twenty years of urban redevelopment...summary of the inances of the authority and the tax increment...

MIDTOWN REDEVELOPMENT AUTHORITYHOUSTON, TEXAS

TWENTY YEARS OF URBAN REDEVELOPMENT

DECEMBER 31, 2014

To: The Residents and Stakeholders of Midtown

As we recognize our twentieth year, this report details the growth of Midtown since its creation

by describing some of our projects and our plan for the future. It also provides an easy-to-read

summary of the finances of the Authority and the Tax Increment Redevelopment Zone No. 2 (“TIRZ #2” or the “Zone”) for the fiscal year ending June 30, 2014 and the budget for fiscal year 2015.

Midtown seeks to be an example of a sustainable urban community. Both residents and visitors benefit from Midtown’s urban, mixed-use environment, enhanced with pedestrian-oriented sidewalks, decorative street lighting and streets designed for easy traffic flow whether on foot, on bicycles or in vehicles.

Midtown uses one-third of its tax increment revenue to induce and develop affordable housing. The Authority has developed an affordable housing strategy that focuses on land assembly and affordable housing development to encourage mixed use, transit-oriented affordable housing development.

Our efforts reflect the collaboration and financial participation of the City of Houston, Harris County, the Houston Independent School District and the Houston Community College System along with the direction of State Senator Rodney Ellis and State Representative Garnet Coleman – Midtown’s partners in the leadership, funding and participation in the Zone. If you have any questions or concerns, please contact me.

Sincerely,

Matt Thibodeaux

Executive Director 410 Pierce Street, Suite 355, Houston, TX 77002

Phone: 713-526-7577

Midtown Redevelopment Authority Phone 713.526.7577 Fax 713.526.7519410 Pierce St, Suite 355, Houston, TX 77002 www.houstonmidtown.com

Position I William J. Taylor, III Assistant Secretary

Appointed by State Senator Rodney EllisPosition II Douglas A. Erwing Appointed by State Representative Garnet ColemanPosition III Robert D. Sellingsloh Chairman

Appointed by the City of HoustonPosition IV Pamela Castleman Secretary

Appointed by the City of HoustonPosition V Al Odom Appointed by the City of HoustonPosition VI Abe S. Goren Appointed by the City of HoustonPosition VII Caton M. Fenz Appointed by the City of HoustonPosition VIII James Dinkins1 Appointed by Houston Independent School DistrictPosition IX Jeremy Ratcliff Appointed by Harris County

MIDTOWN REDEVELOPMENT AUTHORITY BOARD OF DIRECTORS

42015 | MIDTOWN REDEVELOPMENT AUTHORITY

1Mr. Dinkins' appointment was approved by the Houston City Council on January 7, 2015

Midtown Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Demographic and Economic Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Continuing Its Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Budget Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Capital Budget and Capital Improvement Plan. . . . . . . . . . . . . . . . . . . . . . . .22

Debt Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Next Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Midtown—Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Appendix A—Project List Midtown TIRZ #2 . . . . . . . . . . . . . . . . . . . . . . . . . . .28

TABLE OF CONTENTS

5 MIDTOWN REDEVELOPMENT AUTHORITY | 2015

2015 | MIDTOWN REDEVELOPMENT AUTHORITY 6

History. At the turn of the twentieth century,

the Midtown area was flourishing as the second residential neighborhood for the city of Houston (the “City”). At that time, the area was a neighborhood of single-family Victorian style homes known as

Southside Place. The homes were built on small lots of approximately 5,000 square feet. Increasing commercial development in the area caused Midtown

residents to relocate to new suburbs that were being

developed along the fringes of Houston causing the neighborhood to decline. During the 1970s, the area became known as “Little Saigon,” the home to new Vietnamese immigrants who began the revitalization

of the area. The area saw a steep decline in the

1980s as a result of the crash in oil prices.

Houston’s population grew less than one

percent during that

decade, and the area

that includes Midtown

was the only district

in the state of Texas to lose population.

By the early 1990s, Midtown experienced significant blight and a lack of

development. From 1992 to 1994, a private group of

property owners

worked to secure

petitions from over

700 additional property owners

seeking the

creation of Tax Increment Reinvestment Zone #2 (the “Zone” or “Midtown”). The City Council responded, and the Zone was created by City of Houston Ordinance No. 94-1345 and took effect on January 1, 1995.

In early 1995 by Resolution 95-96, the City Council authorized the creation of the Midtown Redevelopment Authority (the “Authority”), a not-for-profit local government corporation, to manage initiatives of the Zone. In addition to the City, certain other governmental entities have partnered with

Midtown by committing to share their tax increment revenues with the Zone. Midtown’s stakeholders are the City of Houston, Harris County (the “County”), the

Houston Independent School District (“HISD”) and the Houston Community

College District or system (“HCC”).

The Authority’s nine-member Board is composed of

a representative

of the County, a representative of

HISD, the state senator in whose

district the Zone is located or his

designee, the state

representative in

whose district the

Zone is located or his designee and five representatives from

the City.

MIDTOWN PROFILE

1010

59

59

290

I-45

I-45

610

610

288

8

8

8

8

8

The

Galleria Midtown

Reliant

Stadium

Med

Center


The Zone Today. Originally, the area known today

as Midtown included approximately 617 acres of land. In 1999 and 2009, additional acreage was annexed, and the area now includes 771 acres including certain parts of the Museum District. Midtown is located between the central business district of the City and the Texas Medical Center, the two largest employment centers in the City. Midtown is home to a diverse group of residents and businesses including significant educational and cultural institutions. The area is generally bound by U.S. Highway 59 on the south, State Highway 288 on the east, Interstate (IH) 45 on the north, and Texas Spur 527 and Bagby Street on the west.

