HomeMy WebLinkAboutContract 51345 k �
CITY SECRETARY
CONTRACT NO.
GGI- 12� k ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
uF ON WORTH
f;l i v SECRETARY
This ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
("Agreement") is entered into by and between the CITY OF FORT WORTH, TEXAS
(the "City"), a home rule municipality organized under the laws of the State of Texas,
and ELAN WEST 7TH,L.P., a Delaware limited partnership ("Developer").
RECITALS
The City and Developer hereby agree that the following statements are true and
correct and constitute the basis upon which the City and Developer have entered into this
Agreement:
A. On or about August 27, 2013, the City and Developer entered into a Tax
Abatement Agreement, a public document on file in the City Secretary's Office as City
Secretary Contract No. 44750 (the "Tax Abatement Agreement"). Under the Tax
Abatement Agreement, Developer agreed to construct and complete a multi-family
development consisting of apartments, townhomes, and a parking garage (the
"Development") on approximately 5.1 acres of land owned by Developer, bounded by
Carroll Street on the east, Merrimac Street on the south, Foch Street on the west, and
Azalea Avenue on the north (the "Land"). In return, the City agreed to grant Developer
an Abatement of up to seventy percent (70%) of the City ad valorem taxes assessed on
real property improvements located on the Land annually for a period of ten (10) years,
as more specifically described in the Tax Abatement Agreement.
B. The Land is located in Tax Abatement Reinvestment Zone No. 88, City of
Fort Worth Texas, which was designated by the City Council on July 16, 2013 pursuant
to Ordinance No. 20808-07-2013. The annual Abatements under the Tax Abatement
Agreement were, among other things, based upon a finding by the City Council
Ordinance No. 20808-07-2013 that the Development would benefit the City for a period
in excess of ten (10) years by contributing to the expansion of primary employment and
attracting major investment in the area. The Tax Abatement Agreement also imposed an
Affordable/Accessible Housing Requirement that mandated a minimum set-aside of
affordable residential units on the Land.
C. Under the Tax Abatement Agreement, the first tax year that Developer
was supposed to receive an Abatement was 2017. Previously, the City's practice with
Tarrant Appraisal District (TAD), which is under contract with the City to prepare the
City's tax bills, was to notify TAD of any Abatements that the City was granting for a
given tax year, including the property location and the percentage of Abatement to be
applied. Unbeknownst to the City or Developer, TAD requires any recipient of an
Abatement to also file an application with TAD in order for an Abatement to be applied
to the applicant's tax bill. Because of this disconnect, Developer did not file such an
application for the 2017 tax year. As a result, Developer did not receive the Abatement
Page 1
Economic Development Program Agreement
between City of Fort Worth and Elan West 7th,L.P.
for the 2017 tax year that both the City and Developer expected in accordance with the
Tax Abatement Agreement. The amount of Abatement that Developer should have
received for the 2017 tax year is $204,085.61.
D. In order to effectuate the parties' intent under the Tax Abatement
Agreement, the City and Developer wish to enter into this Agreement under which the
City will provide an economic development grant to Developer in an amount equal to the
amount of the Abatement that both the City and Developer expected to be applied for the
2017 tax year, as authorized by Chapter 380 of the Texas Local Government Code. As
recommended in the City's 2018 Comprehensive Plan, adopted by the City Council
pursuant to Ordinance No. 23133-03-2018 (the "Comprehensive Plan"), and in
accordance with Resolution No. 3716-03-2009, the City has established an economic
development program pursuant to which the City will, on a case-by-case basis, offer
economic incentives authorized by Chapter 380 of the Texas Local Government Code
that include monetary loans and grants of public money, as well as the provision of
personnel and services of the City, to businesses and entities that the City Council
determines will promote state or local economic development and stimulate business and
commercial activity in the City in return for verifiable commitments from such
businesses or entities to cause specific employment and other public benefits to be made
or invested in the City (the "380 Program").
