HomeMy WebLinkAboutResolution 4322-05-2014 A Resolution
NO. 4322-05-2014
PROVIDING THAT THE CITY OF FORT WORTH ("CITY")
ELECTS TO BE ELIGIBLE TO PARTICIPATE IN TAX ABATEMENT
AUTHORIZED BY CHAPTER 312 OF THE TEXAS TAX CODE AND
ESTABLISHING A TAX ABATEMENT POLICY GOVERNING
CERTAIN TAX ABATEMENT AGREEMENTS
WHEREAS, a municipality may enter into tax abatement agreements authorized by
Chapter 312 of the Texas Tax Code ("Code") only if the governing body of the
municipality has previously adopted a resolution stating that the municipality elects to be
eligible to participate in tax abatement and has established guidelines and criteria
governing tax abatement agreements ("'Tax Abatement Policy"); and
WHEREAS, pursuant to the Code, a Tax Abatement Policy is effective for two (2)
years from the date of its adoption; and
WHEREAS, the City Council's Tax Abatement Policy for all tax abatements other
than those granted pursuant to the Neighborhood Empowerment Zone Policy (Resolution
No. 4209-05-2013) or the Relocation Incentives Policy (Resolution No. 4266-12-2013)
expires on June 21, 2014;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF FORT WORTH, TEXAS:
1. THAT the City hereby elects to be eligible to participate in tax abatement in
accordance with Chapter 312 of the Code.
2. THAT the City hereby adopts the Tax Abatement Policy attached hereto as
Exhibit "A", which constitutes the guidelines, criteria, and procedures governing tax
abatement agreements entered into by the City (other than those granted pursuant to the
Neighborhood Empowerment Zone Policy or the Relocation Incentives Policy), to be
effective from June 22, 2014 through June 21, 2016, unless earlier amended or repeated by
a vote of at least three-fourths (3/4) of the members of the City Council.
3. THAT this 'Fax Abatement Policy, as it may subsequently be amended, will,
expressly govern all tax abatement agreements entered into by the City (other than those
granted pursuant to the Neighborhood Empowerment Zone Policy or the Relocation
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Resotution No. 4322-0S-20t4 ....
Incentives Policy) during the period in which this Tax Abatement Policy is in effect.
ADOPTED this 20" day of May 2014.
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Mary J. Kaye, City Secretary A?*X
ORT WURT
City of Fort Worth
General Tax Abatement Policy
Effective June 22, 2014 through June 21, 2016
1. GENERAL PROVISIONS.
LL Purpose.
Chapter 312 of the Texas Tax Code allows, but does not obligate or require, the City to
grant a tax abatement on the value added to a particular property on account of a specific
development project that meets the eligibility requirements set forth in this Policy. In order for
the City to participate in tax abatement, the City is required to establish guidelines and criteria
governing tax abatement agreements. This Policy is intended to set forth those Guidelines and
criteria for persons or entities interested in receiving a tax abatement from the City. This Policy
shall expire on June 21, 201.6.
1.2. General Eligibility Criteria.
A tax abatement can only be granted to persons or entities eligible for tax abatement
pursuant to Section 312.204(a) of the Texas Tax Code, which persons or entities as of the
effective date of this Policy are (1) the owner of taxable real property located in a tax abatement
reinvestment zone; or (11) the owner of a leasehold interest in real property located in a tax
abatement reinvestment zone. Although the City will consider all applications for tax
abatement 'that meet the eligibility requirements set forth in this Policy, it is especially
interested in development projects that:
• result in the creation of new full-time jobs for Fort Worth Residents and Central City
Residents; and
• are located in the Central City; and
• result in development with little or no additional cost to the City while producing a
positive economic impact to the tax paying citizens of Fort Worth; and
• have a positive impact on Fort Worth Companies and Fort Worth Certified M/WBE
Companies; and
• promotes quality, affordable housing and/or mixed income development.
1.3. General Exclusions and Limitations.
1.3.1. Lessees of Real Property.
A person or entity seeking tax abatement on real property that is leased from a
third party should be advised that, pursuant to state law, the City can only abate taxes or)
the increased value of the taxable leasehold interest in the real property, if any, and the
increase in value of taxable improvements and Business Personal Property located on
the real property and subject to the leasehold interest, if any. Before applying for a tax
abatement from the City, such persons or entities should seek professional and legal
guidance, and may wish to consult with the appraisal district having jurisdiction over
the property in question, as to whether their development projects will result in a
taxable leasehold interest in the property and, if so, the anticipated value of that
leasehold interest.
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1.3.2. Property Located in Nei2hborbood Empowerment Zones ("NEZs").
The City Council has designated certain distressed areas of the City needing
affordable housing, economic development and expanded public services as NEZs.
