Sep 23, 2020 Downtown Denton Tax Increment Financing Zone No. 1 Board on 2020-09-23 12:00 PM

We have determined that a quorum has been met. The downtown Denton tax increment finance reinvestment zone number one board of the city of Denton Texas will now convene in a regular meeting at 12.04 p.m. this Wednesday, the 23rd day of September 2020. Our first order of business is 1A to consider approval and our corrections of the meeting minutes from the July 23rd, 2020 downtown Denton TIF reinvestment zone number one board of the city of Denton Texas. Are there any corrections to the minutes as distributed? Do we have a motion? Motion to approve. Was that a first and a second? Gerard is the first. Was that Alex as a second? Alex first, Gerard second. Okay. So we have a motion and a second. All those in favor of adopting the motion say aye. Aye. Those opposed say no. Melissa, could you please go around the horn? Yep. Thank you. Ben approve or opposed? Approve. Paul? Approve. Alex? Approve. Gerard? Approve. Melissa approve. The motion passes by unanimous vote. The next order of business is to receive a report and hold a discussion and give staff direction regarding the downtown Denton TIF reinvestment zone number one study and analysis being conducted by TXP Inc. Melissa also before I hand it over, I guess, am I handing it to you, Christina? It will be Erica. Okay. I just wanted to really just say thanks for staff for putting this together and I think it's terrific. We just really appreciate the work being done on this project. Thank you. The chair recognizes Jessica Rogers, Director of Economic Development. Actually, I will be facilitating for Jessica Rogers today. Thank you, Erica. She's on a much needed vacation. Good for her. No vacations allowed. I'm sorry? No vacations allowed. Oh, yeah. So many of you know me, but I'm Erica Solomon. I'm the analyst here and I also wanted to take the opportunity to introduce two new staff members that we have here. I want to introduce Dan Rosenfield. Maybe you can wave. He's our new ED analyst and I'd also like to introduce Kay Brown-Patrick, our business development administrator. We're really happy to have him on our team and Kay replaces Michelle Cunningham for those of you who remember her. She retired this summer. And I'd also like to recognize our consultant, Travis James from TXP. It's an economic development consulting firm out of Austin, and they presented to this board late last year, if we can all remember, the time before COVID. And he's going to be telling, giving an update on the status of the TIRS study. All right. Well thank you, Erica. Are you ready for me to start walking through my presentation? So I'll start the presentation and then I will pause after every slide. It's about a 15-minute presentation, but I know with the delay might make it a little bit easier if there are any questions. On the next slide that Erica will pull up, we were fortunate to be retained at the end of 2019, and the primary focus of our effort at that point was to determine if the TIRS could fund PEC 4 Phases 3 and 4. There was a project located along West Mulberry that needed that drainage flow control project to be completed to allow them to proceed. There was also a potential request for some parking facilities. And so the focus at that time at the end of November, with the cost of PEC 3 and 4 being about $21 million, it's subsequently been refined down to about $15, $16 million, was if we went ahead with this project and did PEC Phases 3 and 4 with the TIRS, was there going to be sufficient funding to pay for that project? And if so, what did that mean in terms of the financing plan? So I came up in November 20th, met with this board, and that was some developers to go over what was happening in the TIRS. Obviously, COVID has occurred and the timeline got delayed. In addition, that project on Mulberry and another project that was in the pipeline for a variety of reasons, those projects have been put on hold or canceled. And so the focus of what I was asked to do was let's step back and look at the TIRS overall and maybe we fund PEC Phases 3 and 4 and if we don't, what else could we do with the money? So that's a little bit of background or how we got here with the focus getting shifted. On the next slide, I'm going to ask Erika if you don't mind to remind the folks about the TIRS and how it's structured. Sure. The Downtown TIRS was created in 2010, shortly after the Downtown Implementation Plan was adopted and it took effect on January 1, 2011. It will terminate on December 31st, 2041, or when 24.8 million has been collected. The City of Denton, unlike the West Park TIRS, is the only participating jurisdiction in the Downtown TIRS and it's structured at a decreasing ratio participation from 100 down to 80%. We are in the second cohort there, year 6 to 10 at 95%. As of the previous annual report, the TIRS revenue was 2.4 million and the total TIRS expenditures was 1.9 million. So that leaves about $21 million, $22 million left with that $24.8 million cap. So that's an important number as we think about funding projects and talking later in the presentation about how we prioritize and looking at the return on investment. Unlike other TIRS, this TIRS has a cap, both the timeline, duration, and the cap. On the next slide, this is to repeat what I said earlier. We got to about step five before COVID hit. In the past couple of months, we've had about five or six stakeholder input sessions to get additional feedback from the stakeholders. And now we're looking to provide you all an update and get direction on how to proceed. So that's where we are in the process. Originally, it was about a four-month process and obviously now it's been delayed. On the next slide, just to remind everybody, I think you all know this. This is the current boundary of the downtown TIRS. This is how it was created and nothing has changed. But part of the original project and finance plan you all did years ago, another consultant did. On the next slide, they identified five catalytic areas. So in the next slide, Erica, they were labeled A through E. Go back one more. So one of my tasks was to examine these four or five areas, see what has occurred, what hasn't occurred, and see how that would impact the