HomeMy WebLinkAboutIR 9972 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9972
To the Mayor and Members of the City Council December 13, 2016
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rrn SUBJECT: IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING
STANDARDS BOARD STATEMENT NO. 77, "TAX ABATEMENT
DISCLOSURES"
On August 14, 2015, the Governmental Accounting Standards Board ("GASB") issued Statement
No. 77 (Statement) "Tax Abatement Disclosures". With this new Statement, governments must
disclose how much tax revenue was foregone due to tax abatement agreements. This Statement
is effective for the City's financial periods beginning October 1, 2016 (fiscal year 2017).
This Statement requires the disclosure of tax abatement information when the City enters into a
tax abatement agreement, and when tax abatement agreements are entered into by other
governments (Tarrant County or the State of Texas) that reduce the City's tax revenues. This
Statement requires the City to disclose the following information about these abatement
agreements:
a. Brief descriptive information, such as the tax being abated, the authority under which the
tax abatements is provided, eligibility criteria, the mechanism by which taxes are abated,
provisions for recapturing abated taxes, and the types of commitments made by tax
abatement recipients;
b. The gross dollar amount of taxes abated during the period; and
c. Commitments made by a government, other than to abate taxes, as part of a tax
abatement agreement.
Impact on City
The Financial Management Services Department is working collaboratively with the Economic
Development Department and the Neighborhood Services Department to identify all of the
agreements that the City has which may require disclosure under this Statement. While no
financial impact will occur, the required additional disclosures will be outlined and published in the
City's Comprehensive Annual Financial Report.
City's Current Incentive Programs
The City provides incentives through various programs as more fully described below.
Economic Development Department
• Taxing Increment Reinvestment Zones (TIRZs) are special zones created by City Council
under Texas Tax Code Chapter 311 (Tax Increment Financing Act). A TIRZ is used to
finance public improvements within a defined area that are intended to promote
development or redevelopment. Taxes attributable to new improvements (tax increments)
are set aside in a special revenue fund to finance public improvements within the
boundaries of the zone.
• Enterprise Zones Program was created by resolution of the City Council pursuant to Texas
Government Code Chapter 2303. Enterprise Zones are used to promote job creation and
ISSUED BY FINANCIAL MANAGEMENT SERVICES FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9972
To the Mayor and Members of the City Council December 13, 2016
3- Page 2 of 2
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{i7 Y
* *a
rrn SUBJECT: IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING
STANDARDS BOARD STATEMENT NO. 77, "TAX ABATEMENT
DISCLOSURES"
capital investment in economically distressed areas of the state. These programs offer
local and state benefits. Benefits include state sales and use tax refunds and franchise tax
reductions or credits.
• Chapter 380 Economic Development (ED) Program Grants were created by resolution of
City Council pursuant to Texas Local Government Code Chapter 380. Chapter 380 is
used as a gap financing tool for projects facing extraordinary impediments to development
and offering significant positive impact to the community and surrounding neighborhoods
where the project is located. Benefits include reimbursement to private developers for the
range of expenses that may contribute to a financing gap yielding projects financially
infeasible.
• Relocation Incentives Policy was created by resolution of City Council pursuant to Texas
Tax Code Chapter 312. The relocation incentives policy provides for tax abatement,
various fee waivers, and other incentives to certain businesses displaced by Major
Infrastructure Projects if those businesses relocate their facilities and operations to an area
of the City targeted by the City Council for development or redevelopment.
• Tax Abatement Program was created by resolution of the City Council pursuant to Texas
Tax Code Chapter 312. A tax abatement is the full or partial exemption from ad valorem
taxes on eligible taxable real property and business personal property located in a
reinvestment zone for a period of up to ten years and an amount of up to 100 percent of
the increase in appraised value (as reflected on the certified tax roll of the appropriate
county appraisal district) resulting from improvements begun after the execution of the tax
abatement agreement.
Neighborhood Services Department
• Neighborhood Empowerment Zones (NEZ) were created by resolution of the City Council
pursuant to Texas Local Government Code Chapter 378. NEZ are used to promote
affordable housing, economic development and quality services. Municipal property tax
abatements, fee waivers and release of city liens are available to property owners who
build or rehabilitate property within a NEZ.
If you have any questions, please call Aaron Bovos, Chief Financial Officer, at 817-392-8517.
David Cooke
City Manager
ISSUED BY FINANCIAL MANAGEMENT SERVICES FORT WORTH, TEXAS