U.S., Texas and North Texas Economic Trends and Forecast. Where are we? Where are we going? And what can we do about it?

U.S., Texas and North Texas Economic Trends and Forecast Where are we? Where are we going? And what can we do about it?

The North Texas Perspective: Real Estate Finance Executives Association March 12, 2015 M. Elizabeth Morris CEO / Chief Economist Insight Research Corporation

Our Services Land Use Economics Transportation Infrastructure Impact Analysis Investment-Grade Economic, Employment and Tax Revenue Analysis Site Selection Municipal Land Use and Financial Planning Analysis Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838. theteam@getinsight.com

Can Your City Afford Its Future? The Impact TRAKKER The Fast TRAKKER The Z-Snap TM The FlexTRAK DSM Insight s MUNICIPAL SUITE: Getting It Together... Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

DFW CMSA Transportation and Toll Improvements Completed or Underway Using Insight Research Corporation s Land Use, Demographic / Employment and Investment-Grade Forecasts 1 Trinity River Parkway (River Corridor) 2 SH 183 3 PGBT Superconnector 8 6 12 4 5 SH 360 PGBT Eastern Extension 15 6 7 8 Dallas North Tollway & Addison Toll Tunnel LBJ Freeway Improvements & Toll Tunnel Lake Lewisville Bridge 2 13 3 1 7 5 11 14 9 SH 121, SW Pkwy, Chisholm Trail Pkwy 10 Loop 9, SE Segment 9 4 10 11 PGBT I-30 to I-20 12 SH 121 Denton Collin County 13 SH 161 Extension SH-183 to I20 14 SH 80 Trans Reinvestment Zone 15 I 35E HOV Lane Analysis Blacklands Turnpike/ Northeast Gateway Currently Abandoned Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Today s Topics Community Development and Economic Development A critical perspective U.S. Economy, Texas Comparison Texas to North Texas Economies Current Economic Chatter Leveraging Our State and Regional Advantages Forecast: U.S.-Texas-DFW MSA

Real Estate Development: The Primary Economic Development Source Developers and Finance Executives in the Real Estate Industry are key to a region s economic status Working with public and private sector partners, the real estate industry creates and maintains the local tax bases that allow public jurisdictions to function. The innovation, creativity and hard-won stability of property tax values is the bedrock of local revenues supporting any region s quality of life.

The Biggest Texas Advantage: Business Friendly Texas gets it! The clear understanding that... All taxes flow from profitable businesses. And all Jobs, too! Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

U.S. Economic, Employment and Population Trends

HISTORIC PROJECTED.com Bubble Depression 1929 to 1933 WW II 1941 to 1945 1995 to 2001 Recent Recession 2007 to 2012 50 40 30 20 10 0-10 -20-30 -40 U.S. Cycles of Capital Investment 1919 to 2035, Insight s 2015 Forecast to 2035 High Cycle Points Low Cycle Points 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 Total Employment Construction Employment

U.S. Cycles of Capital Investment 1919 to 1955.com Bubble Depression 1929 to 1933 WW II 1941 to 1945 1995 to 2001 50 40 30 20 10 0-10 -20-30 -40 Source: U.S. Bureau of Labor Statistics 1919 1922 1925 1928 1931 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 High Cycle Points Low Cycle Points Total Employment Construction Employment Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

U.S. Cycles of Capital Investment, 1956 to 2021 2015 Forecast to 2021 HISTORIC PROJECTED.com Bubble Depression 1929 to 1933 WW II 1941 to 1945 1995 to 2001 High Cycle Points Low Cycle Points 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 Recent Recession 2007 to 2012 50 40 30 20 10 0-10 -20-30 -40 Total Employment Construction Employment Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

HISTORIC PROJECTED.com Bubble Depression 1929 to 1933 WW II 1941 to 1945 1995 to 2001 Recent Recession 2007 to 2012 50 40 30 20 10 0-10 -20-30 -40 LOOKING AGAIN at U.S. Cycles of Capital Investment 1919 to 2035, Insight s 2015 Forecast to 2035 High Cycle Points Low Cycle Points 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 Total Employment Construction Employment

