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HomeMy WebLinkAboutIR 9432INFORMAL REPORT TO CITY COUNCIL MEMBERS To the Mayor and Members of the City Council September 13, 2011 Page 1 of 2 i M k SUBJECT: REVIEW OF TAX ABATEMENT AGREEMENT FOR PROPERTIES x�Ta LOCATED AT 2920 WEST LANCASTER AVENUE AND 1020 CURRIE STREET The purpose of this Informal Report is to provide City Council with information regarding a proposed tax abatement agreement and fee waivers with Locap Holdings LLC. Lancaster Avenue Locap Holdings LLC is the owner of the properties at 2920 West Lancaster Avenue and 1020 Currie Street which are located in Council District 9. The company plans to invest an estimated $23,252,000 by March 31, 2013 to construct a multifamily apartment complex consisting of 315 units with 1001% affordable housing. The planned development calls for structured parking that will provide approximately 15% more spaces than required by the apartment units. Additional parking will be open to the public to provide off - street parking for visitors to the area. Residential units and additional parking will contribute to the overall success of this urban village. In order to address a financing gap associated with the return on investment until vacancy rates stabilize, the owner has applied for a five -year tax abatement that could potentially abate up to 85 percent of the City's taxes on the incremental value of real property investment at the site. City staff has reviewed the financing plan for the project and verified the need for financial assistance in the first few years of the project to allow the project to receive adequate financing. The requested abatement would reduce incremental city property taxes after construction by approximately $169,000 per year, for a total abatement of $845,000 over the five -year period, assuming the property owner meets all the compliance commitments under the agreement. During the abatement period, the City would collect an estimated $30,000 annually which would total approximately $150,000 over the five year abatement period. Once the abatement ends, the City will collect approximately $220,000 annually in property taxes from the project. The estimated ratio of private investment to public dollars provided for the development is 40:1. In addition, Fort Worth ISD is projected to collect approximately $1,700,000 over the five -year abatement period. Under the terms of the agreement, the company must ensure that the capital investment is in place by the completion deadline or the tax abatement agreement will be terminated immediately. Of the investment, the owner will have to spend the greater of $6,975,600 or 30 percent of the construction costs in making those improvements with contractors that are Fort Worth companies and the greater of $5,813,000 or 25 percent of the construction cost with contractors that are Fort Worth Certified M /WBE companies. The agreement requires the employment of a minimum of 3 Full -Time Employees (FTE) on the property by March 31, 2013 with I FTE being a Fort Worth Central City resident. The company has also committed to spend $60,000 of annual discretionary service and supply expenditures with Fort Worth contractors and $25,000 of annual discretionary service and supply expenditures with Certified Fort Worth M /WBE contractors (with the understanding that dollars spent with certified Fort Worth M /WBE companies will also count as dollars spent with Fort Worth companies). These commitments apply to all years in which the City participates in the project. Additionally, along with the tax abatement, staff proposes that the City will agree to waive the following fees related to the development: (i) all building permit, plan review, inspection, and re- inspection fees; (ii) ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS �Z 03 0 Lo E To the Mayor and Members of the City Council September 13, 2011 Page 2 of 2 5 SUBJECT: REVIEW OF TAX ABATEMENT AGREEMENT FOR PROPERTIES LOCATED AT 2920 WEST LANCASTER AVENUE AND 1020 CURRIE STREET TS all zonlru, fees; (iii) all temporary encroachment tees; (iv) all platting fees; and (v) all fire, sprinkler, and alarm pen-nit fees. All other fees charged or assessed by the City, including, but not limited to, transportation impact fees and water and sewer impact fees, are not waived by this agreement and will be fully payable. Next Steps Staff recommends proceeding with creating the tax abatement and fee waiver agreement and will forward an M&C for City Council consideration on the creation of a tax abatement reinvestment zone on September 20, 2011 and an M&C to consider approval of the tax abatement agreement on September 27, 201 L Tom Hwiggi Interim City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS