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HomeMy WebLinkAbout2002/03/19-Minutes-HEDC City of Fort Worth City Council Economic Development Committee Highlights of the Meeting Held March 19, 2002 Committee Members Present: Jeff Wentworth, Jim Lane, Becky Haskin, Frank Moss City Staff Present: Linda Brown, Bette Chapman, Chris Harmon, Tom Higgins, Gary Jackson, James Keyes, Reid Rector, Peter Vaky, Ardina Washington. Call to order: Chairman Wentworth called the meeting to order at 10:36 a.m. Approval of Minutes from the Meeting held on February 19, 2002: Committee Member Haskin moved to approve the minutes. Committee Member Lane seconded. The motion was approved unanimously. Status Report on the Cultural District and Will Rogers Memorial Center Master Plan: Mr. Chris Harmon, Assistant Director of Public Events, who was standing in for Public Events Director Kirk Slaughter, presented the update. The Western Heritage Center paving, utility and storm water improvements are being completed on schedule. Phase 4A, which is the street construction between Harley and Burnett-Tandy, has been graded, steel is in place and the concrete is to be poured as soon as weather permits. Mr. Harmon added that the colors have been chosen for the Events Plaza, and the contractor should start forming up this Section this week. He estimated it would take thirty days to pour the circle at the Events Plaza. Phase 5, which is the storm drain system, is all in the ground, and the connection has been made at Gendy Street. On the north end, the storm drain system has been completed to Montgomery Street and will be continued past the museum after March 28, when the museum finishes a program that could not be interrupted. The project is still on budget and on time. Discussion and Consideration of Terminating the Star Uniform Tax Abatement Agreement: Business Development Coordinator Ardina Washington presented the recommendation to terminate the Star Uniform Tax Abatement Agreement, even though there are three years left on the agreement. The company has requested that the agreement be terminated because they can no longer meet its terms. The Committee accepted the recommendation, and Chairman Wentworth directed staff to move forward. Discussion and Consideration of Expanding Tax Increment Reinvestment Zone No. 2, City of Fort Worth, Texas (Speedway TIF): Economic and Community Development Department Director Tom Higgins began the presentation and said there are three issues that Council would be asked to consider: (1) the advisability of expanding TIF 2 for a second time; (2) the City's participation in this expansion; and (3) a structure that commits the increment generated on the Beechwood property to first reimburse for infrastructure that is on the Beechwood property. Mr. Higgins then presented some background concerning TIF 2. The TIF, also known as the Speedway TIF, was formed in 1995. At that time it included only the property that is the Texas Motor Speedway. The City of Fort Worth and Denton County chose to participate in that TIF, and the Northwest ISD chose not to participate. IF 2 was then expanded in 1999 to include portions of the Beechwood development, basically the hotel and he golf course. At that time, only the Northwest ISD participated, and the City and County chose not to. The original TIF boundary is generally referred to as TIF 2A and the 1999 expansion as TIF 2B. The tax increment Page 1 of 4 from TIF 2A is pledged to the purchase of the Texas Motor Speedway by the Fort Worth Sports Authority. Sixty-six and two-thirds percent of the tax increment generated from TIF 2B is committed to projects in Northwest ISD. The other thirty-three and one-third percent is committed to other TIF projects. a, r. Higgins then introduced Mr. David Farmer, Chief Financial Officer of Beechwood Business Park, who presented details of the request to expand TIF 2. (Presentation attached.) Mr. Farmer used a map to indicate the original TIF, the 1999 TIF expansion and the approximate current boundary of Beechwood Business Park. His request was to expand TIF 2 to include all of the currently commercially-zoned property of Beechwood Business Park that is not in the TIF. This expanded TIF would be referred to as TIF 2C. In addition, he requested that the City and County participate in the 1999 expansion, which was the golf course and hotel within Beechwood Business Park. Mr. Farmer further requested that proceeds from the City and County for TIFs 2B and 2C be designated for improved infrastructure projects within Beechwood Business Park. He stated that once the infrastructure projects have been reimbursed, funds would be available until the expiration of the TIF to be used for other projects deemed appropriate by the TIF board. Chairman Wentworth asked for an explanation of the difference of the land in TIF 2B and the proposed TIF 2C. Mr. Farmer explained that 2B represents