1. Economic Development Agreements with Radio Shack City of Fort Worth Housing and Economic Development Department May 18, 2010

2. 2 Overview of Presentation Background Radio Shack Economic Impacts Proposal Summary City Agreement Amendments Point of Sale Agreement TIF Amendments Recommendations/Next Steps

3. 3 Background In 2002 Radio Shack began search for a new headquarters location The City entered into an economic development agreement in 2004 making Radio Shack eligible to receive up to 100% of the Real & Personal Property Tax Increment from the new Downtown Campus location The City created TIF 6 (Riverfront) as part of the overall incentive agreement to allow the County, TRWD & TCC to participate on public infrastructure associated with the development

4. TIF 6 (Riverfront) Boundary

6. Background Requirements under original economic development agreement: –Employment 1,000 Fort Worth Residents 250 Central City Residents –Fort Worth Based Businesses $1.2M annually –MWBE Commitments $200,000 annually 30 year term Estimated maximum incentive approximately $60 million TIF reimbursement of $9.8 mil. + 6% interest 6

7. 7 Economic Development Agreement Incentive Payments to Date Payments to date total: $2,877,282* –Payment #1 (11/01/06)$ 900,635 –Payment #2 (5/23/07)$ 1,284,443 –Payment #3 (5/30/08)$ 692,204 * Payments were suspended in 2009 awaiting outcome of TAD valuation associated with TCC purchase

8. 8 Current Situation Radio Shack began search for new headquarters location in Fall 2009 Multiple cities part of site selection process Radio Shack leases approximately 40% of TCC Downtown Campus - lease ends June 2011 Radio Shack would like to extend the lease for 5-years through June 2016 with opportunity to recapture costs associated with the TIF public improvements

9. 9 2009 Radio Shack Profile Total Employees 1,139 Fort Worth Residents 434 Fort Worth Central City Residents 138 Value of Business Personal Property$19,900,530 Value of Real Property$81,302,624

10. 10 Economic Impact Direct Jobs 1,139* Direct & Indirect Jobs 3,075 Radio Shack HQ Payroll$ 94,000,000 Economic Impact of HQ Payroll$253,800,000 Direct Amount to FW MWBE$ 59,257* Direct Amount to FW Vendors$ 7,401,426* * Based on 2009 economic development agreement audit

11. 11 Corporate Retention Proposal Summary Radio Shack enters into lease extension with TCC to keep headquarters at current location through 2016 City and TIF Board amend agreements to reflect Radio Shack’s current profile City of Fort Worth enters into a new Point of Sale (POS) agreement with Radio Shack for sales tax currently not cited in Fort Worth Total of incentives capped at outstanding value of public improvements associated with radio Shack Headquarter campus ($10.76 million) due from TIF City will nominate Radio Shack for Enterprise Project Designation by the State

12. 12 Proposed Economic Development Agreement Amendment OriginalProposed Fort Worth Residents 1,000 400 Central City Residents 250 150 FW Businesses $1.2 mil. $1.2 mil. MWBE $200,000$100,000 Agreement ends at the earlier date of either June 2016 or when total payout to Radio Shack from all sources equals $10.76 million

13. 13 Economic Development Agreement Incentive Projections Projected taxes Personal Property: –Taxable Value$19,900,530 –Annual Taxes $ 170,150 Real Property: –Taxable Value$81,302,624 –Annual Taxes $ 695,137 EstimatedTotal Annual Tax Generated$ 865,287 Est. Incentive payments over lease term $ 5,938,541* * Includes 2009/2010 payments not made - awaiting final TAD valuation associated with TCC purchase

14. 14 Point of Sale Agreement Similar agreement with Acme Brick Consolidation of sales tax purchases by RadioShack based on point of purchase and of eligible retail sales Agreement would allow for 100% of the 1% sales tax currently not collected in Fort Worth (new incremental taxes) to be part of the retention package City would retain the.5% sales taxes for CCPD and The T would collect.5% associated with transit Term of POS agreement would be 15 years with options to extend by mutual consent Once $10.76 million on infrastructure is paid to Radio Shack, POS will be split 50/50 with City

15. 15 Point of Sale Projections Estimated RadioShack cites $15 Million in new sales annually within the City of Fort Worth Example: $15,000,000Taxable Sales Cited X 1%Fort Worth Sales Tax Rate $ 150,000POS Grant from City Est. Sales Tax during lease term: Radio Shack$780,606 CCPD$390,303 The T$390,303

16. 16 Proposed TIF Amendment No City Council action required TIF Board approves amendment TIF agreement would stay in place at current levels 100% Participation: –Tarrant County –Tarrant Regional Water District –Tarrant County Hospital District 80% Participation: –Tarrant County College Repayment provision added if Radio Shack does not meet lease terms All TIF obligations end when $10.76 million reached from all sources Est. TIF Payments over lease term $4,047,367

17. 17 Estimated Revenue Forecast

18. 18 Benefits of Proposal Ensures Radio Shack Headquarters remains in Fort Worth Retains over 1100 jobs and $94 million payroll Allows additional time (5-year lease) to find permanent location locally for headquarters New revenue stream developed for CCPD and The T from POS agreement

19. 19 Recommendation/Next Steps Staff recommends that the City Council approve, as proposed: –amending the existing Economic Development Agreement; and –approve new Point of Sales Agreement Next Steps –City Council considers M&Cs on June 8 –TIF 6 (Riverfront) Board considers TIF amendment on June 9