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HomeMy WebLinkAboutContract 42254 CITY SECRETARY CONTRACT NO. TAX ABATEMENT AGREEMENT FOR PROPERTY LOCATED IN A NEIGHBORHOOD EMPOWERMENT ZONE 1329 S. Henderson Street This TAX ABATEMENT AGREEMENT ("Agreement") is entered into by and between the CITY OF FORT WORTH, TEXAS (the "City"), a home rule municipal corporation organized under the laws of the State of Texas and acting by and through T.M. Higgins, its duly authorized Assistant City Manager, and Shawn Fite ("Owner"), owner of property located at 1329 S. Henderson Street, South 75 feet of the West 1/2 of Lot 7, Block 26 of the DS Ross Subdivision of Block 26, Field-Welch Addition to the City of Fort Worth, Tarrant County, Texas, according to the plat recorded in Volume 66, Page 356, of the Plat Records of Tarrant County, Texas. The City Council of the City of Fort Worth ("City Council")hereby finds and the City and Owner hereby agree that the following statements are true and correct and constitute the basis upon which the City and Owner have entered into this Agreement: A. Chapter 378 of the Texas Local Government Code allows a municipality to create a Neighborhood Empowerment Zone (NEZ) if the municipality determines that the creation of the zone would promote: (1) The creation of affordable housing, including manufactured housing in the zone; (2) An increase in economic development in the zone; (3) An increase in the quality of social services, education, or public safety provided to residents of the zone; or (4) The rehabilitation of affordable housing in the zone. B. Chapter 378 of the Texas Local Government Code provides that a municipality that creates a NEZ,may enter into agreements abating municipal property taxes on property in the zone. C. On July 31, 2001, the City adopted basic incentives for property owners who own property located in a NEZ, stating that the City elects to be eligible to participate in tax abatement and including guidelines and criteria governing tax abatement agreements entered into between the City and various third parties, titled "NEZ Basic Incentives", these were readopted on December 7, 2010 (Resolution No. 3943). The December 7, 2010 NEZ Incentives are attached hereto as Exhibit"1"hereby made a part of the Agreement for all purposes. D. The NEZ Incentives contain appropriate guidelines and criteria governing tax abatement agreements to be entered into by the City as contemplated by Chapter 312 of the Texas Tax Code, as amended ("Code"). E. On December 7, 2010, the City Council adopted Ordinance No. 19463 ("Ordinance") establishing"Neighborhood Empowerment Reinvestment Zone No. 5R,"City of Fort Worth, Texas("Zone"). }': i. 'v� fi. +_>R.,�'•tea q,!' F. Owner owns certain real property located entirely within the Magnolia Village NEZ and that is more particularly described in Exhibit "2", attached hereto and hereby made a part of this Agreement for all purposes (the "Premises"). G. Owner or its assigns plan to construct the Required Improvements, as defined in Section 1.1 of this Agreement, on the Premises to be used as a single-family residence that will be Owner occupied. H. On May 13, 2011, Owner submitted a complete application for NEZ incentives and for tax abatement to the City concerning the contemplated use of the Premises (the "Application"), attached hereto as Exhibit "3" and hereby made a part of this Agreement for all purposes. I. The City Council finds that the contemplated use of the Premises, the Required Improvements, as defined in Section 1.1, and the terms of this Agreement are consistent with encouraging development of the Zone in accordance with the purposes for its creation and are in compliance with the NEZ Incentives, the Ordinance and other applicable laws, ordinances,rules and regulations. J. The terms of this Agreement, and the Premises and Required Improvements, satisfy the eligibility criteria of the NEZ Incentives. K. Written notice that the City intends to enter into this Agreement, along with a copy of this Agreement, has been furnished in the manner prescribed by the Code to the presiding officers of the governing bodies of each of the taxing units in which the Premises is located. NOW, THEREFORE, the City and Owner, for and in consideration of the terms and conditions set forth herein, do hereby contract, covenant and agree as follows: 1. OWNER'S COVENANTS. 