The Allen City Council previously approved an incentive package for The Farm and a separate incentive package for The Avenue to spur the development of infrastructure to support these developments located at Alma and SH 121.  Over time, the combined investment for these two mixed-use projects by the private sector is estimated to be $1.5 billion and is projected to generate significant economic benefits to the City of Allen and other taxing entities.  The incentive packages were put in place to specifically support the construction of infrastructure necessary for these economic development projects, including utilities, drainage, roads, sidewalks and shared parking garages, among other items. 

It was previously determined that Allen Economic Development Corporation (AEDC) Sales Tax Revenue Bonds would be an advantageous financial vehicle to provide a portion of the overall incentive package.  The portion to be funded through AEDC bonds was determined to be $2 million for The Farm, and $4.5 million for The Avenue, for a cumulative total of $6.5 million.  The actual bond issuance is anticipated to be approximately $7.34 million, once the cost of issuance and the required Debt Service Reserve Fund (DSRF) are included.

It has been the intention that the City of Allen will reimburse the AEDC for the cost of debt service associated with these bonds.  This is being reimbursed to AEDC because the infrastructure incentives were intended to come from the City of Allen, with the AEDC instead dedicating its funding to incentivize the construction of Class A office buildings within these mixed-use projects.  The recruitment of office employers, including primary jobs and capital investment, are core to the mission of the AEDC.  

The City of Allen would reimburse the AEDC for the cost of debt service on an annual basis using only those property and sales taxes generated by The Farm and The Avenue.  Should the property and sales taxes generated by the project for a specific year be insufficient to cover the debt service, any unreimbursed amounts will be rolled forward and reimbursed in future years.

The property tax and sales tax revenues for The Farm and The Avenue are not currently included in City budgets, as the developments are not anticipated to be on the tax rolls in any significant amount until 2023 or beyond.   

In order to allow the debt service schedule for the AEDC Sales Tax Revenue Bonds to align with the timing for the completion of construction of the first phases of The Farm and The Avenue, the AEDC Board chose to defer payment of principal on the bonds until 2024.  The anticipated term of the bonds is 15 years, with the annual debt service being approximately $685,000 once principal payments begin.  If the phases of the two mixed-use projects progress on the schedule estimated in the previously completed impact analysis, the developments are anticipated to generate $144.6 million in taxes to the City of Allen over the next 15 years.  The cost of servicing the AEDC Sales Tax Revenue Bonds is estimated at $9.3 million during that same period.  This means the City of Allen can anticipate retaining $135.3 million during this period, after reimbursing the AEDC, based on projections.

Staff recommends that City Council Authorize the City Manager to Execute a Sales Tax Revenue Reimbursement Agreement By and Between the City of Allen and Allen Economic Development Corporation for The Farm and The Avenue Projects.

I make a motion to authorize the City Manager to execute a Sales Tax Revenue Reimbursement Agreement by and between the City of Allen and Allen Economic Development Corporation for The Farm and The Avenue Projects.