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HomeMy WebLinkAbout2002/12/10-Minutes-HEDC City of Fort Worth City Council Economic and Community Development Committee I CIF Highlights of the Meeting Held December 10, 2002 Committee Members Present: Jeff Wentworth, Wendy Davis, Frank Moss, Clyde Picht City Staff Present: Brian Boerner, Teresa Carreon, Bette Chapman, Fernando Costa, John Cox, Bea Cura, Hugh Davis, Sundra Davis, Cynthia Garcia, Pat Hale, Kathryn Hansen, Ossana Hermosillo, Tom Higgins, Chun-I Lu, Christine Maguire, Patrina Newton, Sandy Oliver, Galen Price, Reid Rector, Robert Sturns, Peter Vaky, Jerome Walker, Ardina Washington Call to Order: Chairman Jeff Wentworth called the meeting to order at 1:14 p.m. Approval of Minutes from the Meeting Held on November 12, 2002: Committee Member Wendy Davis moved to approve the minutes. The motion was seconded by Committee Member Frank Moss and carried. Discussion and Consideration of Approving the Worth Heights Model Block Neighborhood Revitalization Strategy (NRS) and Amendment to the City's Consolidated Plan 2000-2003: Housing Director Jerome Walker made the presentation. He explained that in February of 2001, City Council approved the designation of the Worth Heights Neighborhood as a Model Block. In October of 2001, Mr. Walker added, the Council awarded a contract totaling $267,000 to the Worth Heights Neighborhood Association contingent upon their becoming a 501 (C) 3 non-profit organization. Mr. Walker said that the 4 eighborhood has now attained 501 (C) 3 status and is requesting that the City amend its 2000-2003 onsolidated Plan to include their Neighborhood's revitalization plan so that they may submit their plan to HUD for designation as a Community-based Development Organization (CBDO) and receive the benefits thereof. Mr. Wentworth asked if any other Model Blocks had what the Worth Heights Neighborhood was requesting. Mr. Walker said that there were about four or five of these organizations that had received the CBDO designation, including the Lake Como Community Development Corporation and the Near Southeast Community Development Corporation. Mr. Moss asked if the Worth Heights Neighborhood Association wanted to expand this beyond the Model Blocks area. Mr. Walker said their current plan only covers the Model Blocks, but it would not be that difficult for them to expand if they should choose to do so. Ms. Davis moved to approve the request. The motion was seconded by Mr. Moss and carried. Discussion and Consideration of Housing Development Fund Program Composed of FannieMae & HOME Funds for Housing Development in the Central City of Fort Worth: Housing Director Jerome Walker made the presentation (attached). He explained that prior to the establishment of the Economic and Community Development Committee, staff had made a presentation to the Safety and Community Development Committee regarding the establishment of a Housing Trust Fund. However, Mr. Walker said, staff was not able to proceed with the development of the Housing Trust Fund due to general fund �,,' udget constraints. Because funds are still needed for housing development and other housing activities in Fort orth, Mr. Walker said that staff would like to establish a Housing Development Fund that would provide a stop-gap measure until such time as the Housing Trust Fund can be developed. He said that the Housing Development Fund would meet immediate housing activity needs, and it would be rolled over into the Housing Page 1 of 5 Trust Fund whenever it was established. Mr. Walker then requested approval of the proposed Housing Development Fund and the authority to proceed in negotiating a line of credit with FannieMae to establish the Fund. r. Wentworth asked about the repayment source for the FannieMae line of credit. Mr. Walker said permanent financing would replace these short-term construction loans. Mr. Moss asked about the source of the $2.5 million that is to be used for security. Mr. Walker explained that this would come from the Housing Endowment Fund, which has a corpus amount of about $5 million, and which resulted from the restructuring of an old mortgage bond issuance. Mr. Moss moved that staff continue discussions with FannieMae and return to the Committee with a draft agreement for further consideration. Ms. Davis seconded the motion, which carried unanimously. Mr. Wentworth requested that, when staff returns with the draft agreement, they also bring further explanation of what would occur if there was a delay in selling a house constructed under the short-tern financing. Mr. Walker explained that part of the $2.5 million in security funds could be used in such an instance. He said that the City would also have the option of taking over the property, of requesting an extension, or of paying off the loan. Mr. Walker added that there would be a million dollars in federal funds in the development fund that could be used to cover a loan if a builder could not sell a house in a timely manner. Committee Member Clyde Picht asked if the funds would be used to build homes on which there would be no buyers' income limit. Mr. Walker said that this was correct. Mr. Picht asked what could be done to encourage private sector participation in the target areas if the City was doing the building. Mr. Walker said that the City was not doing the actual building, but the funds would