property.

Office of Economic Development 3 WWW.DALLAS-ECODEV.ORG DCTIF District Overview: Current Status of District Development Goals

• Improve access between and within the Uptown and Downtown areas Construction has commenced on the Woodall Rogers Deck Park. Work began on the Downtown Area Plan which will coordinate all of the on-going planning documents that affect the downtown area and the surrounding neighborhoods.

• Improve the image of the Downtown Connection Area Installation of high-tech digital sign boards within downtown. Passage of a newsrack ordinance requiring all newsracks to be uniform in size and color, requires them to hold multiple publications and limits the number of locations they may be installed.

• Support redevelopment of the existing building supply Thirteen on-going and/or announced projects, including five adaptive re-uses of existing buildings that will add 574 residential units, 170 hotel rooms, 23,000 square feet of retail and 320,000 square feet of office space. (See Appendix D.)

Office of Economic Development 4 WWW.DALLAS-ECODEV.ORG DCTIF District Overview: Current Status of District Development Goals (cont’d)

• Develop a more diverse mixture of land uses within the District 3,317 residential units; 553 hotel rooms; 399,000 square feet of retail; and 2,875,000 square feet of new Class “A” office space have been announced, completed and/or under construction within the district.

• Increase open space and recreational opportunities in the District Main Street Gardens Park opened in December 2009. Construction of the Woodall Rodgers Deck Park is underway. Final land acquisition for Belo Garden Park has been completed, while planning continues on Pacific Garden Park.

• Incentivize catalyst project(s) to accelerate reaching a critical mass of residential units, retail establishments, and public amenities for a vibrant downtown The entire Mercantile Block has been completed. Incentives have been approved by the City Council for Atmos and Continental projects, which will add additional residential units, including affordable units, and increase the amount of space available for retail. Office of Economic Development 5 WWW.DALLAS-ECODEV.ORG DCTIF District Overview: Budget Status

Downtown Connection TIF District Budget Projected Budget in Actual Anticipated Dollars Initial total Budget $432,320,443 TIF Bond Interest ($150,363,000) Park and Plaza Design and Acquisition ($1,500,000) Retail Initiative/ Streetscape Improvements ($1,985,000) Downtown Area Plan ($515,000) Affordable Housing ($3,000,000) Administration and Implementation ($6,750,000) Catalyst Projects/ Redevelopment of Vacant-Underutilized Buildings $268,207,443 Mercantile Block ($58,000,000) Stoneleigh ($2,500,000) Santa Fe IV ($4,296,264) Atmos Complex ($23,000,000) Arts District Garage ($9,000,000) Continental Building ($22,525,288) Remaining for Redevelopment Projects After Existing Commitments $148,885,891 -- Joule Hotel Expansion ($20,658,550) Total Funds Remaining $128,227,341

Office of Economic Development 6 WWW.DALLAS-ECODEV.ORG Joule Hotel Expansion: Location Map

Office of Economic Development 7 WWW.DALLAS-ECODEV.ORG Joule Hotel: Existing Project

• The current Joule Hotel consists of two buildings, 1530 Main 1524 Main 1524 and 1530 Main Street.

• The development of this hotel was directly related to City Council approved funding of the project from the City Center TIF District Fund for the redevelopment of 1524 Main ($4,200,000) and 1530 Main ($4,300,000).

• The project also received a historic tax credit ($5,901,635).

• The Joule Hotel was completed in December, 2007 and opened in May, 2008. The five star hotel includes: 114 luxury rooms, Charlie Palmer Restaurant, PM Nightlife Lounge and Next Vintage Wine Shop (a retail wine store).

Office of Economic Development 8 WWW.DALLAS-ECODEV.ORG Joule Hotel Expansion: Project Details

• The developer/owner is proposing to expand the Joule Hotel in order to add needed space for additional rooms, ballrooms, and retail. • The expansion will encompass several recently acquired vacant buildings along Main and Commerce Streets, which are located in the Downtown Connection TIF District.

Office of Economic Development 9 WWW.DALLAS-ECODEV.ORG Joule Hotel Expansion: Project Details

Redeveloped New Existing • 32 new hotel rooms including eight suites and two penthouses.

• 11,000 square feet of Banquet, Catering and Meeting space.

• 20,700 square feet of retail space.

Main Street Elevation Office of Economic Development 10 WWW.DALLAS-ECODEV.ORG Joule Hotel Expansion: Project Details (cont’d)

Redeveloped New Existing • The conversion of the Commerce Street buildings into a secondary entrance into the Joule Hotel, and a surface parking lot to be used for service loading and unloading.

Commerce Street Elevation New – Service Entrance Redeveloped

Office of Economic Development 11 WWW.DALLAS-ECODEV.ORG Joule Hotel Expansion: Development Team

• DEVELOPER: TIF Hotel, Inc.

• OWNERS REP: Tim Headington, President and Michael Tregoning, CFO.

• ARCHITECT: Architexas, Inc.

• CONSTRUCTION MANAGEMENT: Juno Construction Management

• GENERAL CONTRACTOR: TBD

* Each of the above named parties were involved in the development and completion of the original Joule Hotel.

Office of Economic Development 12 WWW.DALLAS-ECODEV.ORG Proposed DCTIF Assistance: TIF Board Approval

On May 7, 2010, the Downtown Connection TIF District Board of Directors reviewed and approved TIF funding for TIF Hotel, Inc. for the Joule Hotel expansion project in an amount not to exceed $16,712,215 plus a TIF Grant in an amount not to exceed $3,946,335*, for a total incentive amount not to exceed $20,658,550.

*Note: TIF grant shall be reduced by $500,000 if the project does not include a retail “jewelry” box along the frontage of 1417-19 and 1503 Main Street.

Office of Economic Development 13 WWW.DALLAS-ECODEV.ORG DCTIF Assistance: Conditions for Funding

As a condition for funding, TIF Hotel, Inc. will be required to:

• Provide an additional 32 hotel rooms (or a minimum of 27,000 square feet (net) of room space), 12,500 square feet (net) of ground floor retail space, 4,500 square feet (net) for an open-area event deck, and 10 on-site parking spaces and 2 on-site spaces for loading/unloading of non-guest operations.

• Provide evidence of a minimum private investment of $76,500,000 in private improvements for the Joule Hotel Expansion project, including land acquisition costs ($16,900,000) and building construction and soft costs ($59,600,000).

Office of Economic Development 14 WWW.DALLAS-ECODEV.ORG DCTIF Assistance: Conditions for Funding (cont’d)

TIF Hotel, Inc. will adhere to the following deadline dates:

• Obtain approval by the Downtown Connection TIF District Design Review Committee of the final conceptual design prior to start of construction.

• Provide evidence of receipt of a building permit by December 1, 2010.

• Obtain Landmark Commission review by February 28, 2011.

• Provide evidence of receipt of a final certificate of occupancy for entire project by December 1, 2013.

Office of Economic Development 15 WWW.DALLAS-ECODEV.ORG Strategic Importance of Proposed Project

• Completes Main Street Redevelopment and ties together more than $259 Million in public and private investment from Mercantile to Magnolia Hotel.

• Redevelops existing buildings, protects existing historic structures, increases street-front retail, expands business and commercial activity and creates jobs.

• Removes over 80,000 square feet of vacant office space and adds 34,000 square feet of occupied commercial space along Main and Commerce Streets.

Office of Economic Development 16 WWW.DALLAS-ECODEV.ORG Recommended Next Steps

• Economic Development Committee approval of the execution of a development agreement, on behalf of the DCTIF, with TIF Hotel, Inc. in an amount not to exceed $20,658,550 for City Council consideration on May 26, 2010.

Office of Economic Development 17 WWW.DALLAS-ECODEV.ORG Appendix A – Proforma Information - Project Requirements/Other Information

Minimum # of new hotel guest rooms/ guest room space required 32 rooms or 27,000 s.f. Retail – net square footage required 12,500 Parking stalls 10 on-site Required private investment – site acquisition, hard and soft costs $76,500,000 Expected total project cost $85,814,000 TIF Funding $20,658,000 Base TIF funding $16,712,215 TIF grant $ 3,946,335 % TIF funds to total project cost 24.07% Return on Investment without TIF 4.77% Return on Investment with TIF 6.56% Deadline for Landmark Commission courtesy review February 28, 2011 Deadline to obtain building permit December 1, 2010 Deadline to obtain Final CO December 1, 2013 Office of Economic Development 18 WWW.DALLAS-ECODEV.ORG Appendix B – Joule Hotel Expansion project: Project Budget

Joule Hotel Expansion Project Budget Land Acquisition $ 16,908,000 Hard Costs - Construction $ 47,065,000 - Permits/Licenses/Fees $ 200,000 - Construction Management $ 3,500,000 - Contingency $ 3,200,000 Total Hard Costs $ 53,965,000 Soft Costs - Design Consultants $ 4,230,000 - F&E/OS&E/Technology $ 8,814,000 - Pre-opening/ Marketing $ 661,000 - Legal Fees/Taxes $ 350,000 - Soft Cost Contingency $ 886,000 Total Soft Costs $ 14,941,000 TOTAL PROJECT BUDGET $ 85,814,000 Office of Economic Development 19 WWW.DALLAS-ECODEV.ORG Appendix C – Joule Hotel Expansion project: Sources and Uses of Funds

