HomeMy WebLinkAboutResolution 3317-02-2006Resolution No. 3317-02-2006
APPROVING THE CITY OF FORT WORTH POLICY GUIDELINES AND
PROCEDURES FOR TAX INCREMENT REINVESTMENT ZONES (TIFs)
WHEREAS, Tax Increment Financing (TIF) is an important tool and resource for improving the
community by funding public improvements and fostering development and redevelopment projects
which the City finds and determines are desirable and m the public interest; and,
WHEREAS, the CITY OF FORT WORTH finds rt m the best interest of the public to establish certain
policies and guidelines for the establishment of Tax Increment Reinvestment Zones and for the
consideration of proposals that may be presented to the CITY by private developers requesting TIF
assistance; and,
WHEREAS, the CITY desires to use TIF for those projects which demonstrate the highest public
benefit by eliminating blight, financing desirable public improvements, strengthening the employment
and economic base, increasing property values, creating economic stability and implementing the
Comprehensive Plan, Redevelopment Plans and economic development strategy of the Crty• and,
WHEREAS, by adopting this policy the CITY intends to set forth a flexible framework for evaluating
private apphcattons for TIF assistance; and,
WHEREAS, all applications for the establishment of a TIF or for TIF assistance submitted to the CITY
will be evaluated on their own merits, and an evaluation of the proposals will be performed by Crty Staff
and if appropriate forwarded to the Crty Council with recommendations,
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 (TIFs) ns hereby adopted as fully set out on the attached
documents
AND IT IS SO RESOLVED
ADOPT•E;Dthis 28th day of February 2006
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APPROVED
CITY COUNCIL
FEB 2 $ 2006
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City Se~of thews
City at Port Worth, Tex
Policy, Guidelines and Procedures
for
Tax Increment Reinvestment Zones (TIFs)
February 2006
City of Fort Worth
Economic and Community Development Department
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TABLE OF CONTENTS
GENERAL GUIDELINES
SECTION I OVERVIEW, REQUIREMENTS AND CRITERIA
SECTION 11 APPLICATION PROCESS AND FEES
SECTION I11 STATUTORY CRITERIA FOR DESIGNATION OF A
REINVESTMENT ZONE
SECTION IV STATUTORY RESTRICTIONS ON COMPOSITION OF
REINVESTMENT ZONES
SECTION V APPLICATION FOR PROPOSED TAX INCREMENT
REINVESTMENT FINANCING DISTRICT
CITY OF FORT WORTH POLICY, GUIDELINES AND PROCEDURES FOR TAX
INCREMENT REINVESTMENT ZONES (TIFs)
GENERAL GUIDELINES.
a) Each TIF application must demonstrate that:
i. "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
ii. an area is ripe for development or redevelopment provided that public
infrastructure is constructed to support the revitalization o f the area;
and/or
iii. use of a TIF is the appropriate incentive tool to recruit or relocate a
catalyst project worthy o f public investment; AND
iv the area proposed for designation as a TIF will have an increase in real
property taxable value within the first 2 years following designation.
b) The term of any TIF cannot exceed 21 years (20 years of tax increment
contributions);
c) 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% of the tax increment;
d) The City o f Fort Worth Economic and Community Development Department
will receive and evaluate all T-F requests/applications;
e) The City o f Fort Worth Economic and Community Development Department
will be responsible for all TIF administration unless otherwise approved by the
City Council in the Preliminary Project and Finance Plans.
SECTION I. OVERVIEW, REQUIREMENTS AND CRITERIA
A. Local Authority The City of Fort Worth adopted these guidelines by Resolution No.
on This Policy is intended to provide direction to City staff and
interested parties regarding the development and establishment of TIFs within the City of Fort
Worth.
B. Statutory Authority Under authority of Chapter 3 I I of the Texas Tax Code, municipalities
are permitted to establish TIFs. The City of Fort Worth will comply with all requirements of
the Chapter 3 I I of the Texas Tax Code.
C. TIF Goats and Objectives of City 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 intention of the City to use TIF for the primary purpose
of encouraging Central City revitalization and those other target areas identified by the City
Council by leveraging private investment for certain types of development activities that
support the goals outlined in the City of Fort Worth s Comprehensive Plan.
