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INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8476
POE Date: March 4, 2003
TO: The Mayor and Members of the City Council
Page 1 of 1
SUBJECT: Tax Abatement Agreement for Motheral Printing Company
This Informal Report will present an overview of the tax abatement application submitted by Motheral
Printing Company.
Company Information
Motheral Printing Company has submitted an application for tax abatement to the City's Economic &
Community Development Department. The tax abatement would apply to personal property and to real
property that Motheral will occupy in CentrePort Business Park, located in east Fort Worth.
Motheral Printing is a third generation family-owned printing business that began in 1934 in Fort Worth
and has been located at 510 South Main Street since 1956. Motheral's primary business is catalogs,
publications, and direct mail. Motheral Printing has sold this property to FWISD for $2,600,000. It is
now necessary that Motheral Printing vacate the property by September 2003.
Motheral is planning to relocate to CentrePort Business Park to a new 150,000 square feet facility that
� '�ntains 34,000 square feet of expansion area. The estimated cost of the new facility is $7,500,000.
axable inventory is estimated to be $1,500,000, with 49% freeport exempt. Sales subject to Fort
Worth sales tax are estimated to initially be $12,300,000, and are estimated to grow to $30,000,000 by
year 10. Motheral is planning to acquire $15,000,000 in new taxable personal property (printing
equipment).
In consideration of the City granting a tax abatement, Motheral has agreed to pay taxes at an amount
equal to the taxes that they are paying on the current facility at 510 S. Main for the period that they
receive the abatement. Current taxes at the present location are approximately $63,000 per year.
Abatement Agreement
Under the terms of the agreement, Motheral will invest approximately $7,500,000 into the proposed
project. The length of the abatement request is 10 years with a maximum of 87% abatement (see
attached abatement structure).
To be eligible for tax abatement, the property must be located within a reinvestment or enterprise zone.
"fhe Economic & Community Development Committee has reviewed the tax abatement application and
has instructed staff to begin the process to move it forward to the full City Council for consideration.
Staff plans to establish the reinvestment zone and present the agreement to Council for consideration
on March 18, 2003.
r,r"d 6415ar
Iry W. Jackson
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
PROPOSED TAX ABATEMENT STRUCTURE
For Motheral Printing Company
Abatement
Maximum
Construction of New Building and Improvements 20%
Minimum investment of$7,500,000
FW Contractors at least 40% of total
FW MWBE Contractors at least 15% of total
(Must meet or exceed all three items above)
Employment 37%
Retain current 217 employees
Maintain 136 Fort Worth (FW) residents
Maintain 77 Central City (CC) residents
Reduce by 1/2percentage point for each person below 136 FW and 77 CC,
up to 10 employees; 11 employees or more, reduce by I percentage point for
each person below 136 FW and 77 CC
dditional Employment 20%
percentage point for each FW resident above 136, maximum 10% abatement
'/a percentage point for each CC resident above 77, maximum 10% abatement
Fort Worth residents must always be at least 25% of total employment
Annual Supply & Service Spending 10%
Minimum annual spending of$400,000
FW Companies 25%, maximum 5% abatement
FW MVY'BE Companies 15%, maximum 5% abatement
TOTAL ABATEMENT 87%
Notes:
If any portion of the construction component is missed, the abatement will be terminated.
If any portion of the annual supply & service spending component is missed, that portion will be
roeduced to zero.
Motheral will continue to pay the current property taxes which total approximately $63,000 per year.
FINANCIAL SUMMARY OF PROPOSED TAX ABATEMENT
For Motheral Printing Company
INVESTMENT
Building (150,000 SF—New) $ 7,500,000
Site Development $ 500,000
Personal Property(new printing equipment) $15,000,000
Total Investment $23,000,000
POTENTIAL REVENUE FROM TAXES
Building$7,500,000 appraised @ 75% of cost $ 5,625,000
Personal Property$15,000,000 appraised @ 50%of cost $ 7,500,000
Total Taxable Value $13,125,000
CFW $13,125,000 x 0.00865 = $ 113,531
Tarrant County $13,125,000 x 0.00615 = $ 80,719
HEB ISD $13,125,000 x 0.01712 = $ 224,687
Total Annual Property Tax Revenue $ 418,937
SUMMARY OF ANNUAL ABATEMENT BENEFIT MOTHERAL CFW
87% 13%
Total CFW Taxes 000%)
Real Property Tax $ 48,656 $ 42,331 $ 6,325
Personal Property Tax $ 64,875 $ 56,441 $ 8,434
Total $ 113,531 $ 98,772 $14,759
CITY OF FORT WORTH ANNUAL TAX SUMMARY
New Property Taxes $ : 113,531
Less Proposed Annual Abatement of 87% $ 98,772
Net New Property Taxes to CFW $ 14,759
Additional Taxes Paid by Motheral
Current Property Taxes (5 10 South Main) $ 63,207
Inventory Taxes (49% subject to Freeport exemption) $ 1,500,000 x5l% = $ 6,617
Sales Tax $12,300,000 x 1% = $ 123,000
Total Additional Taxes $ 192,824