the golf course and the hotel grounds and incremental taxes generated from that. TIF 2C would be the commercially zoned areas within Beechwood Business Park that are not currently part of the existing TIF. Mr. Wentworth then asked Assistant City Attorney Peter Vaky if the City could legally go back and join TIF 2B since it was already developed. Mr. Vaky said that the City could elect to participate in 2B from this point forward. Committee Member Haskin then asked about the difference between the type of projects that would be completed in TIF 2B and the proposed TIF 2C. Mr. Farmer said that there would be no difference, but he is &_questing that the City and County participate in TIF 2B and the proposed TIF 2C, and that the incremental tax generated from both the City and Denton County would first be dedicated to infrastructure projects within Beechwood Business Park and then to other projects. Ms. Haskin then asked what types of projects are acceptable. Mr. Vaky said that the TIF statute defines permissible project costs. All of the projects would be outlined in the project plan, which would be amended by the TIF Board, and subsequently approved by the City Council. Mr. Wentworth asked what was the amount of the taxes that are already being generated in TIF 2B. He added that, according to his understanding, the approval of TIF 2C would result in a tax loss to the City and the County. Mr. Tom Higgins said that the increment for TIF 213 in 2001 was approximately$12,500,000. Mr. Farmer then explained how the City of Fort Worth would benefit in return for the dedication of real property taxes to TIF 2C. He said the City already benefits from taxes on the Westin Beechwood Hotel and the Beechwood golf course. He added that, in the proposed TIF, the City would gain direct taxes in excess of $137.3 million and indirect revenue of approximately $83.6 million. According to Mr. Farmer's projections, when the existing TIF expires in 2035, the full amount of almost $13,000,000 would come back to the City on an annual basis. The total economic impact of the development of Beechwood Business Park through 2026 would equal approximately $46.7 billion. This represents direct investment, taxes generated from the property, new jobs and money spent within the City of Fort Worth. Mr. Wentworth asked for a fuller explanation of the projected tax revenue. Mr. Farmer explained that the ;.imber on the chart ($41.9 million) represented the incremental taxes collected by the City and given to the TIF at would be used to reimburse the developer for infrastructure. He also pointed out the amount of tax revenue that would not be contributed to the TIF. Page 2 of 4 Mr. Wentworth expressed concern that the projected revenue for 2003 seemed too optimistic, given the fact that there is as yet no development on the property to generate that amount of tax revenue. Mr. Farmer said that significant development is anticipated within the next twelve to eighteen months. He added that if the evelopment schedule does not meet the current timeline, then neither the City nor the TIF has any obligation to reimburse the developer. The current timeline is based on the current master plan; it is possible that the timeline may change. Ms. Haskin expressed concern about basing tax revenue off the $41.9 million total that would be put into the project. Mr. Farmer said that the $41.9 million represented the City's contribution of incremental taxes to the TIF. This revenue would be generated from development that would occur as a result of the infrastructure being placed on the property. Committee Member Lane then asked Mr. Vaky if the proposal was legally sound. Mr. Vaky said that the City can elect to participate in the existing TIF 2B from this point forward, and if the City Council decides to expand the TIF into the proposed 2C, the City also has the option to participate up to 100%. Mr. Lane then asked Mr. Higgins and Assistant City Manager Reid Rector to comment on the proposal. Mr. Higgins said it was an opportunity for the City to accelerate the development of Beechwood. He said if the $41 million projected investment was considered against the $137.3 million of projected revenue, it was a good investment for the City. He added that the $41 million dollars would not be paid by the City unless the revenue occurs as a result of Beechwood building the infrastructure. Mr. Rector said it was a way to work with the developer to promote ongoing development within Beechwood. He added that obviously there are some unknown factors concerning the exact numbers, but the City has no obligation to reimburse the developer if development does not occur. This provides the City a safety net. r. Lane then asked about the validity of the projections. Mr. Higgins said that staff had been looking at the numbers for about nine months, and he said that although they appeared to be somewhat optimistic, he