1.1. Real Property Improvements. Owner shall construct, or cause to be constructed, on and within the Premises certain improvements consisting of a single-family residence, of at least 2150 square feet in size and built to the specifications listed in Exhibit "4" (collectively the "Required Improvements"). Owner shall provide a survey of the home upon completion of the Required Improvements. The parties agree that the final survey shall be a part of this Agreement and shall be labeled Exhibit "5". Minor variations and more substantial variations if approved in writing by both parties to this Agreement before construction is undertaken in the Required Improvements from the description provided in the Application for Tax Abatement shall not constitute an Event of Default, as defined in Section 4.1, provided that the conditions in the first sentence of this Section 1.1 are met and the Required Improvements are used for the purposes and in the manner described in Exhibit "4". 1.2. Completion Date of Required Improvements. Owner certifies that the Required Improvements will be completed within two years from the issuance and receipt of the building permit, unless delayed because of force majeure, in which case the two years shall be extended by the number of days comprising the specific force majeure. For purposes of this Agreement, force majeure shall mean an event beyond Owner's reasonable control as determined by the City of Fort Worth in its sole discretion, which shall not be unreasonably withheld, including, without limitation, delays caused by adverse weather, delays in receipt of any required permits or approvals from any governmental authority, acts of God, or fires. Force majeure shall not include construction delays caused due to purely financial matters, such as, without limitation, delays in the obtaining of adequate financing. 1.3. Use of Premises. Owner covenants that the Required Improvements shall be constructed and the Premises shall be sold so that it is continuously used as the primary residence of the Home Buyer in accordance with the description of the Project set forth in the Exhibit "4". In addition, Owner covenants that throughout the Term, the Required Improvements shall be operated and maintained for the purposes set forth in this Agreement and in a manner that is consistent with the general purposes of encouraging development or redevelopment of the Zone. 2. ABATEMENT AMOUNTS,TERMS AND CONDITIONS. Subject to and in accordance with this Agreement, the City hereby grants to Owner a real property tax abatement of City of Fort Worth imposed taxes on the Premises for the Required Improvements, as specifically provided in this Section 2 ("Abatement"). Abatement does not include taxes from other taxing entities. 2.1. Amount of Abatement. The actual amount of the Abatement granted under this Agreement shall be based upon the increase in value of the Premises due to the Required Improvements, over its value on January 1, 2011, the year in which both parties executed this Agreement. If the square footage requirement and the appraised value of the Required Improvements are less than as provided in Section 1.1 of this Agreement, Owner shall not be eligible to receive any Abatement under this Agreement. 2.2 Increase in Value. The Abatement shall be 100% of the increase in value from the construction of the Required Improvements and shall apply only to taxes on the increase in value of the Premises due to construction of the Required Improvements. The Abatement shall not apply to taxes on the land, nor shall the abatement apply to mineral interests. 2.3. Term of Abatement. The term of the Abatement ("Term") shall begin on January 1 of the year following the calendar year in which the Required Improvement is sold to a Home Buyer ("Beginning Date") and, unless sooner terminated as herein provided, shall end on December 31 immediately preceding the fifth (5`h) anniversary of the Beginning Date. 2.4 Protests Over Appraisals or Assessments. Owner shall have the right to protest and contest any or all appraisals or assessments of the Premises and/or improvements thereon. 2.5. Abatement Application Fee. The City acknowledges receipt from Owner of the required Application fee of $100.00. The application fee shall not be credited or refunded to Owner or its assigns for any reason. 3. RECORDS,AUDITS AND EVALUATION OF REQUIRED IMPROVEMENTS. 3.1. Inspection of Premises. Between the execution date of this Agreement and the last day of the Term, at any time during normal office hours throughout the Term and the year following the Term and following reasonable notice to Owner, the City shall have and Owner shall provide access to the Premises in order for the City to inspect the Premises and evaluate the Required Improvements to ensure compliance with the terms and conditions of this Agreement. Owner shall cooperate fully with the City during any such inspection and/or evaluation. 