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Irving staff's presentation to council promoting the ARK plan on 2013-07-24
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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
16
Discussion/Questions
17