be loaned to builders in the private sector to build the houses. ar. Moss said that one of the problems in target areas was the acquisition of property, and that it takes time for the City or another entity to assemble the land for sale to developers. Ms. Davis agreed, saying this creates a disincentive, and this resource will give staff time to assemble the land. Mr. Walker added that this also provides a source for non-profit organizations to pursue development on a smaller scale. Mr. Moss agreed, saying that it gives the non-profit organizations in Model Blocks a source with which to compete with private developers. Discussion and Consideration of the Practice of Rewarding the Use of Fort Worth Minority and Woman- owned Business Enterprises (M/WBE) by Companies Receiving Incentives from the City of Fort Worth: Assistant City Manager Reid Rector prefaced the presentation by saying that staff wanted to update the Committee and get their feedback on the issue. Tom Higgins, Director of Economic and Community Development, said that the minority chambers had expressed concern over the application of the M/WBE component in the incentive packages because the Chambers feel the 1.5 multiplier dilutes the actual amount of dollars spent with Fort Worth M/WBEs. He then introduced Ossana Hermosillo, Economic Development Specialist, who made the presentation (attached). Ms. Hermosillo reviewed background information on companies currently receiving incentives from the City and presented benchmarking information on the issue. She said that to date five companies have the 1.5 multiplier in their tax abatement agreements, but at this time, compliance information is only available for Bell Helicopter. After reviewing this compliance information, Ms. Hermosillo said that the information indicates that the 1.5 multiplier is relatively insignificant in this case. Mr. Higgins emphasized that although information on the effectiveness of the 1.5 multiplier is as yet inconclusive, Taff recommends discontinuing the practice of including the 1.5 multiplier during the short term. He added that taff would continue to discuss the issue with those who are concerned about the 1.5 multiplier and would try to bring forward an M/WBE component directed at Fort Worth M/WBEs. Mr. Higgins also said that in the future, staff would involve the City's M/WBE office in incentive negotiations, and they would continue to discuss the Page 2 of 5 issue and update the Committee on it, since this will be an important component of the revamped Tax Abatement Policy that will be prepared in the upcoming year. Mr. Wentworth asked when staff planned to come back with a report on the issue. Mr. Higgins said staff would Oeturn with an initial report on the revised Tax Abatement Policy in February. Mr. Moss said that he felt that the 1.5 multiplier did help in encouraging the use of locally-owned M/WBEs because audits prior to the use of the multiplier had revealed that many of the M/WBEs that were being used were not in Fort Worth. He added that at present there are no real incentives to encourage home-based business development or joint ventures that would grow M/WBEs, and he felt this type of incentive was a key component. Ms. Davis agreed and suggested polling the companies that have tax abatements to see what services they're looking for in M/WBE's. She added that this could create opportunities for the Business Assistance Center to help grow companies that provide services that are not currently available in Fort Worth. Mr. Picht expressed concern that M/WBE's located elsewhere might set up storefront operations in order to be considered a Fort Worth M/WBE. Mr. Higgins agreed that this was not desirable and said that the rigorous M/WBE certification process provided protection against this. Mr. Wentworth asked if the Fort Worth M/WBE list was kept up-to-date. Mr. Higgins said that it was. Mr. Higgins concluded by saying that staff would continue discussion on the issue and would return to the Committee with recommendations at a later date. Discussion and Consideration of a Purchase Agreement with Fort Worth South, Inc. for Property ocated at 2222 Rosedale Street: ommunity Development Manager Christine Maguire made the presentation (attached). She briefed the Committee on the Fort Worth South, Inc. (FWS) redevelopment proposal for the City-owned property at the northeast corner of Forest Boulevard and Rosedale Street. After giving a brief description and history of the property, which has been appraised for $2,054,000, Ms. Maguire presented information on the mixed-use development proposal for the area, which will be known as Gateway Center. Because the development partners need site control of the property to continue their due diligence, Ms. Maguire said that staff is seeking guidance concerning the terms of the agreement and approval to enter into the agreement, upon completion of which there would be a direct sale of the property for fair market value. Mr. Picht asked who had appraised the property. Ms. Maguire said that the appraisal was commissioned by Real Property in August 2002. Assistant City Attorney Cynthia Garcia added that the property was appraised by Jay Searcy. Mr. Picht then asked if the property was in a Neighborhood Empowerment Zone. Ms. Maguire said that it was, and that it was also in a TIF. Ms. Davis moved to forward the item to Council