D M/WBE Goals. In satisfaction of the requirements set forth in Section 3 I 10101 of the Texas
Tax Code, before initiating work on any phase of the public improvements the following
M/WBE 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's project plan will require the City's Minority/Women
Business Enterprise Office to set goals for utilization of certified minority-owned and
women-owned business enterprises (MWBEs) 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's project plan will require a commitment for utilization
of Fort Worth certified M/WBEs of at least 25% of the total construction costs of a
given project. The commitment must be outlined in the Economic Development
Agreement or TIF Development Agreement specifying the terms under which
construction of the public improvements receiving assistance from a TIF are
delineated. Any commitment below 25% will require a developer to meet with the
City of Fort Worth s 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. The M/WBE Advisory
Committee s recommendation if different from the commitment made by developer
will be non-binding, but should be taken under advisement by the applicable TIF Board.
E. 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 satisfactorily 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 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 for 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 a TIF? How does
the proposed Financing Plan meet the needs of the proposed projects?
h) How will the TIF impact targeted public projects and improvements that are not
proposed as projects in the TIF?
F TIF Tax Increment. Once a Reinvestment Zone 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 taxing 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,
design, construction or acquisition of public improvements in the TIF The City of Fort
Worth may elect to contribute less than 100% of incremental real property taxes to the TIF
In no event will the City contribute any incremental sales taxes to the TIF
G Use of TIF Proceeds. TIF funds may be used only to pay for those public works and public
improvements authorized by Chapter 31 I of the Texas Tax Code. TIF proceeds cannot be
used to support exclusively private purposes.
H 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.
Participation by Other Taxing Entities. Under Section 31 1013 of the Texas Tax Code,
other local taxing entities retain the right to determine the amount of the 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 (i)
the conditions for payment of the tax increment into a TIF (ii) the portion of tax increment
to be contributed by each entity to the TIF and (iii) the term of the agreement.
Term of Reinvestment Zone. As prescribed under Section 31 1017 of the Texas Tax
Code, reinvestment zones shall terminate on the earlier of•
I) the termination date designated in the ordinance(s) creating and/or
amending the zone, or
2) the date on which all TIF project costs and interest have been paid in full.
In addition, in accordance with this Policy the duration of a TIF may not exceed 21 years from
the date of its creation (i.e. a maximum of 20 years of tax increment contributions).
K. Criteria for TIF District Creation Requests
1n addition to the items outlined in E" above, before reviewing an application for the creation of
a TIF the City will require that the requestors, as part of the application, provide the following:
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 & bounds) and a map of the real property proposed for
designation as a TIF
c) An economic impact study as prescribed in Section 3 I 1003 of the Texas Tax Code.
d) A minimum of four 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 31 1003 and 31 I OI I of the Texas
Tax Code, with detailed descriptions of the projects and their costs, including detailed
pro formas, if available.
f) A proposed Financing Plan as described in Sections 31 1003 and 31 I OI I of the Texas
Tax Code, with complete tax increment projections for the entire term of the TIF
All information must be provided in both paper and electronic form. A minimum of 5-copies of
the information must be provided.
L. Criteria for TIF Project Requests
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Once a TIF has been established, in order for the City staff to recommend funding of a particular
project by the TIF the party desiring TIF financing must provide the following:
a) Information satisfactorily demonstrating the financial wherewithal to meet project
costs and complete the project (i.e. 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 completed 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 number of jobs retained or created, percentage of jobs etc., tax
base benefits estimated market value of new development, new property taxes
generated, etc., housing benefits number of new rental or ownership benefits related
to the project, transportation benefits, parking impacts, blight remediation,
environmental cleanup and historic preservation)
d) A demonstrable gap in financing for the project (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.
f1 Demonstrated commitment to the quality of development, the project area and
project completion.
SECTION I1. APPLICATION PROCESS AND FEES
APPLICATION PROCESS.
Depending on the exact nature and complexity of a 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 the:
Economic and Community Development Department
TIF Administrator
1000 Throckmorton
Fort Worth, TX 76102
817 392-6103
A. Application Form Requestors desiring the City to create a proposed 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 C
below
B. 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 Economic and
Community Development Department.
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C. Application Fee. Non-refundable application fees of $1500 must accompany all applications.