10 Real Economic Growth in the Gross Domestic Product (GDP) Percent Change from Previous Quarter at Annual Rate 8 6 4 th Qtr 14: +2.2% 4 2 0-2 -4-6 -8 A Recession: Two consecutive quarters of economic loss -10 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Bureau of Economic Analysis (Next Update April 30, 2015) Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Components of the GDP Economic Component 2015 Status over 2014 Government Spending Consumer Spending Continued Unprecedented High Measurably More Optimistic Private Capital Investment Cautionary, Marginal Uptick Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Job Job Recovery Time: time Current from Prior to Prior Recessions...from From Peak Peak to Return to Return in Months in Months

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 160,000 150,000 140,000 130,000 120,000 110,000 100,000 U.S. CIVILIAN LABOR FORCE, 1980-2014 In Thousands of Workers, Source - U.S. BLS 154,322 155,899 Boomer retirements and other losses to US workforce 106,974

U.S. Unemployment Rate Percent 12 In Percent of Unemployed Persons in the Civilian Labor Force 10 U.S. Unemployment Feb 2015 5.5% 8 6 4 2 BLS considers 4% of Labor Force as Permanently Unemployed; 6.5% is Average Unemployment since 1980 0 JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJF 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: U S BLS

120 U.S. Consumer Confidence Index From a Monthly Survey of 5,000 US Households, 1985 = 100 100 80 February 15 U.S. 96.4 (p) At 25.3, Feb 09 was lowest since 1967 when index began. A healthy index is considered to be 90%. 60 40 20 0 JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJ FMAMJ J ASONDJ F 2008 2009 2010 2011 2012 2013 2014 2015 Source: The Conference Board

Economic Performance Comparisons US, Texas and North Texas

Texas Job Growth Outpaces US 1970 through 2014 Gray bars reflect US recessions, Year-to-year % change, SAA

Annual Average Unemployment Rate US (Blue), Texas (Red), No TX (Green) 12.0% 10.0% BLS considers 4% of Labor Force as Permanently Unemployed - 6.0% is Average Since 1980 8.0% 6.0% 4.0% 2.0% December 2014 US: 5.6%, Texas: 4.6%, DFW 4.0% 0.0% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Texas US N. Texas 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

% Change 5.0% 4.0% Civilian Labor Force Comparison U.S. to Texas to North Texas While the size of the US CLF declined in 2009 for the first time in 30 years, the CLF in Texas and North Texas continue to grow. 3.0% 2.0% 1.0% 0.0% -1.0% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 US TEXAS N. TEXAS Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

U.S. BEA Regional Market Segments

Comparisons of Regional Consumer Confidence 2007 2008 2009 2010 2011 2012 2013 2014 Dec Dec Dec Dec Dec Dec Dec. Dec The Consumer Confidence Board considers a score of 90 to be a healthy baseline. Dec 2014 Difference from US Pacific 98.6 37.6 52 54.7 57.4 72.2 85.5 100.9 7.8 Mountain 114.0 37.2 52.6 64.5 54.1 59.6 84.0 99.7 6.6 Midwest 86.9 33.5 50.9 62.1 70.1 70.9 75.3 92.2-0.9 Northeast 72.2 30.0 47.9 57.2 56.3 52.6 71.1 94.1 1.0 Southeast 91.4 40.9 48.2 56.9 56.1 58.7 69.9 87.2-5.9 West South Central 119.5 65.9 72.1 81.1 78.1 95.9 104.7 110.0 16.9 U.S. 92.6 35.9 50.3 59.1 58.8 66.7 77.5 93.1 Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

140.0 Consumer Confidence Index West South Central Reg. Compared to U.S. 1985 = 100 120.0 100.0 West So Cent Difference From U.S. +16.9 West South Central 80.0 United States 60.0 40.0 20.0 December 2014 Consumer Confidence Index West South Central Region: 110.0 United States: 93.1 0.0 Source: Conference Board JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASOND 2008 2009 2010 2011 2012 2013 2014 Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

2014 Median Home Price and Inventory by Texas MSA % Price Increase, 2014 to 2013

US Auto Sales, 2008-2014, 2015 Projection Lower Gasoline Prices Boost Auto Sales

TEXAS METROPOLITAN STATISTICAL AREAS Ft. Worth-Arlington MD Johnson, Parker, Tarrant and Wise Counties Ft Worth Dallas-Plano-Irving MD Collin, Dallas, Delta, Denton, Ellis, Hunt, Kaufman and Rockwall Counties Dallas EL Paso MSA El Paso Co El Paso Austin Houston Austin-Round Rock MSA Bastrop, Caldwell, Hays, Travis and Williamson Counties San Antonio San Antonio MSA Atascosa, Bandera, Bexar, Comal, Guadalupe, Kendall, Medina and Wilson Counties Houston-Baytown-Sugar Land MSA Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto and Waller Counties

ANNUAL AVERAGE UNEMPLOYMENT RATES U.S. Texas Austin Dallas Ft. Worth El Paso Houston San Antonio 2000 4.0 4.4 3.0 3.6 3.6 6.8 4.3 4.0 2001 4.7 5.0 4.3 4.8 4.4 7.3 4.7 4.6 2002 5.8 6.4 5.9 6.7 6.0 8.2 6.0 5.7 2003 6.0 6.7 6.0 6.8 6.3 8.8 6.7 6.1 2004 5.5 6.0 5.1 6.0 5.6 7.6 6.2 5.6 2005 5.1 5.4 4.5 5.3 5.1 7.0 5.6 5.0 2006 4.6 4.9 4.2 4.8 4.7 6.7 5.0 4.6 2007 4.6 4.3 3.6 4.3 4.3 5.9 4.3 4.1 2008 5.8 4.9 4.4 5.1 4.8 6.3 4.8 4.7 2009 9.3 7.4 6.8 7.7 7.6 9.0 7.6 6.5 2010 9.6 8.2 7.1 8.3 8.2 9.8 8.5 7.4 2011 9.0 7.9 7.0 8.1 7.9 10.2 8.3 7.5 2012 8.0 6.8 5.8 6.7 6.5 9.3 6.8 6.5 2013 7.4 6.5 5.2 6.3 6.1 8.8 6.2 6.0 2014 6.2 5.1 4.2 5.1 5.0 7.2 5.1 4.8 Source: U.S. Bureau of Labor Statistics Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Population, % change, mid-year 2014 US Population Growth 0.9% or greater 0.4% to 0.9% 0.4% or less U.S. = 0.73% Sources: Census Bureau, Moody s Analytics

United States Population 1960 through 2014, Source U.S. Census Bureau 350,000,000 300,000,000 1960 179,972,000 2014 319,906,652 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

State of Texas Population 1960 through 2014 30,000,000 25,000,000 1960 9,624,000 20,000,000 2014 26,956,958 15,000,000 10,000,000 5,000,000 0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 7,500,000 6,500,000 5,500,000 4,500,000 3,500,000 2,500,000 1,500,000 500,000 DFW MSA Population 1960 through 2015 1960 1,425,775 2014 7,097,813 or 26% of the State Dallas MD Ft Worth MD Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

AREAS OF PUBLIC UTILITY SERVICE AT TWENTY YEAR INTERVALS Dallas-Fort Worth Population Growth Areas Aqua 1970 Yellow 1990 White 2010 Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Continuing Advantages for Texas, especially North Texas

Statewide Advantages Supporting The Competitive Texas Rebound Economic Realities Lower Cost of Living & Housing Employment Diversity Energy s Influence Marketing Support 4A&B Funds Local Incentive Flexibility Special Districts TIF, TIRZ Texas Enterprise Fund Public Policy Benefits Homestead LOC Cap No State Income Tax Speed to Market Right-to-Work State Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

TOTAL TAX BURDEN #1 High, # 50 Lowest % of Avg Per Capita Income Paid in State & Local Taxes 2011 Rank 2011 2010 Rank 2010 2009 Rank 2009 New York 1 12.6% 1 13.1% 1 12.7% New Jersey 2 12.3% 2 12.9% 2 12.7% Connecticut 3 11.9% 3 12.5% 3 12.4% California 4 11.4% 4 11.6% 5 11.2% Wisconsin 5 11.0% 5 11.5% 4 11.4% Minnesota 6 10.7% 7 11.0% 7 10.8% Maryland 7 10.6% 10 10.5% 13 10.3% Rhode Island 8 10.5% 6 11.2% 6 11.2% Vermont 9 10.5% 11 10.5% 10 10.6% Greatest Pennsylvania 10 10.3% 12 10.5% 12 10.4% Least Alabama 41 8.3% 44 8.5% 42 8.7% South Carolina 42 8.3% 41 8.6% 41 8.7% Nevada 43 8.1% 42 8.6% 45 8.2% New Hampshire 44 8.0% 43 8.6% 43 8.4% Tennessee 45 7.6% 48 7.9% 48 7.9% Louisiana 46 7.6% 47 7.9% 44 8.4% Texas 47 7.5% 45 8.1% 47 8.1% South Dakota 48 7.1% 49 7.8% 49 7.8% Alaska 49 7.0% 50 7.3% 50 6.7% Wyoming 50 6.9% 46 8.0% 46 8.1% Source: Bureau of Economic Analysis, Tax Foundation Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

