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HomeMy WebLinkAbout2011/08/02-Minutes-HEDCCITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Present: Committee Member Jungus Jordan, Chairman Committee Member Dennis Shingleton Committee Member Betsy Price Committee Member Salvador Espino Committee Member W. B. "Zim" Zimmerman Committee Member Danny Scarth (arrived at 1:10 p.m.) Committee Member Frank Moss (arrived at 1:15 p.m.) Committee Member Kathleen Hicks Committee Member Joel Burns City Staff: Susan Alanis, Assistant City Manager Peter Vaky, Deputy City Attorney Marty Hendrix, City Secretary Jay Chapa, Director of Housing and Economic Development Department Cynthia Garcia, Assistant Director, Housing and Economic Development Department Robert Stums, Manager, Housing and Economic Development Department Other City Staff in Attendance: Tom Higgins, Interim City Manager Karen Montgomery, Assistant City Manager Mark Folden, Housing and Economic Development Department With a quorum of the committee members present, Chairman Jungus Jordan called the meeting of the Housing and Economic Committee to order at 1:03 p.m., on Tuesday, August 2, 2011, in the Pre - Council Chamber of the Fort Worth Municipal Building, 1000 Throckmorton Street, Fort Worth, Texas 76102. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 2 of 22 Approval of the Minutes of the June 7, 2011, Housing and Economic Development Committee MOTION: Upon a motion made by Committee Member Hicks and seconded by Committee Member Zimmerman, the Committee Members voted seven (7) "ayes" and zero (0) "nays ", with Committee Members Scarth and Moss temporarily absent, to approve the minutes of the June 7, 2011, Housing and Economic Development Committee Meeting. The motion carried unanimously. Overview of Economic Development Incentive Programs (Agenda Item 2) Jay Chapa, Director of the Housing and Economic Development Committee, spoke before the committee on his presentation of an overview of the incentive programs used by the City to bring economic development to the City of Fort Worth. Using a PowerPoint presentation, Mr. Chapa started with a slide showing: What is Economic Development? He stated that it was the following: The creation of jobs ■ New employment and income opportunities increase the wealth of the city and region. • Locations competing for new investment ■ 15,000 U. S. Economic Development organizations compete for approximately one hundred major projects ( >100 employees) per year. • Build and diversity the economy and tax base • Revitalize depressed areas • New resources to fund city services Mr. Chapa spoke about the presentation's objectives as follows: Provide an overview of: ■ The type of incentives the city uses, and ■ How incentives are used to promote private investment and economic development projects that directly benefit Fort Worth and its citizensibusinesses CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 3 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) ■ How the City leverage private investment to develop projects that further City goals Mr. Chapa reviewed the City Council's strategic goals for the community as follows: The City Council had established five (5) strategic goals for the community as follows: • Make Fort Worth the nation's safest major city • Improve mobility and air quality • Create and maintain a clean, attractive city. • Strengthen the economic base, develop the future workforce, and create quality job opportunities. • Promote orderly and sustainable development. Mr. Chapa presented a slide showing the Housing and Economic Development Department's Five -Year Goals as follows: • Preserve and increase the number of quality, affordable, accessible housing units throughout Fort Worth. • Increase job growth and private investment throughout Fort Worth • Increase investment and stabilization of targeted neighborhoods utilizing the various department programs. • Create and support mixed - income, mixed -use development in urban villages and transit - oriented development areas. • Management the implementation of the Directions Home Program • Be recognized as a leader in business and housing development by our peers and our customers. Mr. Chapa reviewed the City's incentives focused on promoting development projects that: • Conform to the Strategic Goals and Comprehensive Plan CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 4 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) • Avoid negative fiscal impacts — incentives are based only on incremental revenues produced by the project • Effectively leverage private dollars o a minimum of a 1:10 ratio on public vs. private investment is the minimum goals (could be less in targeted areas) • Provide quality, sustainable jobs • Contract opportunities for Fort Worth Minority /Women's Business Enterprise and Fort Worth -owned companies • Provide preference for projects in targeted Central City areas that create mixed - use activity centers. Mr. Chapa provided an organization structure of his department. Mr. Chapa provided the primary incentives as follows: • Tax abatement • Economic Development Grants • Tax Increment Reinvestment Zone public project funding • Reduced development fees • Permit fee waivers • Enhanced participation in community facilities agreements • Community Development Programs using federal grant funds and special entities (HFC & LDC) Mr. Chapa advised that the additional