felt they were valid. Mr. Lane asked Mr. Higgins if he could recommend these numbers to the Committee. Mr. Higgins said that he could. Mr. Rector concurred. Ms. Haskin said that according to her information, the proposed TIF would be based on the same time frame as the Speedway TIF; therefore, the revenue projected to 2026 was invalid because the TIF would no longer exist once the Speedway was paid off. Mr. Vaky said that if the project plan is amended by the TIF Board, and that amendment is approved by the City Council, the expiration of the TIF would be either the date established in the original ordinance creating the TIF or the date on which there were no longer any TIF obligations, whichever occurs earlier. He explained that TIF 2 is one TIF, but the different sections are referred to as A, B and C because a different base value has been established for the property, which was brought into the TIF at different times. If the ordinance creating the TIF was amended to provide that the City expand and participate in it, then the expiration of the TIF would be adjusted as well. Ms. Haskin asked if the payoff of the Speedway would not dictate the time frame in which the opportunity was available to participate in the TIF. Mr. Vaky said there should be a date established for the expiration of the TIF in the ordinance. Ms. Haskin then asked if the proposed TIF 2C would still exist once the Speedway was paid off, and would it be regulated by the same board. Mr. Vaky answered yes to both questions, saying that the date established in the ordinance for expiration of the TIF would control it. Mr. Wentworth then asked, as an example, if the Speedway was paid off in 2015, would that portion of the TIF ��` ° eliminated and the other portion remain. Mr. Vaky said that the degree of participation is governed by the .d 'roject plan that is in place. The project plan would be amended to provide for participation in the Beechwood development. Mr. Wentworth then asked if once the Speedway was paid off, and there were no other TIF Page 3 of 4 projects, would the revenue generated after the Speedway debt was retired be returned to the taxing entities. Mr. Vaky said that if the Speedway was paid off, but the TIF was still in existence, then any increment generated in subsequent years would still go into the TIF fund. Mr. Wentworth expressed concern about this loss of revenue o the taxing entities and said that the numbers needed to be considered in light of this loss of revenue. ry Speaking for Beechwood, Mr. David Chappell said the company was not seeking to be reimbursed from any monies that come from the Speedway. Mr. Wentworth said this was understood, but everything needed to be clearly stated. He asked staff to review the numbers again. Mr. Wentworth then asked for clarification concerning placing the City in the TIF retroactively to 1999. Mr. Farmer said that the base year of 1999 would remain, but the estimated $120,000 of tax revenue that was collected in 2001 would stay with the appropriate taxing entities. According to Mr. Farmer, if the TIF is expanded, the increment from the 2002 valuation would go into the TIF, provided the City chooses to participate in TIF 2B. Mr. Farmer said this would provide revenue to the TIF that could accelerate the development of the infrastructure and provide some funds for reimbursement for infrastructure before the rest of the property has been developed. Ms. Haskin asked if tax abatements would be considered in Beechwood Business Park in addition to the TIF. Mr. Farmer said it would have to be considered later, but he pointed out that it would reduce the contribution to the TIF, and therefore, the contribution available to Beechwood. Ms. Haskin then asked if the project plan for the proposed TIF 2C was available, if the company would have any board representation on the current TIF board, and if the City would be required to share costs on roads, in addition to its contribution to the TIF. Mr. Lane asked how the committee could proceed positively on the issue. Mr. Higgins said that staff would *ommittee tempt to answer Ms. Haskin's questions, if the committee would like. However, it was decided that the would go into Executive Session to discuss legal issues and then return to open session. Executive Session: Chairman Wentworth then recessed the public meeting and the Committee went into a closed Executive Session to discuss legal issues pertaining to the Discussion and Consideration of Expanding Tax Increment Reinvestment Zone No. 2, City of Fort Worth, Texas (Speedway TIF). Return to Open Session: Mr. Wentworth re-opened the public meeting and asked staff to develop answers to all the questions posed on the proposed TIF 2C expansion and said these answers would be presented at a subsequent meeting. Adjourn: Chairman Wentworth adjourned the meeting at 12:04 p.m. Approved by: Olt-eff Wentworth, Chairman Page 4 of 4