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HomeMy WebLinkAbout2010/08/03-Minutes-HEDCCITY OF FORT WORTH ® CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Present: Committee Member Jungus Jordan, Chairman Committee Member Carter Burdette, Vice Chairman Committee Member Mike Moncrief Committee Member Salvador Espino Committee Member W. B. "Zim" Zimmerman Committee Member Danny Scarth (arrived at 1:29 p.m.) Committee Member Frank Moss Committee Member Kathleen Hicks Committee Member Joel Burns (arrived at 1:05 p.m.) City Staff: Tom Higgins, Assistant City Manager Peter Vaky, Senior Assistant City Attorney Marty Hendrix, City Secretary Jay Chapa, Director of Housing and Economic Development Department is Robert Stums, Manager, Housing and Economic Development Department Kirk Slaughter, Director, Public Events Other City Staff in Attendance: Cynthia Garcia, Assistant Director, Housing and Economic Development Department Marcia Wise, Deputy Assistant City Attorney Vicki Ganske, Senior Assistant City Attorney Guests: Johnny Campbell, Chairman of the Board, Fort Worth Convention and Visitors Bureau Pam Minick, Vice Chairman of the Board, Fort Worth Convention and Visitors Bureau David DuBois, President and CEO, Fort Worth Convention and Visitors Bureau Rick Helmreich, Controller, ATC Logistics & Electronics, Inc. Mona Shoemate, Director, Tax Advisory Services, DuCharme, McMillen & Associates Mark Barfield, Vice President, RadioShack Corporation Jubal Smith, PricewaterhouseCoopers With a quorum of the committee members present, Chairman Jungus Jordan called the meeting of the Housing and Economic Committee to order at 1:00 p.m., on Tuesday, August 3, 2010, in the Pre - Council Chamber of the Fort Worth Municipal Building, 1000 Throckmorton, Fort Worth, Texas 76102. CITY OF FORT WORTH ® CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 2 of 20 Approval of Minutes of the June 8, 2010, Housing and Economic Development Committee (Agenda Item 2) Chairman Jordan opened the floor for a motion on the approval of the minutes. MOTION: Upon a motion made by Committee Member Moncrief and seconded by Committee Member Espino, the Committee Members voted seven (7) "ayes" and zero (0) "nays ", to approve the minutes of the June 8, 2010, Housing and Economic Development Committee meeting. The motion carried unanimously. Written Reports: Weatherization Program Report (Agenda Item 3 -A.) Chairman Jordan opened the floor for questions and /or comments on the written report of the Weatherization Program. 0 There was no discussion or questions. • This agenda item was received as a matter of information. Executive Session (Agenda Item 4) Chairman Jordan advised that there was no need for the following Executive Session: 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. This agenda item was passed over. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 3 of 20 Chairman Jordan moved down the agenda to Agenda Item No. 6, due to the fact that the representatives from the Convention and Visitor Bureau had not arrived at the meeting. Presentation on 2009 Audit Year Findings for Incentive Agreements (Agenda Item 6) Mr. Robert Sturns, Manager, Housing and Economic Development Department, spoke before the committee regarding the 2009 Audit Year findings for incentive agreements. He advised that the presentation objectives were to explain the audit process for incentive agreements and to present the findings from the 2009 audit of tax abatement agreements and economic development program grant agreements. Mr. Sturns stated that the audit process began with courtesy reminder letters that were sent to companies in December. He pointed out that the companies submitted information to be audited by February 1' 2010. He stated that the City's Internal Audit Department reviewed the information and conducted the audit, including site visits. isMr. Sturns presented the summary of audit findings. He stated that there were 19 Tax Abatement Agreements, with 17 performance specific agreements and two (2) non - performance specific agreements (agreements with no automatic penalty for non - compliance). He clarified that this was the last year for those two agreements. He added that there were 12 economic development program grant agreements (380 agreements) that were audited. Mr. Sturns showed a chart of the 2009 employment summary. The chart showed the total of committed jobs at 7,580 and the actual at 9,152; the Fort Worth committed jobs at 3,941 and the actual at 4,151; and the Central City jobs committed at 1,469 and the actual at 2,360. Mr. Sturns reviewed the next chart showing the 2009 Fort Worth business participation as follows: $243.8 million in construction committed $422.9 million in construction