City incentives were: • Reduced development fees • Permit fee waivers • Fee and lien waivers • Historic Preservation Program Mr. Chapa reviewed the incentive contractual commitments as follows: • Minimum investment in the project • Construction spending with Fort Worth companies CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 5 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) • Construction spending with Fort Worth Minority and Women owned Business Enterprise companies • Commitments on total employment and the percentage of employees that will be Fort Worth and "Central City" residents • Annual supply and service spending with Fort Worth companies • Annual supply and services spending with Fort worth Minority and Women owned Business Enterprise companies • Quality affordable housing commitments on multi - family projects Mr. Chapa showed a slide of the Central City area and its boundaries. The legend on the map stated that the area established by the City Council consisted of Community Development Block Grant (CDBG) - eligible census block groups; and state - designated enterprise zones; and census block groups that were contiguous by 75 percent or more of the perimeter to CDBG eligible block groups or enterprise zones. He advised that the City Council adopted the definition of the Central City in October 2000. Mr. Chapa presented the measuring progress of audits as follows: • Commitments verified, findings used to determine annual incentive levels • Number of jobs created or retained through incentive projects • Number of Fort Worth/Central City residents employed at companies receiving incentives • Value of Fort Worth and Fort Worth MWBE contracts through incentive projects Mr. Chapa presented a map showing tax abatements and economic development program grants located throughout the City. He advised that 13 tax abatement agreements had been audited and 16 economic development program grants had been audited. Mr. Chapa showed a chart of the 2010 employment summary with total job figures, Fort Worth jobs and Central City jobs for committed jobs as compared to actual jobs. He also showed a chart of the 2010 Fort Worth business participation showing construction and goods and services, identified as either committed. He also showed a chart of the 2010 M /WBE participation for construction and goods and services for dollars committed and actual. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 6 of 22 Overview of Economic Development Incentive Prosram (cont'd) (Agenda Item 2) Mr. Chapa advised that the 2010 economic development incentive agreements in aggregate were: Total Incentives Value $9,640,298 Net Revenue to City $5,184,461 Mr. Chapa presented information on the comparison of incentives to total ad valorem taxes as follows: City of Fort Worth appraised value of real & personal property: $ 56.0 billion Estimated total real & personal property taxes: $350.6 million Estimated sales taxes: $ 99.7 million Estimated total ad valorem & sales taxes: $450.3 million Estimated total taxes abated /granted: $ 9.6 million Percent of taxes abated /granted: 2% Mr. Chapa reviewed information on tax abatements as follows: • Authorized by Chapter 312 of the Texas Tax Code o The City's first abatement was in 1989 with a total 59 abatement agreements approved to date. • Allows eligible business interests to be exempt from paying all or a portion of ad- valorem taxes on improvements for up to 10 years • City of Fort Worth Tax Abatement Policy governs the conditions under which tax abatements are granted, but emphasis is placed on projects that: • Are located in the Central City, and • Result in the creation of new full -time jobs for Fort Worth and Central City residents; and • Result in the creation of new full -time jobs for Fort Worth and Central City residents; and • Result in development with little or no cost to the City; and • Have a positive impact on Fort Worth companies and Fort Worth Certified M /WBE companies Mr. Chapa presented charts showing the number of tax abatements from 1991 through 2010 and the total number of companies receiving benefits per year. He also presented a chart CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 7 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) showing the total value abated for the same period of time. He reviewed another chart showing the total taxes abated per year for the same time period. Mr. Chapa continued his presentation with a review of the economic development grants. He advised that these were called 380 agreements and were authorized by Chapter 380 of the Texas Tax Code. He stated that they were used to promote economic development and stimulate business and commercial activity by providing grants. He clarified that the grants were used to reimburse private developers for expenses that might contribute to a financing gap in a project. He added that it was a financing tool that provided flexibility for use of incremental tax revenues received from the project. Mr. Chapa spoke about how economic development grants worked as follows: o City provided a grant to a business (one time or annually over a term) to stimulate business and commercial activity based on a financial gap. o Business enterprise paid all taxes in a given year. o In the following year, the Council appropriated an amount equal to the incremental value of all or a portion of the City's taxes paid the prior year per agreement. o