financing plan to date and what would likely happen in the future. On the next slide, it provides a summary from that other consultant's report about the type of development that would likely happen, the value, and the timeline when it would occur. And so some of these zones shouldn't be developing based on the timeline until today. Some of them should have already seen development. There hasn't been a lot of new development in any of these zones except area A in a slightly different location. And I'm referring to the residential that was built next to the transit center. So there was projected to be about $126 million of new development within these five zones that are within the downtown TIRS. On the next slide, what's interesting is that due to redevelopment and appreciation throughout the TIRS, but primarily outside of those five zones, the TIRS is tracking the projections of the original plan. So even though we haven't seen that development occur yet, the projections are still on pace. About $3 million has been collected to date, about $21 million left. Assuming no new development and a 2.5% appreciation of what's there today, the TIRS will hit that $24.8 million cap by about year 28-29. So if nothing else gets built today, 2.5% appreciation, we're going to hit the cap in about year 30. So we don't need to see any new development to take place to get to that revenue stream. On the next slide, this shows you the annual taxable value growth from year 2010 up to the year 2020. I might defer to David if you have questions about 2020, I know people are protesting values all over the state within Denton as we deal with COVID, I see some smiling. New construction according to what the appraisal district has given us was about $28 million in the zone. Now it gets a little bit confusing when they show partial one year and then the next year it's completed where it shows up. But based on the reports from the appraisal district, the growth in the TIRS has been about $150 million over the past 10 years. $28-30 million has come from new construction, $124 million from appreciation. Does that make sense to everybody, are there any questions on that? On the next slide, this will depict the annual revenue when it pops up, the annual TIRS revenue per year. We're approaching $800,000, $900,000 a year, so we've got 20 years to go, we're getting about a million dollars a year, that's how we hit the revenue cap. The next slide is cumulative revenue, it's based on actuals plus projections and again, this is appreciation only. As I said, when I was brought in, there were two projects in the pipeline that were pending and I ran a number of scenarios and shared those with city staff. You hit the cap sooner, is the short answer, if any new project gets built, but especially those projects. So we'll hit that $24.8 million cap in about 20 years. Next slide. So stakeholder input, so we got input from local business owners, developers, we talked to the TIRS board. The consensus was that more downtown parking is not a priority. One of the projects that had kind of been talked about when I was brought on was maybe the need for a parking garage. The general consensus was that it's not needed in the short or medium term. Downtown businesses said they're struggling obviously with COVID and if you think about starting a new big infrastructure project, please think about how that will impact our businesses as we're trying to reopen, as COVID hopefully is ending sooner than later. They thought that smaller projects focused on lighting and sidewalk improvements are more important in the short term than a big hickory street type project. Drainage improvements are necessary to create development opportunities, but new projects might not occur in the short term. So other than the one or two projects I looked on at the beginning, there isn't necessarily a project related to PEC phase three and four that would be imminent if that project was completed tomorrow. The next slide, we heard that downtown needs more daytime office employment and traffic to balance the nighttime activity. The flip side is that office rents are not high enough to justify those new construction costs. So you would likely need to incentivize office users to come downtown. Tourists said they'd like to use the tourist funds to incentivize larger economic development projects. Look to other city revenue streams to pay for infrastructure. Leave the tourist funds to incentivize those catalytic projects that I went over earlier. Existing businesses said they'd like to use the tourist fund on expanding the building improvement and facade programs that are there today. I think when I was there on November 20th, y'all were approving some of those grant programs to businesses in the downtown. And I think in general, there was a feeling that downtown lacks an overall vision, making prioritizing any of the improvements that we're about to talk about challenging. It's not clear what's more important and why, that it lacks that vision. So I'll pause there again. Is there any comment or questions on the feedback we heard or for folks to like clarification? Okay, and I'll keep going with the presentation. Given your existing, when Erica goes back to the slide deck, the way the project plan was written, a lot of the projects we're going to talk about can be funded without making changes to the types of projects that are eligible for reimbursement. So on slide 14, parking, complete streets, support for grant projects, whether it's 380 maintenance loans, utility drainage improvements, those would all be eligible given the current plan. All right. So on the next slide, this is, I apologize for a confusing map, but I think it's easier to maybe visualize all this at once. So based on the feedback, we mapped the types of projects that people told us that tourists should think about funding. One would be maybe Oak Street, do kind of hickory street-like improvements along Oak Street. That was a project that came up. The new streets, as you see highlighted there in gold on the screen, would be the kind of project that could be funded through a tourist that people thought would help drive visitor activity and business sales, may not increase property values, but would be an important project