SOURCES USES

$10,180,000 Historic Tax Credit $53,965,000 Hard Costs

$20,658,550 TIF Funding $14,941,000 Soft Costs

$54,975,450 Equity $16,908,000 Acquisition

$85,814,000 Total Sources $85,814,000 Total Uses

Office of Economic Development 20 WWW.DALLAS-ECODEV.ORG Appendix D – DCTIF District Projects

21 Appendix D – DCTIF District Projects (cont’d)

22 Appendix E – DCTIF District Increment Projections

23

April 27, 2010

City of Dallas Office of Economic Development www.Dallas‐EcoDev.org Overview • This is a long term investment for the City • Current status ‐ minimal taxes generated from 1661 acre site • Cost of infrastructure into area is high and would be prohibitive for the City to undertake without private development commitment

• Proposal on table is for creation of partnership where – Capital cost financing is provided by private group – Reimbursed in part through existing programs • Developer can proceed with quality development • City gains – Potential 'windfall' to general fund of $17+ million annually in approximately 23 years – Opportunity to advance other goals of affordable housing (20%), M/WBE hiring for construction work (25%) and stringent urban design standards for area – Opportunity to realize substantial growth while minimizing costs and risk

2 Table of Contents

• Project Location • Project Vision • Project Orientation • Project Maps • Zoning • Service Delivery Plan • Financing Strategy • Next Steps • Appendix

3 Project Location

4 Project Location Map

5 Project Location Map

6 Project Vision

7 Cypress Waters Vision To be a planned development comprised of: • Traditional multi-family and single-family neighborhoods, • Commercial and retail areas Designed with strict architectural guidelines to ensure quality and excellence emphasizing aesthetics, human comfort and the creation of a sense of place.

8 Traditional Neighborhood Development (TND) The Project intends to utilize a comprehensive planning system called Traditional Neighborhood Development to include a variety of housing types and land uses in a defined area including educational facilities, civic buildings and commercial establishments to be located within walking distance of private homes. A TND is designed to include a network of paths, streets and lanes suitable for pedestrians as well as vehicles which provides residents the option of walking, biking or driving to places within their neighborhood. Present and future modes of transit are also considered during the planning stages. Public and private spaces have equal importance.

9 Waterfront views from the retail, courtyards, greens and residences (single and multi-family)

10 Commercial Design Commercial buildings are to be designed to be a part of the community, harmonious to their environment and within architectural guidelines to ensure quality and lasting value.

11 Project Orientation

12 Project Description

• Property – Located at the northeast corner of LBJ/I-635 and S. Beltline Road 5 miles from DFW Airport and 20 miles from Downtown Dallas – The property in and around North Lake consists of approximately 1,661 acres, all within the City of Dallas. Of that land area, Billingsley will develop 928 acres of contiguous undeveloped land which will be adjacent to a 362 acre lake. • Build Out Goals – 4+ million square feet of Commercial Office Space – 10,000 Multi-Family and Single Family Residential Units with waterfront living with parks and parkways, plazas, water features, hike and bike trails, playgrounds, sports fields, swimming pools, community centers and workout facilities – 150,000 SF of Pedestrian Oriented Retail in Dallas – 25,000 Residents and 9,000 Jobs on site. • Experienced Developer – Billingsley Company has numerous office, industrial, retail, single-family and multi- family developments – Active projects include International Business Park, , Austin Ranch, Hemingway Court, Austin Waters, and Gramercy on the Park

13 Project History

• In 2004, Billingsley purchased 360 acres from TXU at Northlake – During the zoning process, Coppell ISD and the City of Coppell filed condemnation claims on this land – City of Coppell lost the case due to lack of jurisdiction and CISD was awarded the right to condemn; appeals filed • In 2007/08, Billingsley bought an additional 715 acres • In late 2008, as part of the settlement process – Billingsley agreed to sell 122 acres to CISD which plans for up to 3 school sites and one 20 acre administrative campus – City of Coppell purchased 558 acres – TXU (now Energy Future Holdings and Luminent) retains 55 acres (which includes a power plant), 7 drill sites, transmission lines and easements • Power plant can stay for up to 10 years; however TXU has given written notice it intends to begin removing it over the next 3 years. At closing, the lake size will be 360 acres • City of Coppell is responsible for lowering the lake level – Billingsley agreed to a cap of 10,000 residential units • During this period, the developer, the Cities of Dallas and Coppell have worked to establish an efficient utility delivery plan • In June 2009, an MMD was established on 947 acres – Permits multiple financing options for public infrastructure/municipal service costs

