FMSbonds, Inc. served as placement agent between the city of Plano, Texas, and a private investment fund in the purchase of approximately $227 million in ad valorem, tax increment reinvestment zone (TIRZ) revenues.
The TIRZ revenues are to be generated from property taxes collected on any appreciated, taxable value exceeding the project’s established tax base at the time of sale. To support redevelopment of the project, the city and county contributed a portion of future tax increment revenues.
The projected TIRZ revenues were based on conservative growth assumptions, providing the investor with potential to realize increased ROI should actual growth exceed the baseline model.
At the time of sale, the mixed-use project was undergoing demolition in preparation for development of single-family townhomes, multifamily units, and retail and office buildings.
Additional support for the project came in the form of two publicly offered special-assessment revenue bonds, exceeding $47.4 million in par, that were underwritten solely by FMSbonds.
At buildout, the redevelopment project is anticipated to consist of 500 single-family residences, 2,600 multifamily units and more than 1.7 million square feet of retail, office and hospitality development.
Modeled cash flows
FMSbonds initially worked with the city and developer to model future cash flows to be sold. FMSbonds then prepared a credit packet to market the cash flows to multiple investors.
Once identified, FMSbonds worked diligently to bring all parties together and maintained a continuous line of communication, ensuring the investbor received all requested due diligence materials.
FMSbonds also accompanied the investor on due diligence meetings with the developer and provided updated projections based on feedback from both the investor and developer.
FMSbonds’ expertise with land-secured financing provides investors with a clear understanding of the risks and rewards associated with a private purchase of reimbursement cash flows.
$227,000,000 Private Sale of TIRZ Revenues From A Mixed Use Redevelopment Projected Located in