actual $37.9 million in goods and services committed and $48.1 million in actual Mr. Sturns' next chart showed the 2009 Minority /Women's Business Enterprise participation as follows: 0 $129.5 million for construction committed CITY OF FORT WORTH ® CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 4 of 20 Presentation on 2009 Audit Year Findings for Incentive Agreements (cont'd) $233.0 million for construction actual $15.6 million for goods and services committed $14.8 million for goods and services actual (Agenda Item 6) Mr. Sturns continued his presentation with the audit findings for the Tax Abatement Agreements. He reviewed the following information for companies with performance specific Tax Abatement Agreements. *One year tax abatement, converts into a 380 agreement in subsequent years. Committee Member Moss requested clarification on the problem that the Chase Operations Center was running into as far as achieving the full abatement. Mr. Sturns clarified that they fell short on their job creations for Fort Worth and Central City jobs. Mr. Sturns went on to explain that the downturn in the economy was affecting many companies regarding job Abatement Abatement Company Maximum Earned Allied Electronics (2017) 100% 75% Bell Helicopter- Textron (2010) 80% 80% Ben E. Keith (2010) 75% 75% Chase Operations Center (2015) 90% 35% Cinram Wireless (2018) 75% 19.8% Coca -Cola Enterprises (2014) 90% 42% ConAgra Foods (2013) 90% 0% Cott Beverages (2015) 100% 0% Cotton Depot Lofts (2015) 100% 100% CUNA Mutal (2017) 75% 25% Grandmarc -W. Berry St. (2017) 100% 100% Mattel, Inc. (2012) 100% 100% Mother Parker's Tea/Coffee 80% 47.5% (2010) OBIM Fresh Cut Fruit (2017) 100% 6% Omni Fort Worth Hotel (2018) 100% 100% Stockyards Station Hotel (2012) 100% 0% Trinity Bluff Development, Ltd.* 100% 100% *One year tax abatement, converts into a 380 agreement in subsequent years. Committee Member Moss requested clarification on the problem that the Chase Operations Center was running into as far as achieving the full abatement. Mr. Sturns clarified that they fell short on their job creations for Fort Worth and Central City jobs. Mr. Sturns went on to explain that the downturn in the economy was affecting many companies regarding job CITY OF FORT WORTH ® CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 5 of 20 Presentation on 2009 Audit Year Findings for Incentive Agreements (cont'd) (Agenda Item 6) • creations. He pointed out that some of them had to lay off employees, thus this was affecting their job creation commitment requirements. Committee Member Moss responded that he knew their agreement was somewhat different from the standpoint that it was not necessarily specific to the site. Mr. Sturns indicated that was correct. Committee Member Moss explained that it was related to their overall operations and job creations within Fort Worth. Mr. Sturns reconfirmed that they were falling short on both of those numbers. Mr. Sturns reviewed the non - performance specific Tax Abatement Agreements as follows: Blackstone Hotel (2010) 100% Villas by the Lake 75% 92.08% 73.60% He pointed out that again the lack of ability to reach their numbers was due to the economic downturn and creation of jobs. He reviewed the following information for companies receiving Tax Abatement Benefits: $ Value to $ Taxes to City Company Company Allied Electronics (2017) $ 99,393 $ 33,131 Bell Helicopter- Textron (2010) $ 326,763 $ 81,691 Ben E. Keith (2010) $ 179,550 $ 59,850 Chase Operations Center (2015) $ 122,943 $228,323 Cinram Wireless (2018) $ 59,273 $240,086 Coca -Cola Enterprises (2014) $ 20,044 $ 27,679 ConAgra Foods (2013) $ 0 $104,381 Cott Beverages (2015) $ 0 $232,786 Cotton Depot Lofts (2015) $ 117,819 $ 0 CUNA Mutal (2017) $ 29,214 $ 87,642 Grandmarc -W. Berry St. (2017) $ 285,541 $ 0 Mattel, Inc. (2012) $ 180,172 $ 0 Mother Parker's Tea/Coffee $ 69,041 $ 76,309 (2010) OBIM Fresh Cut Fruit (2017) $ 109 $ 1,705 Omni Fort Worth Hotel ( 2018) $1,333,190 $ 0 CITY OF FORT WORTH ® CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 6 of 20 n Presentation on 2009 Audit Year Findings for Incentive Agreements (cont'd) Stockyards Station Hotel (2012) $ 0 $ 55,081 Trinity Bluff Development, Ltd.