Downtown Connection TIF District PetroCorrigan Redevelopment Project (Tower Petroleum and Corrigan Tower Buildings) Economic Development Committee August 6, 2012 Office of Economic Development 1 WWW.DALLAS- ECODEV.ORG Purpose Provide background information on Downtown Connection TIF District Review the PetroCorrigan Redevelopment Project Obtain Economic Development Committee’s approval for consideration of the project by City Council on August 22, 2012 Office of Economic Development 2 WWW.DALLAS- ECODEV.ORG Downtown Connection TIF District Background Created June 2005 Project Plan and Reinvestment Zone Financing Plan approved August 2005 Expires December 31, 2035, or when approximately $392 million in TIF increment has been collected (NPV of $189.8 million) Established to fund projects creating a greater density/critical mass of development within Downtown core area Office of Economic Development 3 WWW.DALLAS- ECODEV.ORG Downtown Connection TIF District TIF Budget Downtown Connection TIF District Projected Increment Revenues to Retire TIF Fund Obligations Category TIF Budget¹ Allocated³ Balance Catalyst Projects: - Environmental remediation, demolition, historic façade, restoration, street/utility improvements & streetscape improvements, land acquisition, and non project costs, including, but not limited to machinery, equipment, materials and supplies $68,000,000 $68,000,000 $0 Redevelopment of Vacant/Underutilized Downtown Buildings - Environmental remediation, interior/exterior demolition, historic façade restoration, street/utility improvements, land acquisition, TIF grants, affordable housing $156,960,438 $148,389,725 $8,570,713 Uptown/Downtown connection improvements $0 $0 $0 Park and plaza design and acquisition $3,098,356 $0 $3,098,356 Affordable Housing² $3,000,000 $2,000,000 $1,000,000 Retail Initiative/Streetscape Improvements $1,985,000 $459,845 $1,525,155 Downtown Area Plan $515,000 $512,464 $2,536 Administration and Implementation $8,139,145 $617,914 $7,521,231 Debt Service (Interest Only) $150,363,000 $150,363,000 $0 Total Project Costs $392,060,938 $370,342,948 $21,717,990 ¹TIF Budget shown above in total dollars; TIF Project Plan shows the budget in net present value. ²The Affordable Housing line item has been reduced by the amount of money allocated to the Continental project ³The Allocated total shown for the RedevelopmentOffice of Vacant/Underutilizedof Economic Downtown Development Building line item reflects the total TIF District's commitment to projects currentlyWWW.DALLAS in the Reimbursement- ECODEV.ORG Queue (including amount for PetroCorrigan Project) See Appendix C 4 Tower Petroleum and Corrigan Tower Background Tower Petroleum – 1907 Elm Street • Constructed 1931 • Designed by Mark Lemmon • 22 stories tall and approximately 136,000 square feet (gross) in size. • A contributing structure in the Harwood Historic District (Categorized as adding to the historical integrity or architectural qualities of a historic district) Corrigan Tower – 1900 Pacific Avenue • Constructed 1951 • Designed by Wyatt Hedrick • 17 stories tall and approximately 244,000 square feet (gross) in size • Located in the Harwood Historic District, but is not a contributing structure. Office of Economic Development 5 WWW.DALLAS- ECODEV.ORG Tower Petroleum and Corrigan Tower Background February 22, 2006 – Historic Tax Abatement approved for the Tower Petroleum Building June 13, 2007 – Development Agreement with Pacific 2004 Holdings, Ltd. for $12,000,000 in TIF funding for redevelopment of Tower Petroleum and Corrigan Tower buildings Tax Abatement Eligibility Expired 2009 Development Agreement Terminated 2009 March 2012 – PetroCorrigan Towers, L.P. purchased both buildings Office of Economic Development 6 WWW.DALLAS- ECODEV.ORG PetroCorrigan Redevelopment Project 1. City Hall & Plaza 2. Dallas Central Library 3. Dallas Convention Center 4. Aloft Hotel 5. Omni Dallas Hotel 6. Bank of America 7. Belo Garden 8. Main St. Historic District 9. AT&T HQ 10.Majestic Theatre 11.Mercantile Block 12.Continental 13.Statler Hilton 14.Atmos Lofts 15.Main St. Garden 16.UNT 17.500 S. Ervay 18.PetroCorrigan Project Office of Economic Development 7 WWW.DALLAS- ECODEV.ORG PetroCorrigan Redevelopment Project Project Description Conversion from vacant office space to mostly residential buildings with parking and small ground floor retail Petroleum Tower • 98 residential units • 4,400 square feet of ground floor retail Victory Plaza & Buildings Corrigan Tower • 160 residential units • 137 valet parking spaces (basement and first four floors of building) The project will include restoration of both buildings’ façade Project Start Date: January 1, 2013 Project Completion Date: March 31, 2015 Total Project Cost: $44,660,000 Office of Economic