C. Use of the City's 380 Program in this case is appropriate because the terms
and conditions of the Tax Abatement Agreement satisfy the requirements of the 380
Program. Specifically, the Development is located in an area (the City's Cultural District)
that has been designated by the Comprehensive Plan as a regional mixed-use growth
center. The Comprehensive Plan notes that the potential benefits of a mixed-use growth
center are economic development; the development of multifamily housing at appropriate
locations; efficiency in the provision of public facilities and services; reduced reliance
upon single-occupancy vehicles; and the protection of the environment. The
Development specified in the Tax Abatement Agreement is consistent with the goals
espoused in the Comprehensive Plan and the 380 Program. In addition, the City believes
that this Agreement will preserve the intentions behind the City's economic development
objectives, as outlined in the Tax Abatement Agreement and the Comprehensive Plan.
This Agreement is authorized by Chapter 380 of the Texas Local Government Code.
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
Page 2
Economic Development Program Agreement
between City of Fort Worth and Elan West 7th,L.P.
AGREEMENT
1. INCORPORATION OF RECITALS.
The City and Developer hereby agree that the recitals set forth above are true and
correct and form the basis upon which the parties have entered into this Agreement.
2. TERMS OF TAX ABATEMENT AGREEMENT SATISFIED.
Under Section 6 of the Tax Abatement Agreement, the amount of each annual
Abatement is a percentage of the City's ad valorem taxes on the increase in value of all
improvements located on the Land (but not on the Land itself) over their value for the
2013 tax year, which percentage equals the sum of what are defined in the Tax
Abatement Agreement as the Overall Construction Percentage; the Fort Worth
Construction Percentage; the M/WBE Construction Percentage; the Overall Employment
Percentage; the Fort Worth Employment Percentage; the Central City Employment
Percentage; the Fort Worth Supply and Service Percentage; and the M/WBE Supply and
Service Percentage. These various Percentages are dependent, in part, on the extent to
which Developer met various employment and supply and service spending commitments
in the year preceding the tax year in which the Abatement is applied. The City and
Developer agree that Developer was entitled to an Abatement under the Tax Abatement
Agreement for the 2017 tax year on the following bases:
2.1. Completion of Development.
Developer satisfied the requirements of Section 4.1 of the Tax Abatement
Agreement by expending Thirty-five Million Dollars ($35,000,000.00) in
Construction Costs for the Development by the Completion Date, thereby
establishing an Overall Construction Percentage of fifteen percent (15%) under
Section 6.1 of the Tax Abatement Agreement.
2.2. Fort Worth Construction Cost Spending.
Developer expended or caused to be expended at least Twelve Million
Two Hundred Fifty One Nine Hundred Seventy Three Dollars ($12,251,973.00)
of the Hard Construction Costs for the Development with Fort Worth Companies,
but instead spent 9% or Three Million Five Hundred Thirty-Five Nine Hundred
Twenty Nine Dollars ($3,535,929.00), which was sufficient to establish a Fort
Worth Construction Percentage of Two and Eighty nine hundredths percent
(2.89%) under Section 6.2 of the Tax Abatement Agreement.
2.3. Fort Worth M/WBE Construction Cost Spending.
Page 3
Economic Development Program Agreement
between City of Fort Worth and Elan West 7th,L.P.
Developer expended or caused to be expended at least Four Hundred Eight
Thousand Four Hundred Ninety Five Dollars ($408,495.00) in Hard Construction
Costs for the Development with Fort Worth Certified M/WBE Companies, which
was sufficient to establish a Fort Worth Construction Percentage of Four Tenths
percent (.40%) under Section 6.2 of the Tax Abatement Agreement.
2.4. Overall Employment.
There were Eight (8) Full-time Jobs were provided on the Land in 2016,
which was sufficient to establish an Overall Employment Percentage of Five
percent (5%) under Section 6.4 of the Tax Abatement Agreement.
2.5. Fort Worth Employment.
There were Four (4) Full-time Jobs were provided on the Land to Fort
Worth Residents in 2016, which was sufficient to establish a Fort Worth
Employment Percentage of Ten percent (10%) under Section 6.5 of the Tax
Abatement Agreement.
2.6. Central City Employment.
There were Two (2) Full-time Jobs were provided on the Land to Central
City Residents in 2016, which was sufficient to establish a Central City
Employment Percentage of Five percent (5%) under Section 6.6 of the Tax
Abatement Agreement.