Commitments to Fort Worth/Central City jobs and FW /MWBE contractors must be made and are audited annually. Mr. Chapa presented information on the Enterprise Zone Projects. He reviewed the enterprise projects and benefits as follows: • The City Council nominates developments /companies within a zone as Enterprise Projects and application is made to the state. • Benefit from the state is a refund on state sales and use taxes on qualifying expenses including: • Building materials • Tangible property • Machinery /equipment • Taxable services used within the zone CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 8 of 22 Overview of Economic Development Incentive Program (cont'd) • The City could nominate nine (9) projects per bi -annum • State could have up to 105 projects per bi -annum (Agenda Item 2) Mr. Chapa presented a chart showing all of the enterprise projects, with a total of the projects at $939,011,904 and with 8,929 jobs created /retained. Mr. Chapa continued his presentation with a review of the enhanced community facility agreements. He stated that community facility agreements were: • Community Facility Agreements permit a private developer to construct public infrastructure improvements and may, by policy, provide for City participation • Streets, storm drain, street signs, street lights (bond funded items), pedestrian enhancements, water and wastewater utilities • Handled through T /PW or Water Department • City participation beyond what is called for in the "standard" CFA policy is an Enhanced Community Facility Agreement • Enhanced CFA funding was provided in the 2004 CIP Bond Program ($6.7 million in New Development Bond Fund) • City pays a portion of public infrastructure costs that would otherwise be the developer's expense • City acknowledges that inadequate and aged infrastructure presents significant barrier to quality development (the "but- for ") or that the lack of current infrastructure keeps a development from occurring • City participation is governed by the Community Facility Agreement Policy. Mr. Chapa reviewed the chart showing each of the projects approved using enhanced community facility agreements, with a total of $5,288,426 and a private investment of $185,480,000. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 9 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) Mr. Chapa presented the tax increment financing districts (TIFs). He showed a map of the city limits and identified the TIFs shown on the map. He advised that TIFs were authorized by Chapter 3 of the Texas Tax Code. He stated that it was a defined area that has been designated as a reinvestment zone in anticipating of either new private development or taxable value growth. He added that local governments can publicly finance needed structural improvements and enhanced infrastructure using tax increment without impacting the current stream of general fund revenues. Mr. Chapa explained how TIF districts worked. He pointed out that: The tax increment was derived from the difference in appraised value between the year in which the reinvestment zone was established (base year) and each year the reinvestment zone was in existence. The increment paid for TIF- related eligible public improvements, which were delineated in the TIF's project plans. Each taxing entity, except for school districts, may elect to participate in a TIF at a defined participation rate. Mr. Chapa showed a slide of the calculation of the tax increment from the creation date to the termination date, with the base value and the captured value. He advised that those two figures then become the tax revenues that would flow to the tax increment fund and to the City and the county. Mr. Chapa spoke about the City of Fort Worth TIF Policy General Guidelines, dated December 2009. He reviewed those items as follows: ■ Term of any newly created TIF may not exceed 21 years (20 years of tax increment collection), unless approved by the City Council • Only TIFs created to help finance a "Major Infrastructure Project:, may have a term greater than 21 years • City participation in any TIF district was limited to ad valorem real property taxes. • HED staff would evaluate all TIF requests and applications. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 10 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) ■ HED staff would administer all TIF districts unless otherwise approved by City council in the preliminary project and financing plans. Mr. Chapa reviewed a chart of the TIFs in Fort Worth. He pointed out that there were ten (10) active TIF districts in Fort Worth, with different goals focusing on one or many projects. The TIFs were: TIF 2 Speedway TIF 3 Downtown TIF 4 Southside TIF 6 Riverfront TIF 7 North Tarrant Parkway TIF 8 Lancaster TIF 9 Trinity River Vision TIF 10 Lone Star TIF 12 East Berry Renaissance TIF 13 Woodhaven Single — Texas Motor Speedway Multiple Multiple Single — RadioShack Campus Infrastructure /Project Specific Multiple Single — Trinity River Vision Single — Cabela's Multiple Multiple Mr. Chapa presented a chart showing all of the TIFs, their base value, the 2010 taxable value, the increment and the percentage of change from the base. The grand total was Base Value 2010 Taxable Value Increment % Change from Base $1,104,559,724 $2,554,275,997 $1,449,676,263 131% Mr. Chapa showed a slide of the 2010 Tax Year as follows: Total Value of ALL Real Property $32,314,003,758 Total Value