Notwithstanding anything that may be interpreted to the contrary, this Policy does not
apply to property located in a NEZ. A person or entity seeking tax abatement on
property owned or leased in a NEZ should refer to the Neighborhood Empowerment
Zone Tax Abatement Policy, adopted by the City Council pursuant to Resolution No.
4209-05-2013.
1.3.3. Property Located in Tax Increment Reinvestment Zones ("Tffs").
The City Council has designated certain areas of the City as TlFs. This Policy
does apply to property located in a TIF. However, a person or entity seeking tax
abatement on property owned or leased in a TIF should be advised that state law
requires a TIF's board of directors and the governing bodies of all taxing jurisdictions
contributing tax increment revenue to a TIF to approve a City tax abatement agreement
on property located in that TIF before the agreement can take effect.
1.3.4. Property Located in Enterprise Zones.
The State of Texas has designated certain areas of the City with high
unemployment as enterprise zones. Various economic development incentives are
available to owners of property located in enterprise zones. In accordance with state
law, all property located within an enterprise zone is automatically designated as a tax
abatement reinvestment zone. However, the City typically designates individual tax
abatement reinvestment zone overlays when it wishes to grant tax abatements on
property located in an enterprise zone.
1.3.5. Business Relocations Due to Major Public Infrastructure ProitcL-
Pursuant to Resolution No. 4266-12-2013, the City Council has approved a
Relocation Incentives Policy (the "Relocation Policy") for qualifying businesses that are
required to relocate due to a .Major Public Infrastructure Project, as that term is defined
in the Relocation Policy. Tax abatement is one of the incentives authorized by the
Relocation Policy. Notwithstanding anything to the contrary herein, any tax abatement
granted by the City under the Relocation Policy shall be governed solely by the terms of
and in accordance with the Relocation Policy.
2. DEFINITIONS.
Capitalized terms used in this Policy but not defined elsewhere shall have the following
meanings:
Abatement or Tax Abatement - A full or partial exemption from ad valorem taxes on eligible taxable
real property and Business Personal Property located in a Reinvestment Zone for a specified period on
the difference between (i) the amount of increase in the appraised value (as reflected on the certified
City of Fort Worth General Tax Abatement Policy
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tax roll of the appropriate county appraisal district) resulting from improvements begun after the
execution of a written Tax Abatement Agreement and (ii) the appraised value of such real estate prior
to execution of a written Tax Abatement Agreement (as reflected on the most recent certified tax roll
of the appropriate county appraisal district for the year prior to the date on which the Tax Abatement
Agreement was executed).
Abatement Benefit Term — The period of time specified in a Tax Abatement Agreement, but riot to
exceed ten (10) years, that the recipient of a tax abatement may receive the Abatement.
Abatement Compliance Term — The period of time specified in a Tax Abatement Agreement during
which the recipient of a tax abatement must comply with the provisions and conditions of the Tax
Abatement Agreement and file an annual report with the City which outlines and documents [lie extent
of the recipient's compliance with such provisions and conditions.
Business Expansion Project — A project (i) in which the square footage of a facility or facilities
,located in the City that will be expanded by an existing business or (11) that will expand production
capacity of an existing facility through new real property and Business Personal Property investment or
(iii) that will cause vacant land or a vacant building or buildings located in the City to be redeveloped
or reused, whether by an existing business or a new business.
Business Personal Property -- Any tangible personal property that (1) is subject to ad valorem
taxation by the City; (ii) is located on the property subject to Abatement; (iii) is owned or leased by the
party to the Tax Abatement Agreement; and (iv) was not located in the City prior to the effective date
of the Tax Abatement Agreement.
Capital Investment - Only real property improvements such as, without limitation, new facilities and
structures, site improvements, infrastructure improvements, facility expansion, facility modernization,
and utility installation. Capital Investment does NOT include (i) land acquisition costs; (ii) any
improvements existing on the property prior to execution of a Tax Abatement Agreement; or (iii)
personal property such as, withoutfirnitation, machinery, equipment, supplies, utilities and inventory.
Central City — A geographic area within the City, defined by the City Council and shown in the map
of Exhibit "A" of this Policy.
Central City Resident — An individual whose principle place of residence is at a location within the
Central City.
Commerciat/Industrial Development Project — A development project in which a facility or
facilities will be constructed or renovated on property that is or meets the requirements to be zoned for
commercial or industrial use pursuant to the City's Zoning Ordinance.
CDBG Eligible Area — Any census tract in which fifty-one percent (S1%) or more of the residents in
that census tract have low to moderate incomes, as defined by the United States Department of
Housing and Urban Development.
Commitment - An agreed upon amount and/or percentage related to the utilization of Fort Worth
Companies and Fort Worth Certified MJWBE Companies for construction spending on a given project
or for Supply and Service Expenditures and related to the hiring of Fort Worth Residents and Central
City Residents.
