Travis County Commissioners Court
March 4, 2008
Item 14
And we have our 10:00 a.m. Group here. 14 is to review and take appropriate action on the following -- a, interlocal agreement with the city of Austin to participate in the tax increment financing (tif) reinvestment zone number 17 for the development and funding of the waller creek tunnel project; and 14 b is appointment of one county representative and one alternate to the board of directors of the tif reinvestment zone number 17.
>> I would like to introduce kimberly springer on the far left who is with the city. Handling the citizens group. Wall larry creek, gary jackson as the waller creek can do, go to can. Leslie browder with the city. I forget your name
>> [laughter] I think it's gordon bowman who -- who is with the county -- with the city attorney's office. What you have before you --
>> another that was stolen away from the county to the city attorney's office.
>> who has been very helpful as he understands both cultures.
>> christian I didn't recognize a word you said. Right over you. You didn't make that comment.
>> you have before you a four page summary of the project and it's -- it's operational financial implications along with a rather thick interlocal agreement that we believe is consistent with the actions of the -- of the Commissioners court along with the city council on this project. The project has been under discussion 30 years, 10 years ago. The citizens voted a 25 million-dollar bond project for -- for venue bonds for the waller creek tunnel project as -- as time went on it was very clear that in order to do it right, the costs would be substantially greater than that which was originally estimated. The project now has grown that the city realized 18 months ago that it needed a partner in order to make this happen. This came to the county for financial participation and the Commissioners court agreed to a certain set of principles. The project is fairly straightforward. A big pipe, 22 feet in diameter, a mile long, starts in waterloo park, ends at ladybird lake. It has straws that go into it for flood control purposes and in essence takes one -- over one million square feet of land out of the floodplain. In one of the most critical parts of the city. 41 instrumentures, 12 roadways -- structures 12 roadways out of the floodplain. It is estimated at
>> [indiscernible] the city has money in hand from the original bond proposal, but -- but sees the need for a bond in today's dollars of about $109 million. That is -- that is too large for one government to embrace. The city came to the county, last year, and said in essence would you participate in a partnership where the county would contribute 50% of its incremental tax revenue above a certain base, and the city would contribute 100% of its tax increment above that same base, to -- to help pay for the debt service for this project.
>> christian, didn't mean to interrupt you but I知 going to have to. That is folks in the general public don't understand what the heck is going on, especially when you are talking about a subject matter that they really don't understand and I have persons to ask me the question and I said well I知 going to ask staff to explain things a little more thoroughly. Would you do this for me? Tell the public what a t.i.f. Is. Texas increment -- what is it, how does it work?
>> tax incremental financing districts can be established by governments in the state of Texas to allow development to occur that otherwise would not occur except for the investment of -- of dollars to typically build some kind of infrastructure. In this case it happens to be infrastructure. And that means it can be roads and -- and other -- other physical modifications to an area. What -- what a tax incremental financing district does is say there's a certain base of value, let's say it's using simple terms, $100 worth of value. If we put $10 or $20 worth of investment into this area, then that $100 is going to grow. One can dedicate a certain amount of the increased tax revenue to help pay for the investment of those dollars that went in to improve this particular region. And it can be a small region or a large region. The -- the -- in the case of -- of a tax increment financing district, you can have one percent, 10%, 50%, 100% of all of the extra tax revenue that was created as a result of this original investment going in to make the property developable. And that in essence, most simplistic way, I think, is what a tax increment financing district does. And why -- why in certain areas it makes a lot of sense because -- because if you didn't put the original investment in, the area would stay just like it's been. And sometimes when you put that investment in, if it's a large investment, you have got to pay it back. And the way to pay it back is through this incremental tax revenue. That would come in as a result of development. Does that -- is that consistent with your understanding?
>> oh, yes, my understanding is perfect on it. I知 just saying those folks that are listening to us now. They question staff sometimes making presentations and it's above them as far as their understanding. I just want to make sure that when the staff is -- you know we say t.i.f. No one knows what a t.i.f. Is per se. That's been brought to my attention. I知 just wanting you to explain and expound on it so the folks in the general public will understand. Thank you.
>> you're welcome.
>> the city came to the Commissioners court last spring, said would you be our partner to help us build this -- build this big tunnel. We will contribute 100 spers 10f our additional tax revenue if you contribute 50% of your additional tax revenue. Do it for 20 years. Meaning dedicate this 50% of the tax revenue. Dedicate this to the project, at the end of 20 years, then you will retain 100% of the tax revenue. For the county. And that seemed like a very good arrangement. Seemed to make sense, especially since if the county did nothing and if the city did nothing, waller creek would remain as it is, which is not a particularly attractive part of town, one million square feet of land would remain in the floodplain if this partnership did not come about. It became clear that the numbers had gotten so large that the city really did need a partner. That it -- that it wouldn't happen without the county's participation and the city also said this is a risk free deal. If the costs are higher we will take care of with sources available legally to the city above and beyond what is expected to occur now. And -- there was worry gosh what if this gets to be even more expensive than 127 million. It probably will be because the $127 million happens to be in $2,006. So -- so all of that resulted in the Commissioners court saying seems to make sense. Staff is trying to put together an interlocal, which is what you have before you, and the so the project would begin in 2010, end in 2012. There have been hot and cold running consultants who are pricking what the increase in value will be and there are those who have optimistic projections and pessimistic projections, the current projections show that the value right now -- at the baseline is $238 million, for -- for the -- for the city. And I think it's 238.