14 Build Out Statistics

9,500 units averaging 500 units averaging 871 Sq. Ft. per unit 3,060 Sq. Ft. per unit

15 Build Out Statistics

16 Project Maps

17 Existing Conditions Map

18 Ownership Map

19 Conceptual Master Plan Map

* All maps are conceptual and may change in response to specific development plans 20 MMD Map

Cypress Waters Current Land Ownership October 7, 2009 Property Owner Within MMD Billingsley Company (MMD) 947.6 City of Coppell 0.0 MMDMMD AreaArea Coppell ISD 0.0 Energy Future Holdings/TXU 0.0 Total 947.6

21 Zoning

22 Zoning Map

23 Rezoning Requested

• Current Zoning • MU‐3 in PD 741: 187.86 Acres • TH‐3 in PD 741: 154.72 Acres

• Requested Zoning : Amend & Expand PD 741 as follows: – Include expanded Billingsley and CISD owned property – 1019 Acres – Expand MU‐3 Base Zoning

– Include 10,000 Dwelling Unit Cap per Settlement Agreement – Add additional main uses such as Single Family, Data Center and Light Manufacturing among others

– Amend various restrictions to create a more Urban and Pedestrian friendly environment such as: • Incorporation of non standard public street cross sections and lighting; Setback Reductions; Lot Coverage Increased by 10%; Various Parking Reductions

24 Rezoning Requested – Eliminate the PD requirements for any Residential Adjacency Review (RAR), Residential Proximity Slope, and Urban Form Setback • Site is contiguous and there are no existing developments within the boundaries – Enhance landscaping requirements to utilize lake as storm detention plus storm water reuse for irrigation. – Modify tree replacement requirements to provide flexibility to perform tree replacement as development occurs – Require a Tree Survey prior to the issuance of any building or grading permit – Require a Development and Landscape Plan before the issuance of a building permit

• Timeline – Zoning Application October 6, 2009 – CPC Meeting March 18, 2010

– City Council Meeting May 26, 2010

25 Ownership Recap

CYPRESS WATERS CURRENT LAND OWNERSHIP WITHIN THE CITY OF DALLAS November 3, 2009

TOTAL LAND AREA UPON PLANT REMEDIATION & CURRENT TOTAL FINAL CISD CURRENT ZONING PROPERTY OWNER LAND AREA PURCHASE WITHIN MMD REQUEST

BILLINGSLEY COMPANY 947.6 927.6 947.6 917.3

CITY OF COPPELL 412.9 557.5 0.0 0.0

COPPELL INDEPENDENT SCHOOL DISTRICT 102.0 122.0 0.0 102.0 ENERGY FUTURE HOLDINGS / TXU 199.3 54.7 0.0 0.0

TOTAL 1661.8 1661.8 947.6 1019.3

26 Service Delivery Plan

27 City Service Delivery

• Major infrastructure will include approximately: — 5 miles of water transmission improvements — 9 miles of sanitary sewer improvements — 9 miles of primary and 18 miles of secondary road improvements • Police

— DPD will provide basic services through existing facilities. — As development grows, a permanent police presence can be provided on site using the joint DPD/DFR public safety facility. Developer will contribute approximately 2.5 acres. At some intermediate point in time, the owner may furnish space until there is sufficient development to support the joint facility. — Cost reductions possible through private security force in the early years • Fire‐Rescue: — DFD will provide basic services to the site through existing facilities. — As development grows, could utilize joint DPD/DFR public safety facility

28 City Service Delivery

• Library: — A City of Dallas branch library site is optional for this area based on the anticipated population at full build‐out. — However, City is exploring alternative opportunities to augment library services such as through partnership with Coppell ISD. • Parks: — Extensive green space on site along the lake edge and power line easements, accessible to the public — Multiple parks, hike and bike trails, and vehicular and pedestrian connections through‐out development will be available to the public for use — Over 122 acres of school land (CISD) — Any maintenance over and above basic city services will be provided by Developer or MMD. • Sanitation: — Multi‐family and Commercial solid waste and recycling services to be rendered via private vendor contract. Such services to be provided in accordance with city ordinance. — City will coordinate solid waste and recycling services for Single‐family residences within the area. Only 500 single‐family residential units are planned at full build‐out.