* $ 242,017 $ 0 Blackstone Hotel (2010) $ 9,551 $ 822 Villas By the Lake (2010) $ 48,625 $ 17,422 *One year Tax Abatement, converts into a 380 agreement in subsequent years. Mr. Sturns reviewed the agreements completed in 2009: • Firestone Apartments - Total Added Value $26,069,500 - Estimated Annual Taxes Beginning 2010 $ 222,895 - Total Jobs 9 • JC Penney Distribution - Total Added Value $16,458,672 - Estimated Annual Taxes Beginning 2010 $ 140,722 - Total Jobs 385 Mr. Sturns' next chart detailed the following Incentive Value Totals: Collected Incentive Value Taxes Estimated Per Agreements $4,028,655 $ 341,518 Actual Per Audit $3,123,247 $1,246,927 *City collected $905,406 above projected. (Agenda Item 6) Mr. Sturns continued his presentation with the audit findings for the Economic Development Program Agreements (Chapter 380 Agreements). He reviewed the following information for companies regarding the potential maximum percentage by agreement. Company Acme Brick (2039) Cabela's (2025) Potential Maximum Percentage by Agreement 100% 67°,0 CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 7 of 20 Presentation on 2009 Audit Year Findings for Incentive Agreements (cont'd) Company La Gran Plaza (2025) Montgomery Plaza Kimco(2029) Omni Fort Worth Hotel (2018) Pier 1 (2025) Presidio Hotel Fort Worth, LP (2028) RadioShack (2035) Railhead Business Park (2015) Renaissance Worthington (2025) Super Target at Montgomery Plaza (2030) The Tower (2014) (Agenda Item 6) Potential Maximum Percentage by Agreement 100% 100% 100% 90% 100% 100% 90% 100% 100% 100% Mr. Sturns provided the following information relative to the various companies that received the Economic Development Program grants: Acme Brick • Grant: 100% of personal property & sales taxes capped • Earned: 100% • Total Taxes Collected: $634,127 • Grant Amount: $422,751 • City Funds: $211,376 Cabela's • Grant: 67% of personal property & sales taxes capped • Earned: 67% • Total Taxes Collected: $1,151,482 • Grant Amount: $543,815 • City Funds: $607,668 ** *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. ** Figure is net $ that is contributed to TIF 10 • CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 8 of 20 Presentation on 2009 Audit Year Findings for Incentive Agreements (cont'd) (Agenda Item 6) La Gran Plaza • Grant: 50% of real & personal property and 100% sales taxes capped • Earned: 98% • Total Taxes Collected: $821,933 • Grant Amount: $180,485 • City Funds: $641,447* *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. Montgomery -Kimeo • Grant: 100% of real property, business personal property & sales taxes capped • Earned: 100% • Total Taxes Collected: $995,178 • Grant Amount: $823,041 • City Funds: $172,137* *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. Omni Fort Worth Hotel • Grant: 100% of real property, sales taxes and hotel occupancy taxes capped • Earned: 100% • Total Taxes Collected: $2,045,296 • Grant Amount: $1,980,986 • City Funds: $64,309* *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. Pier 1 • Grant: 90% of real & personal property taxes capped • Earned: 70 1% CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 9 of 20 Presentation on 2009 Audit Year Findings for Incentive Agreements (cont'd) (Agenda Item 6) • Total Taxes Collected: $700,401 • Grant Amount: $441,256 • City Funds: $259,150* *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. Payment on hold due to assignment issues with Chesapeake. RadioShack Corporation • Grant: 100% of real property taxes capped • Earned: 85% • Total Taxes Collected: $865,287 • Grant Amount: $735,494 • City Funds: $129,793 * *City unds includes net revenue from property taxes sales taxes and hotel occupancy taxes Y P p Y � p Y , where applicable. Payment on hold due to current negotiations. Railhead Business Park • Grant: 90% of real & personal property taxes capped, plus interest • Earned: 90% capped maximum plus interest • Total Taxes Collected: $412,305 • Grant Amount: $412,305 • City Funds: $ -0 -* *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. Renaissance Worthington • Grant: 100% of sales & hotel occupancy taxes capped • Earned: 100 %* • Total Taxes Collected: $1,360,092 • Grant Amount: $ -0- • City Funds: $1,360,092* 0 *Eligible for grant but did not exceed base values • CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 10 of 20 Presentation on 2009 Audit Year Findings for Incentive Agreements (cont'd) (Agenda Item 6) *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. Payment on hold due to assignment issues with Chesapeake. Super Target at Montgomery Plaza • Grant: 100% of ad valorem & sales taxes capped • Earned: 100% • Total Taxes Collected: $636,387 • Grant Amount: $474,769 • City Funds: $161,618* *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. The Tower • Grant: 100% of real property taxes capped • Earned: 100% • Total Taxes Collected: $917,712 • Grant Amount: $874,712 • City Funds: $43,000* *City Funds includes net revenue from property taxes, sales taxes, and hotel occupancy taxes, where applicable. Mr. Sturns advised that an audit was underway for the Presidio Sheraton Hotel for future year grants and the current grant fund amount was zero. Mr. Sturns summarized the Economic Development Program Grants and