to help existing businesses. Another thing we heard from developers was, instead of doing hickory street-like improvements along Oak, maybe we should think about doing those along Elm and Locust, that there's areas more ripe for redevelopment in the long-term from Eagle Drive down to the courthouse along Elm and Locust. You also see I've highlighted PEC phase three and four, which you notice is that most of it is outside of the tourist. To be eligible as a tourist project, we would have to expand the boundaries of the tourist to be able to fund that project. In purple, you see the parcels that are impacted that are within the floodplain that could be taken out of the floodplain once that project is completed. What I tried to summarize on this map was these are the projects that we heard from the stakeholders that they would like to see funded or should be eligible to be funded through a tourist, and that then directed the next phase of analysis. So is everybody clear on that map, so if you wanted to fund, for example, PEC phase three and four, you'd have to expand the boundaries. If you wanted to pick up all of the parcels that are taken out of the floodplain, you have to draw it even larger to pick up those purple parcels. So again, no right or wrong answer. That's why we want to get your feedback is what would make sense in terms of expanding a tourist. Yes, Melissa? What are some of the hurdles for expanding the area to include the floodplain from downtown to Eagle? You would just have to make sure there are caps on residential, the amount of residential within a tourist. I think we could add those, and that wouldn't be a problem. It would require city council to formally amend the boundaries, and those properties would have a different base value than the rest of the tourists. You'd have an expanded tourist with two different base values. On the next slide, which would be slide 16, I know return on investment is always an important question as you think about this, right? That makes sense when you're using the public's money. So what we tried to do, we tried to both quantify what we could. So what we found out as part of this process is that PEC4 phase three and four, I still don't know that I get that wording correct, we thought was going to cost about $21 million. The revised numbers are about $15 million. We also discussed Corps of Engineers, EDA, some other funding sources for that project. None of those have been finalized. If you wanted to fund this project with the tours, and assuming you don't get any other funding source, PEC4 would be the only project you could fund. So if you expanded the boundaries, we didn't bust the cap, then with interest, working with David kind of high level, the interest on that $15 million, it would consume the balance of the tourist funds. Plus, you still need to fund those small business grants out of the tourist fund as well. I believe that was shifted from the general fund over to the tour, so that still needs to get funded as well. It's not linked to a specific project per se, it has a longer term impact or properties there today that are residential, that are being rented, that are being cash flow. So it would likely take time for those to redevelop, but it would improve the value long term. City staff did a study before I was brought on, they looked at this to look at the return on investment. They found that when you take the properties within the floodplain compared to the properties adjacent that are outside of the floodplain, if you did this project, those properties would increase in value by about $17 million. That translates to about $100,000 per year. So is everyone clear on that? So based on the city analysis, looking at the parcels within the floodplain compared to what's not in the floodplain adjacent, once the project is completed, those properties should be worth about $17 million more today than they are today, which translates using this current city tax rate to about $100,000. Another project was the Mew Streets. That's a $7 million project, again, not linked to a specific redevelopment opportunity. Has a shorter term impact, and the real benefit to that is helping drive activity to the existing businesses downtown, make it more appealing. Unlikely that you would see four properties torn down and something else getting built. So this one isn't going to have the property value impact that the PEC project would have. I use the generic term corridor improvements because I know a lot of folks talk about Hickory Street. Since the Hickory Street project has been completed, and we can get into a but for debate, the parcels along Hickory Street have increased in value by $50 million over the past five years. So if you did another corridor improvement like Hickory, that was a $7 to $8 million project. It was about half a mile long, and it is a more disruptive project. It just takes longer to complete and would have an impact on the businesses located along there. Developer incentives was something else that we talked about. Again, when I was brought on, there were two developers looking for incentives. That's going to vary by project probably in the $5 to $10 million range. The return on investment is difficult to calculate because you just don't know what the specific project would be, but it's likely you're reimbursing for infrastructure, parking, those kinds of things. $5 to $10 million means you could probably do two or three of those depending on how much you offered. All businesses said they'd like to see an expanded grant program, maybe in the $50 to $100,000 range. Again, it has an immediate impact, but the return varies by project. Another thing we heard from stakeholders was that general maintenance. We should use tourist funds for general maintenance, beautification, street sweeping, those kinds of things. Probably doesn't have a return on investment that you could measure, but was something that folks said we should use tourist funds to take care of. So I know I've covered a lot. So PEC 4, phase 3 and 4, based on city analysis, property values could go up $17 to $20 million, translates to about $100 million to $100,000 a year in new property tax revenue. New streets, that costs about $7 million, not an obvious or significant increase in