of Real Property in TIFs $2,564,648,437 Percentage of Real Property Value in TIFs 7.9% Percentage of Real Property Acreage in TIFs 5.7% Value of Increment $1,459,988,462 Total City Contributions $8,317,570 Total Contributions from ALL Entities $19,135,944 Mr. Chapa then reviewed the Neighborhood Empowerment Zones (NEZs). He advised that the NEZs were authorized by Chapter 378 of the Texas Local Government Code and that CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 11 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) there were 19 designated NEZs in the City. He stated that the basic incentives were tax abatement on the City's incremental real property value (excluding land); development fee and impact fee waivers and release of city liens. Mr. Chapa spoke about the NEZ activity as follows: • NEZ areas represent 29.5 square miles within the central city. • From 2001 to mid -2010, the NEZ program provided $3.9 million in basic incentives • Approximately $2.1 million in actual taxes abated on projects totaling over $239 million. • Approximately 2,500 projects supporting nearly $1.7 billion in investments by the end of 2010. • The greatest volume of activity has been seen in the Magnolia Village and Berry /University NEZ areas. • Other areas with strong NEZ activity are Stop Six, Rolling Hills, Trinity Park and Ridglea/Como. Mr. Chapa continued his presentation with a review of Housing and Community Development as follows: • Focus incentive tools along with federal funding in target areas to maximize new development and redevelopment. • Allow only direct sale of properties in proposed targeted areas that ensure quality development. • Utilize multiple development types and infrastructure improvements to redevelop overall neighborhoods and communities • Goal is to reach tipping point that allowed the market demand to become the driver for development. Mr. Chapa reviewed the projects of Renaissance Square, which utilized the development tools of TIF money, Chapter 380 EDPG, and ECFA. It was a 67 -acre grocery- anchored shopping center. Renaissance Square would feature 400,000 square feet of shopping, sit down restaurants, fast food and more. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 12 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) Mr. Chapa reviewed the Hardy Street project, which utilized the development tool of Community Development Block Grant funds. He advised that the project consisted of two (2) acres of land and a vacant dilapidated nursing home in the 3600 block of Hardy Street. He stated that property would be redeveloped into 21 new quality, affordable and accessible single family homes to be funded and constructed by a private builder. He presented the project of Evans and Rosedale /Terrell Heights. He stated this project utilized the development tools: NEZ, CDBG, TIF, ECFA, HOME and General Obligation Bonds. He stated that it was a neighborhood steeped in history was experiencing a renaissance of economic and cultural opportunity. He added among the many projects currently underway was the recently completed Jack in the Box, street improvements on Evans and Missouri Avenue, new street lights, Evans - Rosedale Plaza, and the Shamblee Library, infill housing including the Terrell Homes project. Mr. Chapa presented the project of the Race Street Lofts. He advised that the development tools that were used were: NEZ, HOME Funds, HFC Partnership, General Funds HTF. He reviewed the project and advised that there were five (5) lots located on Race Street and McLemore Avenue for the construction of a 36 -unit multi - family rental complex in Six Points Urban Village (19 HOME assisted units). He stated that it was partnership between the City's Housing Finance Corporation and NRP Holdings, LLC, the private developer. He explained that the Texas Department of Housing and Community Affairs tax credits were awarded and the construction was to completed by March 2012. Mr. Chapa completed his presentation. Chairman Jordan opened the floor for questions and /or comments. Committee Member Burns requested that Mr. Chapa provide the revised organizational chart to the committee. He indicated jokingly that he wanted to give Mr. Chapa an opportunity to correct any misperceptions on whether or not highly educated people could be found in the Central City area. He pointed out to the committee members that the economic development activities were one of the most important things that the City of Fort Worth did. He added it was the opportunity to bring in the new jobs and new investments that lift the property tax burdens off of the existing tax payers. He stated that it was the means by which the City would build and repaired roads, maintained the parks, and open the swimming pools. He pointed out that it CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 13 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) certainly contributed to the citizens' quality of life in Fort Worth. Committee Member Burns indicated that he understood that there were people that talked about the TIF districts and some of the financial incentive agreements that the City had with major corporations as if it was a giveaway. He added that the truth was that it brought investment into the City and he felt it was an incredible key to providing the quality of life to the citizens. He expressed appreciation to Jay Chapa in particular for restoring and transforming the