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Home My WebLink AboutResolution 3824-12-2009A Resolution NO 3824-12 2009 Approving Revised Policy Guidelines and Procedures for Tax Increment Reinvestment Zones (TIFs) WHEREAS on February 28 2006 the City Council adopted Resolution No 3317 02 2006 establishing Policy Guidelines and Procedures for Tax Increment Reinvestment Zones commonly referred to as `TIFs (the TIF Policy") and WHEREAS the current TIF Policy states that the City Council will not create a TIF for a term greater than twenty one (21) years and WHEREAS the current TIF Policy states that a TIF created by the City Council will expire on the date specified m the ordinance designating the TIF or an earlier date established by subsequent ordinance and WHEREAS House Bill 1770 as passed by the 81st Texas Legislature in 2009 amended Section 311 017(a)(1) of the Texas Tax Code to allow the term of a TIF to be extended as well as reduced by a municipality and WHEREAS the City Council now wishes to revise the TIF Policy to allow a TIF to have a term in excess of twenty one (21) years if the purpose of the TIF is to finance `Mayor Infrastructure Projects as designated by resolution of the City Council in accordance with the Relocation Incentives Policy for Businesses Displaced by Mayor Public Infrastructure Projects (Resolution No 3556 11 2007) NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH TEXAS THAT the Policy Guidelines and Procedures for Tax Increment Reinvestment Zones attached hereto (which contains redlined revisions to the original Policy adopted on February 28 2006 pursuant to Resolution No 3317 02 2006) is hereby approved and shall supersede the Policy adopted pursuant to Resolution No 3317 02 2006 ORT WORT RESOLUTION NO 3824 12 2009 Adopted this 8th day of December 2009 ATTEST ne.e,ne tr'1 BY ~ _ ~ ~'~ "~ ~ Marty Hendrix C,tty~S'e~cretary Dtl, „ ~,' .,; .~ ~ ~• `~ . '~ ~ City Secretary of the '~~-- } `~`` .~ City of Fort Worth, Texas !~ ~ 4 ..:~7/ +r 1 N~ ~ ®RT WORT RESOLUTION NO 3824-12 2009 ~ '' ~~ Policy Guidelines and Procedures for Tax Increment Reinvestment Zones (TIFs) December 2009 City of Fort Worth Housing and Economic Development Department RESOLUTION NO 3824-12 2009 Section I General Guidelines. 1 Each TIF application must demonstrate a `but for" the creation of a TIF quality development is not likely to occur in the proposed area without financial assistance from a TIF and/or b An area is ripe for development or redevelopment provided that public infrastructure is constructed to support the revitalization of the area and/or c use of a TIF is the appropriate incentive tool to recruit or relocate a catalyst project worth of public investment; and d The area proposed for designation as a TIF will have an increase in real property taxable value within the first two (2) years following designation 2 The term of any newly created TIF may not exceed 21 nears (20 nears of tax. increment collection), unless otherwise approved by City Council. Only TIFs created to help finance a `Major Infrastructure Project", as designated by the City Council pursuant to Resolution in accordance with the City's Relocation Incentives Policy for Businesses Displaced by Major Infrastructure Projects (Resolution No. 3556-11 2007) may have a term greater than 21 years, and the longer term shall only be permitted as necessary to fully finance the Major Infrastructure Project", 3 City of Fort Worth participation in any TIF will be limited to ad valorem real property taxes and preference will be given to participation at a rate less than 100 percent of the tax increment; 4 City of Fort Worth Housing and Economic Development Department will receive and evaluate all TIF requests and applications and 5 City of Fort Worth Housing and Economic Development Department will be responsible for all TIF administration unless otherwise approved by the Fort Worth City Council in the Preliminary Project and Financing Plans Section II Overview Requirements, and Criteria 1 Local Authority The City of Fort Worth adopted the initial guidelines by Resolution No 3317-02 2006 on February 28 2006 and was revised by Resolution No (TBD) on December 8 2009 The intent of this Policy is to provide direction to City Staff and interested parties regarding the development and establishment of TIFs within the City of Fort Worth 2 Statutory Authority Under authority of Chapter 311 of the Texas Tax Code municipalities are permitted to establish TIFs. The City of Fort Worth will comply with all requirements of Chapter 311 of the Texas Tax Code 3 TIF Goals and Objectives. It is the City's goal to utilize TIFs as an economic development tool in the development or redevelopment of targeted areas The City of Fort Worth may use TIFs to finance needed public improvements and enhance infrastructure within those targeted areas It is the intent of the City to use TIFs for the primary purpose of the encouragement of revitalization within the Central City and other targeted areas identified by City Council by leveraging private investment for certain types of development activities that support the goals outlined in the City of Fort Worth 2 RESOLUTION NO 3824-12 2009 Comprehensive Plan 4 M/WBE Goals. In satisfaction of the requirements set forth in Section 311 0101 of the Texas Tax Code before initiating work on any phase of the public improvements, the following goals and commitments must be met: a Any project costs for improvements that will ultimately be owned by the public and contemplated under a TIF Project and Financing Plan will require goals set by the Minority/Women Business Enterprise office for utilization of Fort Worth certified minority-owned and women-owned business enterprises (M/WBEs) in accordance with the same process followed for City Public Works contracts