The Biggest Texas Advantage: Business Friendly Texas gets it! The clear understanding that... All taxes flow from profitable businesses. And all Jobs, too! Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Hillwood Properties, Corporate Services SPEED TO MARKET July 19 September 16 October 4 October 29 December 2 December 31

Texas: A Good Financial Bet Location Central Time Zone Economic Stability Oil/Gas, Defense, Transportation Job Creation and Population Growth Low Cost of Living/ Low Tax Burden Business Friendly Environment Local Control of Zoning, Special District Formation, Incentive Packages and Negotiations Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

DFW Real Estate Performance Overview Year End 2014

New and Existing Home Sales in the US Home sales continue to be supported by Job Growth, Low Rates

2014 Median Home Price and Inventory by TX MSA % Price Increase, 2014 to 2013

New Home Construction Flattens

Construction Contract Values Up

Market Segments Included: Single Family Multi Family Retail Office Industrial Each segment reviews Dallas, Fort Worth and the DFW performance data combined.

Single Family

50,000 DALLAS MD SINGLE FAMILY PERMITS 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Annual Number of Permits 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Texas A&M RE Center

DALLAS MD SINGLE FAMILY PERMITS BY COUNTY Hunt 66 0.42% Kaufman 219 1.38% Rockwall 965 6.09% Ellis 1087 6.86% Denton 2892 18.25% Collin 6670 42.10% Delta 4 0.03% Dallas 3941 24.87% Source: Texas A&M RE Center

Annual Number of Permits FORT WORTH MD SINGLE FAMILY PERMITS 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Texas A&M RE Center

FORT WORTH MD SINGLE FAMILY PERMITS BY COUNTY Wise 68 1% Johnson 777 11% Parker 376 6% Tarrant 5557 82% Source: Texas A&M RE Center

DFW MSA SINGLE FAMILY PERMITS 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Annual Number of Permits 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Texas A&M RE Center

Multi-Family

65,000 55,000 45,000 35,000 25,000 15,000 5,000 (5,000) Source: CBRE Inc. DALLAS MD MULTI-FAMILY CONSTRUCTION 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Units ABSORBED DELIVERIES

65,000 55,000 45,000 35,000 25,000 15,000 5,000 (5,000) Source: CBRE Inc. FORT WORTH MD MULTI-FAMILY CONSTRUCTION 2006 2007 2008 2009 2010 2011 2012 2013 2014 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Units ABSORBED DELIVERIES

Units DFW MSA MULTI-FAMILY CONSTRUCTION 65,000 55,000 45,000 35,000 25,000 15,000 5,000 (5,000) 2006 2007 2008 2009 2010 2011 2012 2013 2014 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: CBRE Inc. ABSORPTION DELIVERIES

Retail

12.0 9.0 6.0 3.0 0.0 (3.0) Source: CBRE Inc. DALLAS MD RETAIL CONSTRUCTION 2006 2007 2008 2009 2010 2011 2012 2013 2014 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Millions of Square Feet ABSORBED DELIVERIES

12.0 9.0 6.0 3.0 0.0 (3.0) Source: CBRE Inc. FORT WORTH MD RETAIL CONSTRUCTION 2006 2007 2008 2009 2010 2011 2012 2013 2014 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Millions of Square Feet ABSORBED DELIVERIES

12.0 9.0 6.0 3.0 0.0 (3.0) Source: CBRE Inc. DFW MSA RETAIL CONSTRUCTION 2006 2007 2008 2009 2010 2011 2012 2013 2014 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ABSORPTION DELIVERIES Millions of Square Feet

Office

DALLAS MD OFFICE CONSTRUCTION 25 Millions of Square Feet 20 15 10 5 0 (5) 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: CBRE Inc. ABSORBED DELIVERIES

FORT WORTH MD OFFICE CONSTRUCTION 25 Millions of Square Feet 20 15 10 5 0 (5) 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: CBRE Inc. ABSORBED DELIVERIES

Millions DFW MSA OFFICE CONSTRUCTION 25 20 15 10 5 0 (5) 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: CBRE Inc. ABSORBED DELIVERIES

