Memo re Economic Impact of dev. T H E ¢ I T Y 0 F
COPP-EEL
VIA E-MAIL
MEMORANDUM
DATE:
February 20, 2004
TO:
Jim Witt, City Manager
FROM:
Andrea Roy, Economic Development Coordinator
SUBJECT: Economic Impact of Proposed MacArthur/121 Development
In conjunction with Case No. PD-199-HC (Vista Point II, MacArthur Ridge) and Case No. S-
1211 (Service Star), 1 would like to provide you with information on the potential tax revenue
implications to the City as related to these requests. The information listed below will give a
financial comparison of the proposed uses, the existing conditions, and possible alternative uses.
As you are aware, there are two components of the subject request; one related to approximately
118,945 sq. ft. of flex/office space on 18.956 acres; and the other related to a retail component
consisting of a gas station/convenience store, car wash, auto repair/tire sales, and an additional
32,600 sq. ft. of speculative retail space on approximately 7 acres. These two components will be
broken out separately for clarity purposes. Additionally, the land values have not been
considered in the analysis due to their relatively stable level; however, it is understood that the
land values will increase with the sale of the property. Today, this undeveloped property
generates under $20,000 annually to the City.
Flex/Office (118,945 sq. ft.)
The proposed development of six flex space buildings has been compared to the existing Vista
Point Addition, also developed by Jackson-Shaw, and located on the north side of SH 121 within
the city of Lewisville. This existing project in Lewisville, which contains four buildings
(approx. 144,588 sq. ft.) is assessed at $10,430,000, excluding land. This total value translates
into values of approximately $72.14 per square foot. The applicant has indicated that this value
is somewhat similar to that which will be characteristic of the Coppell project, yet it is actually
estimated that the values will most likely exceed this nmnber, due to a higher level of building
Jim Witt
Febmary 20, 2004
Page Two
detail/finish out and the increased number of buildings. Based on the conservative estimate of
$72.14 per sq. ft., the proposed project will reach real property values of approximately
$15,128,000, generating approximately $98,120 in real property tax (excluding land) to the City
on an annual basis. The proposed real property estimate represents improvements only and does
not take into consideration the business personal property (furniture, fixtures, and equipment)
that will be located within the project or any sales tax that will be generated as a result of certain
types of tenants. Unfortunately, the true level of business personal property and level of sales tax
generated is unknown because the project is speculative in nature. However, conservative
estimates would place business personal property values at approximately $5 milliogAbringing
the total project value to approximately $20,000,000. -- ~ ~.
Because the possibility/desirability of a more conventional office use has been discussed, I have
provided you with a list of per square foot values on several "pure office" uses in Coppell and
nearby Lewisville. Office development values are significantly higher than those of standard
light industrial projects, which fall in the $27-$37 per square foot value range. This project is
unique in that it contains a much higher level of finish out than light industrial uses, and is more
closely aligned with office values.
Project
Proposed Project
Value Per Foot
$72.14 per ft. (likely $75 + per ft.).
1111 Northpoint (Citifinancial)
555 Dividend (WAMU/Brinks)
750 Canyon (Verizon)
722 S. Denton Tap (Creekview II Office)
*700 SH 121 (Vista Ridge II) (Formerly Genuity, now BEA)
*750 SH 121 (Vista Ridge I) (Verizon Wireless)
$64.61 per ft.
$69.00 per ft.
$93.77 per ft.
$100.00 per ft.
$50.00 per ft.
$50.00 per ft.
*Note: In 2003 these facilities were assessed jointly due to same ownership; however, it is
anticipated that these values will increase in 2004, due to the properties being separated.
Gas Station/Convenience Store, Car Wash, Auto Repair, and Speculative Retail
The proposed retail component of this request will contain a gas station with 2,107 square foot
convenience store, 1,075 square foot car wash, 5,956 square foot auto repair/tire sales, and
32,600 square feet of speculative retail space. On average, retail space would be valued at
approximately $90 per square foot, bringing the total real property value to $3,756,420. This in
turn would generate approximately $24,364 in real property taxes on an annual basis, excluding
the land.
Again, business personal property values and sales tax revenues are not definitive, due to the
speculative nature of the retail space. However, sales tax revenues for the gas station,
Jim Witt
Febmary 20, 2004
Page Three
convenience store, car wash, and auto repair/tire sales uses, have been estimated by the applicant
to be in the area of $55,000 annually. Staff would add that similar uses, which were located on
less visible intersections in Coppell, generate approximately $30,000 to the City as a result of the
City's 1% sales and use tax. It is more likely that values at this intersection would lie closer to
the applicant's estimate.
Additionally, the retail speculative sites are slated to contain up to approximately 19,000 sq. ft.
of restaurant uses. Again, based on several other restaurant uses within the City, including both
sit-down and quick-service, Staff can estimate that the restaurant uses ~vould generate another
$30,000 to the City as a result of the City's l% sales and use tax. The remaining retail space will
be occupied by traditional retail uses, which will also contribute a level of sales tax to the City.
In summary, proposed values of both the flex/office and retail components of the project are
favorable when compared to the more traditional office use, with the added benefit of sales tax
revenue potential. The estimates I have provided are accurate, yet also conservative, indicating
that this project could generate an even higher level of revenue to the City.
If you have any questions related to the information provided, please do not hesitate to contact
me.
/AR