HomeMy WebLinkAboutIR 6931 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6931
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Go— To the Mayor and Members of the City Council April 10, 1984
C Subject: STOCKYARDS REDEVELOPMENT FINANCING
In response to the request from the City Council at the meeting on April
3, the staff has met with the bond counsel and financial advisor for the
City to discuss possible methods of financing public use facilities in
t ho Nort haida Stockyards Aran.
Under provisions of various State and Federal statutes the City may
issue revenue bonds to finance public use improvements of the type
involved in the Stockyards project. To avoid having the bonds treated
as Industrial Development Bonds, it would be necessary for the City to
own and operate such facilities. To interest the private investor in
the Stockyards Development, however, it appears that it will be
necessary to provide for the investor to have "tax" ownership of these
public use facilities.
To accomplish "tax" ownership of such facilities in a way to encourage
( private investment, the City can form an Industrial Development
Corporation (IDC) that would have the legal authority to issue bonds
(subject to specific City Council approval) and lend the proceeds to
private investors in return for an agreement to repay the loan and
manage the facilities for the benefit of the public.
Using the Northside Coliseum as an illustration, the new IDC formed by
the City could sell bonds after City Council approval and lend the
proceeds to an investor who would agree to remodel the building to the
City's specification and manage the building for the benefit of the
public. The City would still own the building, but the investor would
own the improvements for tax purposes. At the end of the time period
agreed on in advance by the City and the investor and after the investor
had repaid the loan for improvements, the building and the improvements
would be owned by and under the complete control of the City.
In the case of public parking needed in the Stockyards area, the IDC
could issue bonds after City Council approval and loan the proceeds to
the investors to build parking facilities on land owned by the
investors. The investors would contractually obligate themselves to
repay the loan and operate the parking facilities for the benefit of the
public. The facilities could not be operated for the exclusive benefit
of any party, but would have to be available to the public on a
consistent rate basis at all times.
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ISSUED BY THE CITY MANAGER -- FORT WORTH, TEXAS
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INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6931- Paae. 2
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t 10.Rr s To the Mayor and Members of the City Council April 10,1984
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YrExA`'� Subject: STOCKYARDS REDEVELOPMENT FINANCING
The new IDC created by authority of the City Council could establish as
a part of its rules and procedures the requirement that no bonds would
be sold unless the investor to whom the proceeds would be loaned
guaranteed through some third party financial institution the full
repayment of the loan (bonds). Neither the City nor the IDC would be at
risk in the transaction.
To initiate the process outlined above, at least three responsible
individuals (Council members are the logical parties) would have to make
application to the City Council for permission to form an industrial
development corporation with power to issue bonds and loan the proceeds
to responsible users. In the purpose clause of the application the
corporation could be restricted to providing funds in a specific
geographic location and for certain purposes. In order to make the
type of loans needed in the Stockyards area (Coliseum and parking) the
City will have to declare the area blighted and obtain approval from the
State for the designation.
Preliminary work has been done on the paperwork that would be necessary
to accomplish the preceding. The paperwork will be available in time
for next City Council meeting (April 9) and representatives from the
City's bond counsel, McCall, Parkhurst, & Horton, will be present to
explain the process. At that time, the City can choose to approve the
formation of a corporation and the process can begin. Interested
investors would then have to come forward with a proposal to do
development in the Stockyards and request financing. When that occurred
the IDC board and the City Council could decide if the guarantees were
adequate and whether or not the project could be accomplished.
` Robert L. Herchert
City Manager
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ISSUED BY THE CITY MANAGER -- FORT WORTH, TEXAS