The purpose of the Zone is to promote the revitalization and redevelopment of Midtown by

managing the investment of the tax increment revenue through the use of tax increment financing to improve infrastructure and public spaces in Midtown. The Authority is also directed by Texas law to support affordable housing in the City by dedicating one-third of its increment to affordable housing initiatives within the City limits proper.

Tax Increment Reinvestment Zones. Tax Increment Reinvestment Zones (“TIRZ”) generally, and Midtown specifically, seek to redevelop land, build public infrastructure and to acquire, improve or maintain other public projects and, in Midtown, fund

affordable housing. These projects are funded by a financing tool called tax increment financing (“TIF”). In 1995, the appraised value of property in Midtown within the original boundaries was frozen. The frozen value is called “the Base Year Value.” The tax revenue collected on the Base Year Value is collected and distributed to each partner (i.e., taxing authority) based on its respective tax rate and the Base Year Value. The value of the property in the Zone may increase due to new construction, new or improved development

or improvements to property and is referred to

as "Incremental Property Value." The tax revenue collected on any increase in property value in excess of the Base Year Value is pledged and allocated to Midtown. The additional revenue generated by the Incremental Property Value is managed by the Authority pursuant to a tri-party agreement, a

project plan and a budget approved by the City of Houston. There are no changes or exceptions to

the appraised value other

than those provided by law.

Using this tool as a financing mechanism merely allocates

a portion of the tax revenue to redevelop and improve

the Zone.

The graph portrays the incremental growth in the

appraised property value

within the Midtown TIRZ compared to the frozen base.

The lower portion of the bar represents the base year

value. The slight increase in the base year value

represents the annexation of 154 acres into the Zone that includes portions of the

Cultural District. $0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Growth In Taxable Value Base Year Value

GROWTH IN INCREMENTAL PROPERTY VALUE

Source: Equi-Tax Inc., Houston, Texas

DEMOGRAPHIC AND ECONOMIC PROFILE


Since the creation of the Zone, Midtown has realized a steady growth in population

of approximately 4.7% per year. The U.S. Census Bureau predicts that the population

will grow by another 11.5% by 2019.

Younger adults, ages 25-44, are the largest portion of the

demographic base. The 2010 U.S. Census reported 4,614 households in Midtown.

Households with one person make up 58.4% of Midtown’s residents; households with 2 or more residents represent

41.6%. All households with children make up

7% of the households. Residents identify the geographic proximity to the Downtown and Medical

Center work locations, efficient mass transportation and living within walking distance of restaurants and

entertainment venues as reasons for living in Midtown.

Students studying at nearby higher education institutions also choose to reside in Midtown. The median age of residents is 33.5 years.

Midtown residents are employed in a variety of

occupations. Sales, professional and technical positions represent the largest portions of the jobs

listed in the census.

MIDTOWN POPULATION GROWTH 1990–2019 (EST.)

0

4,000

3,000

2,000

1,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1990 2000 2010 2014 2019 (est.)

3,222

5,436

8,464

9,314

10,382

Source: For 1990, the population is based on Midtown's Records. The additional data source is

the U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2014 and 2019. Esri

converted Census 2000 data into 2010 geography. October 2014

0

400

300

200

100

500

600

Agricultu

re / M

ining

Fina

nce /

Insu

ranc

e

Profess

iona

l / Te

ch

Educa

tion / L

ibra

ry

Hea

lth P

ract

ice

& Sup

port

Hos

pita

lity /

Foo

d

Building

/ Maint

. Rep

air

Man

ufac

turin

g

Enter

tainm

ent &

Spo

rts

Office

/ Adm

inistra

tion

Con

stru

ction

Tran

spor

tatio

n / M

oving

Oth

er

Sales

264 265

492

205

328282

207

495

221

105

212

337

191

320

Em

plo

yed

Po

pu

lati

on

55–64

45–54

Ag

e G

rou

p

Percentage of Population

35–44

25–34

15–24

0–14

65 and above

0 5% 10% 15% 20% 25% 30% 35%

5%

10%

14%

17%

33%

15%

6%


Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2014.

Esri converted Census 2000 data into 2010 geography.

MIDTOWN POPULATION BY AGE GROUP

2014 EMPLOYMENT BY INDUSTRY1

1The “Other” category includes public administration, law enforcement, utilities and personal care.

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2014.

Esri converted Census 2000 data into 2010 geography.

Other economic data includes the following:


Median Household Income . . . . . . . . $ 74,188

Average Household Income . . . . . . . $ 93,111

Median Home Value . . . . . . . . . . . . . . .$ 298,611

Average Home Value . . . . . . . . . . . . . .$ 335,994

Per Capita Income . . . . . . . . . . . . . . . . . . $ 53,256

Source: U.S. Census Bureau, Census 2010 Summary File 1.

Esri forecasts for 2014. Esri converted Census 2000 data

into 2010 geography.


CONTINUING ITS MISSION

Midtown continues to implement its plan to enhance

and improve public infrastructure in the Zone. The Authority invests the Zone's tax increment revenue to provide public infrastructure improvements and

public right-of-way enhancements to foster economic

development while maintaining a commitment to

creating a sustainable urban environment.

To help foster further economic development and revitalization, the Authority has focused its efforts in several core areas: mobility, infrastructure and pedestrian improvements, parks and open spaces,

parking facilities, support of cultural infrastructure,

(together classified as “Capital Improvements”) and affordable housing.

As of December 2014, the Authority has completed or planned 93 projects totaling approximately $206.2 million in infrastructure. The "Infrastructure Developer Agreements" identified below are those projects where the Authority has reimbursed private developers for

public improvements to support private development,

such as sewer, wastewater and drainage projects.

"Affordable Housing" includes land purchased for Midtown's Land Bank. The Land Bank Program accounts for approximately $31 million of the Affordable Housing costs. See Appendix A—Project List for more detailed information.