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Fort Worth Certified MIWBE Company — A minority or woman-owned business that (i) has
received certification as either a minority business enterprise (MBE), a woman business enterprise
(WBE), or a disadvantaged business enterprise (DBE) by the North Central Texas Regional
Certification Agency (NCTRCA), and (ii) has a Principal Office located within the corporate limits of
the City that provides the product or service for which credit is sought for purposes of a specific
commitment set forth in a given Tax Abatement Agreement.
Fort Worth Company — A business that has a Principal Office located within the corporate limits of
the City that provides the product or service for which credit is sought for purposes of a specific
conunitment set forth in a given Tax Abatement Agreement.
Fort Worth Resident — An individual whose principal place of residence is at a location within the
corporate limits of the City.
Mixed-Use Development Project — A development project in which a facility or facilities will be
constructed or renovated such that (i) at least twenty percent (20%) of the total gross floor area will be
used as residential space and (ii) at least ten percent (10%) of the total gross floor area will be used for
office, restaurant, entertainment and/or retail sales and service space.
NI/WBE Advisory Committee (MWBEAC) — A committee appointed by the Fort Worth City
Council to review and make recommendations as to Commitments proposed by an applicant for Tax
Abatement if any such Commitments contain less than a 25% expenditure with Fort Worth Certified
M/WBE companies for construction spending and for Supply and Service Expenditures and to advise
the City as to the availability of Fort Worth Certified M/WBEs.
Principal Office — An office facility that is fully operational and has sufficient equipment, supplies,
and personnel to provide the product or service of the business in question to clients in the City without
significant reliance on the resources of another entity or affiliate or of an auxiliary facility of the
business which is located outside the corporate limits of the City.
Reinvestment Zone — An area designated by the City as a tax abatement reinvestment zone in
accordance with Chapter 312 of the Texas Tax Code.
Residential Development Project — A development project in which a facility or facilities will be
constructed or renovated as multi-family living units on property that is or meets requirements to be
zoned for multi-family or mixed-use pursuant to the City's Zoning Ordinance.
Supply and Service Expenditures Discretionary expenditures made as part of normal business
operations on the real property subject to tax abatement, such as, by way of example only, office
supplies,janitorial supplies and professional services.
Tax Abatement Agreement — A written Agreement that the recipient of a tax abatement must enter
into with the City and that outlines the specific terms and conditions pertaining to and governing the
tax abatement.
3. RESIDENTIAL DEVELOPMENT PROJECTS ELIGIBLE FOR TAX ABATEMENT.
To be eligible for tax abatement under this Policy, a Residential Development Project must meet
all of the criteria set forth in one of the following paragraphs:
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3.1. (i) Be located in the Central City; and (ii) Satisfy the Capital Investment and
affordability criteria necessary for a Residential Development Project to be eligible for tax abatement
under Section III.B. of the NEZ Policy; and (Ili) Meet all of the Corinnitments set forth in Section 7 of
this Policy (Standard Requirements for Residential Development Pro.jects, Certain Commercial/
Industrial and Mixed-Use Development Projects); or
3.2. (1) Be located in a CDBG Eligible Area; and (ii) Have a capital investment of at least $2
million; and (iii) Meet all of the Commitments set forth in Section 7 of this Policy (Standard
Requirements for Residential Development Projects and Certain Commercial /Industrial and Mixed-
Use Development Projects); or
3.3. (i) Be located outside of the Central City; and (ii) Have a capital investment of at least $2
million; and (Ili) Meet all of the Commitments set forth in Section 7 of this Policy (Standard
Requirements for Residential Development Projects and Certain Commercial/Industrial and Mixed-
Use Development Projects).
In addition, an applicant for a Residential Development Project tax abatement that includes, in
whole or in part, the renovation of one or more existing structures shall provide, as part of the
applicant's Tax Abatement Application, a detailed description and the estimated costs of the
renovations contemplated.
4. COMMERCIAL/INDUSTRIAL DEVELOPMENT PROJECTS ELIGIBLE FOR TAX
ABATEMENT.
To be eligible for tax abatement under this Policy, a Commercial/Industrial Development
Project must meet all of the criteria set forth in one of the following paragraphs:
4.1. (1) Have a minimum Capital. Investment of$250,000; and (ii) Be located in the Central
City or on property immediately adjacent to the major thoroughfares which serve as boundaries to the
Central City, or within a CDBG Eligible Area; and (iii) meet all of the Commitments of Section 7 of
this Policy (Standard Requirements For Residential Development Projects, Certain
Commercial/Industrial Development Projects, Mixed-Use Development Projects, And Business
Expansion Projects); or
4.2. (1) Have a ininimurn Capital. Investment of $5 million; and (ii) meet all of the
Commitments of Section 7 of this Policy (Standard Requirements For Residential Development
Projects, Certain Cornmercial/Industri"al Development Projects, Mixed-Use Development Projects,
And Business Expansion Projects); or
4.3. (i) Have a minimum Capital Investment of $100 million; and (ii) satisfy additional
requirements that may be set forth by the City on a project-specific basis, if any.