property values, then generic corridor improvements like Hickory Street, developer incentives, expanded grant programs, general maintenance. If the direction from this group is to fund PEC 4, phase 3 and 4, there is no money for these other projects, given how the tourist has a cap, or you could fund two or three of these other projects. Paula, you're muted. Okay, that tends to work better when I'm unmuted. I have a couple of questions. Would it be conceivable and maybe advantageous to create a second TURS that encompasses the PEC 3, PEC 4 areas that aren't in the current one, that is not structured with a cap, and allow both to invest in PEC 3 and PEC 4, would that have some advantages? Yeah, let me hear the answer to that one, then I've got another related question. So maybe, Erica, if you don't mind, could you pull up slide 15 so I could answer the council member's question? I think you could. I think the more common and easier thing to do would be just to expand the current TURS on slide 15. It's an easier process, there's not a separate TURS board. You could do it that way, now you'd have to figure out how to, it'd be easier to expand the current TURS, you could use all of the growth that's already occurred, because if you keep that TURS the way it is, with the downtown TURS, all you could fund would be that little stretch down mulberry of phase three. You couldn't use the downtown TURS to pay for what's outside of it. Okay, so if we, I have to be on camera, I think, while I'm speaking. So, if we did that, wouldn't that then also increase the earning rate of the TURS, like you're saying, it would consume all the money, but wouldn't there be more coming into it if we expand the boundaries too? Yes, there would be more, and in addition, I should have said this, if you go, I guess have to talk on camera, but if you look at the map, the improvements along Elm and Locust, you wouldn't see the increase in those properties without taking, without doing PEC 4. They're still in the floodplain, it's a little bit confusing to describe, if you go back to that map, those parcels along that corridor would still be in the floodplain. So as you think about prioritizing projects and expanding the TURS, just keep that in mind as well, right there, there you go. And sorry, I'm kind of pressing ahead, Melissa, but if I could just ask one more on the same topic. What do you think about the ratio of inputs to outputs, and to put it differently, how much should we be interested in investing to garner $100,000 a year income stream, and could that guide us toward how much other resources we need to bring to bear, right? Let's say, I mean, maybe that's great to invest $20 million and get $100,000 a year income stream, or if there are other, I mean, maybe if there are other resources, we should get them anyway. But might that be a guideline, like we need to fund half of it in order for the return to be attractive, that kind of thing, is that completely unclear? No, it makes total sense. I mean, I think that's sort of a philosophical debate about TURS and how you use them. Is it to fund infrastructure that have a longer term payback, or do you want to use your TURS dollars to fund higher impact catalytic projects like developer incentives? So I do think return on investment should be taken into account. What makes this one tricky, and it's harder to answer your question, is that there is that $24.8 million cap. So if you didn't have the cap, I think it might change how you prioritize these. But if you were able to get, I'm making up numbers here, no basis for any of this, if you were able to get 10 million from the Corps of Engineers because they like writing checks, and then, in fact, did you say something about how there's revised numbers that now it's only 15? Originally we thought it was closer to 20 million when we were talking about it, and I think the numbers now are 15 to 16, maybe revised isn't the right word, but as we delved into and pulled the specifics, I know it's part of a larger project. It's about 15 to 16 million. So let's say for argument's sake, Corps of Engineers magically wants to give us 10 million, so now it's 6 to 7, do we like those returns then? And then that leaves room, it's kind of a portfolio, so I think of it, in fact, in my very first TIFF board meeting, we very carefully worked out an agreement that was completely steamrolled by council, but we talked about a portfolio approach where a certain percentage would be for some unspecified big thing, and a certain percentage would be for more immediate things, and I don't remember where we landed, I think it might have been 60/40, and maybe if there are, in fact, other sources, investment sources toward this, we could get to some kind of a portfolio like that and like the basket of returns. No, and I see Alex has a question, but I would say yes, I think the portfolio makes sense, and again, then you have to decide, do we wait and not do anything to see if that other money comes in. Sort of, there's a lot of circular, if this, you know, but that's, sorry, Alex, so. Okay. I'm done. Thanks. Yeah, I can kind of weigh in probably a little further than I could initially because I was involved in one of the projects that Travis referenced on Moulby that's dead at this point, so to me, I don't have a problem talking about it. That project could have funded alone, just the tax revenue alone on that project could have funded a big chunk of the drainage improvements for potentially some public garages, so you could almost look at this and say, expand the boundaries, you know, the city could incentivize development to occur, the type of development to occur where they want it along that, you know, flood corridor within that flood corridor so that the funds generated just off those projects could fund those improvements over time, you know, that was kind of the direction it was headed, a few factors, you know, there was a desire to stall and use and study the turs which maybe that, you know, again, that was probably needed, then you had the seller signed a long-term lease on the property because he wasn't willing to wait for a study and then COVID, so quite frankly, I'm glad to not have taken a big leap on a project, you know, right then, you know, at this