Number of Projects

Completed

Projects to be

Scheduled

Total Project

Costs

Infrastructure Developer Agreements 37 — $ 9,138,103

Public Improvements 29 5 88,352,758

Affordable Housing 16 2 49,816,154

Scheduled Infrastructure Projects — 12 58,964,767

TOTAL 82 19 $ 206,271,782

PROJECT LIST SUMMARY MIDTOWN TIRZ #2

Midtown Redevelopment Authority as of December 2014

Source: Midtown Redevelopment Authority, December 2014. See Appendix A to this Report


Parks and Open Spaces. The Authority has developed a Parks and Open Space Master Plan to increase community gathering opportunities and

enhance quality of life in Midtown. The continued development of new green spaces and the

redevelopment of existing green spaces is vital for the creation of a cohesive and vibrant community.

Parks and plazas help foster social interactions that define the public realm and urban culture. Recently, Midtown completed several park projects and has

plans for future improvements in targeted areas. The recently completed improvements at Baldwin Park

and Glover Park added several new amenities and

received the Parks and Natural Areas Award from the Houston-Galveston Area Council. Baldwin Park

received upgraded lighting, a rebuilt jogging trail, new

playground equipment, and landscaping upgrades. Glover Park received a dog run, landscaping with

lawn space, seating, an exercise platform, and cultural exhibits.

Other areas of Midtown are receiving park upgrades

as well. Bagby Park, located at Bagby and Gray Street, will add a new level of liveliness to this signature intersection in Midtown through the

construction of a performance space with iconic

“Midtown” signage, a new water feature, a dog run, and a food kiosk. Together with its partners, the Authority is moving forward with the construction of

Midtown Park at Main and McGowen Streets. This park, commonly referred to as “the SuperBlock,” will be a signature space for Midtown. It will include

a great lawn with a 2,400 square foot pavilion for concerts, entertainment and other public events, food

and beverage installations from kiosks to restaurants

and a subterranean parking garage for approximately 400 cars. Finally, the Authority will commence construction of its Entry Plaza project consisting of

plazas, public squares and landscaping in the public right-of-way that will create community open spaces

and provide connectivity and mixed uses along its Zone corridors. The development of these plazas and public squares will complement cultural arts facilities and offer unique identity branding in Midtown.

Mobility, Infrastructure and Pedestrian Improvements. The Authority has invested and will continue to invest significant capital in mobility, infrastructure and pedestrian improvements to create

comfortable and safe corridors that accommodate

growing mobility needs while improving pedestrian

accessibility. Enhanced streetscapes and amenities such as benches, planters and pedestrian lighting

encourage use by pedestrians and help to create a

safe pedestrian environment. The improvements can also encourage additional development by focusing on

targeted streets and nodes that complement planned

private development.

The Bagby Street Reconstruction project was

recently completed in partnership with the City of Houston and received Silver Certification as the first Greenroads® project in the state of Texas. The project included the reconstruction of Bagby Street from St. Joseph Parkway to Tuam Street and Pierce Street from Baldwin Street to Brazos Street. The project blended Low Impact Development (LID) techniques and environmentally-friendly elements into a sustainable roadway construction project.


The Brazos Street Reconstruction project is the

next step in the Complete Streets Program and will enhance what has been accomplished on Bagby Street. This Project will include concrete pavements, public utility upgrades (water, storm, sanitary), enhanced intersections, wider sidewalks, landscaping,

street furniture, brick pavers, accessibility ramps and

other pedestrian-related infrastructure. The Brazos Street project will provide an enhanced pedestrian environment and an improved vehicular connection for

northbound traffic through Midtown.

The Caroline Street Reconstruction project is a

partnership between the Authority and HCC. It is partially funded through a Texas Department of Transportation ("TxDOT") grant. It includes complete roadway reconstruction with new concrete

pavement and public utility upgrades from Pierce Street to Holman Street. Additionally, the project includes sidewalk improvements with landscape and

pedestrian enhancements as well as improvements

to the City’s designated bicycle route. The Complete Streets Program seeks to accommodate all modes of transportation including automobiles, pedestrians

and bicycles to create a seamless walkable

community. The project aims to balance the needs of transportation, pedestrians, local businesses and on-

street parking.

The Holman Street Pedestrian Enhancement

is a partnership between the Authority and HCC and is partially funded through a Federal Transit Administration ("FTA") grant. Together these partners will construct wider sidewalks, landscaping, street

furniture and other pedestrian-related infrastructure

to improve access for HCC students and other pedestrians to the METRORail station and other transit services on Holman Street.

The Main Street Enhancement project includes

landscaping, street furniture, and other pedestrian-

related infrastructure to better serve the residents

and businesses in the area and facilitate additional

development along this rail corridor.

Parking Facilities. There is a significant need for parking facilities in Midtown due to its location

between Downtown and the Medical Center, access to mass transit, and the mixed-use development of retail, residential, cultural and entertainment venues

that attract visitors to the area. The City’s parking requirements also present physical and financial challenges to private development of new buildings

and adaptive reuse of existing buildings in Midtown. To help satisfy parking demand, the Authority will construct

parking facilities in strategic locations to mitigate

parking requirements and encourage development. Included in the strategic plan for parking facilities will be

the new Midtown Park Parking Garage that will provide parking space for approximately 400 vehicles.

Affordable Housing. In fulfilling its obligation to provide affordable housing, the Authority has adopted an affordable housing strategy consisting of two phases: (1) land assembly within a targeted area of the City limits to create a diversified inventory of property and (2) development of affordable housing units (single-family, duplex/triplex and low- to mid-density multi-family developments) on such land. In 2014, the Authority acquired approximately 360,000 square feet of additional land for its land assembly program. Since its creation, Midtown has assembled a total amount

of property totaling 3.3 million square feet at a cost of approximately $31.1 million.