2.7. Fort Worth Supply and Service Spending.
In 2016, Developer expended or caused its Third Party Manager to expend
One Hundred Sixteen Thousand Fifty Nine and No One Hundredths Dollars
($116,059.00) in Supply and Service Expenditures for the Development with Fort
Worth Companies, which was sufficient to establish a Fort Worth Supply and
Service Percentage of Five percent (5%) under Section 6.7 of the Tax Abatement
Agreement.
2.8. Fort Worth M/WBE Supply and Service Spending.
In 2016, Developer expended or caused its Third Party Manager to expend
Zero Dollars ($0.00) in Supply and Service Expenditures for the Development
with Fort Worth Certified M/WBE Companies, which was sufficient to establish a
M/WBE Supply and Service Percentage of Zero percent (0%) under Section 6.8
of the Tax Abatement Agreement.
2.9. Affordable/Accessible Housing Set-Aside.
Page 4
Economic Development Program Agreement
between City of Fort Worth and Elan West 7th,L.P.
Developer met the Affordable/Accessible Housing Requirement set forth
in Section 4.2 of the Tax Abatement Agreement by reserving in 2016 Thirty-
Seven (37) Affordable Housing Units, of which Three (3) were fully handicapped
accessible. Therefore, the Abatement that Developer was entitled to receive for
the 2017 tax year was not subject to reduction or forfeiture pursuant to Section
6.10 of the Tax Abatement Agreement.
2.10. No Abatement Limitation.
The Abatement that Developer was entitled to receive for the 2017 tax
year was subject to limitation pursuant to Section 6.11 of the Tax Abatement
Agreement. The Abatement amount was calculated on the maximum increase in
taxable value, Fifty Two Million Five Hundred Thousand Dollars ($52,500,000)
because the increase in value exceeded this amount.
2.11. Abatement Calculation for 2017 Tax Year.
The sum of the Overall Construction Percentage, the Fort Worth
Construction Percentage, the M/WBE Construction Percentage, the Overall
Employment Percentage, the Fort Worth Employment Percentage, the Central
City Employment Percentage, the Fort Worth Supply and Service Percentage, and
the M/WBE Supply and Service Percentage for the 2017 Abatement is Forty
Eight and Twenty Nine Hundredths percent (48.29%). Developer paid Four
Hundred Seventy Five Thousand Nine Hundred Fifty Dollars ($475,950.00) in
City ad valorem taxes on improvements on the Land, over their values for the
2013 tax year. As a result, Developer should have received an Abatement for the
2017 tax year in the amount of$204,085.61.
3. ECONOMIC DEVELOPMENT GRANT.
In return for the economic development benefits received by the City on account
of the Development, and in order to preserve the intentions of both parties that Developer
was to receive an Abatement for the 2017 tax year in the amount of$204,085.61, the City
hereby agrees to pay Developer an economic development grant, as authorized by
Chapter 380 of the Texas Local Government Code, in an amount equal to $204,085.61
(the "380 Program Grant"). The source of funds for the 380 Program Grant shall come
from currently available general revenues of the City and not directly from the City's ad
valorem real property taxes on improvements located on the Land. The City shall pay the
380 Program Grant to Developer on or before September 30, 2018. Subject to Section 4,
this Agreement will expire contemporaneously upon payment of the 380 Program Grant,
and the City shall thereafter have no further obligation to Developer under this
Agreement.
4. RESERVATION OF RIGHTS; DEFINITIONS.
Page 5
Economic Development Program Agreement
between City of Fort Worth and Elan West 7th,L.P.
Section 8.3, Sections 9 through 20, and Sections 22 through 24 of the Tax
Abatement Agreement shall also apply to this Agreement and are incorporated herein for
all purposes. Such provisions specifically shall survive the expiration of this Agreement.
Developer understands and agrees that the 380 Program Grant paid hereunder shall fully
satisfy any obligation of the City to grant Developer an Abatement pursuant to the Tax
Abatement Agreement for the 2017 tax year. Developer acknowledges that the City was
in no way responsible or liable for Developer's failure to receive an Abatement for the
2017 tax year, and that the City is entering into this Agreement solely as a good faith
measure to preserve its economic development goals, as expressed herein and in the Tax
Abatement Agreement. IN RETURN FOR THE 380 PROGRAM GRANT PAID
HEREUNDER, DEVELOPER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
PURSUE ANY REMEDY THAT MIGHT OTHERWISE BE AVAILABLE TO DEVELOPER
ON ACCOUNT OF ITS FAILURE TO RECEIVE AN ABATEMENT FOR THE 2017 TAX
YEAR, AND DEVELOPER HEREBY FOREVER RELEASES AND DISCHARGES THE
CITY FROM AND AGAINST ANY SUCH OBLIGATION. Aside from the foregoing,
execution of this Agreement has no bearing on the Tax Abatement Agreement, which
remains in full force and effect. All capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Tax Abatement Agreement.