and place it on the January 7 agenda. The motion was seconded by Mr. Moss and carried. Mr. Moss asked if all the environmental problems on the site had been addressed. Ms. Maguire said that they had. Discussion and Consideration of Amending City Secretary Contract No. 19790, Tax Abatement Agreement with Motorola, Inc.: ,ocusiness Development Coordinator Ardina Washington made the presentation (attached). She said that staff had received a request from Motorola to amend its abatement agreement primarily because the company is selling a portion of the property for which they have the agreement. Ms. Washington then reviewed a comparison of the Page 3 of 5 proposed amendment and the current agreement, and she concluded by saying that staff would place an M & C concerning the amendment on the December 17 agenda if the Committee so desired. Ms. Davis expressed concern that Motorola had fallen short of their Fort Worth job commitment last year, and We amendment would allow Motorola to reduce Fort Worth jobs by approximately 140 more. She asked if staff had discussed a figure between the 60% of Fort Worth jobs in the original agreement and the 35% of Fort Worth jobs in the proposed amendment. Ms. Washington said the matter had not been discussed, but could be if the Committee so desired. She added that the item of urgency was that Motorola was selling the property later in December, and they wanted to amend the agreement to reflect the changes before the end of the year. Mr. Picht asked about the types of jobs that were available at Motorola. Ms. Washington introduced Amanda Cienkus of Motorola to answer the question. Ms. Cienkus said that originally most of the jobs at Motorola were manufacturing jobs, but as the economy has changed, and the company has down-sized, the jobs have become more technical and research and development in nature. Because their job types have changed drastically, Ms. Cienkus said, the company is no longer able to draw from just Fort Worth residents. In addition, she said, the company has had a significant number of lay-offs. Ms. Davis asked if Motorola would be willing to work with local colleges to provide the kinds of training that would give employment opportunities to Fort Worth residents. Ms. Cienkus said they would be willing to do this, and they were already working closely with Tarrant County College to staff their distribution center at Alliance Airport. Mr. Moss said the Fort Worth Opportunity Center would also be a valuable resource for training. Ms. Cienkus said that the company would be happy to work with them. Mr. Wentworth asked if the proposed amendment applied to the current year or to next year. Ms. Washington ,miaid it would be effective for the current year, 2002. Mr. Wentworth expressed concern that 2002 was almost ver, and he felt that if the agreement was to be amended, it should be done at the beginning of a tax abatement year, rather than at the end. Ms. Davis said that the state of the economy and other factors mentioned could be considered as the compliance agreement comes forward, and the Committee makes recommendations concerning the amount of abatement. She added that the agreement could then be amended going into the next year. Mr. Picht asked if the amendment would be retroactive for all of 2002. Mr. Vaky said that it would be effective for the entire year. Mr. Picht then said that it seemed that Motorola requested the amendment because they could not comply with the 2002 abatement requirements. Ms. Washington said staff was approached about the change because of the sale of the property, but felt that since they were already looking at the abatement, they should go ahead and look at other areas as well and make the amendment comprehensive. Mr. Wentworth asked what the sale of the property had to do with the abatement. Mr. Vaky explained that the tax abatement agreement prohibits a transfer of the abatement to any purchaser of the property without formal City Council approval. He also emphasized that if the agreement was amended to provide an abatement for Motorola as the lessee of the property, the abatement would be for a maximum of 70% on the leasehold value of the property and not necessarily on the entire real property value. Mr. Wentworth asked if Motorola was going to sell the property and lease it back. Ms. Cienkus said they would lease a part of it back, and that the part not leased back would return to the tax rolls. Mr. Moss said that he would like to know the amount of the taxes on the property not leased back. 4`o r. Wentwork asked if the Committee wanted the full amount of the M/WBE proposal in the amendment to be rt Worth M/WBE's. The Committee agreed that they did. Page 4 of 5 Ms. Davis moved that the amendment would be effective beginning in 2003, that the percentage of the M/WBE proposal would be clarified and that a written record would be kept so that when the 2002 compliance report was reviewed, any employment deficiencies would be considered. The motion was seconded by Mr. Moss and carried. Executive Session: The Economic & Community Development Committee conducted a closed meeting to discuss or deliberate economic development negotiations, as authorized by Section 551.087 of the Texas Government Code. Requests for Future Agenda Items: There were no requests for future agenda items. Adjourn: The meeting adjourned at 3:10 p.m. Page 5 of 5