Public & Cultural Facilities. The Authority has supported the development and redevelopment of

public and cultural facilities to serve as destination

anchors and activity generators to increase community

gathering opportunities. Midtown was designated a

Texas Cultural Arts and Entertainment District in 2012 and has added support of cultural institutions to its

mission. To date, contributions have been made to the Asia Society Texas Center, Buffalo Soldiers National Museum, Houston Museum of African American Culture, and the Midtown Arts Theatre Center Houston. Midtown anticipates continuing to provide selective grants to new, existing and emerging cultural facilities in the Zone that will strengthen the Cultural District as a true destination within Houston.

NOTE: Greenroads® is a registered trademark of the Greenroads Foundation. The Greenroads Rating System was developed by the

Greenroads Foundation, which is an independent non-profit corporation that advances sustainability education and initiatives for transportation infrastructure. The foundation manages the certification process for sustainable roadway and bridge construction in the U.S. and internationally. For more information on the Greenroads Foundation and its rating system see: www.greenroads.org.


Bagby Street Reconstruction. Bagby Street is a one-way major collector street in Midtown linking IH-45 in downtown Houston to southbound US Highway 59. Prior to its reconstruction, it was a fast-moving street primarily used by automobiles to bypass Downtown traffic.

Today, it is a vibrant corridor that effectively balances the needs of automobiles and pedestrians by providing a

roadway that incorporates traffic calming measures to slow traffic speed and reduce ambient road noise levels. Street crossing distances were reduced by 45%, making the street safer for pedestrians, without compromising vehicle access.

It has become a people-focused community center and

destination place with an energetic mixed-use environment including residential and retail properties, restaurants,

nightlife and entertainment.

In addition to accommodating traffic needs while simultaneously improving pedestrian accessibility, the

project incorporated innovative LID techniques to sustain and protect the environment. Rain gardens capture 33% of rainwater for secondary use, provide water quality treatment of stormwater runoff, reduce total runoff volume, and decrease potable water demands for irrigation. The use of specialized fly ash concrete in the pavement reconstruction prevents 300 tons of carbon dioxide from entering the air. Beneath the street surface are new stabilizing materials that will extend the useful life of the street and reduce long-term maintenance needs, thus saving taxpayer dollars.

For its design and construction sustainability efforts, the Bagby Street Reconstruction project received Silver Certification as the first Greenroads Project in the State of Texas. At the time of its certification in October 2013, the Bagby Street Reconstruction project had achieved the highest score of all eight of the then-certified Greenroads projects.

BAGBY STREET AWARDSThe transformation of Bagby Street into a vibrant, aesthetically unique pedestrian corridor has been recognized

by several organizations. In addition to

the Greenroads Silver Certification, the Bagby Street Reconstruction project has received the following awards:

2014 American Public Works Association (Texas Chapter)—Public Works Projects of the Year in Transportation ($5 million—$25 million category);

2014 Making Cities Livable (International)—Healthy Cities for All Award for Active Mobility/Complete Streets;

2014 Congress for the New Urbanism (National)—Best Street of the Year;

2014 American Society of Landscape Architects (Texas)—Presidential Award of Excellence in Design and Implementation;

2014 American Society of Landscape Architects—Merit Award for

Communication;

2014 American Council of Engineering Companies (National)—Engineering Excellence Honor Award;

2014 American Council of Engineering Companies (Texas)—Engineering Excellence Gold Award in the Special Projects Category.

RECOGNITION


To receive this certification, the Authority established and accomplished the following goals:

� Reduced pedestrian crossing distances from 42 feet to 24 feet;

� Reduced lanes from 4 lanes to 2 lanes without reducing the level of service below standards;

� Increased tree growth in the area by 42%; � Added 28,700 square feet of pedestrian

areas;

� Increased seating and social gathering areas

by 38%; � Created a 12% decrease in surface

temperature through the increase of a tree

canopy in the area;

� Increased lighting levels by five times the original level;

� Conserved water from stormwater runoff and removed dangerous particulates that

accumulated in the water;

� Increased private development by $25 million since the announcement of the project.

Midtown is committed to environmentally sustainable,

safe, modern urban living and has started planning

a strategy for the Greenroads Certification of Brazos Street so that it performs at even higher standards than Bagby Street. Brazos Street, which is Bagby Street’s companion couplet roadway, flows northbound through Midtown into Downtown Houston. The fiscal year 2015 portion of this project, in the amount of $1,122,000 is being funded with bonds issued in fiscal year 2014.

Affordable Housing. The Tax Increment Financing Act requires that one-third of the Tax Increment revenue be used to provide affordable housing within the city limits. The Authority has assembled property within the City limits for sustainable affordable housing to serve major workplaces and provide access to

amenities within the City’s core. As of September 2014, the Authority had acquired 345 lots totaling over three million square feet of land.

The Authority has acquired vacant and blighted property as a strategy to return the property to

productive reuse and to preserve and protect existing

communities. A wide range of tract sizes provide for

a variety of affordable housing opportunities. Many lots, ranging from 3,500 square feet to 5,700 square feet, are ideal locations for single-family affordable home ownership. By providing affordable single family homes, those seeking to make a long-term

commitment to the community are able to enjoy

the urban lifestyle experience without sacrificing the benefits of home ownership. A number of the larger tracts provide the opportunity for multi-family

affordable rental housing. Affordable rental housing is important to providing access to the City’s core for students attending nearby universities and

colleges as well as citizens requiring social services. Senior citizens living on fixed-incomes also desire affordable rental housing that allows them to remain in neighborhoods where they have vested interests.

The term "Affordable Housing" encompasses much more than the cost of a lease payment or mortgage.

Affordable housing also includes construction costs, operation and maintenance expense, energy consumption, access to mass transit and other

important factors that allow families to save money

and invest in better education and other discretionary

items that provide a higher quality of life.