stated: • Total Taxes Collected $10,594,205 • Total Grants $ 6,889,614 • Net Revenue to City $ 3,660,591 Mr. Sturns presented the following chart which provided a comparison of incentives to total ad valorem taxes: CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 11 of 20 Presentation on 2009 Audit Year Findings for Incentive Agreements (cont'd) CFW total appraised value of real & personal property Estimated total real & personal property taxes Estimated sales taxes Estimated total ad valorem & sales taxes Estimated total taxes abated /granted Percent of taxes abated /granted Mr. Sturns completed his presentation. (Agenda Item 6) $56 Billion $284.6 Million $96.4 Million $381 Million $10 Million 3% Chairman Jordan opened the floor for questions and /or comments. Chairman Jordan advised that he felt the message here was that these were business contracts between the City and businesses with specific benefits that accrue to the tax payers of Fort Worth. He added if the terms of the contracts were not met and the benefits did not accrue, then no abatements would be paid. He stated simply, these were not give -away programs, but business agreements that were designed to create jobs and economic development. He added this was what they do. Committee Member Moncrief stated during this difficult economic time the City had been experiencing, and it appeared that it was going to continue to be experienced, this had been helpful to these businesses to help them work their way through those difficult times by maintaining employees and still at the same time giving back to the City a 30% return on the investment. He advised that was a pretty good return. Chairman Jordan responded that he felt it was a very good program and that the audit was essential. This concluded the presentation and discussion on this agenda item. Chairman Jordan returned Agenda Item No. 5. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 12 of 20 Fort Worth Convention and Visitors Bureau Presentation FY 09/10 Update (Agenda Item 5) Mr. Kirk Slaughter, Director of Public Events Department, spoke before the committee to introduce the guest speakers. He spoke about the strong business partnership between the City of Fort Worth and the Fort Worth Convention and Visitors Bureau (CVB). He stated that this was important as it brought spending into the City from visitors. He spoke about the successes in attracting group businesses into the hotels and convention center. He pointed out that corporate travel and leisure travel had been down due to the economy. He added by attracting the group businesses, this had helped the City to deal with the declining economy in other areas. He introduced Johnny Campbell, the Chairman of the Board of the Convention and Visitors Bureau. Mr. Campbell spoke before the committee on what had transpired over the last several years regarding the renovation to the convention center and growing the hotel rooms for more occupancies and the need for a five -year contract between the City and the CVB. He talked about the competition in the market place for business and sales tax receipts. He referenced a is presentation in 2007 that was made by Jeff King where he talked about the table being set and now was the time to send out the invitations. He stated that he was talking about the investment that the City had made and was making at that time. points: Using a PowerPoint presentation, Mr. Campbell spoke before the committee on these Fort Worth: The Table is Set • City has made a significant investment in hospitality and tourism • Developed and implemented a multi -year plan • What this really means — a vibrant product • What has vibrancy done for Fort Worth? Pam Minick, Vice Chairman of the Board for the CVB, spoke before the committee on the following points. Fort Worth: Invitations Are Sent • ESPN — How can we capitalize? • Super Bowl XLV — No provisions in the current budget • Fort Worth's competition ■ Is the risk worth it'? CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 13 of 20 Fort Worth Convention and Visitors Bureau Presentation FY 09/10 Update (cont'd) (Agenda Item 5) How many visitors can we afford to lose before the savings associated with budget reductions are negated by the loss in local taxes? Mr. David DuBois, President and CEO, Fort Worth Convention and Visitors Bureau, spoke before the committee on the following points: Fort Worth: RSVPs Are Growing CVB is generating ROI for Fort Worth ■ Results to date (since FY 06/07) • Meeting Room Nights have increased 115% • Group Tour Room Nights have increased 118% • Media value has increased 167% • Annual business in the Convention Center has increased more than 33% • Room night tax collections have increased 7% (FY 06/07 