Page 39 - Hurst FY19 Approved Budget

Revenue Sharing Success: Over fifteen year ago, Simon Property Group, owners
of North East Mall, approached city officials and requested their participation in the
expansion of the mall, a practice that has become increasingly prevalent between
developers and cities in a competitive retail environment. Simon’s plans evolved from
the addition of one anchor tenant, and remodeling, to a major expansion with three
additional anchor tenants and expanded specialty shops, with the addition of an
adjacent retail center called The Shops at North East Mall. The city’s participation in the
projects came through two sales tax participation agreements with Simon approved
by both the City Council and the Hurst Community Services Corporation Board. Both
agreements were capped by the number of years and shared dollars. If the developer
exceeds revenue projections, the city’s commitment in new sales tax revenues will be
paid off sooner. If the developer does not exceed revenue projections, all principal
and interest remaining unpaid at the end of the term will be forgiven. The developer
exceeded sales expectations in the Shops area and the city reached early payoff in 2009.
After this point, the city began receiving 100% of Shops sales tax earnings and this is
reflected within this document’s financial summaries. It is expected that the city will
continue sharing revenue on the Mall agreement until the end of the contract term in
March 2023.

The projects were determined to be financially beneficial through a comprehensive
cost/benefit analysis, which verified city projections of an annual net benefit to the city
of approximately $7 million dollars over a 20-year period. In addition, the city benefits
from the expanded employment base of around 3,000 jobs. Of primary importance, the
project was deemed necessary to preserve the financial integrity of the city’s sales tax
base. The mall area makes up approximately one third of the city’s sales tax base. The
North East Mall expansion, with its generation of additional sales property tax revenues,
and its positive effect on the area’s economy, is considered an investment for years to
come. To view a current lineup of mall stores, please visit www.simon.com/mall/north-
east-mall.

The revenue sharing agreements with Simon Property Group are considered the model
for subsequent, smaller-scale agreements entered into by the City of Hurst and other
companies. The city creates all economic development agreements under Chapter 380
of the Texas Local Government Code. A successful 380 agreement was approved by City
Council to assist Texas Appliance move into Hurst and occupy a “big-box” retail space
left vacant for several years after CompUSA closed. The agreement generated some
much needed retail traffic within Hurst Town Center. The city also entered into 380
agreements to encourage major projects and redevelopment in aging areas of the city,
including the construction of the 90,000 square foot Shops at Hurst with a new Walmart
Neighborhood Market, with the entertainment venue IFLY, and a recently executed
agreement to improve the Sprouts Crossing center on Highway 26. All agreements are
capped by time or dollar amount and provide long-term financial benefit to the city.
The city will continue to entertain 380 agreements; however, a cost benefit analysis will

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