29 Road Maps

* All maps are conceptual and may change in response to specific development plans

30 Water System Map

* All maps are conceptual and may change in response to specific development plans

31 Wastewater System Map

* All maps are conceptual and may change in response to specific development plans

32 Infrastructure Cost Summary

* *City’s utility participation funded through Water department’s capital fund up to 30% as development creates demand. ** Costs are represented in 2009 dollars.

33 Infrastructure Cost Summary

* Costs are represented in 2009 dollars.

34 Financing Strategy

35 Financing Strategy

• Share costs between City, developer, and future growth • All up‐front funding ($217.2m) will be provided by developer with reimbursement from City and/or TIF/MMD • Cost share: – Developer $133.8m (61.6%) – TIF/MMD $ 68.9m (31.7%) – DWU capital fund $ 14.6m (6.7%)

* Costs are represented in 2009 dollars

36 Financing Strategy

• Several financing/transitioning partners were identified/developed: – Developer Billingsley – City of Dallas’ Water Capital Funds – Municipal Management District (MMD) – Tax Increment Financing Zone (MMD/TIF) – City of Coppell

37 Financing Strategy

• These partnerships provide: – Short term provision of utilities – Taxing authority needed for bonding – Funding through Chapter 49 participation – Funding for non‐infrastructure city services – Up front financing for the water, sewer and roads through direct funding and the issuance of bonds – Mechanisms to reimburse developer and provide revenue stream for operating agreements, long term participation/maintenance

38 Financing Strategy ‐ Phasing

• Immediate provision of utilities are being coordinated through the Cities of Dallas and Coppell and TRA • For all major infrastructure improvements, developer is providing up front financing • Development of infrastructure will be driven by area build out • Reimbursements to developer will be handled by: – Coordination of Water Department bond financings – Generation of TIF increment – MMD Fees

39 Projected TIF Increment Schedule

40 Tax Distribution Graph

2034: End of City's TIF Tax increment to TIF fund $45,000,000 Participation: $40,000,000 Real Property Taxes retained $35,000,000 $30,000,000

$25,000,000 Franchise Taxes retained $20,000,000 $15,000,000 BPP taxes retained $10,000,000 $5,000,000 Sales Taxes retained $0

2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 Base2049 tax revenue retained • Initial tax increment from real property taxes will be split between the City and the MMD/TIF. • The taxing authorities will retain franchise, Business Personal Property, sales and the base tax revenue (non City/County Entities)

41 Tax Revenue Over TIF Term

Taxing Total Tax Revenue Jurisdiction Less TIF Contribution

City of Dallas $ 302,180,979 County 81,593,806 Coppell ISD 568,588,029 Carrollton, Farmer’s Branch ISD 48,011,780 Dallas Co Community College 40,406,979 Parkland 114,802,826 DART 32,633,903

Total $1,188,218,302

42 Next Steps

43 Next Steps Action Date

• MMD: Affirm Board Members December 2009 • PD Zoning: CPC Meeting March 18th , 2010 • PD Zoning *: City Council Vote May 26th , 2010 • TIF Agreement City Council Vote October 2010 • MMD Ad Valorem Tax Election November 2010 • MMD General Obligation Bond Election November 2010 • Begin Utility Design / Engineering Estimated Nov 2010 • Begin Utility Construction Estimated 2011

* Zoning includes finalization and signing of Master Development Agreement.

44 Appendix

45 Major Legal Documents

• PD Ordinance ‐ Effective with zoning approval – Parties: City of Dallas and Developer – Purpose: Establishes zoning and development requirements for project

• Master Development Agreement ‐ Effective on or before zoning approval – Parties: City of Dallas, Developer and MMD – Purpose:

• Establishes obligations relating to water, wastewater, roadways and public service infrastructure and provision of services • Sets up cost sharing relationships

• Imposes targets and triggers for timing of commencement/completion of infrastructure • Ties development obligations and benefits to TIRZ Agreement

• TIF Agreement ‐ Effective when passed by City Council – Parties: City of Dallas, Developer and MMD – Purpose:

• Establishes Tax Increment Reinvestment Zone • Sets up Tax Increment Fund and obligates City to provide/assign agreed percentage of TIF Revenue to MMD to use to reimburse Developer for infrastructure costs incurred and/or to use as funding/security source for TIRZ/MMD Bonds

• Makes MMD and development subject to TIF requirements including required levels of affordable housing,

minimum minority hiring requirements, etc.

• MMD Development/Financing Agreement ‐ Effective when passed by City Council – Parties: City of Dallas and MMD – Purpose:

• Establishes general parameters for MMD assessment based (TIF reimbursed) bond financing

46 Tax Distribution Summary

47