b Any project costs for improvements that will ultimately be owned by a private entity and contemplated under a TIF Project and Financing Plan will require a commitment for utilization of Fort Worth certified M/WBEs of at least 25 percent of the total construction costs of a given project. The commitment must be outlined in the Economic Development Agreement or the TIF Development Agreement specifying the terms under which construction of the public improvements receiving assistance from a TIF are delineated Any commitment below 25 percent will require a developer to meet with the City of Fort Worth M/WBE Advisory Committee prior to action by the applicable TIF Board of Directors to seek their input and assistance The M/WBE Advisory Committee will provide the applicable TIF Board of Directors with a recommendation related to the utilization of Fort Worth certified M/WBEs. This recommendation if different from the commitment made by the developer will be non-binding but should be taken under advisement by the applicable TIF Board of Directors 5.. Determining Eligibility City Staff will undertake an economic analysis and risk assessment of each proposed TIF before arriving at a recommendation to the City Council as to whether the TIF should be created The analysis assessment, and recommendation of all requested TIFs will be based on the applicant's ability to address the following questions a What is the public purpose of the proposed TIF? Will the area develop without being designated as a TIF? What are the required public improvements? b What is the financial need for public investments and/or subsidy? Will use of the TIF recruit or relocate a catalyst project? c. How will the City's general fund be impacted as a result of TIF designation? d What is the potential success of the TIF? e What is the appropriate level of participation by the City and other taxing entities? f What are the risks associated with creation of the TIF? g What alternative economic development tools are available in lieu of the TIF? How does the proposed Project and Financing Plan meet the needs of the proposed projects? h How will the TIF impact targeted public project improvements that are not proposed as TIF projects? 6 TIF Tax Increment. Once a TIF has been established in accordance with Chapter 311 and these guidelines incremental real property taxes resulting from new construction public improvements, and redevelopment efforts will accrue to the various taxing entities Participating entities may deposit all a predetermined portion, or none of the incremental taxes in a designated TIF fund for the purpose of financing the planning 3 RESOLUTION NO 3824-12 2009 design construction or acquisition of public improvements to the TIF The City of Fort Worth may elect to contribute less than 100 percent of incremental real property taxes to the TIF In no event will the City contribute any incremental sales taxes to the TIF 7 Use of TIF Proceeds. TIF funds may be used only to pay for those public works and public improvements authorized by Chapter 311 of the Texas Tax Code TIF proceeds cannot be used to support exclusively private purposes 8 Demonstration of Community Revitalization Impact. It is the intention of the City of Fort Worth to use TIFs for the purpose of supporting community revitalization and redevelopment projects in targeted areas As part of the application a requestor must describe a How the planned investment will contribute to revitalization activities in the zone in question and/or the surrounding area of the community and b How the input of nearby neighborhood residents and businesses has been solicited in the planning process. 9 Participation by Other Taxing Entities. Under Section 311 01 of the Texas Tax Code other local taxing entities retain the right to determine the amount of tax increment that each will retain or each may decide to retain all of the tax increment. The City of Fort Worth will enter into written agreements with all participating taxing entities to specify a The conditions for payment of the tax increment into a TIF b The portion of tax increment to be contributed by each entity to the TIF and c. The term of the agreement. 1.0 Term of a Reinvestment Zone As prescribed under Section 311 017 of the Texas Tax Code reinvestment zones shall terminate on the earlier of• a The termination date designated in the ordinance or order as applicable creating the zone or an earlier subject to Subsection (c) hereof or later termination date designated by an ordinance or order adopted subsequent to the ordinance or order creating the zone or b The date on which all project costs tax increment bonds and interest on those bonds and other obligations have been paid in full c Only TIFs created to help finance a Maior Infrastructure Proiect", as designated by the City Council pursuant to the City's Relocation Incentives Policy and Guidelines for Qualifying Businesses Affected by Public Infrastructure Projects (Resolution No. 3556-11 2007) may be considered for a term extension if such extension is reauired to fully finance the Maior Infrastructure Proiect. 