The City of Irving and Ark Group of Irving, Inc. Partnership

Goal No. 3: Economic Development 1

Overview • Ark Group of Irving, Inc.

• Benefits

• Risk

• Proposal

• Performance Incentives

• Return on Investment (ROI)

• Timeline

• Recommendation/Discussion

2

Ark Group of Irving, Inc. • Amphitheater

• Performance hall

• Four limited food service/ entertainment venues

• Nine full-service restaurants

• 5,000 sq. ft. retail

• Pedestrian walkway

• Three live music stages

• Open air plaza

• 1,200-space parking garage

3

4

Development Budget

5

Size– sq. ft. Estimated Cost Live Music Venues $36,000,000

3,000 Capacity Indoor Venue 50,000

7,000 Capacity Outdoor Amphitheatre 120,000

Indoor Venues & Lounges 40,000 $18,500,000

Restaurants, Bowling, Comedy Club 114,000 $60,750,00

Misc. $48,925,000 Parking Deck $24,000,000 Plazas and Plaza Stages 100,000 $10,000,000 Contingency $14,925,000

Total Cost Including Contingency $164,175,000

• Debt to be based on Brimer HOT tax

• Developer “fronts” project financing

• City owned entertainment center

– Private funding 48.8%

– Public financial participation 51.2%

Benefits

6

• Performance payments from project generated revenues

• 1,550 jobs at the Entertainment Center

• 400-500 construction jobs

• Lawsuit settled

• Catalyst for Urban Center

• Private financing to be used

Benefits

7

Risk • $96.045 M less risk

• City participation identified

• City’s risk not dependent on success (managed risk)

• Settle lawsuit at no increased cost to city

• Structure less than $128 M previously recommended option

8

Risk Analysis Proposal

9

Funding Source LCG Original Increase/

(Decrease)

Current

Recommended

Increase/

(Decrease)

General Fund

Brimer and Project Debt

(Includes: Brimer 2 percent HOT, Brimer Parking Tax, Brimer Ticket Tax, State HOT, Sales Tax, City Sales Tax, Mixed Beverage Tax) $180,450,000

($180,450,000) ($180,450,000)

Existing Brimer Debt $23,500,000 $23,500,000 $23,500,000

Land Debt $2,569,875 $2,569,875 $2,569,875

TIF – Garage $24,000,000 $24,000,000 $24,000,000 $24,000,000

TIF – Infrastructure $20,000,000 $20,000,000 $20,000,000 $20,000,000

Additional Brimer Debt $40,000,000 $40,000,000

City at Risk $206,519,875 $70,069,875 ($136,450,000) $110,069,875 ($96,450,000)

Tax Rate at Risk 8.5 cents -0- cents (8.5 cents) -0- cents (8.5 cents)

• Project performance revenue

– City sales tax

– City mixed beverage tax

– State sales tax

• Brimer HOT tax

• TIF District No. 1

City of Irving Contribution

10

Proposal

11

$84M + $80.175M = $164.175M $84M + $80.175M = $164.175M

Public Funding

TIF – Parking Facility $24,000,000

TIF – Infrastructure $20,000,000

Additional Brimer Debt $40,000,000

TOTAL $84,000,000

% Public Funding 51.2%

Private Funding Developer Participation $80,175,000

% Private Funding 48.8%

Estimated Performance Payments

City Sales Tax $14,544,000

City Mixed Beverage Tax $2,645,000

State Sales Tax* $19,182,000

Ticket Tax Unknown

Parking Tax Unknown

TOTAL $36,371,000

Revenue to City

Annual Rent $1

*Special consideration from Texas Legislature

Financing Proposal/Comparison

12

Convention Center

Convention Center Hotel Ark

Initial Funding Division Public $145 M (100%) $9 M (10%) $84 M (51.2%)

Private 0 M (0%) 81 M (90%) 80 M (48.8%)

Performance Payments City Property Tax $2,304,422 -0-

City Sales Tax 1,425,800 $14,544,000

City Mixed Beverage Tax 200,067 $2,645,000

State Sales Tax 3,962,625 $19,182,000

State HOT 10,613,520 -0-

City HOT 19,952,750 -0-

Ticket Tax* -0- -0- Unknown

Parking Tax* -0- -0- Unknown

TOTAL $38,459,184 $36,371,000 Revenue to City Annual Rent $1

*Cannot reliably estimate revenue due to lack of history

Ark Group of Irving, Inc. Comparison

13

• External Comparisons

• Descriptions

• Funding Structure

• Performance Incentives

• Revenues

• Comments

Return On Investment

14

Risk-Related ROI

ͻ Less risk: $96,045,000 less than LCG proposal

ͻCity participation identified upfront (less risk)

ͻCity cost not dependent on success of venue (managed risk)

ͻ Lawsuit settlement without increase in city cost

ͻProject cost decreased from $250 million to $164 million

ͻCity’s funding contribution decreased from 68% to 51%

Economic ROI

ͻ1,550 permanent jobs ͻ500 construction jobs ͻ Increase in Urban Center

valuation ͻBoost HOT revenue ͻEnhanced capacity for large

scale events ͻ Increased visitors to Urban

Center ͻ Spurs Northshore and

Waterstreet developments ͻCreates activities for

Convention Center and Convention Center Hotel visitors

Strategic ROI

ͻ Supports Strategic Goal 1 and Goal 3

ͻ Synergy with Convention Center and Convention Center Hotel

Time Line – Target Dates

Milestone Target Date Lease Agreement December 31, 2013

Construction Loan Financing Term Sheet and Equity Commitment Letter

December 31, 2013

City Bond Sale March 1, 2014* Estimated date to sale bonds;

date contingent on Ark Group of Irving, Inc. financial commitment letter

15

Recommendation

Recommend Approval of Resolution

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Discussion/Questions

17