In addition, an applicant for tax abatement on a Commercial/Industrial Development Project
that includes, in whole or in part, the renovation of one or more existing structures shall provide, as
part of the applicant's Tax Abatement Application, a detailed description and the estimated costs of the
renovations contemplated.
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5. MIXED-USE DEVELOPMENT PROTECTS.
To be eligible for tax abatement under this Policy, a Mixed-Use Development Project must
meet all of the criteria set forth in one of the following paragraphs:
5.1. (i) Have a minimum Capital Investment of$250,000; and (ii) Be located in the Central
City or on property immediately adjacent to the major thoroughfares which serve as boundaries to the
Central City, or within CDBG Eligible Area; and (iii) meet all. of the Commitments of Section 7 of this
Policy (Standard Requirements For Residential Development Projects, Certain Conuriercial/Industrial
Development Projects, Mixed-Use Development Projects, And Business Expansion Projects); or
5.2. (i) Have a minimum Capital Investment of $5 million; and (11) meet all of the
Commitments of Section 7 of this Policy (Standard Requirements For Residential Development
Projects, Certain Commercial/Industrial Development Projects, Mixed-Use Development Projects,
And Business Expansion Projects); or
5.3. (i) Have a minimum Capital Investment of $100 million; and (ii) consist of multiple
land uses, whereby no single land use would comprise greater than 40% of the project's land area; and
(iii) emphasize live/work/play opportunities with multi-modal access; and, (iv) satisfy additional
requirements that may be set forth by the City on a project-specific basis.
In addition, an applicant for tax abatement on a Mixed-Use Development Project that includes,
in whole or in part, the renovation of one or more existing structures shall provide, as part of the
applicant's Tax Abatement Application, a detailed description and the estimated costs of the
renovations contemplated.
6. BUSINESS :EXPANSION PROJECTS.
To be eligible for tax abatement under this Policy, a Business Expansion Project must meet all
of the criteria set forth in one the following paragraphs:
6.1 (i) Be located in the Central City or a CDBG Eligible Area; and (11) Have been in
business continuously for at least six months prior to the submission of an Application
to the City for Tax Abatement, and (iii) Have a total real and Business Personal,
Property investment of at least $250,000 (with a minimum Capital Investment of
$50,000); and (iv) Meet all of the Commitments set forth in Section 7 of this Policy
(Standard Requirements For Residential Development Projects, Certain
Commercial/Industrial Development Projects, Mixed-Use Development Projects, And
Business Expansion Projects); or
6.2 (i) Be located outside of the Central City and CDBG Eligible Area and (ii) Have been in
business continuously for at least five years prior to the submission of an Application to
the City for Tax Abatement, and (iii) Have a total real and Business Personal Property
investment of at least $5 million (with a minimum Capital Investment of $1. million)
and (iv) Meet all of the Commitments set forth in Section 7 of this Policy (Standard
Requirements For Residential Development Projects, Certain Commercial/Industrial
Development Projects, Mixed-Use Development Projects, And Business Expansion
Projects) improvements,
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7. STANDARD REQUIREMENTS FOR RESIDENTIAL DEVELOPMENT PROJECTS,
CERTAIN COMMERCIAL/INDUSTRIAL DEVELOPMENT PROJECTS, MIXED-
LJSE DEVELOPMENT PROJECTS, AND BUSINESS EXPANSION PROJECTS.