>> 236.
>> 236.
>> and -- and slightly less than that for the county because of the county provides homestead exemptions in any event, the current projection shows in fy 11 the value would be 483 million. 10 years later it would be 1.97 billion. The current projection of $1.5 billion in 10 years. So we all know that's wrong, we just don't know in which direction. It will either be less value or more value. Either way none of that would happen about the project because a million square feet of land would still remain in the floodplain. There are two separate groups that are involved with the project. One is the waller creek citizens advisory committee which the county has a representative. That is really to provide advice and counsel on the projects amenities and the developing a vision for how this will fit into the immediate community. Ments a board of directors of the t.i.f. Which is composed of the city council and a representative from the Commissioners court. The risk to the county is fairly small. We do feel obliged to let you know the primary risk if the city abandoned the project before it was completed. If money went into the t.i.f. Funds from the city and the county, and then for some reason the city walked away from the project, then that money would be lost in essence. The likelihood of that is so -- so very small since the city is contributing 100% of its tax increment. If the city is responsible for managing the project, designing the project, maintaining the project and the county really is simply a financing source to make, to allow it to occur, but the -- but like anything, there are risks and rewards that the rewards of -- of having this project actually occur after 30 years of discussion, seems -- seems much greater than the risks that the city would abandon it before it was completed. And the impact of abandonment would go well beyond this particular project as I知 sure you can appreciate. The county is most likely obligated to pay into the t.i.f. For a 20 year period of time. There is the ability to pay off the t.i.f. Earlier than 20 years if reality is much better in terms of development than -- than is currently projected. But we should expect that if only because of the maintenance and operation obligations for a 20 year period, we should expect to be in this for a 20 year period, the city may choose to use 30 year financing. In which case it would continue to -- to pay off those bonds, actually expecting the city to issue certificates of obligation, whereas the county after 20 years would no longer be a financing source. That in essence is the -- the basis of the project and -- and I would open and ask if there are any discussions.
>> the concerns that we have today are the same things that we had a year ago, 20 years, no more than 20 years at the most and the number is 127 million with $109 million being issued and we are in at 50% of our increased value and same as it was last year, correct? All that we're asking for in a is to reconfirm what we voted on last year, so you just bring it back just to say want to make sure that you all are still there. Is that what a is about.
>> also about, but also a legally binding document. Attorneys have been running all over, along with a variety of financial and engineering people to ensure that all of the words say what they mean and mean what they say.
>> does -- does legal have any issue with that? Does the interlocal agreement comply with all of the requisites discussed in the -- in the previous vote?
>> yes, we've also have -- glen opel has looked at it. As christian said we've had a lot of help and from -- from all of the county offices involved as well to be sure that the designation and direction that you gave us has been put into agreement terms that are going to work best for the county.
>> that's excellent.
>> and the city.
>> so did we receive an annual report that thoses what the county's 50% represents, what amount?
>> yes, this will be part of the budget process. All tax revenue from the properties that are within the t.i.f. District will go into the county's general treasury and then a -- then a -- then 50% of that will be sent back to the city in the form of a check to the t.i.f. Fund. And the -- planning and budget office will be responsible for triggering that and the -- the budget process will include -- will include information to the Commissioners court about money in and money out.
>> do we get a report that shows basically application of city and county funds to an outstanding balance? That hopefully is reduced annually?
>> yes.
>> okay.
>> the t.i.f. Board, one of the reasons for the Commissioners court to make an appointment to the t.i.f. Board is to have a seat at that table. Because it's the t.i.f. Board that is the -- that is the entity that will be -- that will be overseeing the financial infrastructure of the entire project.
>> and the city team is made up of the members of the council, city council.
>> yes.
>> and the method for calculating the t.i.f. Increment, the -- if my understanding of the memo is correct, the county has -- has broached a technique that the city is also interested in using and is it the t.i.f. Board that will be the ones that ultimately land on that? I知 assuming that the city --
>> no.
>> okay.
>> no the county -- in the interlocal there is an attachment e, I believe, the description of how the county will calculate the amount of tax revenue derived from these parcels. It isn't just -- most people pay their taxes. Sometimes that doesn't happen. So what happens -- there was a lot of discussion about well what happens with refunds with delinquent taxes. Et cetera. Rather than go through a very detailed accounting of parcel by parcel by parcel, which required -- rather than hot and cold running attorneys, hot and cold running accountants to track, the auditor's office came up with a relatively elegant and simple way to determine the average -- average collection rate based on history. Therefore it is that -- a certain formula is being -- has been developed to allow the county to identify the -- the tax revenue coming in from these parcels. Then whatever that amount is, half of it will remain in the treasury and half of it will be sent out as a check.