Midtown, in partnership with Project Row House Community Development Corporation (CDC), recently completed the development of 30 affordable housing rental units that boost energy efficiencies and allow residents to save on overall living expenses. Located in the historic Third Ward, these affordable housing units are conveniently located within one block of

the new Southeast METRORail Line. The location


is consistent with the White House’s initiative to create affordable housing within reach of public transportation, thereby reducing transportation costs

for occupants and also creating a more sustainable

environment with improved air quality from the decreased overall carbon footprint.

The Authority has previously collaborated with New Hope Housing CDC and Reward Third Ward CDC to develop over 300 affordable rental units, and partnered with Guiding Light CDC and EPIC Homes to develop single-family affordable homes.

As the Authority continues to focus on development of sustainable

affordable housing with community partners, the land acquisition and redevelopment efforts will further focus on acquiring land along the expanded mass transit lines in the City’s Third Ward and facilitating development projects that lie in close proximity to public transportation corridors, libraries, schools, recreational facilities and hike and bike

trails. To maximize its use of land assembly holdings, the Authority will consider future partnerships with private developers of mixed income residential housing that align with the community dynamics and

current market demands.

FANNIN SOUTH

BELL

MCGOWEN

ENSEMBLE/HCC

TMC TRANSIT CENTER

MUSEUM DISTRICT

HERMANN PARK/RICE U

MEMORIAL HERMANN HOSPITAL/

HOUSTON ZOO

DRYDEN/TMC

SMITH LANDS

RELIANT PARK

MOODY PARK

FULTON/NORTH CENTRAL

QUITMAN/NEAR NORTHSIDE

MELBOURNE/NORTH LINDALE

LINDALE PARK

NORTHLINE TRANSIT CENTER/HCC

CAVALCADE

WHEELER TRANSIT CENTER

DOWNTOWN TRANSIT CENTER

PRESTON

UH-DOWNTOWN

BURNETT TRANSIT CENTER/

CASA DE AMIGOS

MAIN STREET SQUARE

LEGEND

Midtwon Station

Rail Station

Transit Center

Park & Ride

Future Rail Station

LEGEND

Midtwon Station

Rail Station

Transit Center

Park & Ride

METRORail Red Line

Future Rail Station

MIDTOWN STATIONS


The Midtown Redevelopment Authority was created by the City of Houston on June 28, 1995 with the sole objective of redeveloping Midtown. Because Midtown is a legally separate entity for which the City appoints the majority of the board members, Midtown is defined as a “component unit” of the City of Houston (the “primary government”) by the Government Accounting Standards Board (“GASB”). The primary government is financially accountable for its component units and must report their financial position in the City’s Comprehensive Annual Financial Report. The fiscal year for both the City and Midtown is July 1 of the then-current year through June 30 of the following year.

Authority Funds. The broadest category used to account for the Authority’s operations and services is referred to as a fund. The Authority uses five funds to account for its operations. In fiscal year 2014, the Authority's Board approved a new fund, the

Infrastructure and Project Fund. The purpose of the fund is to distinguish those capital projects funded with

tax increment revenue and other sources of revenue from those projects funded with bond proceeds that

are reported in the Capital Projects Fund.

Financial Statements. The Statement of Net Position includes all assets and liabilities using the accrual basis of accounting. The Statement of Activities presents the operating results of

the Authority.

Revenues. The primary source of income for the Authority is the tax increment revenue that it receives from the City as collecting agent from its partners. In 2014 the Authority received $18,812,088 in tax increment revenue. Investment and other income

totaled $580,675. Total revenue was $19,392,773 after adjustments.

FINANCIAL HIGHLIGHTS FOR THE FISCAL YEAR ENDING JUNE 30, 2014

CHART OF ACCOUNTS

General Fund

The general operating accounting for all

activities except those required to be accounted for in other

funds due to various

legal requirements.

Infrastructure and Project Fund

Accounts for the

construction and

improvements to

projects funded with

tax increment revenue.

Capital Projects Fund

Accounts for the

construction of

improvements and

projects funded with

bond proceeds.

Affordable Housing Fund

Accounts for the

accumulation of

financial resources for the payment of

affordable housing projects. The Tax Increment Financing Act requires that at least 1/3 of the proceeds of its

contract revenue

bonds and 1/3 of the Contract Tax Increments be used

for affordable housing.

Debt Service Fund

Accounts for the

accumulation of

financial resources for the payment of

principal and interest

of its bonds including

the debt service

reserve fund.


Other Sources of Funds. The Authority issued bonds in the amount of $19,086,306 in fiscal year 2014 to fund various capital projects, affordable housing and the debt service reserve fund. Of that

amount, $5,646,683 remained available at the beginning of fiscal year 2015 to fund capital projects that are in progress or soon to be undertaken.

Expenses. Total expenses for the fiscal year 2014 were $28,308,084. Expenses occur in three categories. They are classified as current expenses, debt service, and capital outlay.

Fund Balance. Each of the Authority’s Funds shows the difference between the fund’s assets and its liabilities as the Fund Balance. The Fund Balance is further divided into five categories based on constraints on how the funds may be spent and the

reason for the constraint.

The total fund balance is the difference between the assets and liabilities for all funds of the Authority.

It includes all fixed assets as well as cash and unspent bond and loan proceeds. The Total Fund Balance for the fiscal year ending June 30, 2014 was $79,282,482. However, the Total Fund Balance does not represent cash available to the Authority for any

purpose. The Fund Balance of each of the Funds is classified as follows:

� Nonspendable—Resources or assets that cannot be spent because they are

in a nonspendable form such as land,

property, supplies and equipment or because they are legally unavailable. The Nonspendable category is the largest fund balance category because the assets of the

Affordable Housing Fund are included in this category in the amount of $31,106,157 as well as certain assets of the General Fund

totaling $7,132,462. The nonspendable assets for all

funds total $38,238,619. � Restricted—Assets

with constraints placed on

them either by creditors, by

law or by its bond indenture.