To be eligible for property tax abatement, a Residential Development Project meeting the
requirements set forth in Sections 3.1, 3.2 or 3.3 of this Policy; a Commercial/Industrial Development
Project meeting the requirements set forth in Sections 4.1 and 4.2 of this Policy; a Mixed-Use
Development Project meeting the requirements set forth in Sections 5.1 and 5.2; and a Business
Expansion Project meeting the requirements set forth in Sections 6.1 or 6.2 shall meet all of the
following requirements:
7.1. Commit to provide full-time employment to a set number and/or a percentage of full-
time jobs offered on the real property where the Development is located, to Central City Residents,
which Commitment will be agreed upon and set forth in the Tax Abatement Agreement; and
7.2. Commit to provide full-time employment to a set number and/or a percentage of full-
time jobs offered on the real property where the Development is located, to Fort Worth Residents,
which Commitment will be agreed upon and set forth in the Tax Abatement Agreement; and
7.3. Commit to spend a set amount or percentage of total construction costs and annual
Supply and Service Expenses with Fort Worth Companies, which Commitment will be agreed upon
and set forth in the Tax Abatement Agreement; and
7.4 Commit to spend a set amount or percentage of total construction costs and annual
Supply and Service Expenditures with Fort Worth Certified M/WBE Companies. Any Commitment
below 25% of the total construction costs and of the annual Supply and Service Expenses will require
an applicant for Abatement to meet with the City of Fort Worth's M/WBE Advisory Committee to
seek input and assistance prior to action by the City Council. The M/WBE Advisory Committee will
provide the City Council with a recommendation related to the utilization of Fort Worth Certified
M/WBEs. 'The M/WBE Advisory Committee's recommendation, if different from the Commitment
made by the applicant for Abatement, will be non-binding, but should be taken under advisement by
the City Council
7.5 For Residential Development Projects and Mixed-Use Development Projects that
include rental residential units, to:
(a) commit that at least ten percent (10%) of total rental residential units-must be
set aside exclusively for lease to qualifying households whose adjusted incomes do not exceed
the then-current eighty percent (80%) income limits established by the United States
Department of Housing and Urban Development ("HUD") for the Fort Worth-Arlington, TX
I-ItJD Metro FMR (fair market rents) Area at rents that are affordable to such households, as
defined by [IUD (currently those that do not exceed thirty percent (30%) of such adjusted
household income without the inclusion of utility allowance) and that at least ten percent
(10%) of total rental residential units must be set aside exclusively for lease to qualifying
households whose adjusted incomes do not exceed the then-current sixty percent (60%) income
limits established by the United States Department of Housing and Urban Development
("HUD") for the Fort Worth-Arlington, TX HUD Metro FMR (fair market rents) Area at rents
that are affordable to such households, as defined by HUD (currently those that do not exceed
City of Fort Worth Genera[Tax Abatement Policy
Page 7 of 13
thirty percent (30%) of such adjusted household income without the inclusion of utility
allowance); or
(b) if specifically permitted by the City Council, in its sole discretion, and as
specified in the tax abatement agreement, pay the Fort Worth Housing Finance Corporation an
annual sum equal to $200.00 for each rental residential unit located on the property which is
subject to the tax abatement. The Fort Worth Housing Finance Corporation is a housing
finance corporation created pursuant to authorization by the City Council of the City of Fort
Worth in accordance with Chapter 394, Texas Local Government Code, to assist in the
financing of the costs of residential development and ownership for citizens of decent, safe and
sanitary housing at affordable prices. An applicant's choice as to whether to commit to an
affordable housing set-aside or to an annual payment to the Fort Worth Housing Finance
Corporation must be made prior to execution of the tax abatement agreement and may not be
changed during the term of the agreement. The number of rental residential units on the
property which is subject to the tax abatement will be calculated annually. Payment of the
annual sum will be due on or before February 1 of each year in which a tax abatement is
granted (or such other date that may be agreed to in the tax abatement agreement). Failure to
pay the annual payment to the Housing Finance Corporation when due will result in the
forfeiture of the entire tax abatement for the tax year in which payment was due. Additional
terms and conditions governing this annual payment requirement will be set forth in the tax
abatement agreement.
7.6 For Residential Development Projects and Mixed-Use Development Projects that
include rental residential units, commit to a set number or percentage of total rental residential units
that must be fully handicap accessible.
7.7 All Commitments established pursuant to Sections 7.1 through 7.6 will be agreed upon
and set forth in the Tax Abatement Agreement and, if not met, will serve to reduce the value of
Abatement in accordance with the specific terms and conditions of the Tax Abatement Agreement; and
7.8. If the commitment for use of Fort Worth Certified M/WBE Companies is less than
25% of the cost of the Capital Improvements to be made, commit to (i) file a plan with the City
(within six weeks of City Council approval of the Tax Abatement Agreement) as to how the
Commitments for use of Fort Worth Certified M/WBE Companies will be attained and, in order to
demonstrate compliance with that plan, (ii) file monthly reports with the City and the Minority and
Women Business Enterprise Advisory Committee throughout the construction phase of any
improvements required by the Tax Abatement Agreement reflecting then-current expenditures made
with Fort Worth Certified M/WBE Companies, (iii) list the name of a contact person that will have
knowledge of the construction phase of the project, and (iv) from the start of the First Compliance
Auditing Year (as defined in Section 9) until expiration of the Tax Abatement Agreement, file
quarterly reports with the City reflecting then-current expenditures made with Fort Worth Certified
M/WBE Companies.
The City Council may, in its sole discretion, require a Commercial/Industrial Development
Project meeting the criteria set forth in Section 4.3 of this Policy and a Mixed-Use Development
Project meeting the criteria set forth in Section 5.3 of this Policy to satisfy some, all or none of the
requirements set forth in this Section 7.
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8. TAX ABATEMENT CALCULATION.