Housing and Economic Development Department. He added he had also restored trust and admiration to the department. Committee Member Burns referred to the changes that had been made in the last two to three years. He thanked him again for his stewardship in his department and really transforming it. Committee Member Espino requested to go back to the slide that showed the zip codes for the CDBG eligible areas. He indicated that he had concern for some of the older areas of the City located slightly north of Loop 820. He stated that he was not sure if the Summerfields area in zip code 76137 would qualify and he questioned also an area south in Council Member Jungus Jordan's district. He added that he thought the definitions had changed defining the Central City areas. He added he did feel that there was a need to reinvest in some of the older areas which were outside the Loop 820. He also spoke about a housekeeping note that needed to be fixed on the map. He stated that the zip code 76106 was split several years ago between zip codes 76106 and 76164. He suggested that the map be updated with that information and the new boundaries for the Northside area. Committee Member Espino reiterated some of the same statements that Committee Member Burns had stated. He commended the department on doing a great job. He told Mr. Chapa to keep up the good work. He suggested again that the City staff look at the CDBG map to see if there were other areas of the City that could qualify. Mr. Chapa indicated that he felt the map was just for illustration for tax incentive purposes. He stated that it was just to illustrate the CDBG areas for hiring purposes. Committee Member Espino indicated that in that case, he would like to see all of the areas in the City that would be CDBG eligible. Committee Member Burns requested to know when the map would be updated for the 2010 census. Mr. Chapa indicated that City staff was still waiting on the final information to come forward from the Census Bureau. He added that they were under the impression that it was to occur at the end of the summer; however, he pointed out that it might be at the end of the year. Committee Member Burns clarified that at some point the City would know the new areas that would be CDBG eligible. Committee Member Price indicated that she agreed with Committee Member Burns that only through economic development would the City bridge the gap in the budget in order to deliver services to the citizens. She requested a point of clarification on the primary incentives CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 14 of 22 Overview of Economic Development Incentive Program (cont'd) (Agenda Item 2) he referred to as Tax Increment Reinvestment zones as TIFs. She pointed out that they are really called TIRs. She pointed out that the TIFs and TIRs appear in different parts of the Tax Code. Mr. Chapa explained that from the beginning they have always been referred to as TIFs in the City of Fort Worth. He advised that he understood in other cities and entities they were referred to as TIRs. She pointed out that when they were shown on the tax reports, they had to be reported separately. Mr. Chapa explained that in the original handbook for the State of Texas Office of Economic Development they talked about tax increment financing and this was where the terminology came from originally. He stated now in the Code they were referred to tax reinvestment zones or TIRs. Mayor Price indicated that this came from her 10 years of working in the Tarrant County Tax Office. Chairman Jordan added that there were now transportation reinvestment zones, which would add to the confusion. Committee Member Scarth requested that a copy of the PowerPoint presentation be e- mailed to the committee members. There was further deliberation that the Dropbox for the IPads was not working properly in order for the committee members to receive the PowerPoints. Chairman Jordan expressed appreciation to Mr. Chapa for his presentation. He added a point of information. He stated he felt that the presentation should emphasize that all of the audits that were done on these projects were performance -based and if they did not live up to the performance under the contract, there would be penalties or the full contract would not be provided. He reiterated that there were audits on an annual basis. Chairman Jordan indicated he supported comments made by Committee Member Burns and that quality jobs was the primarily purpose of what the City did with these tools. He added also that the infrastructure was not accentuated enough in the presentation because mobility was probably the primary tool in the City's tool box as the City built economic development. Chairman Jordan pointed out highly successful projects, such as the 7 1 Street area. He stated that the City offer the catalyst through the Montgomery Plaza and the rest had taken off on its own. Chairman Jordan also pointed out that TIFs could be abolished once the financial criteria that was established in the creation of the TIF was met through the life of the TIF. He referred to the Southwest Parkway TIF, which was just abolished. The presentation and discussion was concluded on this agenda item. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 15 of 22 Presentation on 2011 -2012 Application for Various Federal Grant Funds (Action Plan) (Agenda Item 3) Jay Chapa, Director of Housing and Economic Development Department, spoke before the committee regarding the selection process for the PY 2011 -2012 Community Development Block Grant (CDBG) Public Services. Using a PowerPoint presentation, Mr. Chapa reviewed a chart showing the timeline of the Request for Proposal (RFP) release date on March 9, 2011, through to the Action Plan due to the Housing of Urban Development on August 16, 2011. Mr. Chapa provided the CDBG funding available as follows: • CDBG funding • PY 2011 — 2012: $6,228,267 • Reduction of $1,102,940 • Public Services capped at 15% of allocation and program income • PY 2011 — 2012: $934,220.40 • Reduction of $192k,559.60 • Total amount of CDBG requested in RFP ■ $1,901,999.01 (over 200% of available funds) Mr. Chapa spoke about the contract administration issues that the City had experienced in the past as follows: • City cited by HUD for not having enough capacity to administer the large number of contracts under public service designation • Suggested solution was to increase the contract amounts and reduce total contracts administered annually • Community Development Council (CDC) approved changes to the Request for Proposals (RFP) that included: o A maximum of 25 contracts o $25,000 minimum contract amount o New criteria based on agency performance related to meeting HUD regulations for administration and reporting Mr. Chapa presented the evaluation criteria as follows: ■ Units of service — Maximum 5 points available. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 16 of 22 Presentation on 2011 -2012 Application for Various Federal Grant Funds (Action Plan) (cont'd) (Agenda Item 3) • Clearly definable, e.g., Hours of Counseling, Days of Childcare Delivered, Number of Meals Delivered, Number of People Training • Goal Alignment — Maximum 3 points available o Program demonstrated consistency with City Council Goals • Unduplicated Clients — Maximum 10 points available • Key reporting metric to HUD • 1 person or household could be served multiple times, but was only counted once ■ Administrative Load —Maximum 10 points available • Management and General Expenses /Total Expenses • Financial Capacity — Maximum 5 points available • Total Cash and Equivalents /Total Liabilities • Financial Leveraging — Maximum 5 points available • % of Program Paid for by CDBG • Compliance Issues: Maximum 30 points available • Findings History: Range of 20 to 10 points • Reporting History: Range of 10 to 20 points Mr. Chapa presented a slide showing the CDBG Funding Recommendations, listing all of the agencies, their funding for the current year, their request and the recommendation from the Community Development Council. He pointed out that the total amount of funding to be distributed was $922,970.40. Mr. Chapa then reviewed a chart showing the agencies that had received funding in the past but were not recommended to receive funding as follows: Children's Advocacy Resources and Education YMCA of Metropolitan Fort Worth Senior Citizen Services of Greater Tarrant County East Fort Worth Montessori Mr. Chapa reviewed a chart showing a scenario 1: without considering financial capacity and the agencies that would receive funding and the amount of the funding. He then showed a CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 17 of 22 Presentation on 2011 -2012 Application for Various Federal Grant Funds (Action Plan) (cont'd) (Agenda Item 3) chart showing agencies in this same category that would not receive funding. Mr. Chapa presented a chart showing scenario 2: without considering findings and the agencies that would receive funding and the amount of the funding. He showed a comparison chart of the scenario 2: without considering findings and the agencies that would not receive funding. Mr. Chapa continued his presentation with a review of scenario 3: without considering reporting and the agencies that would be receiving funding and the amount of the funding. He provided the comparison chart of scenario 3: without considering reporting and the list of agencies that would not be receiving funding. Mr. Chapa presented charts showing scenario 4: financial capacity, without findings or reporting and the list of agencies that would be receiving funding and the amount of the funding and the comparison chart of the agencies that would not be receiving funding. Mr. Chapa then reviewed the options to be considered: 1. Adopt the Community Development Council (CDC) recommendations. 2. Disregard some of the evaluation criteria, and fund agencies based on new rankings. 3. Fund 100% of agencies that applied by reducing proportionately those recommended for funding by the CDC and eliminating the $25K minimum (each agency would receive approximately 48% of request) 4. Adopt funding amounts based on new City Council recommendations. Mr. Chapa completed his presentation and reiterated that it was the City staff s recommendation to adopt the CDC recommendations. He stated that it was a very tough issue, and he was not sure how else it could be addressed. Chairman Jordan opened the floor for questions and /or comments. Committee Member Price requested clarification as to whether this was the first year that the guidelines had been used. Mr. Chapa indicated that this was the first year that they had used these specific guidelines; however, all agencies were under the same guidelines. Mr. Chapa further explained that from the staff s standpoint, the YMCA had indicated that they were audited