Industrial

30 25 20 15 10 5 0 (5) Source: CBRE Inc. DALLAS MD INDUSTRIAL CONSTRUCTION 2006 2007 2008 2009 2010 2011 2012 2013 2014 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Millions ABSORBED DELIVERIES

FORT WORTH MD INDUSTRIAL CONSTRUCTION 30 Millions of Square Feet 25 20 15 10 5 0 (5) 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: CBRE Inc. ABSORBED DELIVERIES

30 25 20 15 10 5 0 (5) Source: CBRE Inc. DFW MSA INDUSTRIAL CONSTRUCTION 2006 2007 2008 2009 2010 2011 2012 2013 2014 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Millions ABSORPTION DELIVERIES

Special District Financing Increasingly Used Approaches that can Stabilize and Enable Development Opportunities

Typical TIF Eligibility Criteria A TIF District can be established if: There is significant potential to stimulate new, private sector, taxable development or redevelopment (regeneration). The public infrastructure is currently insufficient to support the new private sector development, including streets, utilities, water and wastewater treatment, sidewalks, lighting and common area public space. Development will not occur but for the creation of the District.

As Used in the US, Tax Increment Financing is NOT: A tax abatement program A direct or uncontrolled subsidy to a developer A tax break for property owners within the TIF District A public sector-initiated enticement -- but rather a response to the expressed infrastructure needs of private sector development commitments Tax increment financing IS an alternative financing tool in which the community decides to participate temporarily to help fund the costs of the district s infrastructure for the ultimate financial benefit of the community s tax base.

TEXAS MOTOR SPEEDWAY

CITY OF FORNEY TIF/TRZ AREA (in Gold) Balance of the City s s Tax Base in Red, City Limit in Green TIF area is about 55% of the city s land area, and 18% of its existing tax base.

The U.S., Texas and North Texas Economic Forecast from Insight Research Corporation

FORECASTS AND FORECASTERS What do the Other Guys have to say about economic performance in Texas in the coming year? Comerica Bank Federal Reserve JPMorgan Chase Like this week s Northeast weather forecast, is the chatter about a poor performance year for 2015 in Texas just another snow job? Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Regional Economic Effects of Higher Energy Prices S S Helped Hurt + 8 42

How About Comerica Bank and The Dallas Federal Reserve Bank? The Chief Economist of Comerica Bank expects a 2.0% U.S. GDP growth in 2015, and forecasts a slowing economic outlook for Texas. The Chief Research Economist for the Federal Reserve Bank of Dallas expects slower growth in Texas as well, Texas may not outpace the U.S. economy. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

And JPMorganChase? December 18, 2014: According to U.S. Chief Economist, JPMorgan Chase Michael Feroli, We think Texas will, at least, have a rough 2015 ahead, and is at risk of slipping into a regional recession. As support for his opinion, Feroli points to two months of job count decline statewide for Texas from January to March of 1986. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Direct Energy Employment Differences US and Selected Texas MSAs U.S. 0.6% of total employment, or 910,000 direct jobs nationwide Texas Average 2.6% 303,900 jobs statewide Houston MSA 4.0% 113,500 jobs in the region Midland-Odessa 20.0% 30,400 jobs regionally DFW MSA 0.7% 23,800 jobs Given the ripple effect multiplier applicable to employment, the Federal Reserve Bank estimates that approximately 140,000 direct and indirect jobs may be somewhat affected in the State of Texas. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

A 2015 Texas Recession? According to Insight Research Corporation s Chief Economist, that perspective can be summed up in one word: RUBBISH! Shale production of oil & natural gas has been a boost to the Texas economy, helping to jump-start the employment numbers in the state ahead of much of the rest of the nation. However, unlike Feroli s additional citation of the similarities in Texas and North Dakota, the Texas economy is strong and diverse. At year end 2014, the Texas economy and particularly the North Texas economy -- has the bit between it s teeth and is experiencing strong gains in employment and in-migration of both companies and households. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Oil and Gas Prices Plunge

How long will lower gas prices last? The U.S. Energy Department projects a price at the pump of 2.16 per gallon during the first quarter of 2015 and $2.33 as an average through the year, down from an average of $3.36 per gallon in 2014. It projects an average of $2.72 per gallon for 2016. Diesel fuel prices, which averaged $3.83 per gallon in 2014, are expected to fall to $2.85 for 2015, and rise again to $3.25 per gallon in 2016.

