HomeMy WebLinkAboutOrdinance 18411-12-2008ORDINANCE NO 18411 12-2008
AN ORDINANCE AMENDING ORDINANCE NO 12323 BY
REDUCING THE CITY OF FORT WORTH'S LEVEL OF
CONTRIBUTION OF TAX INCREMENT TO THE TAX
INCREMENT FUND OF TAX INCREMENT REINVESTMENT
ZONE NUMBER TWO CITY OF FORT WORTH, TEXAS.
WHEREAS, as authorized by Section 311 005(a)(4) of the Texas Tax Code, the
City Council created Tax Increment Reinvestment Zone Number Two City of Fort
Worth, Texas (the `Zone"), which Is generally known as the Speedway TIF pursuant to
Ordinance No 12323 adopted by the City Council on December 19 1995 and
WHEREAS, pursuant to Ordinance No 13889 adopted by the City Council on
August 10 1999 the City Council expanded the onglnal boundary of the Zone
established in Ordinance No 12323 (the `Original Area") to include certain additional
property described In Ordinance No 13889 (the `Expanded Area") and
WHEREAS, pursuant to Crty Secretary Contract No 24426 executed m
accordance with Section 311 013(f) of the Texas Tax Code, Denton County Texas (the
`County") entered into an agreement with the Crty under which the County agreed to
deposit into the tax increment fund of the Zone (the `TIF Fund") one hundred percent
(100%) of its tax increment, as defined in Section 311 012(a) of the Texas Tax Code,
generated from property located in the Onginal Area (and not m the Expanded Area) of
the Zone (the `County Participation Agreement") and
WHEREAS, by operation of Section 311 013(1) of the Texas Tax Code, because
Ordinance No 12323 did not specify the portion of tax increment that the Crty would
deposit into the tax increment fund of the Zone, the City Is required to deposit one
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hundred percent (100%) of its tax increment generated by property located In the Original
Area of the Zone into the TIF Fund (with the understanding that, in accordance with
Ordinance No 13889 the City does not contribute tax increment generated by property
located m the Expanded Area of the Zone into the TIF Fund) and
WHEREAS, FW Sports Authonty Inc. (the `Sports Authority") is an industrial
development corporation created by the City pursuant to the Texas Development
Corporation Act (as codified at Article 5190 6, Section 4B Texas Revised Civil Statutes)
to aid, assist, and act on behalf of the City m the performance of the City's governmental
functions to promote the common good and general welfare of the City and in
undertaking and completing projects authorized by such Act; and
WHEREAS, m accordance with rts mission, the Sports Authonty has purchased
the real property and improvements known as Texas Motor Speedway (the `Property")
for $20 million (the `Purchase Price") from Texas Motor Speedway Inc. ("TMS '), a
Texas corporation, pursuant to and in accordance with that certain Purchase Contract
between the Sports Authonty and TMS dated on or about December 18 1996 (the
`Purchase Contract") and
WHEREAS, as provided in the Purchase Contract and the Zone s current project
and financing plans, adopted by the board of directors of the Zone on September 6 2002
and approved by the City Council on October 29 2002 pursuant to Ordinance No 15304
tax increment generated from property located in the Original Area of the Zone is to be
used to pay installments on the Purchase Price of the Property and
WHEREAS, the Sports Authority and TMS have entered into that certain Joint
Exploration Contract dated on or about November 26 2008 (the Joint Exploration
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Contract") for the purpose of facilitating the production of oil, gas, and other minerals
from the Property and the Sports Authonty expects to receive certain revenues
associated with the lease or leases of Minerals (as defined m the Joint Exploration
Contract) underlying the Property and
WHEREAS, the City Council desires that certain revenues received by the Sports
Authonty associated with the lease or leases of Minerals underlyng the Property (the
`Designated Mineral Lease Revenues") be used by the Sports Authonty as a funding
source for installments on the Purchase Pnce of the Property in lieu of the City's tax
increment revenues, and
WHEREAS, in accordance with that certain Amendment No 1 to Purchase
Contract dated on or about November 26 2008, the Sports Authonty and TMS have
amended the Purchase Contract to accommodate this substitute funding arrangement,
subject to execution of a Mineral Lease m accordance with the Joint Exploration
Contract; and
WHEREAS, accordingly the City wishes to cease its deposit of any tax
increment into the TIF Fund, subject to and in accordance with the terms and conditions
