SUBJECT: Ordinance approving an Economic Development Program for Reinvestment Zone Number Twenty-Three, City of Houston, Texas (Harrisburg Zone) and an economic development agreement between the Harrisburg Redevelopment Authority, on behalf of TIRZ Number Twenty-Three, and Work at Headquarters, LLC pursuant to Chapter 380, Texas Local Government Code.
RECOMMENDATION: (Summary) Adopt an ordinance approving an Economic Development Program for Tax Increment Reinvestment Zone Number Twenty-Three (Harrisburg TIRZ) pursuant to Chapter 380, Texas Local Government Code and pursuant to Chapter 311 of the Texas Tax Code and approving an economic development agreement (“Agreement”) between the Harrisburg Redevelopment Authority (“Authority”), on behalf of TIRZ No. 23 (“Zone”), and Work at Headquarters, LLC. (“Developer”), as adopted by its Board of Directors, for the public purpose of developing and diversifying the economy of the zone.
SPECIFIC EXPLANATION:
In 1989, the State legislature enacted Chapter 380 of the Texas Local Government Code (“Code”) to create a mechanism that municipalities could use to grant or loan public funds for economic development purposes. Subsequently, by Ordinance 99-674, the City established the City of Houston Chapter 380 loan/grant program, pursuant to the provisions of Chapter 380 of the Code, and adopted criteria for Chapter 380 assistance to provide the City with an additional tool to encourage development in targeted areas to fulfill a critical need to attract new business growth, commerce and commercial retail to an area resulting in a positive economic impact.
The Board of Directors of the Harrisburg Redevelopment Authority and the Harrisburg TIRZ, at a public meeting, approved the Zone’s Project Plan and Reinvestment Zone Financing Plan on March 23, 2013. The Plans reflect the goals, capital project priorities, other programs to spur economic growth and development and revenue sources.
As reflected in the Zone’s Project Plan, the Zone desires to establish an Economic Development Program under the authority of Chapter 380 of the Texas Local Government Code. The objective of the Economic Development Program is to continue and enhance the efforts of the Zone to promote revitalization in the Zone, attract residents and visitors to the Zone and enhance other commercial and residential enterprises in the Zone. Site-appropriate retail and commercial facilities would provide support to the economic stability and well-being of the Zone and ensure the continued vibrancy of the historic character of the Zone that are vital elements to the economy of the Zone and the City. The Economic Development Program is intended to enhance and ensure the continued vitality of the existing retail and commercial businesses in Houston’s East End and other commercial suitable areas of the Zone, as well as promote the creation and sustainability of new retail and commercial facilities that would add to the economic impact of the retail and commercial facilities within the Zone. Any economic development agreement for financial incentives pursuant to this Economic Development Program shall require approval of the City.
Tax Increment Reinvestment Zones may utilize this program with the establishment of a Chapter 380 Program approved by City Council to use tax increment for projects that align with established economic development goals.
The board of directors of both the Authority and the Zone approved an Agreement with Developer to assist in meeting the economic feasibility of the proposed development and to encourage the $6.7M project to develop in the East End and within the second ward community.
The Developer plan to invest a minimum of $6,700,000 to redevelop and rehabilitate 35,000 square feet of area into uniquely designed office space and shared amenities, designed to cater to the needs of small to medium sized technology and other companies by providing co working space with private parking, bike racks and bike station (the “Project”). The Project will allow Houston to attract innovation and technology start-ups and entrepreneurs as a continued strategy to diversify the local industries and strengthen Houston’s economic resilience.
Beginning with the First Full Operating Year, Developer will host at least eight (8) Community Events each year. To demonstrate support for and in partnership with the Mayor’s Technology Initiative, Developer will partner with a middle school located in Houston’s East End and host a Coding Career Day.
The Agreement will provide an incentive payment to the Developer solely from the TIRZ incremental property tax increases from the new improvements that the developer will construct on the site. The Authority will serve in an administrative capacity and will perform the necessary reviews of the project and cost, receive funds from the City from the property tax increment and reimburse the Developer per the Agreement terms.
The Authority will make an annual payment of 75% of the Tax Increment generated from the Project until the incentive is paid, unless the Agreement is terminated earlier in accordance therewith. Maximum reimbursement will be $600,000 but not to exceed the total amount of revenue generated by the Project. Reimbursements will begin upon completion of the Project and compliance with the Agreement terms (Reimbursement Date).