Assets of the Debt Service Fund totaling $15,737,329 compose the largest portion

of the Restricted category. � Committed—Assets or

resources that can be used

only for specific purposes based on actions taken by

the Authority or the City. � Assigned—Assets

constrained by the Authority’s intent to use the assets for

a specific purpose. This classification includes any remaining fund balance for all

funds except for the General Fund. � Unassigned—This classification is used

only for the General Fund, and includes any remaining positive fund balance that is not

used to offset negative fund balances in the other four funds. The unassigned fund balance in the amount of $2,780,802 is available to the Authority for appropriation to other uses

in fiscal year 2015. Furthermore, $833,949 of deferred Revenue was subsequently received and is included in this category, increasing the

Unassigned Fund Balance to $3,614,751.

56

35

9

Debt Service

Capital Outlay

Current Expenses%

EXPENSES FISCAL YEAR 2014


The Fund Balance Chart represents the Total Fund Balance as it is allocated to each category in all funds.

The Financial Statements and Supplementary Information for the Year Ended June 30, 2014 were prepared using Generally Accepted Accounting

Principles ("GAAP") and audited by independent

auditors. The financial statements received an

unmodified opinion, meaning that the statement did

not include any material

misstatement of information

and were fairly presented.

Although the financial information presented in this

report comes from an audited

source, it is presented in

a condensed, unaudited,

non-GAAP format. Citizens and investors who would

like more detailed financial information should refer to

the Financial Statements and Supplementary Information presented on the

Authority’s website at www.

houstonmidtown.org.

48

35

4

5

8

Unassigned

Assigned

Restricted

Nonspendable

Committed%

FUND BALANCE BY CATEGORY

http://www.houstonmidtown.org

http://www.houstonmidtown.org


The Annual Budget for the Zone is prepared on a modified accrual basis. Modified accrual accounting recognizes revenues when they become measurable

and available. Measurable means that the dollar value

of the revenue is known. Available means that it is

collectible within the current period, or soon enough

after the end of the current period to pay liabilities for

the budget year. Midtown receives its tax increment revenue from the City, as the collection agent for its partners, by the end of the preceding fiscal year and applies the revenue to expenses in the next fiscal year. Other revenue is collected within the fiscal year and used to pay expenses in the same fiscal year.

BUDGET OVERVIEW

BUDGETED REVENUE & OTHER SOURCES OF FUNDS FISCAL YEAR 2015

(In Thousands)

REVENUE AMOUNT, $

Tax Increment Revenue Received 2014 18,812

Other Revenue 503

TOTAL REVENUE 19,315

OTHER SOURCES OF FUNDS AMOUNT, $

FTA Grant—Holman Street1 2,000

Loan—Developer Agreement1 11,510

Fund Balance—Capital Project Fund2 5,646

TOTAL OTHER SOURCES OF FUNDS 19,156

TOTAL 38,471

1 This Source of Financing is available to fund a specific capital project.2 This money is unspent bond proceeds to be used only for capital projects.


Sources of Funds. The Authority received Tax Increment revenue in the amount of $17,978,139 in fiscal year 2014. The revenues are classified in the fund balance in the categories identified as “Reserved”, “Committed” or “Assigned.” The Authority has budgeted miscellaneous revenue

and interest income during fiscal year 2015 to be $503,285.

Midtown has entered into a Development Agreement to fund certain aspects of the Midtown Park project. Such amounts, drawn over the next several fiscal years, will not exceed $18 million. This report assumes that $11.51 million will be drawn in Fiscal Year 2015.

The City advised Midtown that it had been awarded a Federal Transportation Authority (FTA) grant in the amount of $2,000,000 to fund the Academic Walk on Holman Street near the HCC. Total sources of funds for fiscal year 2015 are budgeted to be $38.47 million.

The Authority anticipates receiving $19.87 million in tax increment revenue in June of fiscal year 2015 to fund operating expenses and certain capital projects in the fiscal year beginning July 1, 2015 (fiscal year 2016). These revenues are not shown in the chart of Budgeted Revenue & Other Sources of Funds.

Budgeted Expenses. The Authority uses its money to pay for the following items: the cost of administration and support, the Municipal Service Costs Agreement, and other administrative costs defined as “Administration and Management Services”, Debt Service, and Capital Expenses including general capital improvements and affordable housing. Expenses are budgeted to be $36.544 million. Due to timing differences between the receipt and disbursement of funds, certain expenses will be paid from fund balances.

Further Information. The Budget is an annual financial plan. Tax Increment Revenue projections are provided by the City of Houston. Interest income is based on reasonable assumptions made by the

staff of the Authority in consultation with its Financial Advisors. Expenses are also based on reasonable assumptions provided by the staff of the Authority using certain timing and work progress assumptions.

The City Council has delegated to the Authority Board the responsibility for making certain adjustments to

the Budget.

BUDGETED EXPENSES FISCAL YEAR 2015

(In Thousands)

AMOUNT, $

Administration & Management Services 2,271

Debt Service 10,008

Capital Expenses 20,485

Affordable Housing 3,780

TOTAL 36,544


The costs of capital projects and capital improvements are, in total, the largest expenses of the Zone. Capital Projects are those projects that cost more than $5,000 and generally have a useful life expectancy greater than five years. The purchase of land is always capitalized. The sources of funding for capital projects includes tax increment revenue and bonds, notes and loans incurred by the Authority as well as grants and

other private funding.

Each year the Authority prepares both a capital budget and a capital improvement plan. Some projects are completed within the fiscal year. Other project construction occurs over two to three years.

The Capital Budget identifies those categories of expenses and the expenses that will occur in fiscal year 2015. The Capital Budget for fiscal year 2015 totals $24.265 million.

The Capital Improvement Plan (“CIP”) is a five-year projection of the project categories and the respective

expenses that the Authority will incur in completing projects over the five-year period commencing in fiscal year 2015 and ending with fiscal year 2019. The five-year CIP totals $93.992 million.