twice within a nine (9) month process. He added every agency was audited within that nine (9) month process. He stated that it was to set up the guidelines that the CDC had recommended be followed. Mr. Chapa explained that when they had merged the two CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 18 of 22 Presentation on 2011 -2012 Application for Various Federal Grant Funds (Action Plan) (cont'd) (Agenda Item 3) departments (Housing Department and Economic and Community Affairs Department), the compliance group for the department consisted of four (4) people that both administered contracts and did the compliance. Mr. Chapa indicated that he saw that as a conflict of interest. He explained that they have a new compliance group that consisted of five (5) people and this work was all that they did. He explained that they have been catching up on some of this work in the last twelve to eighteen months. Committee Member Shingleton indicated that he was puzzled and concerned about the elimination of former partners that have been subsidized by the City in the past. He questioned if the City should alienate them for years to come or could the City find some other source of funding for them that could offset their predicament. Mr. Chapa added that was always an alternative for the City Council. He added that in this case, he was just addressing the CDBG funds and that 15% cap would not exist. He pointed out that with the City's budget process coming forward, that could be an alternative. He provided a history of the use of CDBG funds was to fund an agency for about a five (5) year period of time then they were supposed to roll off the funding list so that other programs or services could then receive funding. He indicated that because that was not happening, the City began the RFP and ranking of agencies process. He added that the City wanted to create the appearance of fairness and transparency. Committee Member Shingleton indicated that he was not saying that the process was not fair; he was just concerned that the agencies needed some guidance on their ability to conform to the standards that have been placed upon them. He added that they have been good partners in other arenas. Mr. Chapa reviewed with the committee the process when a contract was signed with an agency, how they were to prepare their reports, etc., which was never put into place before. Chairman Jordan indicated that he felt the entire committee was struggling with Committee Member Singleton's concerns. He pointed out for an example the YMCA had been a great partner with the City in stepping up when there was a community need. He added that he believed the staff was correct that there needed to be a measure independently on the criteria on the various kinds of funding that the City had. He pointed out that the City had made arrangements, for example, with the YMCA on the pool situation where the City was reimbursing for some of the associated costs. Assistant City Manager Susan Alanis responded that was correct. She added that since they had been such a good partner, the City was paying them just under $11,000.00 for the partnership that they have provided with the pools. She explained further that the City had discussed with them whether this amount of funding could cover the direct costs and it was determined that it was not covering all of their costs. She CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 19 of 22 Presentation on 2011 -2012 Application for Various Federal Grant Funds (Action Plan) (cont'd) (Agenda Item 3) clarified that the amount would now be $15,000 and was proposed to be funded in next year's City budget. She added that the goal was to make the program whole as the YMCA had been great partners. Chairman Jordan pointed out that this amount was still short of the $75,000 that had been requested; however, he felt the issue was measuring independently these agencies or does the City give special credence to the fact that they have been community partners. He reiterated that all of the committee members were struggling with this issue. Committee Member Scarth indicated that it was very tempting to get involved particularly in the programs that the City had participated with the YMCA and he indicated he could make a great case that the City ought to be able to find some way to do so. He stated that it was very tempting. He added on the other hand, the City had worked very hard to figure out a way to make this process be more systematic so that it did not come down to people coming down to the City Council meetings two or three nights in a row and trying to make their case to the City Council directly. He added that it was also done to take it out of the City Council's hands of trying to make those individual decisions. He added he would hate to get squeamish over one thing now, as laudable as their work was, and blow up the process that was working pretty well. Committee Member Espino indicated that he also shared the same concerns as Committee Member Shingleton and not just on the partnership with the YMCA. He pointed out that the City also had a partnership with them at the North Park YMCA, where they provided $2.5 million for a facility and the City also provided that amount and was currently providing an operation subsidy as well. He reiterated his concern about that particular partnership. Committee Member Espino pointed out that since this was the first year to