Public/Private Partnership Program Economic Development Committee February 4, 2008
Purpose Review the City s Public/Private Partnership Program Guidelines & Criteria. Receive further input from the committee on potential new or revised policy goals in preparation for adoption of new guidelines in April 2008. 2
Public/Private Program Review The Public/Private Partnership Program is designed to provide City of Dallas economic support to private for-profit projects with an emphasis on targeted geographies for the following purposes: Increase the commercial tax base Create and retain quality job opportunities for Dallas residents Target investment and job growth in Southern Dallas and Enterprise Zones Foster the attraction and expansion of targeted industries and existing firms Maintain a competitive position relative to non-city of Dallas sites Encourage the redevelopment of sites and areas experiencing disinvestment The Program Guidelines & Criteria provide a framework for negotiations with businesses/developers on potential projects and are attached as Exhibit A. Residential projects can be considered downtown pursuant to a December 2006 program amendment. 3
Public/Private Program Review The program typically supports the following non-residential project types: Business Recruitment/Attraction Business Expansion and Retention Retail Development Commercial Real Estate Development Brownfields Redevelopment 4
Public/Private Program Review Public/Private Economic Development Tools Tax Abatement an agreement to forego future real property or business property tax revenue from new investment Development Fee Rebates a rebate of fees charged in the permitting, inspection and regulation of land and building development Public Infrastructure Participation offset of capital infrastructure costs such as streets, water and other utilities Right-of-Way Abandonment Fee Rebates/Credits offset of processing fees for abandonment of City property (not to real estate value) Other Program Tools State law allows for the creation of programs for grants and/or loans pursuant to Chapter 380 of the Local Government Code, such as our TOD program. Eligible projects may be supported by the program through the Public/Private Partnership Fund (PILOT payments from Water Utilities) and proceeds from GO Bond propositions for Economic Development 5
Public/Private Program Review In accordance with City Council-approved Guidelines & Criteria, staff will make proposals to projects that are subsequently considered for approval by the City Council. Incentives are proposed for projects wherein, but for the incentive, the project would not otherwise occur in the City, or it would be substantially modified in a way that reduces the benefits accruing to the City. ( But for assumed met in Southern Dallas) Factors considered prior to making incentive proposals include job creation or retention, private investment, competition for the project, financial gaps, location, zoning, wages, industry type, M/WBE participation, etc. A project must meet predetermined minimum eligibility criteria relative to the particular site under consideration in order to receive a staff recommendation to the City Council. 6
Issue for Discussion: Small Business Assistance Small business projects are not typically supported by the program because minimum eligibility is excessive and the incentive tools are not geared to providing meaningful support relative to the needs of small businesses. 7
Issue for Discussion: Small Business Assistance About Small Business: Account for nearly 80 percent of Dallas businesses and nearly 34 percent of the city s workforce Fundamental to workforce development especially in minority, immigrant and under-educated populations Workers more likely to gain entry level experience and receive on the job training that improves the overall workforce Play a key role in growing our tax base 8
Issue for Discussion: Small Business Assistance Staff proposes the creation of a Small Business Support/Capacity Building Program to mitigate the operational and growth barriers facing small businesses The program can be initiated with $500,000 allocated from the Public/Private Partnership Fund and directed to three specific programmatic tools Loan Loss Reserve Interest Rate Buy Down Employee Stipend 9
Loan Loss Reserve Lessen the challenges that small businesses face in securing working capital by establishing a 15 percent Loan Loss Reserve Encourage Dallas banks to make a low interest (3 percent) $2,000,000 loan to a lending entity such as SDDC that can be loaned to small businesses Loan losses in high risk portfolios seldom exceed 10 percent Proposed City Investment: up to $300,000 depending on loan losses 10
Interest Buy Down Many small businesses lack the expertise to bid contracts at a profit and an Interest Rate Buy Down can reduce expenses and increase profit A 5 percent Interest Rate Buy Down would result in a small business loan at 8 percent accruing at 3 percent Provides a net interest margin of 5 percent to the lender to defray the cost of operating the program Proposed City Investment: up to $100,000 11
Employee Stipend Provide a $2,000 employee hiring stipend for small businesses Target small businesses that contract with the City and/or participate in the Small Business Program Hire and train up to 50 employees from low to moderate income census tracts and exoffenders Proposed City Investment: Up to $100,000 12
Next Steps for Small Business Assistance Program Staff will develop underwriting guidelines and necessary policies and procedures for operating the program for further Committee consideration and discussion 13
Issue: Public/Private Eligibility Primary minimum eligibility criteria is job number and investment based on location within the city Recent City Council discussions of economic incentives have introduced other factors that could be considered such as wage rates and resident employment 14
Issue: But for in S. Dallas The but for test is assumed met for projects in Southern Dallas Recent City Council discussions of economic incentives to projects in Southern Dallas lean toward all projects needing to meet the but for test 15
Issue: Project Information Provided to Committee In addition to project deal points, the Committee has requested additional information such as induced or indirect economic impacts (from economic modeling and multipliers) and the impacts on other taxing jurisdictions Exhibit B provides a project summary example proposed for all Public/Private Partnership Program projects submitted to the Committee A project pro forma will be provided for new developments as applicable Competitive corporate relocation projects and company owned developments will not include a pro forma 16
Exhibit A 17
Exhibit B 18
MERRIFIELD HAMPTON POLK WILDWOOD ZANG MARSALIS MARSH MIDWAY HILLCREST COIT PLANO PRESTON WALNUT AUDELIA AUDELIA PLANO JUPITER BUCKNER SHILOH MASTERS Enterprise Zones - City of Dallas ROSEMEADE KELLY 190 FRANKFORD 289 MCCALLUM CA MPBELL WATERVIEW 190 78 ARAPAHO BELT LINE SPRING VALLEY ALPHA 635 NORTHAVEN FOREST 75 66 121 183 114 LUNA DENTON REGAL 356 ROYAL WEBB C HAPE L 35E IRVING HARRY HINES WALNUT HILL INWOOD 12 MAPLE LOVERS LEMMON NORTHWEST COLE MEADOW GREENVILLE ROSS GREENVILLE SKILLMAN GASTON ABRAMS M OCKINGBIRD 635 EASTON PEAVY GARLAND 12 FERGUSON 78 OATES JOHN WEST FERGUSON 30 80 JEFFERSON CAMP WISDOM FM 1382 303 City of Dallas Created 1/31/2008 180 20 CLARK MOUNTAIN CREEK CEDAR RIDGE 12 MERRIFIELD DUNCANVILLE DAVIS KIEST Research & Information Division (214) 670-1685 http://www.dallas-ecodev.org 30 WESTMORELAND LEDBETTER RED BIRD ILLINOIS 67 TYLER JEFFERSON VERNON DANIELDALE SANER 35E ZANG 8TH EWING LANCASTER Legend LAM AR CEDAR CREST CAMP WISDOM WHEATLAND 342 PINE CENTRAL 45 SIMPSON STUART 20 BONNIE VIEW City Boundary Enterprise Zones 2ND Commercial Zones CENTRAL 12 North / South Division JIM MILLER LAKE JUNE SCYENE Sources: Enterprise Zones - Texas Office of the Governor, 2008; Streets & Lakes - City of Dallas, 2007 MURDOCK ELAM PRAIRIE CREEK SAM HOUSTON BRUTON ST AUGUSTINE 635 175 352 BELT LINE LAWSON Miles 0 2 4 8 Lakes Trinity River Freeway Tollway Highway Major Arterial
Exhibit B Proposed Project Information Worksheet Economic Development Committee A. Project Summary City Council District Project/Company Name Project Location Project Type Facilities (Square Feet) Construction Schedule Private Improvement Investment Jobs Average Wage Rate City Incentive Summary Begin Complete Real Property Business Property Created Retained Salary Hourly Tax Abatement Infrastructure Other B. Economic Impact Estimates (Dallas City Economy Only, $ Million) Direct Impact Indirect and Induced Impact* Total Impact Jobs 10-Year Economic Output Jobs 30-Year Economic Output C. City of Dallas General Fund Fiscal Impact ($ Million) (From direct, indirect and induced economic impacts) 10-Year 30-Year Total City GF Revenue Generated Total City GF Service Costs Net Impact Before Incentives City Incentives Net City Fiscal Impact * Indirect impacts represent supplier effects, induced impacts represent spin-off household effects. D. Other Taxing Jurisdiction 10-yr Estimated Tax Revenue Property Taxes Sales Taxes DISD Dallas County DCCCD Parkland Hospital DART