compared to FY 09/10) ■ $1.1 million net increase over three years — even in a recession ■ Continued growth = more jobs and more tax revenues Mr. Campbell spoke again before the committee regarding the following points: Fort Worth: Invest in the Future • CVB is a self - funding non - profit organization • Hotel Occupancy Tax and its positive economic impact • Already operating on a decreased budget • Further budget reductions are a risky proposition Additional budget cuts will only continue to increase the size of the City's deficit. Mr. DuBois spoke again before the committee regarding their positive working relationship with the City's Public Events Department staff members. He also provided some CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 14 of 20 Fort Worth Convention and Visitors Bureau Presentation FY 09/10 Update (cont'd) (Agenda Item 5) statistical information regarding their successes in booking room nights in the City for people that were attending meetings, conferences and events at the City's convention center. Mr. DuBois expressed appreciation to the committee members for allowing their presentations. This concluded the CVB's presentation. Chairman Jordan opened the floor for questions and /or comments. Committee Member Scarth requested clarification on what sort of things the CVB did to help with the equine business. He pointed out that there was a lot of competition in this area, with other cities. He expressed his concerns for loosing this business and for the stiff competition that the City had in this area. Director Kirk Slaughter spoke about the new project at the Will Rogers Coliseum, which will be a new equestrian center that will provide for more stalling capacity. He spoke about what was occurring now was that the City was still seeing a lot of this business; however, the City was getting pressure from Tulsa and Oklahoma City, Oklahoma. Mr. Slaughter talked about the City's partnership with the state for receiving certain funds through grants that helped to incentivize keeping some of the groups here in Fort Worth. Mr. Slaughter talked about attending the Word Equestrian Games in September in order to meet with certain officials and to talk about opportunities here in Fort Worth. There was further discussion about the City's Public Events Department working with the CVB in a partnership in this endeavor. Committee Member Moncrief expressed appreciation to Ms. Minick and Mr. Campbell for their service and energy as volunteers on the Board. He added that it pained him to say that the CVB was probably not as well funded as they should be; however, he wanted to express caution not to further dilute the resources of the CVB. He stated that it was clear to him that when the City and CVB go out and market the City, then business can be brought to the City. He stated that the proof was with bringing ESPN to the City. He stated that he wanted to make sure that the City was prepared for ESPN when they come this year, but again in five (5) years. He stated that he wanted them to come back and he wanted more for the City because those dollars drive what the CVB does. He added that they had done an outstanding job. Committee Member Moncrief stated that he felt the City had gone to the next level and it was up to everyone to keep it there and keep raising the bar. CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 15 of 20 Fort Worth Convention and Visitors Bureau Presentation FY 09/10 Update (cont'd) (Agenda Item 5) Committee Member Zimmerman pointed out the budget crisis that the City was facing and he asked what that meant to the CVB. He asked what they had been asked to do and how would it impact their performance. Mr. Campbell stated that he hoped that the dollars that the City provided to the CVB return a real economic benefit. He stated that they were looking forward and wanted to maximum the benefit of what was happening in the Super Bowl and look at it as a revenue - generating investment. He indicated that they would like to ask the City for more money; however, they knew that would not be possible this year. He reiterated that they were looking to generating more revenue thorough the Super Bowl process. Mr. DuBois stated that they were lucky to be flat funded this year and he added he would be thrilled if they were flat funded next year. He stated that if they had to loose funding, he clarified that they would cut their expenditures. He stated that they would be respectful of what the City Council determined as funding on their behalf. He added that it would affect their ® productivity depending on the level of funding that they received or did not receive. Committee Member Zimmerman clarified that it would be beneficial to know what they project