Dueling Forces for Business Q: What weights the economy down? A. Added expenses to businesses and households. B. Risk Aversion Uncertainty; both businesses and households avoid risk Q: What propels it it forward? A. Lessened business and household expenses B. Risk Taking For both available credit and forecasting stability Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Policy and Regulation Forecast Drivers in the U.S. ANTI-BUSINESS a) Dodd-Frank Act (DFA) b) Affordable Care Act Implementation Uncertainties c) New Taxes, Fewer Exemptions d) Oil, Coal, Gas Restrictions; Cap & Trade PRO-BUSINESS a) Increasing Credit Availability b) Regulatory Revisions to Reduce Business Costs c) Lower Overall Taxes: Local, State & Federal, Capital Gains and Estate d) Lower Energy Cost Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Assumptions for the U.S. Forecast Good: Continued overall economic and housing market recovery Mixed: Fed Action: Slowly increasing interest rates Slowly increasing inflation Reduced oil prices Bad: More domestic terrorism, deteriorating Mid- and Far East... Too important to ignore, too expensive to fix. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

United States Total and Construction Employment 1981 through 2014 Historic; 2015 through 2035 Forecast Annual % of Change Historic EOY 2014 Projected 15 10 5 0-5 -10-15 -20 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 US Total Employment US Construction Employment Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Texas and North Texas Forecasting Assumptions

Texas & No. Texas Economic Keys As of 2015, Texas continues to be light years ahead of the U.S. recovery in terms of job change percentages, especially true in North Texas The Texas economy and job creation performance continued to grow steadily Major Texas cities 2014 housing markets continued rapid improvement, making the switch from a buyer s to a seller s market, driven by the State s increasing employment and inmigration. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Comparison of U.S, Texas and North Texas Construction Employment 1981 through 2014 Historic; 2015 through 2035 Forecast % Change 20 Historic EOY 2014 Projected 15 10 5 0-5 -10-15 -20 At year end 2014, Texas is outperforming the U.S. recovery at a remarkable pace: U.S. 3.5%, TX 5.0%, No. Texas 12.6% -25 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 US Const. Employment Texas Const. Employment N. TX Const. Employment Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

State of Texas Total and Construction Employment 1981 through 2014 Historic; 2015 through 2035 Forecast Annual % of Change 15 Historic EOY 2014 Projected 10 5 0-5 -10-15 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Total Employment Construction Employment Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Annual % of Change 25 DFW MSA Total and Construction Employment 1981 through 2014 Historic; 2015 through 2035 Forecast Historic EOY 2014 Projected 20 15 10 5 0-5 -10-15 -20 Regional economic slowdowns can be expected about 2020, and again in 2028-25 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Total Employment Construction Employment Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Executive Summary Insight is Upbeat for 2015

Executive Summary: Insight is Upbeat for North Texas in 2015 & 2016 While other economists are predicting slower growth and even a recession for Texas, Insight Research is more bullish, citing the demonstrated economic strengths of North Texas. Meeting pent-up demand, the region is poised to continue strong economic development successes. Texas may slow slightly from 2014 in 2015, but Austin and Houston as well as DFW remain strong powerhouses of economic demand and strength. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Upbeat for North Texas in 2015 & 2016 In 2016, a Presidential election year will likely bring a measurable slowing of activity nationwide as businesses and families postpone major decisions to see what may affect them. This happens almost every Presidential election year as the negative drumbeat of daily media and political ads dominate communications. Notwithstanding, North Texas is poised to continue to outpace the U.S. and Texas averages as well into the next economic cycle.

Meeting Looming Challenges Stay ahead of the multiple challenges posed by a rapidly increasing population using all the economic development tools at our disposal: 4A,4B, TIRZ, TIF, and most important, locally controlled incentives. Plan for and provide for Texas future water needs. Manage and finance our transportation, mobility and infrastructure requirements. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

Recognize the Importance of and Protect Some Texas Advantages! Keep Texas one of seven states in the U.S. with no state income tax. Protect our right-to-work status. Keep the cost of living down Insist on professional public management and budget practices. Maintain the economic advantages of our 80% homestead cap on home loan debt that protected Texas in the mortgage meltdown as compared to many other parts of the U.S. Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

In other words, keep doing the Texas thing!

The circulation of confidence is better than the circulation of money. - James Madison -

Our Mission Insight Research Corporation clearly defines the economic costs and benefits of project alternatives so that decision makers have fully informed choices.