timing, but there are ways, I mean, you could look at, you know, even dollars from the TIF acquiring parcels needed to make that a reality if you're talking about an assemblage, you know, so it's just, I mean, other parts of that, of that drainage corridor, it's like, well, a big chunk was available and ready to do something, but the turs could say, well, we need these two little used car lots, you know, that are ugly anyway and combine that with this big parcel and then those, you know, let's put a bow on it and put RFPs out for developers to come in and develop a mixed-use project that meets the design guidelines we want and then that, that in turn helps fund the drainage improvements because that's definitely a but for, there's not going to be a 30 million dollar development on Mulberry as long as there's a floodplain there, it's impossible, so. I think that's a great point and if you look at, I'm sorry, Ben. Go ahead. No, so if you look at that map on 15, there's two considerations, I think Alex had described them perfectly, you can narrowly expand the boundaries that just picks up the geographic boundaries of PEC three and four. I would recommend you look at going further south because you've taken a bunch of properties along Elm and Locust out of the floodplain, so I would pick up that area as well as a way to help repay yourself council member to your point about that return on investment. I'd pick up that larger boundary I've drawn, but that would obviously have to be a council decision. It's probably a moot point if I can speak, I guess, but the south Elm and Locust, yes, I agree, but you know, the point about using the funds for big, I can't remember how you turned them into like hickory street type projects and how disruptive they are, it could have been done, it's a big disruption right now, you know, some beautification could have been done with what's happening as we speak. I'm driving this Ben. One that that keeps hitting me and I guess this is, this is more for Councilman Meltzer and Councilman Hudson, if, if we, if we expanded, if we recommended expanding, we recommended going full in on the drainage issue, this, we're, we're done, we have no more recommendations to make for the life of this thing, right? Travis, you're saying that's, that's the end, right? So to Paul and Gerard, what, what are the chances that we can, if we're expanding the physical scope of, of the TURS, what are the chances we can, we can expand the financial or the time frame as well? Would Council be willing, do you think they'd be willing to do that? Or can you even speak, speak to that? So I'll, if I may, Melissa, okay. Thank you. Yeah. So no, I'll tell you, predicting the future on council decisions is ominous at best, but that being said, I think the challenge for me or what, what I would like to hear from staff is I know there's that particular mix of residential to commercial uses or percentages in that area and that's where I get a little nervous and I hadn't heard from staff. I think you have to, if we include, we've got to carve out and so I don't, I just want to make sure that one, we can dance that dance and stay with the right mix, but then take that a step further to answer your question. I think, yes, it really is a matter of having the right, so when those detractors that I've heard, it's always been centered around existing versus new growth and what that new growth looks like. So I think if we can enhance the new growth and it not be apartments or that sort of thing and truly be a commercial type use, I think there's traction for that and I've heard people that support that. I think the detractors lock on to the fact that it's, if there's any new growth, it's been apartments and hadn't been commercial and there's a myriad of reasons for that. I'm just telling you, I'm just repeating what I hear. Chapter 311 of the tax code does put a cap on residential. When we created the TURZ, the cap was 10%, so it was very difficult at that time, but the cap has since been increased. So we've looked at that. It doesn't look like it'll be a major issue. I believe it's 30% now. Great. So Ben, succinctly to answer your question from my perspective, it's yes, I think there's an appetite to expand that, but then it would, I think the caveat then becomes what new growth and how we can incentivize commercial kind of uses versus residential uses and give some council members peace of mind in that space. That's just one person's read on it. Ben, does that answer your question or Paul, can you answer it as well? Yeah, it's also asked as well, like your response. So first of all, I'm very motivated personally about the idea of a greater downtown that would be live, work and play. So the residential thing is kind of a little tricky. If you're building multi-purpose, I don't know if that's kind of a problem, but as far as whether, I think the point of your question was could we lift the dollar cap? And I think if it was part of a coherent plan that said we need to be this big in order to do the drainage and do the development and spur the development that goes with it and then have something to pretty up the area beyond it. And that's X size. So there's a particular dollar amount we're aiming for to achieve that. I think that's palatable. The reason you wouldn't want it to be completely open-ended is because the city itself as a whole is counting eventually on having growth from property tax, from property values increasing in the future. The city's needs grow too. So if it's all just contained in the tourist, at some point you've got to kick in back toward police and fire and all those other good things. So I think it can't be unlimited or in my opinion, it wouldn't be palatable. But I think if, just to restate, I think if it's part of a coherent plan, I think that'll be saleable. Now, whether Mayor Portem and I are sitting there at the time the vote comes up, we'll find out November 3rd. And does that answer your question? I think that's, I think that's why a lot of cities also have, as you all have the declining percent contribution council member to address that issue. So figuring out with city staff, what's the appropriate level and how you phase it out over time is something you definitely need to think about. I'd also