3.2. Certification. Owner shall certify annually to the City that it is in compliance with each applicable term of this Agreement. The City shall have the right to audit at the City's expense the Required Improvement with respects to the specifications listed in Exhibit "4". Owner must provide documentation that Owner is using the Required Improvements as its primary residence (collectively, the "Records") at any time during the Compliance Auditing Term in order to determine compliance with this Agreement. Owner shall make all applicable Records available to the City on the Premises or at another location in the City following reasonable advance notice by the City and shall otherwise cooperate fully with the City during any audit. 3.3 Provision of Information. On or before March 1 following the end of every year during the Compliance Auditing Term and at any other time if requested by the City, Owner shall provide information and documentation for the previous year that addresses Owner's compliance with each of the terms and conditions of this Agreement for that calendar year. Failure to provide all information within the control of Owner required by this Section 3.3 shall constitute an Event of Default, as defined in Section 4.1. 3.4 Determination of Compliance. On or before August 1 of each year during the Compliance Auditing Term, the City shall make a decision and rule on the actual annual percentage of Abatement available to Owner for the following year of the Term and shall notify Owner of such decision and ruling. The actual percentage of the Abatement granted for a given year of the Term is therefore based upon Owner's compliance with the terms and conditions of this Agreement during the previous year of the Compliance Auditing Term. 4. EVENTS OF DEFAULT. 4.1. Defined. Unless otherwise specified herein, Owner shall be in default of this Agreement if(i) Owner fails to construct the Required Improvements as defined in Section 1.1.; (ii) ad valorem real property taxes with respect to the Premises or the Required Improvements, or its ad valorem taxes with respect to the tangible personal property located on the Premises, become delinquent and Owner does not timely and properly follow the legal procedures for protest and/or contest of any such ad valorem real property or tangible personal property taxes; (iii) OWNER DOES NOT USE THE PREMISES AS PRIMARY RESIDENCE ONCE THE ABATEMENT BEGINS; or (iv) OWNER DOES NOT COMPLY WITH CHAPTER 7 AND APPENDIX B OF THE CODE OF ORDINANCES OF THE CITY OF FORT WORTH (collectively, each an "Event of Default"). 4.2. Notice to Cure. Subject to Section 5, if the City determines that an Event of Default has occurred, the City shall provide a written notice to Owner that describes the nature of the Event of Default. Owner shall have sixty (60) calendar days from the date of receipt of this written notice to fully cure or have cured the Event of Default. If Owner reasonably believes that Owner will require additional time to cure the Event of Default, Owner shall promptly notify the City in writing, in which case (i) after advising the City Council in an open meeting of Owner's efforts and intent to cure, Owner shall have ninety(90) calendar days from the original date of receipt of the written notice, or (ii) if Owner reasonably believes that Owner will require more than ninety(90) days to cure the Event of Default, after advising the City Council in an open meeting of Owner's efforts and intent to cure, such additional time, if any, as may be offered by the City Council in its sole discretion. 4.3. Termination for Event of Default and Payment of Liquidated Damages. If an Event of Default which is defined in Section 4.1 has not been cured within the time frame specifically allowed under Section 4.2, the City shall have the right to terminate this Agreement immediately. Owner acknowledges and agrees that an uncured Event of Default will (i) harm the City's economic development and redevelopment efforts on the Premises and in the vicinity of the Premises; (ii) require unplanned and expensive additional administrative oversight and involvement by the City; and (iii) otherwise harm the City, and Owner agrees that the amounts of actual damages there from are speculative in nature and will be difficult or impossible to ascertain. Therefore, upon termination of this Agreement for any Event of Default, Owner shall pay the City, as liquidated damages; all taxes that were abated in accordance with this Agreement for each year when an Event of Default existed and which otherwise would have been paid to the City in the absence of this Agreement. The City and Owner agree that this amount is a reasonable approximation of actual damages that the City will incur as a result of an uncured Event of Default and that this Section 4.3 is intended to provide the