5. ENTIRETY OF AGREEMENT.
This Agreement contains the entire understanding and agreement between the
City and Developer, and any lawful assign and successor of Developer, as to the matters
contained herein. Any prior or contemporaneous oral or written agreement is hereby
declared null and void to the extent in conflict with any provision of this Agreement.
EXECUTED as of the last date indicated below:
CITY OF FORT WORTH: ELAN WEST 7TH, L.P., a Delaware
limited partnership:
By: Elan West 7th General Partner GP,
L.L.C., a Delaware limited liability
company a is sole general
partner:
By: By:
S san lapis Name: as
A sis t City Manager Title_ Vice President
Page 6 rFT.
AL RECORD
Economic Development Program Agreement 19CRTR
between City of Fort Worth and Elan West 7th,L.P.
R'� ,TX
Date: Date:
Page 7
Economic Development Program Agreement
between City of Fort Worth and Elan West 7th,L.P.
CONTRACT COMPLIANCE MANAGER:
By signing below, I hereby acknowledge that I
am the person responsible for the monitoring
and administration of this contract, including
ensuring all performance and reporting
requirements:
gy_
N me of 016y Employee: i,aC y W i i(t QM..S
Title: F—,„1O ter(: 0-etxj'rPj'V�.f y7 ec,4,S
APPROVED AS TO FORM AND LEGALITY:
By:
Peter Vaky 67
Deputy City Attorney
M&c: C--2M0 , '-/ 1 fl
Form 1295 No. 10 $— 3 7 25'S4 4
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CITE'SmC���ETAKY
FT.WORTH,TX
Page 8
Economic Development Program Agreement
between City of Fort Worth and Elan West 7th,L.P.
M&C Review Page 1 of 2
Official site of the City of Fort Worth,Texas
CITY COUNCIL AGENDA FoRTWorn
COUNCIL ACTION: Approved on 8/14/2018
DATE: 8/14/2018 REFERENCE ..0-28790 LOG NAME: 17ED ELANW7TH_EDPA
NO..
CODE: C TYPE: CONSENT PUBLIC NO
HEARING:
SUBJECT: Authorize Execution of One-Year Economic Development Program Agreement with Elan
West 7th, LP in Connection with a Multi-Family Development in the Vicinity of Carroll
Street and Merrimac Street (COUNCIL DISTRICT 9)
RECOMMENDATION:
It is recommended that the City Council authorize the City Manager to execute a one-year Economic
Development Program Agreement with Elan West 7th, LP allowing for a one-time economic
development grant in the amount of$204,085.61 in connection with the construction of a multi-family
development in the vicinity of Carroll Street and Merrimac Street.
DISCUSSION:
On July 16, 2013, (M&C C-26348)the City Council authorized the execution of a 10-year Tax
Abatement Agreement(City Secretary Contract No. 44750) with Greystar GPI 1, LLC. or an affiliate
(Elan West 7th, LP) (Company)for the construction of a multi-family development in the vicinity of
Carroll Street and Merrimac Street, consisting of apartments and townhomes with at least 374 units
and a parking garage with at least 498 spaces.
Per the Agreement, the Company was required to invest at least $35,000,000.00 in real property
improvements, the greater of 30% or$10,500,000.00 in hard construction spending with Fort Worth
companies, and the greater of 25% or$8,750,000.00 in hard construction spending with Fort Worth
Certified M/WBE companies by December 31, 2015. The Company committed to maintaining a
minimum of eight full-time employees, with a minimum of 20% of all jobs held by Fort Worth residents
and at least 10% held by Fort Worth Central City residents. Annually, the Company must invest the
greater of 30% or$70,050.00 in supply and service expenditures with Fort Worth companies and the
greater of 25% or$58,375 in supply and service expenditures with Fort Worth certified M/WBE
companies. Under the Agreement, the Company must also reserve 37 units as affordable housing
for adjusted incomes at or below 80% of HUD's income limits for the Fort Worth-Arlington, TX
metropolitan area. In addition, eight units on property are required to be fully handicapped accessible
with three being fully handicapped accessible units that are also affordable housing units.