of this Ordinance; and
WHEREAS, Section 311 013(m) of the Texas Tax Code allows the City to
reduce the portion of tax increment that rt is required to deposit into the tax increment
fund of the Zone so long as the Crty first provides each county participating m the Zone
to reduce its contribution rate by the same amount; and
WHEREAS, in accordance with Section 311 013(m) of the Texas Tax Code, the
Crty has provided the County with an opportunity to reduce its contribution rate to the tax
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increment fund of the Zone, and the County has elected to continue its participation in the
Zone, but to cap its annual deposits of tax increment into the tax increment fund of the
Zone at $90 000 per year as reflected in an amendment to the County Participation
Agreement previously approved by the Denton County Commissioners Court;
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF
THE CITY OF FORT WORTH, TEXAS
Section 1
Section 7 of Ordinance No 12323 is hereby renumbered as Section 7.A, and
Section 7 of Ordinance No 12323 is amended to add Section 7.B, as follows
SECTION 7.B That until a Mineral Lease (as defined in that
certain Joint Exploration Contract between FW Sports Authority Inc. and
Texas Motor Speedway Inc. dated on or about November 26 2008) is
executed m accordance with such Joint Exploration Contract, the City will
deposit one hundred percent (100%) of its tax increment, as defined by
Section 311 012(a) of the Texas Tax Code, generated by property located
m the original boundary of the Zone, as established by Ordinance No
12323 (the `Original Boundary"), into an escrow account of the City (the
`Escrow Account") Once a Mineral Lease is executed by and between
FW Sports Authority Inc. and Texas Motor Speedway Inc. in accordance
with the Joint Exploration Contract between those parties,. (i) all funds
deposited by the City into the Escrow Account may be transferred to the
general fund or any other fund of the City in the sole discretion of the
City and (ii) the City shall no longer deposit any tax increment generated
by property located in the Original Boundary of the Zone into the Tax
Increment Fund for the Zone or into the Escrow Account. In the event
that the Joint Exploration Contract between FW Sports Authority Inc. and
Texas Motor Speedway Inc. is terminated a,n accordance with its terms
prior to the execution of a Mineral Lease between those parties, (i) all
funds deposited by the City into the Escrow Account shall be transferred
to the Tax Increment Fund for the Zone and (ii) the City shall thereafter
deposit into the Tax Increment Fund for the Zone one hundred percent
(100%) of its tax increment generated by property located m the Original
Boundary of the Zone until expiration or termination of the Zone in
accordance with Section 5 of Ordinance No 12323 In no event shall the
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Ordinance Increasing Size of Board of Directors of
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City deposit into the Tax Increment Fund for the Zone any tax increment
generated by property located m the expanded area of the Zone, as
established by Ordinance No 13889
Section 2
That all provisions of Ordinance Nos. 12323 and 13889 that are not expressly
amended herein shall remain m full force and effect. If any portion, section or part of a
section of th>_s Ordinance is subsequently declared mvahd, inoperative or void for any
reason by a court of competent ~unsdichon, the remaining portions, sect>ons or parts of
sections of this Ordinance shall be and remain in full force and effect and shall not in any
way be impalred or affected by such declsion, opinion or~udgment.
Section 3.
That this Ordinance shall take effect and be m full force and effect from and after
rts adoption.
AND IT IS SO ORDAINED
ADOPTED AND EFFECTIVE December 16.2008
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APPROVED AS TO FORM AND LEGALITY
By
Peter Vaky
Assistant City Attorney
M&C•G-16405
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Ordinance Increasing Size of Board of Directors of
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City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION Approved on 12/16/2008 Ord No 18411 12 2008
~_..
... 0.
DATE Tuesday December 16 2008
LOG NAME 17TIF 2 DEPOSIT
REFERENCE NO G-16405
SUBJECT
Adopt Ordinance Ceasing Participation in Tax Increment Reinvestment Zone Number Two City of
Fort Worth Texas Speedway TIF Authorize Amendment to Related Participation Agreement with
Denton County Texas City Secretary Contract No 24426
.. .u -- u ~ _ _ _ ..
