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BUDGET OVERVIEW

Economic Overview

The Texas economy has been growing at a relatively healthy pace and the Lone Star State is widely
recognized as a good place to live and do business. The most recent projections indicate that the
state economy is set to continue its upward trend. There are always challenges to be dealt with,
such as current trade and immigration threats and the long-term need to improve infrastructure and
educational outcomes.

Compared to the rest of the country, Texas continues to have the upper hand attracting more and
more business due to the lack of a state income tax, its central location, low worker’s compensation
costs and being a right to work state. The City of North Richland Hills (NRH) is no exception as it
experienced its sixth straight year of economic growth and is set to continue this trend into Fiscal
Year (FY) 2018/2019.

The city has seen a net increase of 30 businesses resulting in 700 more employees working inside
the city limits over the same period last year. Resident unemployment is at its lowest rate since
February 2001, currently 3%, while Tarrant & DFW are both 3.4% (a half percent lower than
previous year).

As NRH continues to enjoy expansion of the sales tax base, the strong economy combined with a
healthy pipeline of upcoming business creates positive outlook heading into the next fiscal
year. The city welcomed Stericycle and its 450 employees, as well as Sushi Axiom. Babe’s Chicken
Dinner House, Sweetie Pie Ribeye’s along with Alamo Drafthouse Cinema, their first location in
Tarrant County, are all expected to open in the coming year. Staff conservatively projects FY
2018/2019 sales tax revenue to be 2% over the FY 2017/2018 Adopted Budget.

A strong economy combined with increases in development typically results in the addition and
appreciation of taxable property value. While this translates to increased tax revenues, so do the
increases in demand for city services. In the Tax Year 2018, the city experienced a 9.43% increase
in total taxable property values driven by over $77.74 million in new commercial and residential
development. Development permit activity remains at the same record pace as the previous two
fiscal years due to new residential construction of all types (single family, townhome and multi-
family). The demand for residential options is also apparent in the city’s existing residential
base. As of June 2018, 356 existing homes have been sold for an average sales price of $298,000,
an increase of 11% over the same period in the previous year.

Fiscal Year 2018/2019 will be the City’s first year in its history to offer public transportation. Similar
to the completion of the North Tarrant Express back in 2014, the City anticipates the introduction of
commuter rail (TEXRail) in early 2019 to further expand and diversify the city’s economic
base. Roughly 300 acres have been designated (transit oriented development or TOD) for new
development or redevelopment around two rail stations, inviting a mix of land uses in a walkable and
bikeable environment reducing congestion on the existing road network. It is estimated that $137
million in capital will start to be invested over the course of FY 2018/2019 resulting in 250
townhomes and patio homes, 600 multi-family units with upwards of 100,000 square feet of
commercial across these TOD areas.

Economic indicators are projected to remain positive heading into FY 2018/2019 as the city is
fortunate to reside in one of the best economic regions of the country and will remain the benefactor
of growth due to its central location, diverse transportation options, abundant workforce, local
amenities, quality education and superior city services.

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