All of the required construction improvements at the project site have been completed. The Company
also acted in good faith to meet all annual commitments under the Agreement. Previously, the City's
practice with Tarrant Appraisal District(TAD), which is under contract with the City to prepare the
City's tax bills, was to notify TAD of any tax abatements that the City was granting for a given tax
year, including the property location and the amount of abatement to be applied. Unbeknownst to the
City or Company, TAD requires any recipient of an abatement to also file an application with TAD in
order for an abatement to be applied to the applicant's tax bill. Because of this disconnect, Company
did not file such an application for the 2017 tax year. As a result, Company did not receive the tax
abatement for the 2017 tax year that both the City and Company expected in accordance with the
Agreement. The amount of abatement that Company should have received for the 2017 tax year is
$204,085.61.
http://apps.cfwnet.org/council_packet/mc_review.asp?ID=26131&councildate=8/14/2018 9/25/2018
M&C Review Page 2 of 2
In order to effectuate the parties' intent under the Tax Abatement Agreement, staff is recommending
that the City and Company enter into a one year Economic Development Agreement under which the
City will provide an economic development grant to Company in an amount equal to the amount of
the Abatement that both the City and Developer expected to be applied for the 2017 tax year, as
authorized by Chapter 380 of the Texas Local Government Code. For 2018 and all remaining years
in which Company is due an abatement, Company will submit the proper application to TAD, and the
Tax Abatement Agreement will govern.
This project is located in COUNCIL DISTRICT 9.
FISCAL INFORMATION/CERTIFICATION:
The Director of Finance certifies that approval of this Agreement will require a one-time payment of
$204,085.61 from the Fiscal Year 2018 Budget. While funds for this payment were not specifically
budgeted, savings from other incentive payments exist in sufficient amounts to offset any costs
associated with this agreement.
TO
Fund Department Account Project Program Activity Budget Reference# Amount
ID ID Year Chartfield 2
FROM
Fund Department Account Project Program Activity Budget Reference# Amount
ID ID Year Chartfield 2
Submitted for City Manager's Office by: Susan Alanis (8180)
Originating Department Head: Robert Sturns (2663)
Additional Information Contact: Tracy Williams(2627)
ATTACHMENTS
180713 Form1295.pdf
http://apps.cfwnet.org/council_packet/mc_review.asp?ID=26131&councildate=8/14/2018 9/25/2018
CERTIFICATE OF INTERESTED PARTIES
FORM 1295
loft
Complete Nos.1-4 and 6 if there are interested parties. OFFICE USE ONLY
Complete Nos.1,2,3,5,and 6 ifthere are no interested parties. CERTIFICATION OF FILING
1 Name of business entity tiling form,and the city,state and country of the business entity's place Certificate Number:
of business. 2018-379846
Elan West 7th, LP
Fort Worth,TX United States Date Filed:
2 Name of governmental entity or state agency that is a party to the contract for which the form is07/13/2018
being filed.
City of Fort Worth Date Acknowl ged:
3 Provide the identification number used by the governmental entity or state agency to track or identify the contract,and provide a
description of the services,goods,or other property to be provided under the contract.
Elan West 7th 380 Agreement
Elan West 7th 380 Agreement
Nature of interest
4
Name of Interested Party City,State,Country(place of business) (check applicable)
Controlling I Intermediary
5 Check only if there is NO Interested Party.
X
6 UNSWORN DECLARATION p
14 My name is. CA,-t� as and my date of birth is 8 t( R9?!
*240
My address is 90 �l�� l V�J q 77M 7 U
(s ) (city) (state) (zip code) (country)
I declare under penalty of perjury that the foregoing is true and correct
• Y
Executed in �{ County, State of TzxaS ,on the day of 20-ML.
(year)
Signature of authorized agent of contracting business entity
(Declarant)
Forms provided by Texas Ethics Commission www.ethics.state.tx.us Version V1.0.6711