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HomeMy WebLinkAboutResolution 2811A Resolution NO ~:~; ~ ~ ;,, PROVIDING THAT THE CITY OF FORT WORTH ("CITY") ELECTS TO BE ELIGIBLE TO PARTICIPATE IN TAX ABATEMENT AUTHORIZED BY CHAPTER 312 OF THE TEXAS TAX CODE AND ESTABLISHING A TAX ABATEMENT POLICY GOVERNING SUBSEQUENT TAX ABATEMENT AGREEMENTS WHEREAS, a municipality may enter into tax abatement agreements authorized by Chapter 312 of the Texas Tax Code ("Code ') only if the governing body of the municipality has previously adopted a resolution stating that the mumcipahty elects to be eligible to participate m tax abatement and has established guidelines and criteria governing tax abatement agreements ("Tax Abatement Policy") and WHEREAS, pursuant to the Code, a Tax Abatement Policy is effective for two (2) years from the date of its adoption, and WHEREAS, the City's current Tax Abatement Policy is due to expire on February 28, 2002, NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS 1 THAT the City hereby elects to be eligible to participate m tax abatement m accordance with Chapter 312 of the Code. 2. THAT the City hereby adopts the Tax Abatement Policy attached hereto as Exhibit A which constitutes the guidelines, criteria and procedures governing tax abatement agreements entered into by the City to be effective from March 1 2002 through February 29 2004 unless earlier amended or repealed by a vote of at least three-fourths (3/4) of the members of the City Council. 3. THAT this Tax Abatement Policy as it may subsequently be amended, will expressly govern all tax abatement agreements entered into by the City during the period m which such Tax Abatement Policy is ~n effect. ADOPTED this 26th day of February 2002. ATTEST By. City Secretary 'S S;~;E~j4 1 f.~+~o~ r m ~ GGO~ /'LGu., \ /i~ PAS J Gitg Sr.~~t,~~ ~ a~' ta'a3 City ox T'a.t ~Jartte, ~~°~aa EXHIBIT "A" CITY OF FORT WORTH TAX ABATEMENT POLICY GENERAL PURPOSE AND OBJECTIVES Certain types of investment result in the creation of new fobs, new income and provide for positive economic growth and inner-city economic stabilization which is beneficial to the City as a whole. The City of Fort Worth is committed to the promotion of high quality development in all parts of the City and improvement m the quality of life for its citizens. The Crty of Fort Worth will, on a case-by-case basis, give consideration to the granting of property tax incentives to eligible residential, commercial, and industrial development projects. It is the policy of the Crty of Fort Worth that consideration of eligible projects will be provided m accordance with the guidelines and criteria outlined m this document. Texas law authorizes the City of Fort Worth to grant tax abatement on the value added to a particular property by a specific development project which meets the economic goals and ob~echves of the Crty and the requirements of the statute (Vernon s Tax Code Ann. Section 312 001 et. seq ) As mandated by state law, this policy applies to the owners of real property It is not the policy of the City of Fort Worth to grant property tax abatement to any development project for which a ~~ building permit has been previously issued by the City's Department of Development. Nothing in the policy shall be construed as an obligation by the City of Fort Worth to approve any tax abatement application. Although all applications which meet the eligibility criteria (Section III.) of this policy statement will be reviewed, rt is the objective of the City of Fort Worth to encourage applications from projects that: (a) are located m enterprise zones or other designated target areas, or (b) result in a development with little or no additional cost to the Crty• or (c) result m 1 000 or more new~obs, with a commitment to hire Fort Worth and inner city residents. II DEFINITIONS Abatement" means the full or partial exemption from ad valorem taxes on eligible properties for a period of up to ten years and an amount of up to 100% 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. Eligible properties must be located in a reinvestment zone. `Reinvestment Zone" is an area designated as such by the City of Fort Worth or State of Texas in accordance with the Texas Property Redevelopment and Tax Abatement Act, Sections 312 001 through 312.209 of the Tax Code. r Page 1 of 7 EXHIBIT "A" `Residential Development Project" is a development project which proposes to construct or renovate multi family residential living units on property that is (or meets the requirements to be) zoned multi family as defined by the City of Fort Worth Zoning Ordinance. `Fort Worth Company" is a business which has a principal office located within the city limits of Fort Worth. `Minority or Woman-owned Business Enterprise (MWBE)" is a minority or woman-owned business that has received certification as either a MBE or WBE by either the North Central Texas Regional Certification Agency (NCTRCA) or the Texas Department of Transportation (TxDOT), Highway Division. `Capital Investment" includes only real property improvements such as new facilities and structures, site improvements, facility expansion, and facility modernization. Capital investment does NOT include land acquisition costs and/or any existing improvements, or personal property (such as machinery equipment, and/or supplies and inventory) `Facility Expansion is a new permanent real property improvement such as a building or buildings constructed to provide additional square footage to accommodate increased space requirements of a Fort Worth company `Facility Modernization is a new permanent real property improvement under taken to provide increased productivity for a new or existing Fort Worth company `Supply and Service Expenses" are discretionary expenses incurred during the normal maintenance and operation activities of a business. • III ELIGIBILITY CRITERIA A. RESIDENTIAL PROJECT ELIGIBILITY A residential development project is eligible for property tax abatement if: 1 The project is located in any of the following census tracts. 