>> but that is the exhibit e is -- is down as a may, so are there two different evaluation techniques that are available? Or -- or will the city and the county be utilizing the same technique.
>> we know how the county was, I will have to defer to my colleague on what the city will do.
>> as we move forward, we'll be looking at which option we want to choose whether we want to go with the average collections or simply account for it on a parcel by parcel basis. As a city we would bring that forward to the t.i.f. And then to the city council to let them know what we recommend. And get direction from them, that's where we are headed there.
>> either/or.
>> a parcel by parcel, it's an average as established by exhibit e.
>> okay.
>> correct.
>> is there -- will both parties to the agreement, the county and city, I don't see that we are required to both use the same. It's at the option of the parties, whether they are going to be parcel by parcel or --
>> check the option.
>> okay.
>> we didn't gift the city representative an opportunity to have their say. Any comments. In addition to what we've heard?
>> I would just like to say that I think this will be a project that we'll all be proud to be a part of once it's completed. I think it's really going to enhance the area and improve the -- the venues that are available in that region.
>> just agree with the comments. There is a excitement for the individuals that are around the creek but also in the city as a whole about the opportunities that this project provides, we also are very appreciative of the county's partnership in this project.
>> mr. Coleburn you were one of our more talkative attorneys with the county.
>> I would like to keep my comments very brief and just say hi
>> [laughter]
>> well, Commissioner eckhardt, you heard what she said earlier.
>> [multiple voices]
>>
>> [inaudible - no mic]
>> christian smith did.
>> we would like to thank marietta and christian and susan spitaro as well for all of the work that went into this. So thanks.
>> move approval of the interlocal agreement.
>> second.
>> discussion? All in favor? That passes by unanimous vote. B we read for the appointment of a county representative and an alternate. Christian and leroy have volunteered, is leroy serving as the -- as the rep or you?
>> we suggest that you appoint me as the rep and leroy as the alternate. Then leroy, should I not be here because of my upcoming schedule, then leroy would step in. And that that occur over the next year or two, then as things, we make this transition over multiple years, I would expect that -- that the new executive manager of planning and budget would be the representative. The next year or two seems to make a lot of sense to have my involvement as the representative, I have been deeply involved, basically I think that I get it.
>> leroy are you in agreement.
>> I agree.
>> I move approval there, judge.
>> that christian be the representative, leroy be the alternate.
>> second.
>> seconded by Commissioner Gomez.
>> and let me ask this question, though, before we vote. Bylaw the opportunity for -- for taxing jurisdiction, to have a personhof the board, that opportunity is available to them. All taxing jurisdictions. I notice that there are -- that there are taxing jurisdictions that decided not to -- not to have members on the board. On the t.i.f. Board. That's -- that's the board that we are talking about. Can anyone tell me -- was there a reason for them opting out, not really wanting to on the board, the t.i.f. Membership board, wanting to suggest that christian smith and leroy nellie be on the t.i.f. Board, can anyone tell me why that is? Were there any -- I really adopt know. I just notice that they opted out. Which is their prerogative. They can decide to do it or not to do it. But they just -- they are just kind of -- kind of stuck out for an opportunity such as this to -- to participate in the t.i.f. Board and the other taxing jurisdictions decided not to.
>> we did actually, when we sent letters out for all of the taxing jurisdictions offering them that opportunity, we followed up with phone calls as well.
>> [one moment please for change in captioners]
>> .
>> .
>> when they sent us back letters they did not indicate what the reason was beyond that. But we will continue to work with them.
>> okay. Just cuff stuck out like a sore thumb when you see something of the magnitude. That the why I wondered if you really had heard from them.
>> on the aic side we did go forward and do a full presentation for their board. So we did bring that link to it.
>> thank you.
>> they are not contributing any of the new tax revenue.
>> no.
>> still getting a hundred percent of what they are do.
>> I can guess the reaction. Good luck, we have enough to do within our own mandate. God bless.
>> that's what most folks would say.
>> maybe the if I知 not at the meeting, they won't ask anymore discussion? All in favor. Yes.
>> two comments. One on the report. There is a requirement in the agreement for an annual report. It will have, there are some statutory requirements for what is in there so we will have that in addition to whatever else we have. Two, on the appointment, as I said earlier, I will look at the option of appointing the alternate. That's not specifically stated in the statute. Go ahead and do what you are doing today. Hen if we need to bring that back for a different action by the court we will do that once we have looked at it. Okay.
>> anymore discussion? All in favor. That passes by unanimous vote. Thank you all very much. Appreciate it.
>> thank you.
>> nice to see the city here.
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Last Modified:
Wednesday, March 5, 2008 8:09 PM