make this point, Ben, and I think Alex said this as well. Given that cap, and to the other council member, if you do an economic development incentive to a business, then you don't have enough money to fund the drainage. So that that's just sort of a little bit where we're stuck. If you sort of pay it likely for anything other than drainage, which is all important, you then can't afford to pay for drainage. That makes sense. So and then I had another slide on slide 17 that I think summarizes what we've talked about, which is should the tourist issue the debt and David could explain that, but should the tourist issue debt to pay for for pack four phases three and four, if yes, then there is not any money to do anything else. If you all say the answer to that question is no, or we want to wait to see if we can find another funding source, then how should the money be you should to be used for strategic corridor improvements for new street, the new streets. What about the request for developer incentives and how much of that should be set aside knowing that we don't have a specific project that we're trying to fund. But that's one thing the developer said is if you want commercial, if you want office, we're likely going to have to provide an incentive because of the rent structures today. And then finally, under what conditions might the city extend the life of the tourist. I just picked five years, maybe it's 10 or seven years, whatever, whatever the right number is, or exceed the revenue cap. I think it would be a good idea to hear from Alex about because Alex, you said that you can't really fund a development project unless you get the PEC4 project moving because there's not any space to develop or spend development money. I was just frankly saying they won't allow you to build in the floodplain. So it's not going to happen on that parcel of land without it being fixed. You were talking about that particular parcel. Right. Yeah. There's others that are affected in the same way, but I'm just saying it was a prime example of a pretty good chunk of land that had the opportunity to add a lot of value to downtown. It's very, very sparsely developed in terms of way too much surface parking and low density, one and two stories tops. So it was definitely somewhere where you could have taken buildings three and four stories high, garage parked. I mean, that's the thing. I mean, to Gerard's point about apartments, I get it. I do. I mean, you don't want to do this and all we get is a bunch of apartments. I mean, if you create a good incentive policy, figure out a way to fix the deficiencies in the area to even allow for it to occur, whether that be code or floodplain. But then to incent then you can incent by saying, okay, we're going to do this, make it economically feasible, but in return, we want these types of quality things. We want retail where it's going to work or we want a percentage of office in this. If you're going to do a $40 million project, we don't want it to be 2 million of retail and 38 million of apartments. We want this percentage of office, this percentage of retail, this percentage of maybe hotel. Again, I'm using these examples in assuming we've got good economic conditions again, but to me, all of those things, in my mind, two years ago were feasible. Today I don't know how much of them are, would I or anyone go finance those things. But hopefully by the time we're ready to spend these dollars, that's different. And Travis, maybe you could speak to some of the development programs, and I think that was bullet point three that are possible. I know based on the original ideas, it looked to me only like number E or letter E was something that was maybe in the wheelhouse today. And I think that the only other thing that I would say is maybe where the mini mall was, that is another opportunity for development that's not in the floodplain. And the rest of them seem to maybe be too far along for cost to develop. But that's just what I'm seeing. No, I think that's right. I think you're referring to the map on slide six, which shows those development zones. C still has floodplain issues for the northern end of the TURS as other floodplain issues. They're likely going to have to provide those economic development incentives. They would come in the form of a grant or a rebate based on conversations with some of those projects and the pipeline. The city could choose to find another source of money other than the TURS, which is probably unlikely. But again, if the five or six or $7 million has to come from the TURS, it just means you now have $14 million as an example to spend in other places. So especially if you want parking, parking garages are always expensive, they're never easy to finance. That's the kind of project that Gallus is right. You could assemble land, TURS can assemble land and then issue an RFP or sell it down the road. So there's different ways you could do economic developments, grants or programs. Paul? Unmute? Yes, something you said just doesn't make sense, or at least I don't understand it yet. And I'd forgotten that the idea was to potentially use the TURS to hold debt. You said if we issued debt held by the TURS, that that would use up all the money. But the carry cost on $15 million can't be the same as paying cash for $15 million. What's the carry cost? How would debt financing it use up all the TURS? I think that might be a really good opportunity, unless there's something I'm missing here. This is David Yanes, Assistance Aid Manager. I think what Travis was referring to is if we issued the debt for the $15 million, over the life of that debt over the 20 years, it would be about $21 million. So you would exhaust with interest cost the entirety of up to the cap. So just interest cost alone is going to kind of take that total from $15 million to $21 million. If that answers your question. Okay, over the life of it, but does that make a difference that it's over the life of it? For instance, you know, if you if you do if what is what is roughly the carry cost on $15 million? You got to have an assumed interest rate, but it's about 70,000, an annual debt service payment is about 70,000 per million. So for $15 million. About a million bucks or so that's about where we are. So