All Tax Abatement Agreements shall require the recipient to construct or cause construction of
specific improvements on the real property that is subject to the abatement. Failure to construct these
specific ic improvements at the minimum Capital Investment expenditure and by the deadline established
in the Tax Abatement Agreement shall give the City the right to terminate the Tax Abatement
Agreement. The amount of a particutar tax abatement shall be negotiated on a case-by-case basis and
specifically set forth in the Tax Abatement Agreement. The calculation of tax abatement for a
Commercial/Industrial Project that meets the requirements of Section 4.3 of this Policy or for a Mixed-
Use Development Project that meets the requirements of Section 5.3 of this Policy shall be negotiated
on a case-by-ease basis and governed solely by the terms and conditions of the Tax Abatement
Agreement. The calculation of tax abatement for any other project shall be negotiated on a case-by-
case basis, but shall be governed directly in accordance with the degree to which the recipient meets
the four (4) Commitments set forth in Sections 7.1, 7.2, 7.3 and 7.4 of this Policy, which will be
outlined in the Tax Abatement Agreement. A Tax Abatement Agreement may establish a base
abatement that is (1) reduced in accordance with the recipient's failure to meet one or more of such
Commitments or (11) increased in accordance with the recipient's meeting and/or exceeding one or
more of such Commitments.
9. TAX ABATEMENT IMPLEMENTATION.
The term of a tax abatement shall be negotiated on a case-by-case basis and specified in the
Tax Abatement Agreement. The City will audit and determine the recipient's compliance with the
terms and conditions of the Tax Abatement Agreement for a full calendar year prior to the first year in
which the tax abatement is available (the "First Compliance Auditing Year"). The Compliance
Auditing Year shall either be the full calendar year in which a final certificate of occupancy is issued
for the improvements required by the Tax Abatement Agreement for the real property subject to
abatement or the following calendar year, as negotiated and set forth in the Tax Abatement Agreement.
The first tax abatement will be available to the recipient for the tax year following the Compliance
Auditing Year. In other words, the degree to which the recipient meets the Commitments set forth in
the Tax Abatement Agreement will determine the percentage of taxes abated for the following tax
year. The City will continue to audit and deterni.ine the recipient's compliance with the terms and
conditions of the Tax Abatement Agreement for each subsequent calendar year, which findings shalt
govern the percentage of taxes abated for the following tax year, until expiration of the Tax Abatement
Agreement.
10. TAX ABATEMENT APPLICATION PROCEDURES.
Each tax abatement application shall be processed in accordance with the following standards
and procedures:
10.1. Submission of Application.
If a given development project qualifies for tax abatement pursuant to the eligibility
criteria detailed in Section 4, Section 5, Section 6, or Section 7 of this Policy, as the case may
be, an applicant for tax abatement must complete and submit a City of Fort Worth Tax
Abatement Application (with required attachments) (the "Application"). An Application can
be obtained from and should be submitted to the City's Housing and Economic Development
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Department. In order to be complete, the Application must include documentation that there
are no delinquent property taxes due for the property on which the development project is to
occur.
10.2. Application Fee.
Upon submission of the Application, an applicant must also pay an application fee.
This application fee shall be $5,000 ("Application Fee") of which $3,000 will be credited to
any permit, impact, inspection or other fee paid by the applicant and required by the City
directly in connection with the proposed project, as long as substantive construction on the
project, as determined by the City in its sole and reasonable discretion, has been undertaken on
the property specified in the Application within one (1) year following the date of its
submission.
If any Application Fee funds are remaining after the development project covered in the
Application has received a final Certificate of Occupancy (CO) from the City, the applicant
must submit a letter to the director of the City's Housing and Economic Development
Department requesting a refund of the remaining funds. The request must be made within
three (3) months from the date of the final CO. Application fees remaining after the
development project covered in the Application has received a final CO will become the
property of the City and will not be eligible for refund, even if a final CO was issued, if the
applicant does not submit the written request for refund as required by this Section. The
remaining $2,000 of the Application Fee is non-reftindable and will be utilized for City staff
expenses associated with processing the Application and fees associated with legal notice
requirements.
10.3. Application Review and Evaluation.
The Housing and Economic Development Department wilt review an Application for
accuracy and completeness. Once complete, the Housing and Economic Development
Departnient will evaluate an Application based on the perceived merit and value of the project,
including, without limitation, the following criteria:
• Types and number of new jobs created, including respective wage rates, and employee
benefits packages such as health insurance, day care provisions, retirement packages,
transportation assistance, employer-sponsored training and education, any other benefits
and whether all benefits are offered on an equal and non-discriminatory basis to all.