11 Criteria for TIF District Creation Requests. In addition to the items outlined above before reviewing an application for the creation of a TIF the City will require that the requestors provide the following as part of their application a A summary that includes a general description of the proposed TIF including proposed boundaries an overview of the proposed projects and proposed levels of participation by each taxing entity This summary should not be more than one page in length b A legal description (metes and bounds) and a map of the real property proposed for TIF designation 4 RESOLUTION NO 3824-12 2009 c. An economic impact study as prescribed in Section 311 003 of the Texas Tax Code d A minimum of four (4) years of tax value information from the appropriate tax appraisal district for all properties in the proposed TIF e A proposed Project Plan as described in Sections 311 003 and 311 011 of the Texas Tax Code with detailed descriptions of the projects and their costs, including detailed pro formas if available and f A proposed Financing Plan as described in Sections 311 003 and 311 011 of the Texas Tax Code with complete tax increment projections for the entire term of the TI F All information must be provided in both paper and electronic form A minimum of five (5) copies must be provided 12 Criteria for TIF Project Requests. In order for City Staff to recommend funding of a particular project by the TIF once the TIF has been established the party desiring TIF financing must provide the following a -nformation satisfactorily demonstrating the financial wherewithal to meet project costs and complete the project (i a financial statement, complete sources and uses budget, or Letter of Credit from an appropriate financial institution), b A complete and detailed market feasibility study c. A complete and detailed cost benefit analysis the direct and indirect benefits of a development proposal shall be determined and quantified by City Staff (e g employment benefits, tax base benefits housing benefits and transportation benefits) d Demonstrated clear financial gap (e g the profitability and feasibility of the project both with and without public assistance including a detailed delineation of the developer equity contribution into the project and the overall proposed financial structure of the project); e Proposed security collateralization or credit enhancement; and f Demonstrated commitment to the quality of development, the project area, and project completion Section III Application Process and Fees Depending on the exact nature and complexity of the proposed TIF the estimated timeframe to complete the process for designation is at least six (6) months Therefore applications for the creation of a TIF must be submitted to the City by June 30 in order for the TIF to be established in the same calendar year Applications submitted to the City after June 30 will not be considered for designation until the following calendar year In addition requestors must submit at least five (5) copies of the application All applications for creation of a proposed TIF and applicable fee(s) should be delivered to City of Fort Worth Housing and Economic Development Department TIF Administrator 1000 Throckmorton Fort Worth Texas 76102 817 392 6103 5 RESOLUTION NO 3824-12 2009 1 Application Form Requestors desiring to designate a TIF must fully complete an Application for Designation of Tax Increment Reinvestment Zone provide all information by this Policy and submit the required application fee as set forth in Subsection III below 2 Pre-Application Review Process. A requestor may request a meeting with appropriate City Staff prior to submitting an application in order to address TIF requirements and development processes. The meeting can be scheduled through the Housing and Economic Development Department. 3 Application Fee Anon-refundable application fee of $1 500 must accompany all applications The application fee should be in the form of a check or a money order and made payable to `The City of Fort Worth The application fee is to support administrative costs of initial review for completeness internal processes and presentations 4 Preliminary Review City Staff will review the application within ten 10 working days to ensure compliance with these guidelines If City Staff determines that an application does not meet the criteria hereunder the requestor will be so notified the application fee will not be refunded and no further action on the application will occur The requestor will have 14 working days to supply any information that is lacking without having to resubmit a new application 5 Application Review If City Staff determines that an application meets these Guidelines, a full financial and programmatic review of the proposed project will occur This review may be conducted by City Staff an outside agency or consultant, and includes at a minimum an analysis of said items under Section I paragraphs V VII VIII XI and XII in the application or may result in a City Staff recommendation that TIF designation is not appropriate 6 Open Records Act. Upon submission of an application all project information provided to or developed by the City could become `public information and therefore may be subject to provisions of the Texas Open Records Act. Section IV Statutory Criteria for TIF Designation In accordance with Section 311 005 of the Texas Tax Code to be designated as a TIF an area must: 1 Substantially arrest or impair the sound growth of the municipality creating the zone retard the provision of housing accommodations or constitute an economic or social liability and be a menace to public health safety morals or welfare in its present condition and use because of the presence of• a A substantial number of substandard slum deteriorated or deteriorating structures b The predominance of defective or inadequate sidewalk and street layout; c Faulty lot layout in relation to size adequacy accessibility or usefulness, d Unsanitary or unsafe conditions 6 RESOLUTION NO 3824-12 2009 e The deterioration of site or other improvements f Tax of special assessment delinquency exceeding the fair value of the land g Defective or unusual conditions of title h Conditions that endanger life or property by fire or other causes, or i Structures, other than single-family residential structures less than 10 percent of the square footage of which has been used for commercial industrial or residential purposes during the preceding 12 years or 2 Be predominantly open