yeah, are the rules different? If you say we're committing a million a year, we're also getting, you know, revenue into the TERS. But how much do we get a year, I think we get, what are we getting about half a million a year? So close to 800,000, close to 800,000 right now. Well, that's kind of interesting. But with an expanded TERS, could you get a million in, that'll cover the debt service? Right. I guess, I guess, but I take your point that you would still that would still consume. I think that's part of the question. Right. So the question is if you expand the TERS and you increase the limit, do you get more capacity with this project? Now when you expand the TERS, I think as Travis mentioned, you're also starting with a new base there for those that you bring in. So you're going to have to have some catch up time, but that would be a benefit of this project if it worked out that way, right? Where you, you expand the TERS and you get more, more revenue in and you can do more things with it. So it just kind of changes the discussion. Once we start thinking about that, but I think you're right, you know, if somehow there was $15 million and there was no interest, you would have five or $6 million left over. But that interest payment is what was what consumes the difference between the project cost and the cap. Yeah, that's right. And the 15 million isn't sitting there now. So correct. Okay. Now I understand. Thank you. And it's all right. I should have been clear on that. No, no, I should have been clear on that. And that's where you have to decide is, and this is why it's a little bit circular. Do you want to wait a year and see if some of these grant opportunities come in, which then reduce the amount of debt the city would have to issue? You know, do you try to wait and pay cash? So I think that first decision about does this group want to recommend, or is it the desire of this group to focus on that drainage project that consumes the balance of the funds without any changes to the duration and the cap? We keep on talking about these other grants and other sources. Are there any, I mean, waiting won't make it happen. You know, are there things we would go after that exist, or is this just a purely theoretical topic? I think Erica could probably go into some detail on that. But there certainly are a couple of avenues, even one that has come up recently associated with the CARES Act. So those are things we're obviously going down the route of and exploring. And if we ever, if we get news on that, we'd obviously bring it back and it would change the discussion quite a bit. But I can hand it over to Erica to get to the specifics on those. The Economic Development Administration, we wouldn't normally qualify because we're not a distressed community, but all communities are now distressed because of COVID and the CARES Act. So we're putting together, I've got three projects put together and I've got opinion and probable construction costs and timelines back from engineering. So I'm putting together a PowerPoint and we're going to bring something to council to see what, which project we want to pursue. One of them is the PEC-4, one of them is Meuse Streets, and the other one is the McKinney property across the street and the William Trades Square combined as more of a pedestrian project. But again, this was a competitive funding source and we don't know if we'd be funded. It is federal. It would take a little while before we would. But we've been working with the North Central Texas Economic Development District and EDA, the local office for the region on possible projects and they seem in line and we'll be moving forward with that. You're asking to have them fully funded and what's the timeframe? What I'm hearing from EDA is they won't fund more than about six million. So that's what we're looking at. There's a 20% match requirement. So it would be a little over seven million, about 7.2 million is what we would be looking at. So it would only fund the majority of Meuse Streets partial on PEC-4, almost a phase basically of PEC-4. But timing wise, it wouldn't affect it much more. That's one of the questions I had back to engineering, even if we just did one phase. Time to find out? Timing on how long it would take to construct. They're looking at obligating, I believe in the fall of 2022 by 2027. What's the timing to find out if you're going to get it? There is no deadline to apply, so they're taking them as they receive them, but they want to obligate funds by 2022, the economic development administration, and they want to have them completed by 2027, last I heard from there. So you wouldn't hear until 2022? You might hear before, but they wouldn't be obligating, but that's the only timeframe they're really giving us. I know that they review them on a monthly basis as they receive them. Okay. Or my conversations with the Economic Development District at the COG. I'm going to really, really try to be quiet now. I think in line, though, with Paul's question, you asked for money for multiple development type projects. It's not an all or nothing, and if we funded PEC4, then the monies that you receive could go to other projects, correct? Erica? I have to unmute, yes. But again, it's a competitive grant, we can't rely on that. They have some non-competitive, and they're typically going to economic development districts, and they're trying to get those out first, and also to, in the past, they had a revolving loan fund, and that's their priority as well because of distress, and typically it's only in areas that have experienced distress, hurricane areas and that sort. So they're not really getting new ones, it's just funding previous ones, from what I understand. No, I have a question for Travis. On the list of projects that are being considered, what experience do you have with, you know, I think it's probably a pretty big thing that Denton has flood zones on both the north and south sides of Denton that are hurting the development of downtown, and I'm sort of one of those people who think that the corridors and the entrances need to be further developed so that, as opposed to like, for me, I feel like new streets are more like an overflow from the square, and so I'd like to get them there as opposed to take