employees;
• Percentage of new jobs committed to Fort Worth Residents;
• Percentage of new jobs committed to Central City Residents;
• Percent of construction contracts committed to (i) 'Fort Worth Companies and (ii) Fort
Worth Certified M/WBE Companies;
• Percentage of Supply and Service Contract expenses committed to (i) Fort Worth
Companies and (ii) Fort Worth Certified M/WBE Companies;
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• Financial viability of the project,*
• The project's reasonably projected increase in the value of the tax base-,
• Costs to the City (Such as infrastructure participation, etc.);
• Remediation of an existing environmental problem on the real property;
• The gender, ethnic background and length of employment of each member of the
applicant's board of directors, governing body or tipper management, as requested by
the City;
• Whether the project will be able to obtain General Leadership in Energy and
Envirom-nental Design (LEER) certification, International Organization for
Standardization (ISO) Standard 14001 certification, American Institute of Architects
(AIA) or ASTM International sustainability standards, or will otherwise comply with
similar sustainable building and management processes acceptable to the City; and
• For residential projects, the number or percentage of units reserved as affordable
housing for persons with incomes at or below eighty percent (80%) of median family
income based on family size (as established and defined by the United States
Department of Housing and Urban Development)
• Other items that the City may determine to be relevant with respect to the project.
Based upon the outcome of the evaluation, the Housing and Economic Development
Department will present the Application to the City Council's Housing arid Economic
Development Committee. In an extraordinary circumstance, the Housing and Economic
Development Department may elect to present the Application to the full City Council without
initial input from the Housing and Economic Development Committee.
10.4. Consideration by Council Committee.
The City Council's Housing and Economic Development Committee will consider the
Application in an open meeting or, if circumstances dictate and the law allows, a closed
meeting. The Committee may either (i) recommend approval of the Application, in which case
City staff will incorporate the terms of the Application into a Tax Abatement Agreement for
subsequent consideration by the full City Council with the Housing and Economic
Development Committee's recommendation to approve the Agreement; (11) request
modifications to the Application, in which case Housing and Economic Development
Department staff will discuss the suggested modifications with the applicant and, if the
requested modifications are made, resubmit the modified Application to the Housing and
Economic Development Committee or directly to the City Council for consideration: or (iii)
deny to recommend consideration of the Application by the full City Council.
10.5. Consideration by the City Council.
A Tax Abatement Agreement will only be considered by the City Council if the
applicant has first executed the Tax Abatement Agreement. The City Council retains sole
City of Fort Worth General Tax Abatement Policy
Page I I of 13
authority to approve or deny any 'Tax Abatement Agreement and is under no obligation to
approve any Application or Tax Abatement Agreement.
11. GENERAL POLICIES AND REQUIREMENTS.
Notwithstanding anything that may be interpreted to the contrary herein, the following general
terms and conditions shall govern this Policy:
11.1. A tax abatement shall not be granted for any development project in which a building
permit application has been filed with the City's Planning and Development Department. In addition,
the City will not abate taxes on the value of real or Business Personal Property for any period of time
prior to the year of execution of a Tax Abatement Agreement with the City.
11.2. The applicant for a tax abatement must provide evidence to the City that demonstrates
that a tax abatement is necessary for the financial viability of the development project proposed.
11.3. The City will riot abate taxes levied on inventory, supplies or the existing tax base.
11.4. An applicant for tax abatement shall provide wage rates, employee benefit information
for all positions of employment to be located in any facility covered by the Application.
11.5. Unless otherwise specified in the Tax Abatement Agreement, the amount of real
property taxes to be abated in a given year shall not exceed one hundred fifty percent (150%) of the
amount of the minimum Capital Investment expenditure required by the Tax Abatement Agreement for
improvements to the real property subject to abatement multiplied by the City's tax rate in effect for
that same year, and the amount of Business Personal Property taxes to be abated in a given year shall
not exceed one hundred fifty percent (150%) of the minimum value of Business Personal Property
required by the Tax Abatement Agreement to be located on the real property, if any, subject to
abatement multiplied by the City's tax rate in effect for that same year.
11.6. The owner of real property for which aTax Abatement has been granted shall properly
maintain the property to assure the long-term economic viability of the project. In addition, if a
citation or citations for City Code violations are issued against a project while a 'Tax Abatement
Agreement is in effect, the amount of the tax abatement benefit will be subject to reduction, as
provided in the Tax Abatement Agreement.
11.7. If the recipient of a tax abatement breaches any of the terms or conditions of the Tax
Abatement Agreement and fails to cure such breach in accordance with the Tax Abatement Agreement,
the City shall have the right to terminate the 'Tax Abatement Agreement. In this event, the recipient
will be required to pay the City any property taxes that were abated pursuant to the Tax Abatement
Agreement prior to its termination.