CAPITAL BUDGET AND CAPITAL IMPROVEMENT PLAN

CAPITAL IMPROVEMENT PLAN FISCAL YEARS 2015 – 2019

(In Thousands)

CAPITAL BUDGET FISCAL YEAR 2015

(In Thousands)

AMOUNT, $

Parks & Open Spaces1 1,515

Mobility, Infrastructure & Pedestrian Improvement 6,885

Parking Facilities 11,530


Cultural Arts 455

Other 100

TOTAL 24,265

1 The Authority expects this category to greatly increase in fiscal year 2016 once Midtown Park is under construction.

AMOUNT, $

Parks & Open Spaces 18,719

Mobility, Infrastructure & Pedestrian Improvement 43,995

Parking Facilities 13,800


Cultural Arts 1,777

Other 801

TOTAL 93,992


As of June 30, 2014 the following amount of debt was outstanding:

Contract Revenue Bond Security Pledge. Contract Revenue Bonds (the “Bonds”) are repaid from the tax increment transferred to the Authority from its partners. The Bonds have a lien on the first tax increment revenues received by the Authority each year.

Debt Capacity. The City of Houston established a maximum outstanding debt capacity of $79,500,000 for the Bonds. As of June 30, 2014 the Authority had $3,865,000 of available debt capacity.

Debt Repayment. No other expenses of the Authority may be paid from the contract revenue until

the annual debt service is funded fully. All currently

outstanding long-term debt will be repaid no later

than January 1, 2033 pursuant to the debt service schedule.

Short-Term Loan Security Pledge. The Short-Term Loans are payable from any source of funds including the sale of the property that was financed with the loans and other revenues.

Bond Ratings. At the end of fiscal year 2014, the Authority’s long-term bonds had an underlying rating of "A-" from Standard and Poor’s Rating Services and “A3” from Moody’s Investors Service, Inc. These ratings reflect the views of the rating agencies and may change from time to time. Certain bonds have been insured by BUILD AMERICA MUTUAL ASSURANCE COMPANY (“BAM”) and carry a higher rating.

Subsequent Event: Contract Revenue Bond Refunding. In January 2015, the Authority sold $13,705,000 of Tax Increment Contract Revenue Refunding Bonds (the “Refunding Bonds”) to replace the outstanding Series 2005 Contract Revenue Bonds. The rating on these and all other uninsured Contract Revenue Bonds was upgraded to “A” by Standard and Poor’s Rating Services. The final maturity of the Refunding Bonds occurs in 2025. The refunding generated present value savings of $1,520,987 over the ten-year life of the Refunding Bonds. The refunding also resulted in the release of $192,154 from the Debt Service Reserve Fund.

Further Information. Bondholders, investors and citizens may obtain more detailed information

about the Authority’s debt and financial position by accessing the website www.emma.msrb.org and

completing the Quick Search menu by inserting the words “Midtown Redevelopment Authority”.

DEBT SUMMARY

Contract Revenue Bonds $ 75,635,000Short-Term Loans 6,170,401Total Debt Outstanding $ 81,805,401

http://www.emma.msrb.org


THE MIDTOWN PARK

In 1999, the Midtown Redevelopment Authority began working with developers to assemble a six-acre tract of land located in the heart of Midtown. This site, known as Midtown Park, is located on Main Street, adjacent to the McGowen Street Station, and will become a premier urban parkspace in the heart of

Midtown. Midtown realized the potential for significant development surrounding the McGowen Street METRORail Station and sought to partner with a developer to create a vibrant mixed-use development that preserved much needed urban greenspace. The six-acre site will soon be jointly developed by Midtown and Camden Properties into a dynamic mixed-use property including a public park, retail and residential

facilities and a public parking garage that has the

potential to transform the surrounding area and attract

new development along the Main Street corridor. The public park, retail space and parking garage are being developed by Midtown. The private multi-family residential development is being developed by

Camden Properties.

Midtown Park will consist of an urban parkspace with restaurant pads and an underground parking garage

providing approximately 400 underground parking spaces. The garage will address significant existing parking demand as well as support future retail and

commercial developments. The half-acre retail plaza will be located adjacent to McGowen Street and will provide visual access to Main Street and Travis

NEXT STEPS


Street. It will include an upscale restaurant, a food and beverage kiosk, and public space next to the rail station. The larger greenspace, accommodating a variety of uses and providing open space as well as

recreational amenities will be located on the 2.5-acre site south of the multi-family development. Midtown

Park space will offer the following amenities:

� An art walk that unifies the north and south portions of Midtown Park;

� A great lawn that will welcome up to 3,000 guests for special gatherings and events;

� A playground serving the needs of multiple

groups welcoming both children and adults;

� A dynamic and interactive water feature;

� A dog run offering interaction for dogs and dog owners;

� A wetland stream and trail for

environmental education;

� A large berm overlooking the park and

providing a scenic view to the City skyline;

� Gardens that represent the various native ecological areas prevalent in the

Houston area.Midtown will create a new non-profit organization to operate and manage Midtown Park. A Board of Directors will be recruited. Operating and maintenance agreements will be created to ensure that Midtown

Park is managed to the highest standards.

Midtown is funding the land purchase and the park with

tax increment revenues and an $18 million development agreement. A capital campaign will soon be launched

to fund the remaining project costs needed to complete

the park. Revenue from the parking garage and restaurant pads will subsidize the park operations.

Successful parks are a key component of sustainable infrastructure and a healthy vibrant quality of life. This upcoming development will enhance the quality of life for current Midtown resident and business

owners by providing new outdoor activity space. It

will also become a destination to attract visitors from

surrounding communities.


Midtown is fast becoming Houston’s first pedestrian-oriented urban community reflecting the efforts of the Authority and its partners—the City, Harris County, HCC and HISD. It serves a market of young professionals who are transforming Houston’s reputation in the national consciousness into a premier

city to live, work and play. Midtown is key to that

transformation as the residential and nightlife hub for

Houston’s young professionals.