use these guidelines and that the amount of the funds were cut at the federal level, he wondered if there was a creative way through this transition to make up that funding in some way. He pointed out that perhaps it was not through CDBG dollars but other funding sources that the City may have at its disposal. He pointed out that last year the City's budget was over a billion dollars and there was $528 million to $538 million in the general fund, thus he wanted to keep that option open and he wanted to talk about it during the budget process as an improvement package. He stated that he understood that the YMCA was docked on the compliance side and their leveraging of funds did not comply; however, he pointed out that part of their debt issue was the fact that they were partnering with the City on the construction of a new facility at North Park and they do carry a lot of debt load because they were building new facilities. Committee Member Espino indicated that he felt there were unique and extenuating circumstances in this situation. He added that as CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 20 of 22 Presentation on 2011 -2012 Application for Various Federal Grant Funds (Action Plan) (cont'd) (Agenda Item 3) the City transitioned to the new guidelines, the lesson had been learned by many of these non- profits. He pointed out again all of the services that the YMCA had provided and that he felt a lot of people would be hurt by the elimination of this funding. He reiterated his concern and encouraged the City staff to keep an option open as the City Council went through the budget process. Committee Member Espino indicated that he felt that the CDC had some tough choices, that he felt the process was fair and the criteria was fair. He reiterated that he felt the YMCA was being penalized because they did have a lot of facilities where they had debt. Committee Member Burns indicated that he agreed with Council Member Espino. He stated that perhaps the City not fund the full $75,000 but a portion of it so that they could do the funding they needed to do in order to keep these programs open for the coming year and then they could figure out how to do it in future years. Committee Member Moss supported the same concern. He added that he was concerned about the audit findings and counting it for two years, so that they were docked twice. He indicated his support for finding funding so that these programs could be continued for next year. Chairman Jordan advised that there would be not vote on this item was it would go before the City Council. He added that he was hearing that there was a consensus of the committee that the City staff should look for other funding sources to address the agencies that did not receive any funding. Assistant City Manager Susan Alanis spoke to the issue of finding the funding sources. She explained that the upcoming City's budget process would start next week and at this time there were no local funding sources identified to make up for the federal dollars that had been eliminated from some of the City's programs and services. She pointed out that a list would be created as the City Council worked its way through the budget process and then the City staff could determine what the choices might be. There was no further presentation or discussion on this agenda item. Chairman Jordan adjourned the regular meeting of the Housing and Economic Development Committee into Executive Session at 1:55 p.m. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 21 of 22 Executive Session (Agenda Item 4) Chairman Jordan called to order the Executive Session at 1:55 p.m. in order to discussion the following items: A. Seek the advice of its attorneys concerning the following items that are exempt from public disclosure under Article X, Section 9 of the Texas State Bar Rules, as authorized by Section 551.071 of the Texas Government Code: (i) legal issues related to any current agenda items; B. Discuss the purchase, sale, lease or value of real property, as authorized by Section 551.072 of the Texas Government Code. Deliberation in an open meeting would have a detrimental effect on the position of the City in negotiations with a third party; and, C. Discuss or deliberate negotiations relating to any economic development negotiations, as authorized by Section 551.087 of the Texas Government Code. Chairman Jordan adjourned the Executive Session at 2:26 p.m., on Tuesday, August 2, 2011. Chairman Jordan reconvened the regular session of the Housing and Economic Development Committee at 2:26 p.m. Request for Future Agenda Items (Agenda Item 5) Chairman Jordan opened the floor for requests for future agenda items. There were no requests for future agenda items. Date of Next Regular Meeting — September 13, 2011 (Agenda Item 6) Chairman Jordan advised that the next regular meeting of the Housing and Economic Development Committee was tentatively scheduled for Tuesday, September 13, 2011. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 2, 2011 Page 22 of 22 Adjourn (Agenda Item 7) With no further presentations or discussions, Chairman Jordan adjourned the regular meeting of the Housing and Economic Development Committee at 2:27 p.m., on Tuesday, August 2, 2011. These minutes approved by the Housing and Economic Development Committee on the 4th day of October, 2011. APPROVED: Joel Burns, Chairm Minutes Prepared by and Attest: Marty Hendrix, City Secretary