1002 02, 1010 1011 1016, 1017 1018 1019 (partial), 1025 1028 (partial), 1029 1030 1031 1033 1035 1036 O1 1037 O1 1038, 1040 1041 (partial) (see Map A') AND 2. a. The project will construct or renovate no less than 50 residential living units of which no less than 20% shall be affordable (as defined by the U.S Department of Housing and Urban Development) to persons with incomes at or below 80% of median family income; OR b The project has a minimum capital investment of $5 million (excluding acquisition costs for land and any existing improvements) B. COMMERCIAUINDUSTRiAL ELIGIBILITY 1 New Projects In order to be eligible for property tax abatement, a new commerciallindustrial development project must satisfy one of the following three criteria. a. Upon completion will have a minimum capital investment of $10 million and commits to hire an agreed upon percentage of residents from an eligible inner city census tract (as identified on Map A') for full time employment. OR Page 2 of 7 EXHIBIT "A" b Is located m the inner city" (as identified on Map A ') or property immediately adjacent to the mayor thoroughfares which serve as boundaries to any of these inner city census tracts and commits to hire an agreed upon percentage of residents from an eligible inner city census tract (as identified on Map A') for full time employment; OR c Is located outside of the inner city" has a minimum capital investment of less than $10 million, and commits to hire an agreed upon percentage of residents from an eligible inner city census tract (as identified on Map A') for full time employment. 2. Existing Business Expansion and/or Modernization In order to be eligible for property tax abatement, a facility expansion andlor modernization by an existing commercial/industrial business must: a. Upon completion have a minimum capital investment of $10 million, OR b Result in increased employment for which the business commits to hire and retain an agreed upon percentage of residents from an eligible inner city census tract (as identified on Map A ') for new full time positions, AND c. Have a minimum capital investment of (1) $500 000 OR (2) an amount equal to or greater than 25% of the appraised value, as certified by the appropriate appraisal district, of real property improvements on the property for the year m which the abatement is requested. • C. PROOF TESTS 1. Building Permits No tax abatement will be granted to any development project which has applied for or received a building permit from the City's Department of Development. 2. Evidence of Need for Tax Abatement The applicant must provide evidence to substantiate and justify the tax abatement request including (but not limited to) an analysis demonstrating the tax abatement is necessary for the financial viability of the project. IV ABATEMENT GUIDELINES The tax abatement agreement must provide that the applicant: (1) Hire Fort Worth residents for an agreed upon percentage (at least 25%) of new full time fobs to be created and make a good faith effort to hire 100% Fort Worth residents for all new fobs created as a result of the abatement, (2) Commit to hire an agreed upon percentage of Fort Worth residents from an eligible inner city census tract (as identified on Map A'} for all new jobs created as a result of the project. The agreed upon percentage shall be determined by negotiation. (3) Utilize Fort Worth companies for an agreed upon percentage of the total costs for construction and Supply and Service Contracts, and Page 3 of 7 EXHIBIT "A" (4) Utilize Minority and Woman-owned Business Enterprises (MWBEs) for an agreed upon percentage of the total costs for construction and supply and service contracts in the manner provided m the Crty of Fort Worth s Minority and Women Business Enterprise ordinance. In addition to the above, the abatement must comply with the following guidelines. A. State law prohibits abatement of taxes levied on inventory supplies or the existing tax base. Crty policy is not to abate taxes on personal property located within Fort Worth prior to the date of the tax abatement agreement. B Unless otherwise specified in the agreement, the amount of the taxes to be abated shall m no event exceed the amount of the capital investment (as specified in the application) multiplied by the City's tax rate m effect for the year m which the calculation is made C In certain cases, the City may consider a tax abatement application from the owner of real property who serves as a landlord or lessor for a development project which meets the ehgibilrty criteria of this section. D The City may consider an application from the owner or lessee of real property requesting abatement of real and or personal property owned or leased by a certificated air carrier on the condition that the certificated air carrier make specific real property improvements or lease real property improvements for a term of 10 years or more E. For an eligible development protect to be considered for tax abatement, the Application for Tax Abatement" form must be completed and submitted to the Office of Economic Development. F An application fee must accompany the application. The fee is calculated at the lesser of: . (i) 1 % of the protect capital investment, or (ii) $15 000 If construction on the protect is begun on the site specified m the application within a one (1) year period from the application submittal date (with or without a tax abatement), this fee shall be credited to any permit, impact, inspection or any other lawful fee required by the Crty of Fort Worth. If the protect is not constructed on the site specified in the application or if construction takes place at the specified site more than one (1) year after the application submittal date, the application fee shall not be refunded or otherwise credited. G If requested, the applicant must provide evidence that there are no delinquent property taxes due on the property on which the development