RECOMMENDATION
It is recommended that the City Council
1 Adopt the attached ordinance providing for the City of Fort Worth to cease participation in Tax Increment
Reinvestment Zone Number Two City of Fort Worth Texas Speedway TIF and
2. Authorize the City Manager to execute an amendment to City Secretary Contract No 24426 an
Agreement between the City of Fort Worth and Denton County Texas to participate in the Speedway TIF
pursuant to which Denton County Texas will continue to participate in the Speedway TIF at an amount not
to exceed $90 000 00 per year
DISCUSSION
The Speedway TIF (TIF) was created by the City Council on December 19 1995 pursuant to Ordinance
No 12323 The original boundary of the TIF included the Texas Motor Speedway On August 10 1999 the
City Council adopted Ordinance No 13889 expanding the size of the TIF including property owned by
Northwest Independent School District, Beechwood Business Park Joint Venture Beechwood Hospitality
Development, L.P Beechwood Golf Development, L.P and Roanoke Ranch and Investment Company
The City of Fort Worth (City) and Denton County elected to deposit into the TIF Fund 100 percent of their
tax increment generated by property located within the original boundary of the TIF Denton County's
obligation to participate in the TIF is governed by a Participation Agreement between the City and Denton
County City Secretary Contract No 24426 All of the City's and Denton County's tax increment revenue
currently is dedicated to discharge the obligation of Fort Worth Sports Authority Inc. (the Sports Authority)
to pay a $20 million purchase price for Texas Motor Speedway which the Sports Authority owns The
current balance of that purchase obligation is approximately $15 9 million
Northwest Independent School District elected to contribute 100 percent of its tax increment generated by
property located within both the original boundary and the expanded boundary of the TIF Two-thirds of that
revenue is required to be used for educational facilities located within the TIF The remaining one-third may
be used for other TIF-eligible expenses set forth in the TIF's project plan which was approved by the City
Council of the City of Fort Worth in 2002 but that revenue is not available for use in discharging the Sports
Authority's purchase obligation for Texas Motor Speedway Neither the City nor Denton County contribute
tax increment generated from property located in the expanded area of the TIF
The Sports Authority has entered into a Joint Exploration Agreement with Texas Motor Speedway Inc
(TMS) for the purpose of facilitating the production of oil gas and other minerals at Texas Motor Speedway
Logname• 17TIF 2 DEPOSIT Page 1 of 2
and the Sports Authority expects to receive certain revenues associated with the lease or leases of minerals
underlying the property The Sports Authority and TMS have agreed to amend the purchase agreement for
TMS so that the Sports Authority can use revenues it receives from mineral leases to discharge its
purchase obligation in lieu of the City's tax increment revenues In 2008 the City contributed approximately
$350 000 00 to the TIF
As a result, it is recommended that the City Council adopt an ordinance under which the City will cease
contributing any tax increment revenue to the TIF However under state law the City cannot reduce its level
of participation in a TIF unless it gives each county that is participating in the TIF an opportunity to reduce
its level of participation by the same amount. Denton County has agreed to continue contributing a tax
increment to the TIF provided that the City agrees to cap Denton County's obligation at $90 000 00 per
year In 2008 Denton County contributed approximately $93 000 00 to the TIF Denton County's continued
deposits of tax increment to the TIF Fund will continue to be used to assist the Sports Authority in satisfying
its purchase obligation for Texas Motor Speedway Once that obligation has been discharged Denton
County's tax increment deposits may be used for any TIF-eligible expense authorized by the TIF's project
plan
The attached ordinance provides for the City to make annual deposits of tax increment generated by
property located in the original boundary of the TIF into a City escrow account instead of the TIF Fund until
a mineral lease is executed between the Sports Authority and TMS Once those parties enter into a mineral
lease all revenues in the City escrow account may be transferred to the City's general fund for any use
desired by the City and the City will cease its participation in the TIF altogether In the event that the Joint
Exploration Contract between the Sports Authority and TMS is terminated before a mineral lease is
executed between those two parties all parties will return to the status quo meaning that the revenues in
the City escrow account will be transferred to the TIF Fund and both the City and Denton County will
continue to contribute 100 percent of their tax increment to the TIF for use in satisfying the Sports
Authority's purchase obligation for Texas Motor Speedway
FISCAL INFORMATION/CERTIFICATION
The Financial Management Services Director certifies that following adoption of the attached ordinance and
execution of a mineral lease between Fort Worth Sports Authority and Texas Motor Speedway Inc. in
accordance with the above-referenced Joint Exploration Contract, the City will save at least $350 000 00
per year
TO Fund/Account/Centers FROM Fund/Account/Centers
Submitted for City Manager's Office bv. Tom Higgins (6192)
Originating Department Head. Jay Chapa (6103)
Additional Information Contact: Peter Vaky (7601)
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