the impact would be as the Council went through the budget deliberations. Mr. DuBois indicated that he would be happy to do that for the Council. Chairman Jordan indicated that the two presentations could be tied together and they showed measurable results and when the City was making business decisions for the tax payers and produced a profit by investing the dollars, the City could justify doing that and he felt that was what this was all about. He felt that was the message. He offered congratulations to the CVB on having ESPN chose Fort Worth for their location during the Super Bowl. He indicated he was looking forward to more continued success. He expressed appreciation to the CVB for their presentation. This concluded the presentation and discussion of this agenda item. Presentation on Enterprise Zone Project Nominations for ATC Logistics & Electronics, Inc., and RadioShack Corporation (Agenda Item 7) Mr. Robert Sturns, Manager, Housing and Economic Development Department, spoke before the committee on the request for an Enterprise Project Designation from ATC Logistics & CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 16 of 20 Presentation on Enterprise Zone Project Nominations for ATC Logistics & Electronics, Inc., and RadioShack Corporation (cont'd) (Agenda Item 7) Electronics, Inc. Before his presentation, Mr. Sturns introduced Rick Helmreich, Controller, ATC Logistics & Electronics, Inc., and Mona Shoemate, Director, Tax Advisory Services, DuCharme, McMillen & Associates, who assisted with this project. Using a PowerPoint presentation, Mr. Sturns provided an overview of the project as follows: • Background of the Enterprise Zone Program • ATC Logistics & Electronics, Inc., Overview • Request for the Enterprise Designation • Next Steps Mr. Sturns explained the program objective of the Texas Enterprise Zone Program. He stated that the Enterprise Zone Program was an economic development tool for local communities to partner with the State of Texas to promote job creation and capital investment in economically distressed areas of the state. He added that the enterprise project was a business that was nominated by a municipality or county and approved by the Governor's bank for economic development for state benefits. Mr. Sturns provided an overview of the enterprise project benefits, which was the state sales and use tax refund on qualifying expenses. He stated that designated projects were eligible to apply for state sales and use tax refunds on qualified expenditures. The level and amount of refund was related to the capital investment and jobs created at the qualified business site. Mr. Sturns identified the enterprise project requirements as follows: • Projects nominated by the City or county and approved by the state. • Projects must have at least 35% of new /retained employees that meet economically disadvantaged or enterprise zone residency requirements. • Jobs must provide employment of at least 1,820 hours annually. • Jobs must exist through the end of the designation period, or at least three years after the date on which a state benefit was received, whichever was later. JAIL Mr. Sturns presented the ATC Logistics & Electronics, Inc., overview as follows: CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 17 of 20 Presentation on Enterprise Zone Project Nominations for ATC Logistics & Electronics, Inc., and RadioShack Corporation (cont'd) (Agenda Item 7) • ATC Logistics & Electronics, Inc., was situated in the Alliance Gateway Development, which was in Council District 2. • There were over 950,000 square feet of warehouse and office space in three (3) facilities. • ATC Logistics & Electronics, Inc., had 2,286 full time and contract employees. Mr. Sturns pointed out that the ATC Logistics & Electronics, Inc., Enterprise Project request consisted of: • Projected Capital Investment: $5,000,000 • 500 jobs retained with payroll of $14.8 million • Request required no fiscal obligation from the City of Fort Worth • $5 million and retention of 500 jobs ■ Maximum refund of $1.25 million on state sales and use tax Mr. Sturns presented the next steps as follows: • Staff recommends proceeding with placing Mayor and Council Communication and resolution of support on the August 17 City Council Agenda. • Submit application to the state prior to September 1 deadline. Committee Member Espino stated that he felt Mr. Sturns had laid out this presentation very succinctly. He added that he had the pleasure of touring the facility and he felt that they did provide good jobs for the community. He stated that he commended the City staff and ATC for moving forward with the process. He pointed out that those jobs were needed. Mr. Sturns continued his presentation with the