City with compensation for actual damages and is not a penalty. This amount may be recovered by the City through adjustments made to Owner's ad valorem property tax appraisal by the appraisal district that has jurisdiction over the Premises. Otherwise, this amount shall be due, owing and paid to the City within sixty (60) days following the effective date of termination of this Agreement. In the event that all or any portion of this amount is not paid to the City within sixty(60) days following the effective date of termination of this Agreement, Owner shall also be liable for all penalties and interest on any outstanding amount at the statutory rate for delinquent taxes, as determined by the Code at the time of the payment of such penalties and interest(currently, Section 33.01 of the Code). 4.4. Termination at Will. If the City and Owner mutually determine that the development or use of the Premises or the anticipated Required Improvements are no longer appropriate or feasible, or that a higher or better use is preferable, the City and Owner may terminate this Agreement in a written format that is signed by both parties. In this event, (i) if the Term has commenced, the Term shall expire as of the effective date of the termination of this Agreement; (ii) there shall be no recapture of any taxes previously abated; and(iii)neither party shall have any further rights or obligations hereunder. 4.5 Sexually oriented business & Liquor Stores or PackaEe Stores a. Owner understands and agrees that the City has the right to terminate this agreement if the Required Improvements contains or will contain a sexually oriented business. b. Owner understands and agrees that the City has the right to terminate this agreement as determined in City's sole discretion if the Required Improvements contains or will contain a liquor store or package store. 5. EFFECT OF SALE OF PREMISES. Except for an assignment to Owner's first mortgagee or to a homebuyer who will use the Required Improvements as its primary residence or the homeowner's mortgagee which City Council hereby agrees to, the Abatement granted hereunder shall vest only in Owner; however if Owner sells the Premises and Required Improvements, this Abatement cannot be assigned to a new owner of all or any portion of the Premises and/or Required Improvements without the prior consent of the City Council, which consent shall not be unreasonably withheld provided that (i) the City Council finds that the proposed assignee is financially capable of meeting the terms and conditions of this Agreement and (ii) the proposed purchaser agrees in writing to assume all terms and conditions of Owner under this Agreement. Owner may not otherwise assign, lease or convey any of its rights under this Agreement. Any attempted assignment without the City Council's prior consent shall constitute grounds for termination of this Agreement and the Abatement granted hereunder following ten(10) calendar days of receipt of written notice from the City to Owner. Upon assignment to Owner's first mortgagee, or to a homebuyer who will use the Required Improvements as its primary residence or the homeowner's mortgagee, Owner shall have no further obligations or duties under this Agreement. In addition, upon assignment to any other entity with the written consent of City Council, Owner shall have no further duty or obligation under this Agreement. IN NO EVENT SHALL THE TERM OF THIS AGREEMENT BE EXTENDED IN THE EVENT OF A SALE OR ASSIGNMENT. THE FAILURE OF OWNER TO SEND THE CITY NOTIFICATION OF THE SALE OF THE REQUIRED IMPROVEMENTS AND EXECUTION OF THE ASSIGNMENT OF THIS AGREEMENT WITH THE NEW OWNER WITHIN 30 DAYS OF THE TRANSFER OF OWNERSHIP OF THE REQUIRED IMPROVEMENTS SHALL RESULT IN THE AUTOMATIC TERMINATION OF THIS AGREEMENT. THE NOTICE AND EXECUTED ASSIGNMENT MUST BE SENT TO THE CITY BY CERTIFIED MAIL OR BY HAND DELIVERY. 6. NOTICES. All written notices called for or required by this Agreement shall be addressed to the following, or such other party or address as either party designates in writing, by certified mail, postage prepaid, or by hand delivery: City: and Owner: City of Fort Worth Housing&Economic Development Dept. Shawn Fite Attn: City Manager's Office Attn: Jay Chapa, Director 2828 River Forest Dr. 1000 Throckmorton 1000 Throckmorton Fort Worth, Texas 76116 Fort Worth, Texas 76102 Fort Worth, Texas 76102 7. MISCELLANEOUS. 7.1. Bonds The Required Improvements will not be financed by tax increment bonds. This Agreement is subject to the rights of holders of outstanding bonds of the City. 7.2. Conflicts of Interest. Neither the Premises nor any of the Required Improvements covered by this Agreement are owned or leased by any member of the City Council, any member of the City Planning or Zoning Commission or any member of the governing body of any taxing units in the Zone. 7.3. Conflicts Between Documents. In the event of any conflict between the City's zoning ordinances, or other City ordinances or regulations, and this Agreement, such ordinances or regulations shall control. In the event of any conflict between the body of this Agreement and Exhibit "3", the body of this Agreement shall control. 7.4. Future Application. A portion or all of the Premises and/or Required Improvements may be eligible for complete or partial exemption from ad valorem taxes as a result of existing law or future legislation. This Agreement shall not be construed as evidence that such exemptions do not apply to the Premises and/or Required Improvements. 7.5. City Council Authorization. This Agreement was authorized by the City Council through approval of Mayor and Council Communication No. C-25068 on July 26, 2011, which, among other things authorized the City Manager to execute this Agreement on behalf of the City. 7.6. Estoppel Certificate. Any party hereto may request an estoppel certificate from another party hereto so long as the certificate is requested in connection with a bona fide business purpose. The certificate, if requested, will be addressed to the Owner, and shall include, but not necessarily be limited to, statements that this Agreement is in full force and effect without default (or if an Event of Default exists, the nature of the Event of Default and curative action taken and/or necessary to effect a cure), the remaining term of this Agreement, the levels and remaining term of the Abatement in effect, and such other matters reasonably requested by the party or parties to receive the certificates. 7.7. Owner Standing. Owner shall be deemed a proper and necessary party in any litigation questioning or challenging the validity of this Agreement or any of the underlying laws, ordinances, resolutions or City Council actions authorizing this Agreement, and Owner shall be entitled to intervene in any such litigation. 7.8. Venue and Jurisdiction. This Agreement shall be construed in accordance with the laws of the State of Texas and applicable ordinances, rules, regulations or policies of the City. Venue for any action under this Agreement shall lie in the State District Court of Tarrant County, Texas. This Agreement is performable in Tarrant County, Texas. 7.9. Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired. 7.10 HeadinEs Not Controlling. Headings and titles used in this Agreement are for reference purposes only and shall not be deemed a part of this Agreement. 7.11. Entirety of Agreement. This Agreement, including any exhibits attached hereto and any documents incorporated herein by reference, contains the entire understanding and agreement between the City and Owner, their assigns and successors in interest, as to the matters contained herein. Any prior or contemporaneous oral or written agreement is hereby declared null and void to the extent in conflict with any provision of this Agreement. This Agreement shall not be amended unless executed in writing by both parties and approved by the City Council. This Agreement may be executed in multiple counterparts, each of which shall be considered an original, but all of which shall constitute one instrument. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] EXECUTED this-9-- day of , 2011,by the City of Fort Worth, Texas. vj EXECUTED this day of , 2011,by Shawn Fite. CITY OF FORT WORTH: OWNER: By: By: Susan Alanis Shawn Fite Askigaai City Manager Owner ij ij ATTEST: d By 4 �+ Marty Hendrix City Secretaryi �f ` APPROVED AS TO FORM AND LEGALITY: BY: W Melinda Ramos Assistant City Attorney M & C: C-25068 0FF1CPAL �3ECORD =T AJC ?T ; �' STATE OF TEXAS § COUNTY OF TARRANT § BEFORE ME, the undersigned authority, on this day personally appeared Susan Alanis, Assistant City Manager of the CITY OF FORT WORTH, a municipal corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of the said CITY OF FORT WORTH, TEXAS, a municipal corporation, that she was duly authorized to perform the same by appropriate resolution of the City Council of the City of Fort Worth and that she executed the same as the act of the said City for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this �ay of 2011. %tary Public in and for thOte of Texas EVONIA DANIELS (Q- Jb Q n ' 5 MY COMMISSION EXPIRES Notary's Printed Name ;' July ia,2013 4„r 0MCIAL RECORD ff� C11 YL'C E-TARY TX STATE OF TEXAS § COUNTY OF TARRANT § BEFORE ME, the undersigned authority, on this day personally appeared Shawn Fite known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that she executed the same for the purposes and consideration therein expressed, in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this day of , 2011. Notary Public in and for the State of Texas Notary's Printed Name Exhibit 1: NEZ Incentives Exhibit 2: Property Description Exhibit 3: Application: (NEZ) Incentives and Tax Abatement Exhibit 4: Required Improvements description including kind, number and location of the proposed improvements. Exhibit 5: Final Survey e. Exhibit 112" Property Description 1329 S. Henderson Street, South 75 feet of the West 1/2 of Lot 7, Block 26 of the DS Ross Subdivision of Block 26, Field-Welch Addition to the City of Fort Worth, Tarrant County, Texas, according to the plat recorded in Volume 66, Page 356, of the Plat Records of Tarrant County, Texas Exhibit"4" Project Description Single Family Residence 5 Bedrooms 3 Bathrooms Fireplace Dining Room Study Mud Room Covered Porch Approximately 2150 square feet Detached 1 Car Garage w/2"d Floor Game Room M&C Review Page 1 of 2 r :ificial site of the City of Fot Worth, Raxas CITY COUNCIL AGENDA FoRTWORTH COUNCIL ACTION: Approved on 7/26/2011 DATE: 7/26/2011 REFERENCE C-25068 LOG NAME: 17NEZ171329SHENDERSON NO.. CODE: C TYPE: NON- PUBLIC NO CONSENT HEARING: SUBJECT: Authorize Five-Year Tax Abatement Agreement with Shawn Fite for Property Located at 1329 S. Henderson Street in the Magnolia Village Neighborhood Empowerment Zone (COUNCIL DISTRICT 9) RECOMMENDATION: It is recommended that the City Council authorize the City Manager to enter into a five-year Tax Abatement Agreement with Shawn Fite for the property at 1329 S. Henderson Street in the Magnolia Village Neighborhood Empowerment Zone in accordance with the Neighborhood Empowerment Zone Tax Abatement Policy and Basic Incentives. DISCUSSION: Shawn Fite (Property Owner) is the owner of the property described as Being the South 75 feet of the West 1/2 of Lot 7, Block 26 of the DS Ross Subdivision of Block 26, Field-Welch Addition to the City of Fort Worth, Tarrant County, Texas, according to the plat recorded in Volume 66, Page 356, of the Plat Records of Tarrant County, Texas, at 1329 S. Henderson Street, Fort Worth, Texas. The property is located within the Magnolia Village Neighborhood Empowerment Zone(NEZ)and the Fairmount/Southside Historic District. On May 9, 2011, the Historic and Cultural Landmarks Commission approved a Certificate of Appropriateness for the construction of a single family residential structure at 1329 S. Henderson Street. The Property Owner plans to invest an estimated $80,000.00 to construct an approximately 2,150 square foot single family residence (Project). The Project will be sold as a primary residence. The Housing and Economic Development Department reviewed the application and certified that the property owner and Project met the eligibility criteria to receive a NEZ Municipal Property Tax Abatement. The NEZ Basic Incentives includes a five-year Municipal Property Tax Abatement on the increased value of improvements to the qualified owner of any new construction or rehabilitation within the NEZ. Upon execution of the Agreement, the total assessed value of the improvements used for calculating municipal property tax will be frozen for a period of five years, starting January 2012 at the estimated pre-improvement value as defined by the Tarrant Appraisal District(TAD) on June 27, 2011, for the property as follows: Pre-Improvement TAD Value of Improvements $ 0.00 Pre-Improvement Estimated Value of Land $30.000.00 Total Pre-Improvement Estimated Value $30,000.00 The municipal property tax on the improved value of Project after construction is estimated at $684.00, per year, for a total of$3,420.00 over the five-year period. However, this estimate may differ from the actual tax abatement value, which will be calculated based on the Tarrant Appraisal District appraised value of the property. http://apps.cfwnet.org/council_packet/mc_review.asp?ID=15579&councildate=7/26/2011 07/26/2011 M&C Review Page 2 of 2 In the event of a sale of this property, the NEZ Tax Abatement agreement may be assigned to a new owner's first mortgagee or a new homeowner as their primary residence. All other assignments must be approved by the City Council. This property is located in COUNCIL DISTRICT 9. FISCAL INFORMATION/CERTIFICATION: The Financial Management Services Director certifies that this action will have no material effect on City funds. TO Fund/Account/Centers FROM Fund/Account/Centers Submitted for City Manager's Office by: Susan Alanis (8180) Originating Department Head: Jay Chapa (5804) Additional Information Contact: Sarah Odle (7316) ATTACHMENTS http://apps.cfwnet.org/council_packet/mc_review.asp`?ID=15579&councildate=7/26/2011 07/26/2011