Development 8 WWW.DALLAS- ECODEV.ORG PetroCorrigan Redevelopment Project Funding Sources and Uses Funding Source Amount Use Private Equity $9,170,000 21% Acquisition and Construction Construction Loan $29,000,000 65% Construction Victory Plaza & Buildings Historic Tax Credits $6,490,000 14% Construction Total $44,660,000 Office of Economic Development 9 WWW.DALLAS- ECODEV.ORG PetroCorrigan Redevelopment Project Proposed TIF Funding Redevelopment of the two buildings not possible without public subsidy Majority of the TIF funds proposed will reimburse the costs of environmental remediation and façade restoration The PetroCorrigan redevelopment project would not occur, but for TIF funding Budget Line Item Amount Environmental Remediation/Demolition $4,932,447 Façade Restoration $4,168,198 Public Infrastructure Improvements $527,225 Architectural, Engineering, Consultants for TIF Improvements $672,130 Total TIF Funding Proposed $10,300,000 Office of Economic Development 10 WWW.DALLAS- ECODEV.ORG PetroCorrigan Redevelopment Project TIF Board Funding Recommendations On June 26, 2012, the Downtown Connection TIF District Board of Directors reviewed and approved TIF funding for the PetroCorrigan project in an amount not to exceed $10,300,000. On June 26, 2012, the Downtown Connection TIF District Design Review Committee reviewed and approved design plans for the Petro Corrigan project. Office of Economic Development 11 WWW.DALLAS- ECODEV.ORG PetroCorrigan Redevelopment Project Conditions of Funding Minimum private investment of $31,000,000 for the Project. • Acquisition - Minimum $3,000,000 • Construction and construction related soft costs – Minimum $28,000,000 The term “Invest” or “Investment” means the sum of all acquisition costs, construction costs (hard and soft) paid, payable or actually incurred by or on behalf of the Owner, with respect to the Property and the improvements thereon. Construction related soft costs include the following items: architecture and engineering, interior design, remediation and demolition. Carrying or other similar costs shall not be considered toward this definition of project investment. The owner must provide verification of all expenditures. Redevelopment of the Project shall include: • Minimum 3,000 square feet of retail/commercial/flex space; and • Minimum 194,500 square feet (approximately 219 residential units) of residential space. Obtain a building and/or demolition permit and start construction and/or demolition for the Project by January 1, 2013; Office of Economic Development 12 WWW.DALLAS- ECODEV.ORG PetroCorrigan Redevelopment Project Conditions of Funding (Continued) Obtain a Certificate of Occupancy (CO) for the Project by March 31, 2015; Obtain final acceptance of public infrastructure improvements associated with the Project, as evidenced by the issuance of a Green Tag from the Public Works and Transportation Department by March 31, 2015 and submit documentation to the Office of Economic Development (the “OED”); Execute an Operating and Maintenance agreement for public infrastructure improvements associated with the Project by March 31, 2015, for a period of 20 years; A minimum of 25% of the total net leasable square footage of non-residential space, with a minimum of at least 50% of ground floor space must be occupied prior to TIF Reimbursement; Mixed Income Housing: A minimum of 10% of the Project’s total residential units must meet affordable housing standards in accordance with the District’s Mixed Income Housing Guidelines, attached as Exhibit B. These guidelines require, but are not limited to, the following: Office of Economic Development 13 WWW.DALLAS- ECODEV.ORG PetroCorrigan Redevelopment Project Conditions of Funding (Continued) • Affordable units must be available for a 15 year period (from the date of CO). • If the total number of affordable units drops below 10%, a 90-day compliance period will be granted, after which the contract may be terminated. • Submit semi-annual reports to the OED Staff (from the date of CO). Construction of Project improvements and building renovations shall be in general conformance with design plans approved by the Downtown Connection TIF Board of Directors and Design Review Committee and Dallas City Council; The Project shall be managed by a management company acceptable to the Director of the OED, such approval not being unreasonably withheld; Owner shall submit to the Director of the OED a quarterly status report for ongoing work on the project, as well as public improvements. Status reports will be due once every three months after the Council approval date; Comply with the Business Inclusion and Development (“BID”) goal of twenty-five percent (25%) Minority/Women-owned Business Enterprise (M/WBE) participation for TIF