The application fee should be in the form of a check or money order and made payable to the
City of Fort Worth The application fee is to support administration costs of initial review
for completeness, internal processes and presentations.
D Preliminary Review City staff will review the application within 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 and 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.
E. 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 E, G H K and L. This review could
culminate .into an entirely different Financing Plan than initially proposed in the application or
could result in a City staff recommendation that a TIF zone is not appropriate.
F 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 III. STATUTORY CRITERIA FOR DESIGNATION OF A TIF
1n accordance with Section 3 I 1005 of the Texas Tax Code, to be designated as a TIF an area must:
A. 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 the public health, safety morals, or welfare in its present condition and
use because of the presence of•
I) a substantial number of substandard, slum, deteriorated, or deteriorating structures;
2) the predominance of defective or inadequate sidewalk and street layout;
3) faulty lot layout in relation to size, adequacy accessibility or usefulness;
4) unsanitary or unsafe conditions;
5) the deterioration of site or other improvements;
6) tax of special assessment delinquency exceeding the fair value of the land,
7) defective or unusual conditions of title,
8) conditions that endanger life or property by fire or other causes, or
9) 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
B. Be predominantly open and, because of obsolete platting, deterioration of structures or site
improvements, or other factors, substantially impair or arrest the sound growth of the
municipality OR
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION Approved on 2/28/2006 Resolution No 3317-02 2006
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DATE Tuesday February 28 2006
LOG NAME 17TIFPOLICY
REFERENCE NO G 15100
SUBJECT
Adoption of Resolution Establishing the City of Fort Worth Policy Guidelines and Procedures for
Tax Increment Reinvestment Zones
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution and Policy establishing Policy
Guidelines and Procedures for Tax Increment Reinvestment Zones (TIFs)
DISCUSSION
On November 1 2005 staff presented proposed policies and guidelines to be applied on all requests to
establish tax increment reinvestment zones (the TIF Policy)to the Central City Revitalization and Economic
Development Committee At the CCRED Committee meeting on February 7 2006 a completed draft of
the TIF Policy which incorporated input provided by the Committee at the November 1st briefing was
provided for review
Policy Summary
The proposed TIF Policy establishes general guidelines to be used in determining whether or not the
creation of a TIF should be considered
. Without a TIF will quality development likely occur in the proposed area?~ and/or
. Is the area ripe for development or redevelopment provided that public infrastructure can be constructed
to support the revitalization of the area?~ and/or
. Is a TIF the appropriate incentive tool to recruit or relocate a catalyst project worthy of public investment?
AND
. Will property in the proposed TIF have an increase in taxable value within the first 2 years of creation?
More specifically proposed uses of tax increment financing will be subject to an economic analysis and risk
assessment. Staff will evaluate each proposed request for the creation of a TIFon a case-by case basis and
consider the possible impacts. The analysis assessment and recommendation of all requested TIFs will be
based on the applications ability to address the following questions What is the public purpose of the
proposed TIF? What is the financial need for public investments and/or subsidy? What is the total cost of
the creation of TlF to the general fund of the City? What is the potential for success of the TIF if created?
What is the appropriate level of City participation if appropriate? What are the risks associated with creation
of the TIF? What are the alternative economic development tools available in lieu of TIF? How does the
proposed project finance plan meet the needs of the proposed projects? How does the creation of a TIF
impact on other publicly financed projects or other required public improvements not proposed as projects
in the TIF?
Additionally all TIFS will be limited to a term not to exceed 21 years and will be limited to participation by
the City through the use of advalorem taxes (Sales taxes will not be included as TIF increment) Preference
will be given to participation at a rate less than 100% of the City tax increment. The Economic and
Community Development Department will receive and evaluate all TIF requestslapplications and will be
Logname. 17TIFPOLICY Page 1 of 2
responsible for all TIF administration unless otherwise approved by the City Council in a given TIF's
Preliminary Project and Financing Plans
FISCAL INFORMATION/CERTIFICATION
The Finance Director certifies that this action will have no material effect on City funds
TO Fund/Account/Centers FROM Fund/AccountlCenters
Submitted for City Manager's Office b~ Dale Fisseler (6140)
Originating Department Head. Tom Higgins (6192)
Additional Information Contact: Jay Chapa (5804)
Ardina Washington (8003)
Logname 17TIFPOLICY Page 2 of 2