Midtown’s location in the heart of the City is its chief asset. It is home to three rail stations, a host of bus

stations and Texas’ first Greenroads certified street. It is easily accessible from three major freeways. The Zone is directly situated between Downtown and the Texas Medical Center, Houston’s two largest employment centers. Rice University, the University of Houston—Downtown, Houston Community College, the University of Texas-Houston Medical School, Baylor College of Medicine, and St. Thomas University are all located within three miles of the

heart of Midtown. A portion of the Museum District, Houston’s largest tourist attraction, is within the Zone’s boundaries. Midtown’s connectivity to transportation

options and major workforce areas, educational and

cultural centers is unrivaled; all of which make it is so

crucial that efforts continue to transform the area into a postcard neighborhood for Houston.

Midtown is working with its partners toward the

ultimate goal of creating a diverse, livable and

walkable community in the heart of Houston. Midtown’s upcoming projects including Midtown Park and the Brazos Complete Street project will further this goal. Infrastructure projects and greenspace

investments have proven to be catalysts for new

development. The location of Midtown Park will spur new development surrounding the McGowen Street Station that can mirror transit oriented development at the HCC/Ensemble Station, already a cultural destination. Infrastructure improvements like the

Brazos Complete Street project make the area safer for pedestrians, bicyclists, transit riders and cars

making a true residential community possible.

The Midtown Authority looks forward to continued opportunities to work with its partners to create a

model for sustainable urban development.

MIDTOWN—FINAL THOUGHTS

MIDTOWN REDEVELOPMENT AUTHORITY | 201527


DEVELOPER AGREEMENTS TOTAL PROJECT COST

Multi-Family Development $7,459,325 Townhome Development $1,565,008 Retail Development $113,770 Sub Total Developer Agreements $9,138,103

PUBLIC IMPROVEMENT PROJECTS TOTAL PROJECT COST

Bagby Park (Bagby & Gray Streets) – Phase I $556,298 Houston Technology Center – Phase I $3,523,641 Houston Technology Center – Phase II $2,580,500 Main Street Landscape Improvements $2,031,596 Baldwin Park – Phase I $725,601 Baldwin Park Neighborhood Streets $3,501,031 Midtown Gateways $759,925 Midtown Street Signs $147,114 Elgin – Walkable Communities FTA Project $2,014,714 Parker District Neighborhood Street Reconstruction & Utility Upgrades $2,954,843 Peggy Point Plaza $69,926 Bagby Street Study $180,000 McGowen Street Reconstruction & Utility Upgrades – FTA Project $5,003,892 Gray Street Enhanced Pathways – FTA Project $2,300,000 HCC Academic Walk/Holman Street – FTA Project $1,450,000 Caroline Street Reconstruction $8,500,000 Alabama Street Reconstruction & Utility Upgrades – FTA Project $6,000,000 Bagby Street Reconstruction & Utility Upgrades $9,598,220 Midtown Park (formerly "SuperBlock Park") $9,000,000 Buffalo Soldiers Museum $800,000 Glover Park $300,000 Bagby Park – Phase II $1,500,000 Baldwin Park – Phase II $580,000 Main Street Enhancements $5,500,000Midtown Park Parking Garage $12,000,000

APPENDIX A

PROJECT LIST MIDTOWN TIRZ #2 Midtown Redevelopment Authority as of December 31, 2014

Certain of these costs are estimates and may change from time to time.


Asia House $915,000 HMAAC 700,0003300 Main $5,000,000 Ensemble Theatre Environmental Remediation $160,457 Sub Total Public Improvement Projects $88,352,758

AFFORDABLE HOUSING PROJECTS TOTAL PROJECT COST

SEARCH Affordable Housing Grant $200,000 HHFC Grant for CDC’s Affordable Housing, Fourth Ward $400,000 Fourth Ward Affordable Housing Grant $339,363 Affordable Housing Refund to City of Houston $1,000,000 Affordable Housing Refund to Harris County each year $7,470,634 Row House CDC Affordable Housing Grant $200,000 Row House CDC Affordable Housing – Hannah Project $500,000 Row House CDC Affordable Housing – Pilot Project $4,000,000 New Hope CDC Affordable Housing Grant $300,000 Reward Third Ward CDC Affordable Housing Grant - 10 lots $500,000 Guiding Light CDC Affordable Housing Grant – 10 lots $500,000 Temenos CDC, Housing Grant of $350,000 (43 units developed) $350,000 Reward Ward Third Ward, Housing Grant of $500,000 (70 units developed) $500,000 Row House CDC Affordable Housing – Pilot Project – Ph. II (22 units developed) $2,200,000 2222 Cleburne Affordable Housing – Environmental Remediation $250,000 Affordable Housing Land Banking Program $31,106,157 Sub Total Affordable Housing $49,816,154

FUTURE PROJECTS TOTAL PROJECT COST

Brazos Street Reconstruction $8,500,000 Webster Street Reconstruction $5,000,000 Almeda/Crawford Street Enhancements $8,000,000 Safe Sidewalk $1,500,000 Street Overlay $750,000 Public & Cultural Museums $5,000,000 Southeast Corridor Street Reconstruction & Utility Upgrades (Elgin/Crawford) $4,500,000 Wheeler/Richmond Pedestrian Enhancements (METRORail – University Line) $3,000,000 District Street Light Program $4,100,000 District Match for Walkable Communities FTA Projects & Future Grants $12,614,767 Future Park Land Acquisition $4,500,000 Future Park Land Development $1,500,000 Sub Total Future Projects $58,964,767

TOTALS $206,271,782

Certain of these costs are estimates and may change from time to time.

twenty years of urban redevelopment...summary of the inances of the authority and the tax increment...

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