project is to occur H. The tax abatement agreement shall limn the uses of property consistent with the general purpose of encouraging development or redevelopment of the zone during the period that property tax abatements are in effect. I. Tax abatement may only be granted for protects located in a reinvestment or enterprise zone. For eligible projects not currently located in such a zone, the City Council may choose to so designate the applicant's property in order to allow for a tax abatement. J The owners of all projects receiving tax abatement shall properly maintain the property to assure the long term economic viability of the protect. • Page 4 of 7 EXHIBIT "A" V PROCEDURAL STEPS Each request for property tax abatement shall be processed according to the following procedural guidelines. A. Application Submission Provided that the project meets the criteria detailed in Section III of this policy the Applicant must complete and submit a City of Fort Worth Application For Tax Abatement" form (with required attachments) and pay the appropriate application fee B Application Review and Evaluation. The Economic Development Office will review the application for accuracy and completeness. Once complete, the application will be evaluated based on. 1 Types of new fobs created, including respective wage rates, and employee benefits packages such as health insurance, day care provisions, retirement package(s), transportation assistance, and any other 2 Percent of new~obs committed to Fort Worth residents. 3 Percent of new~obs committed to Fort Worth `Inner Crty" residents. 4 Percent of construction contracts committed to a. Fort Worth based firms, and b Minority and Woman-owned Business Enterprises (MWBEs) 5 Percent of supply and service contract expenses committed to . a. Fort Worth based firms, and b Minority and Woman-owned Business Enterprises (MWBEs) 6 The project's increase in the value of the tax base. 7 Costs to the City (such as infrastructure participation, etc ) 8 Other items which may be negotiated by the City and the applicant. Based upon the outcome of the evaluation, the Economic Development Office may present the application to the City Council s Economic Development Committee C Consideration by Council Committee Should the Economic Development Office present the application to the City Council s Economic Development Committee, the Committee will consider the application at an open meeting. The Committee may• (1) Approve the application. Staff will then incorporate the application into a tax abatement agreement which will be sent to the Crty Council with the Committee s recommendation to approve the agreement; or (2) Request modifications to the application. Economic Development staff will discuss the suggested modifications with the applicant and then, if the requested modifications are made, resubmit the modified application to the Committee for consideration, or Page 5 of 7 EXHIBIT "A" (3} Deny the application. The applicant may appeal the Committee s finding by requesting the City Council (a) disregard the Committee s finding and (b) instruct city staff to incorporate the application into a tax abatement agreement for future consideration by the City Council. D Consideration by the City Council The Crty Council retains sole authority to approve or deny any tax abatement agreement and is under no obligation to approve any tax abatement application or tax abatement agreement. The City of Fort Worth is under no obligation to provide tax abatement m any amount or value to any applicant. E. Effective Date for Approved Agreements All tax abatements approved by the Crty Council will become effective on January 1 of the year following the year in which a Certificate of Occupancy (CO) is issued for the qualifying development project (unless otherwise specified m the tax abatement agreement) Unless otherwise specified in the agreement, taxes levied during the construction of the project shall be due and payable. VI RECAPTURE If the terms of the tax abatement agreement are not met, the Crty Council has the right to cancel or amend the abatement agreement. In the event of cancellation, the recapture of abated taxes shall be limited to the year(s) m which the default occurred or continued. • VII INSPECTION AND FINANCIAL VERIFICATION The terms of the agreement shall include the Crty of Fort Worth s right to (1) review and verify the applicant s financial statements m each year during the life of the agreement prior to granting a tax abatement m any given year (2) conduct an on site inspection of the project m each year during the life of the abatement to verify compliance with the terms of the tax abatement agreement. VIII EVALUATION Upon completion of construction of the facilities, the Crty shall no less than annually evaluate each project receiving abatement to insure compliance with the terms of the agreement. Any incidents ofnon-compliance will be reported to all affected taxing units. On or before February 1S` of every year during the life of the agreement, any individual or entity receiving a tax abatement from the City of Fort Worth shall provide information and documentation which details the property owner's compliance with the terms of the respective agreement and shall certify that the owner is in compliance with each applicable term of the agreement. Failure to report this information and to provide the required certification by the above deadline shall result in any taxes abated in the prior year being due and payable. Page 6 of 7 EXHIBIT "A" IX. EFFECT OF SALE, ASSIGNMENT OR LEASE OF PROPERTY No tax abatement rights may be sold, assigned or leased unless otherwise specified in the tax abatement agreement. Any sale, assignment or lease of the property which is not permitted in the tax abatement agreement results in cancellation of the agreement and recapture of any taxes abated after the date on which an unspecified assignment occurred. • Page 7 of 7 ~M ~3~~,4.: ~~~w °,-, ;~. ,.,~:', a b :~ a ~~. ;~~ ~~.