11.8. As part of the consideration tinder all 'Tax Abatement Agreements, the City shall have,
without limitation, the right to (i) review and verify the applicant's financial statements and records
related to the development project and the abatement in each year during the term of the Tax
Abatement Agreement prior to the granting of a tax abatement in any given year and (ii) conduct an
on-site inspection of the development project in each year during the term of the 'Tax Abatement to
verify compliance with the terms and conditions of the Tax Abatement Agreement. Any incidents of
City of Fort Worth General Tax Abatement Policy
Page 12 of 13
................................................................. .......... ...............
non-compliance will be reported to all taxing units with jurisdiction over the real property subject to
abatement.
1:1.9. The recipient of a tax abatement may not sell, assign, transfer or otherwise convey its
rights under a Tax Abatement Agreement unless otherwise specified in the Tax Abatement Agreement.
A sale, assignment, lease, transfer or conveyance of the real property that is subject to the abatement
and which is not permitted by the Tax Abatement Agreement shall constitute a breach of the Tax
Abatement Agreement and may result in termination of the Tax Abatement Agreement and recapture
of any taxes abated after the date on which the breach occurred. For additional information about this
Tax Abatement Policy, contact the City of Fort Worth's Housing and Econornic Development
Department using the information below:
City of Fort Worth
Housing and Economic Development
1000 Throckmorton Street
Fort Worth, Texas 76102
(817) 392-7540
www.fortworthtexas.gov/lied/
City of Fort Worth General Tax Abatement Policy
Page 13 of 13
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 5/20/2014 - Resolution No. 4322-05-2014
DATE: Tuesday, May 20, 2014 REFERENCE NO.: **G-18204
LOG NAME: 17TAPOLICY2014
SUBJECT:
Adopt Resolution Stating the City of Fort Worth Elects to Remain Eligible to Participate in Tax Abatement
Authorized by Chapter 312 of the Texas Tax Code and Adopt New General Tax Abatement Policy (ALL
COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council:
1. Adopt the attached Resolution stating that the City elects to remain eligible to participate in property tax
abatement, pursuant to the Texas Property Redevelopment and Tax Abatement Act, Chapter 312 of the
Texas Tax Code, as amended; and
2. Adopt the attached updated General Tax Abatement Policy, including guidelines and criteria, governing
certain property tax abatements granted by the City of Fort Worth,
DISCUSSION:
Chapter 312 of the Texas Tax Code authorizes cities to designate tax abatement reinvestment zones and
to enter into Tax Abatement Agreements only after the city elects to become eligible to participate in tax
abatement and adopts a Tax Abatement Policy that establishes guidelines and criteria governing its tax
abatement program. A Tax Abatement Policy adopted by a city is effective for two years from the date of
adoption. The City of Fort Worth's current General Tax Abatement Policy, which was adopted on June 12,
2012 (M&C G-17617, Resolution No. 4096-06-2012) and amended on May 6, 2014 (M&C G-18138,
Revised, Resolution No. 4319-05-2014), will expire on June 21, 2014.
The new General Tax Abatement Policy contains the following changes from the existing General Tax
Abatement Policy:
1. The current Policy allows Business Expansion Projects to qualify for tax abatement only if they
increase the square footage of improvements on the property. The new Policy will also allow
Business Expansion Projects that expand of production capacity of an existing facility through new
real property and business personal property investment, but that do not increase the overall
square footage of the facility, also to qualify for tax abatement consideration.
2. The new Policy adds a definition of Business Personal Property as any tangible personal property
that (i) is subject to ad valorem taxation by the City; (ii) is located on the property subject to
abatement; (iii) is owned or leased by the party to the Tax Abatement Agreement; and (iv) was not
located in the City prior to the effective date of the Tax Abatement Agreement.
3. The new Policy includes the affordable housing requirements for Residential Development
Projects (Section 7.5) that were adopted by the City Council on May 6, 2014 (M&C G-18138,
Logname: 1.7TAPOLICY2014 Page 1 of 2
Revised), but also clarifies that the U.S. Department of Housing and Urban Development's current
definition of "affordable rent" as those that do not exceed 30 percent of the particular household's
adjusted income.
Once adopted, the proposed General Tax Abatement Policy will be effective from June 22, 2014 through
June 21, 2016, unless amended or repealed by at least a three-fourths vote of the City Council. The
General Tax Abatement Policy does not apply to tax abatement granted, pursuant to the City's
Neighborhood Empowerment Zone (NEZ) Policy or the City's Relocation Incentives Policy.
FISCAL INFORMATION / CERTIFICATION:
The Financial Management Services Director certifies that this action will not increase the total
appropriations of City funds.
FUND CENTERS:
TO F u nd/Accou nt/C enters FROM F u nd/Accou nt/C enters
CERTIFICATIONS:
Submitted for City Manager's Office by: Fernando Costa (6122)
Originating Department Head: Jesus Chapa (5804)
Robert Sturns (212-2663)
Additional Information Contact: Ana Alvarado (212-2680)
Logname: 17TAPOLICY2014 Page 2 of 2