it, you know, have an overflow type thing, but I was just curious how often do you see turds having to take care of just the infrastructure to be able to have development projects happen? That's pretty common in older downtown areas like this. Just the infrastructure is older, and so someone needs to maintain it or upgrade it. So I think that's the tension with these. I mentioned your question between, let's say, a greenfield development where you're not as worried about older infrastructure costs that are part of it or flood. Like one $15 million project like PEC4. Right. Yeah. But they all vary. I would say it's probably not as common to see a cap. I mean, there are caps, obviously, and these have to go back to city council for approval, but that's a little bit different on this one as well. But San Antonio, if you know where the pearl is, all along Broadway, I mean, they use their turds to provide 15-year, 100% tax abatements to encourage residential, then a residential first strategy, and then we're going to stop doing those and then focus on commercial. They felt like they had to focus on getting the residents down and then the businesses will follow. So they all vary. This is not uncommon to struggle between. Do we save money for infrastructure? Do we use it for incentives? We try to fix up sidewalks and lighting to help drive traffic to the existing retailers. And that's sort of a philosophical debate that has to get answered on what is the priority. Some of that goes back to what is the overall vision for downtown. So I know in San Antonio, speaking of that, they have like an executive director kind of driving that vision in a place like San Antonio. Is that something that's been on the table for Denton or for our turds? We haven't discussed that specifically. I mean, downtown San Antonio uses Centro, which is funded through a PID, and so they overlap duties between the PID and the turds. I don't know, depending on what's decided by this group and then by city council, I don't know if that role would be necessary. It might be, depending on if you expand the boundaries and increase funding. But if you, let's say, spend all the money on flood control, then I don't know that that role would be needed. And I think you have Erica and Jessica and other folks that are sort of capable, given the size and scope of this, to manage it. So that puts us on slide 18, which is- Alex, did you have a question I saw on the half hand? I've had experience personally with the Fort Worth South, their TIF district, and they have staff that helps drive that vision. They do. Again, they're bigger, a lot more money, so I don't know that it's, I don't know that we could handle that, but it certainly is helpful. That's it. All right, Travis, I think it's yours. So I'll take it back, slide 18, which is next steps. So where we are today is to get feedback today or come back, but get feedback from this group on how they want to prioritize or provide direction on how to spend the balance of the funds. Maybe ask the county to formally join the terms. I know that's been talked about informally the past couple months I've been on the project. And then whatever this group does, you would need to make a formal recommendation to the city council, I think, on potential changes to the terms in terms of boundaries, number of years, cap, and then they would have to go through, I know we have legal here today, but they'd have to go through the public hearing process and the formal updating of the project and finance plan. There's some paperwork that I think staff could handle on those two, but I think where we are today is how does this board want to proceed with prioritizing the funding that's available? Should I just go around the whore and get everyone's opinion? Sure. I think that's as good as any. Okay. Let's start with Paul. I'd prefer to go last and rather hear from others. Alex, you want to go first? Sure. I will. I also may have to jump, but at 115. So I gave a lot of my feedback to Travis in various forums. And so he's heard from me before, but for the group, and I think a lot of you've heard my opinions as well. I would be probably one that's going to say expand the boundaries, extend the term, not so big that it's a detriment to the remainder of our city. But if you believe that the downtown area and the core of that being the central business district, TURS district is really kind of our showpiece, right? And if it's nice and it brings in visitors and redevelopment, it brings up the city as a whole. So I would say that I would say expand it. And then don't just let it get used to suck away at, suck its funds right into like right down the drain, if you will. And then, you know, or for fixing sidewalks and just while those things are important and necessary, there's other ways of getting that done and encouraging, incentivizing new development is what enables, you know, and then using those dollars to pay for improvements in the district is what we'll get those other smaller things done, at least the sidewalks and that sort of thing and street trees, figure out another way to pay for drainage and just realize that it's going to, you know, make the, you know, make the balances of the, of the TURS go that much higher when you put them in play. Ben, I don't see Ben anymore, but I thought that was maybe just my screen. I don't see Gerard anymore either. And this is Matt in the city attorney's office. I'm just trying to check Erica, do you know, we've only, I only see four members. Do we still have a quorum currently? We need four for a quorum. Okay. So four is the quorum. We're good then. Okay. I don't see Gerard, I see three of us. Melissa Paul and Alex lost your quorum. How long do we have to get back a quorum? Well, we had a quorum for the minutes at least. Yeah. You can take a recess if you wanted to get the quorum back together, but we can't continue with the meeting unless we have one. If we take a recess, Christina, can you reach out to the two that fell off? I will. All right. And Alex, when do you have to go? Okay. All right. We'll recess. It is 1 10 and we are officially closing the meeting for lack of quorum, but we will be sending out a meeting notice to change the rescheduled dates for at least the November meeting.