request for an Enterprise Project Designation from RadioShack Corporation. He introduced Mark Barfield, Vice President, RadioShack Corporation and Jubal Smith, PricewaterhouseCoopers. of: Mr. Sturns advised that the RadioShack Corporation Enterprise Project request consisted • Projected Capital Investment: 560,000,000 CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 18 of 20 Presentation on Enterprise Zone Project Nominations for ATC Logistics & Electronics, Inc., and RadioShack Corporation (cont'd) (Agenda Item 7) • 500 jobs retained with payroll of $29.3 million with an average wage of $58,600. • Request required no fiscal obligation from the City of Fort Worth. • $60 million and retention of 500 jobs. ■ Maximum refund of $1.25 million on state sales and use tax. Mr. Sturns presented the next steps as follows: • Staff recommended proceeding with placing the Mayor and Council Communication and resolution of support on the August 17 Council Agenda. • Submit the application to the state prior to September 1 deadline. Chairman Jordan opened the floor for questions and /or comments. Committee Member Burdette requested clarification on the fact that the City submitted the applications for these two businesses and he wondered if they were in competition with one another when they got to the state for review and consideration. He asked if the City should prefer one application over the other. Mr. Sturns indicated that they were not in competition from the standpoint of the City. He stated that the City had the ability to submit nine (9) applications. He added that the competition came at the state level. He pointed out that the state had 105 designations that they could make. He added that staff had heard that they might run out of designations in the September time frame. Committee Member Burdette stated that as he understood it, these applications would be in competition with other applications submitted from other cities around the state. Committee Member Burdette requested to know what criteria was used in Austin to determine the recipients of the designations. Mr. Sturns indicated that it was based upon the amount of investment, the overall job creations and the commitment on the part of the companies to hire people to the jobs from economically challenged areas. Committee Member Burdette asked if the City would know who received the designations by this fall. Mr. Sturns indicated that was correct. Chairman Jordan pointed out that these were five (5) year programs. He also pointed out that Alcon had this type of designation, which was good for the City. He added that it showed that the City of Fort Worth was a good place to do business. El CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 19 of 20 Presentation on Enterprise Zone Project Nominations for ATC Logistics & Electronics, Inc., and RadioShack Corporation (cont'd) (Agenda Item 7) Mr. Sturns recognized City staff member Ana Alvarado, who had done the work on these projects. Chairman Jordan advised that it was the consensus of the committee to move forward with this project. Request for Future Agenda Items (Agenda Item 8) Committee Member Hicks took this opportunity to express appreciation to Jay Chapa and Cynthia Garcia in the Housing and Economic Development Department, for going with her to Austin to testify for the Terrell Homes Project. She also recognized Andre McEwing, with Southeast Fort Worth, Inc. She added that this was a very important project for her Council District as well as the entire City of Fort Worth. She stated it was important in order to remove the vacant lots out of the City's land bank and place them back on the tax rolls. She also recognized Jay Johnson, who was in the audience. Chairman Jordan requested an overview of the City's economic development program, the Tax Increment Financing philosophies and Public Improvement Districts and where the City stood in relationship to the City's General Fund Budget. Date of Next Regular Meeting — September 7, 2010 (Agenda Item 9) Chairman Jordan advised that the next regular meeting of the Housing and Economic Development Committee would be held on Tuesday, September 7, 2010. (Note: This meeting was later moved to Tuesday, September 14, 2010.) Adjourn (Agenda Item 10 With no further presentations or discussions, Chairman Jordan adjourned the regular meeting of the Housing and Economic Development Committee at 1:55 p.m., on Tuesday, August 3, 2010. 91 CITY OF FORT WORTH CITY COUNCIL HOUSING AND ECONOMIC DEVELOPMENT COMMITTEE AUGUST 3, 2010 Page 20 of 20 These minutes approved by the Housing and Economic Development Committee on the 14th day of September, 2010. Minutes Prepared by and Attest: f Lt��" &X�0� Marty Hendrix,UEity Secretary C APPROVED: