HomeMy WebLinkAboutIR 7236 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7236
December 2, 1987
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Subject: Potential Economic Development Incentives
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As one means of fostering economic development, the City of Fort Worth has
in prior years issued industrial revenue bonds through several corporate
entities created by the City for this purpose. Passage of the 1996 Tax
Reform Act has severely limited such tax-exempt financing by municipal
governments causing many governmental units to examine the other forms of
economic incentives available to them. A survey of other Texas cities, as
well as surrounding states, reflects that many governmental units are
aggressively promoting economic development with a full range of attractive
incentives ranging from tax exemptions to employee training programs.
Some incentives such as certain state job credit programs, state enterprise
zones and state freeport laws are peculiar to other states and, therefore,
not available to any Texas city. This report is being presented for
informational purposes only and to identify those direct economic
development incentives currently available to the City of Fort Worth, if
the City Council should care to pursue them.
Taxable Revenue Bonds
While federal law has limited tax-exempt financing, taxable financing for
economic development purposes is possible if applicable state statutes are
followed. The Texas Development Corporation Act of 1979 limits issuance of
industrial development bonds to "manufacturing and industrial facilities,
transportation facilities (including but not limited to airports, ports,
mass commuting facilities, and parking facilities), sewage or solid waste
disposal facilities, air or water pollution control facilities, facilities
for the furnishing of water to the general public, distribution centers,
small warehouse facilities capable of serving as decentralized storage and
distribution centers, and facilities which are related to any of the
foregoing".
The Charter of the City of Fort Worth provides the City with broader powers
in this area than is available to Texas cities, which are not home-rule
cities. The City may acquire property (and issue bonds) for "any municipal
purpose". The appropriateness of any municipal purpose for which financing
might be considered would be subject to the approval of the Attorney
General, as all debt issues must be approved by that office.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS
December 2, 1987
vop). To the Mayor and Members of the City Council
Subject: Potential Economic Development Incentives
Tax Abatement
Provisions of the Texas Property Redevelopment and Tax Abatement Act allow
a city to designate a reinvestment zone (as defined in the Act) in which
all or part of the increase in value of the property may be exempted from
taxation for a period not to exceed fifteen years. Although adopted in
1981, tax abatement for reinvestent zones has not yet been successfully
used in Texas; however, amendments made in 1987 will apparently result in a
number of zones being created. Recent action taken by the Tort Worth
Independent School District and the City of Forest Hill will result in the
first reinvestment zone in this area. As a result, Fort Worth should
expect to receive inquiries from developers seeking this form of economic
incentive.
If the City Council should have need of more specific information
concerning either of these two direct economic developement incentives, the
staff will be pleased to provide it.
oualMs Harman~
C it y Manager
-ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS