To approve a TIRZ Revenue Assignment Agreement by and between City of Plano, Texas and ORIX Public Finance, LLC relating to the Tax Increment Reinvestment Zone Number Four; approve and adopt all findings and determinations contained therein; and authorize the City Manager to execute all necessary documents incidental and related thereto, including such agreement. Approved

Previously, federal funds were to be used to pay for the construction of the public spaces within the Collin Creek East Parking Garage.  In July 2021, Staff determined that awaiting the approvals to use federal funds would seriously delay and perhaps derail the entire project.  Looking for alternative sources of funds, our bond underwriter suggested assigning (or selling) the TIRZ increment.  This assignment has significantly less risk than TIRZ revenue bonds.  FMSBonds, Inc., the City’s underwriter for the Project circulated an offering to firms that work in the public financing.  Although the sale of TIRZ increment is not yet a common occurrence there have been three recent sales.  Unlike our TIRZ, the other deals all involved existing financing districts with a record of generating increments.  Comparatively, the Collin Creek deal has more risk to the purchaser.  In the end, only Orix responded with an offer to purchase the increment.  Below is an outline of the offer:

Assignment structure: The TIRZ Assignment will be a purchase and sale between the City and ORIX which will be memorialized in a Purchase, Sale and Assignment Agreement (the “PSAA”), among other documents, between ORIX and the City.

Sellers/Assignors: The City of Plano, Texas (the “City”).

Purchaser: ORIX Public Finance, LLC, or its subsidiary (“ORIX”).

Private Placement Agent: FMSbonds, Inc.  FMSBonds, Inc. is also handling the PID bond sales.

Purchase Price: (Anticipated to be) a minimum of $38,500,000.

Term/Maturity: 34-year term (taxes levied and due, including interest and penalties, from 1/31/22 through 12/31/2054). In addition to the term, the deal would mature once caps in the increment is reached (whichever is first). 

Continuing Disclosure: The City will require the developer to provide to ORIX monthly continuing disclosure updates on the progress of the parking garage.

Use of proceeds: It is anticipated that the proceeds from this transaction will be allocated to the construction of an underground parking garage in the Collin Creek Property.

Pledged Increment: Assignment of 75% of the City’s real estate taxes (“City Taxes”) levied from the Collin Creek Property during the Term with the maximum amount of $200 million (“City Cap”) and assignment of 50% of the County’s real estate taxes (“County Taxes”) levied from the Collin Creek Property during the Term with the maximum amount of $27 million (“County Cap”).

Indenture: The City agrees that the proceeds from this TIRZ Assignment will be included in a private improvement account and subject to an indenture created in association with the East PID bonds.

ORIX Transaction Costs: The City agrees to fund from proceeds up to $75,000 for legal and other third party costs associated with this transaction at closing.

Closing: No later than September 14, 2021.

Risk to the City:  The City has no direct risk.  Orix shoulders all the risk in this transaction.   

Staff recommend approval of the attached agreement.

As proposed in the approved Amended and Restated Funding Agreement, approval of this item will allow the assignment and sale of TIRZ#4 Increment for the funding of the Collin Creek East Parking Garage.  All funds from this transaction will be used for the purpose stated with no anticipated risk or financial impact to the City. 

Approval of this item will support the City's Strategic Plan Critical Success Factor of being an Excellent, Innovative, and Accountable City Government.