and because of obsolete platting deterioration of structures or site improvements or other factors substantially impair or attest the sound growth of the municipality or 3 Be in a federally assisted new community located in the municipality or in an area immediately adjacent to a `federally assisted new community" or a Federally assisted new community is defined as an area that has received or will receive assistance in the form of loan guarantees under Title X of the National Housing Act, if a portion of the federally assisted area has received grants under Section 107 (a) (I) of the Housing and Community Development Act of 1974) 4 Be an area described in a petition requesting that the area be designated as a reinvestment zone if the petition is submitted to the governing body of the municipality of the owners of property constituting at least 50 percent of the appraised value of the property in the area according to the most recent certified appraisal roll a Only City Council is able to make a defensible finding that the area described in the petition is unproductive underdeveloped or blighted as required by Article VIII Section I - g (b) of the Texas Constitution Section V Statutory Criteria for TIF Designation 1 Size Limitations. The City of Fort Worth is not permitted under Section 311 006 of the Texas Tax Code to create a TIF or change the boundaries of an existing TIF if the total appraised value of taxable real property in the proposed TIF and in existing TIF exceeds a 15 percent of the total appraised value of taxable real property in the City of Fort Worth and industrial districts created by the City of Fort Worth or b 15 percent of the total appraised value of taxable real property of a county in which the TIF is located or c. 15 percent of the total appraised value of taxable real property of a school district in which the TIF is located 2 Use Limitations. The City of Fort Worth is not permitted under Section 311 006 of the Texas Tax Code to create a TIF or change the boundaries of an existing TIF if more than 10 percent of the property in the proposed or modified zone (excluding publicly- owned property) is used for residential purposes A property is considered to be used for residential purposes if it contains less than five (5) living units This particular restriction does not apply to TIFs established pursuant to a petition received in accordance with Section 311 005 (a) (5) of the Texas Tax Code 7 RESOLUTION NO 3824-12 2009 Any questions regarding this Policy should be directed to the City of Fort Worth Housing and Economic Development Department, 1000 Throckmorton, Fort Worth, Texas 76102, or by phone, 817 392.6103. 8 City of Fort Worth, Texas Mayor and Council Communication ;, COUNCIL ACTION: Approved on 1.2!8/2009. -Res. _No. 3824-12-2009 __ _ ._ ..,. _ ~ _.... ~ -~~-~ ~~... ~ ~b~~~ ~~~:~~a~ ~~ DATE Tuesday December 08 2009 LOG NAME 17TIFPOLICYREV REFERENCE NO G-16781 SUBJECT Adopt Resolution Revising the City's Policy Guidelines and Procedures for Tax Increment Reinvestment Zones RECOMMENDATION It is recommended that the City Council adopt the attached resolution revising the City's policy guidelines and procedures for Tax Increment Reinvestment Zones (TIFs) specifically in regard to the permissible terms of certain TIFs DISCUSSION On February 28 2006 the City Council adopted Resolution No 3317-02 2006 approving the policy guidelines and procedures for Tax Increment Reinvestment Zones, commonly referred to as TIFs (the TIF policy). This TIF policy established general policies and guidelines with regard to TIFs created by the City The current TIF policy states that a TIF created by the City will not have a term in excess of 21 years. The current TIF policy also states that the term of a TIF will expire on the date specified in the ordinance designating the TIF or an earlier date set forth in a subsequent ordinance Clty staff recomends that the City Council revise the TIF policy to allow a TIF to have a term in excess of 21 years if the purpose of the TIF is to finance a Major Infrastructure Project, which is a significant public infrastructure project specifically designated by resolution of the City Council in accordance with the City's Relocation Incentives policy and Guidelines for Qualfiying Businesses Affected by Public Infrastructure Projects (Resolution No 3556-11 2007) and if the longer term is necessary for the TIF to generate sufficient tax increment to fund the TIFs desired financial role in that Major Infrastructure Project. The City Council has previously desginated the Southwest Parkway project and the Trinity River Vision project as Major Infrastructure Projects In addition House Bill 1770 approved by the the 81st Texas Legislature in 2009 amended Section 311 017(a)(1) of the Texas Tax Code to allow the term of a TIF to be extended as well as reduced Accordingly City staff recommends that the City Council revise the TIF policy to allow the City to extend the term of a TIF beyond the date specified in the ordinance as long as (1) the purpose of the TIF is to fund a Major Infrastructure Project and (2) the extension is necessary for the TIF to fulfill its desired obligations with regard to the funding of the Project. Lanuage reflecting the recommended changes to the current TIF Policy are underlined in the attached revised TIF Policy FISCAL INFORMATION /CERTIFICATION The Financial Management Services Director certifies that this action will have no material effect on City funds FUND CENTERS. TO Fund/Account/Centers FROM Fund/Account/Centers Logname 17TIFPOLICYREV Page 1 of 2 CERTIFICATIONS Submitted for City Manager's Office bv: Originating Department Head. Additional Information Contact: Thomas Higgins (6192) Jay Chapa (5804) Maggie Allen (2235) Ossana Hermosillo (8618) Logname• 17TIFPOLICYREV Page 2 of 2