FORT WORTH, TEXAS
REINVESTMENT ZONE #4
TAX INCREMENT FINANCING DISTRICT
Fort Worth Southside Development District
PROJECT & FINANCE PLAN
August 30, 1999
Updated 5-28-02
TAX INCREMENT FINANCE DISTRICT #4
TABLE OF CONTENTS
PAGE
CHAPTER 1 - EXECUTIVE SUMMARY 1
CHAPTER 2 - INTRODUCTION
Tax Increment Financing 3
Project and Finance Plans 4
TIF Increment 4
Financing the Project 4
Fort Worth Southside Development District 5
CHAPTER 3 - PROJECT PLAN
Background 7
Tax Increment Financing District #4 7
Existing Uses and Conditions 8
Land Use Description 8
Transportation 9
Visual Characteristics 10
Historic Resources 10
Development Concepts 10
Projects by Category 13
Propose Changes of Municipal Ordinances 15
Non-Project Costs 15
Relocation Plan 16
CHAPTER 4 - FINANCE PLAN
Economic Impact 17
Tax Increment 18
Background 18
Projections 20
With and Without TIF 22
Project Financing 25
Project Elements by Category 26
Project Cost Assumptions 30
Projected Timeline of Expenditures -1999 thru 2006 31
CHAPTER 5 - VALUATION UPDATE AND INCREMENT PROJECTIONS 33
CHAPTER 6 - ADMINISTRATIVE EXPENSES 34
CHAPTER 7 - BOARD OF DIRECTORS & SUPPORT STAFF 35
CHAPTER 8 - MEETING AGENDAS & HANDOUTS 37
APPENDICES TAB
Fort Worth Southside Development District Strategic Plan 1
Executive Summary - October 1995
Preliminary Finance Plan - November 10, 1997 2
Increment Details By Taxing Jurisdiction 3
Exhibits I through N - 1998 estimates
Chronology of Events - May 1995 to date 4
Adopting Ordinance No.13259 on November 25, 1997 5
Substitute correct property description to Ordinance 13259, 12/16/97 6
Ordinance No.13919 approving Project & Finance Plan - 8/31/99 7
Inter-local Agreements between the City of Fort Worth and:
Fort Worth Independent School District - August 31, 1999 8
Tarrant County 9
Tarrant County College 10
Tarrant County Hospital District 11
Tarrant Regional Water District 12
TIF Enabling Legislation 13
Open 14
Open 15
EXHIBITS PAGE
A. Aerial photograph of Fort Worth Southside Development District 5
B. Map of TIF Boundaries 6
C. Land Use Development Concepts Map 12
E. Graph of Taxable Real Property Value Change - 1994 through 1997 17
F. TIF Increment Projections 20
G. Tax Revenues With and Without Reinvestment Zone 23
H. Graph of Revenues With and Without Reinvestment Zone 24
I. TIF Increment Projections - City of Fort Worth TAB 3
J. TIF Increment Projections - Fort Worth Independent School District TAB 3
K. TIF Increment Projections - Tarrant County TAB 3
L. TIF Increment Projections - Tarrant County College TAB 3
M. TIF Increment Projections - Tarrant County Hospital District TAB 3
N. TIF Increment Projections - Tarrant Regional Water District TAB 3
O. Project Elements by Category 27
P. Project Costing Assumptions 30
Q. Project Implementation Timeline - 1998 through 2006 31
CHAPTER 1
EXECUTIVE SUMMARY
Purpose Revitalization of Fort Worths near Southside
Property values between 94 - 97 decreased 8% in TIF District vs. increasing 23% in the County and increasing 16% in the City.
Boundaries 2,770 Parcels and 1,330 Owners
Largely coincident with Fort Worth Southside Development District
Large exempt properties - Harris, Cook Childrens, and JPS hospitals
Carved out properties enjoy City historical property tax exemptions
3.33% of value and 8.74% of land area within TIF is residential
Projects Fort Worth South Master Development Plan
Southside Medical District Strategic Redevelopment Plan - May95
Pay as you go, or developer financed infrastructure investments
Valuation Property inside TIF boundary valued at $520 million before carve outs
Taxable Value 1-1-97 $230 million Base Value
Taxable Value 1-1-98 $226 million (1.7%)
Taxable Value 1-1-99 $222 million (1.5%)
Taxable Value 1-1-00 $235 million 5.8%
Taxable Value 1-1-01 $253 million 7.7%
Increment Through January 1, 2001 property values increased $23.6 million.
Tax Rates Entity 01 Tax Rate (per $100 in value) Percentage
City $ 0.865000 27.59%
ISD $ 1.641100 52.24%
County $ 0.274785 8.70%
Hospital District $ 0.234070 7.45%
TCC $ 0.106410 3.39%
Water District $ 0.020000 0.63%
Total $ 3.141365 100%
Term 25 years - January 1, 1997 until December 31, 2022
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Cash Flow Increment projections suggest TIF will reach $60 million cap in year 19
Participation All six taxing jurisdictions are participating fully
FWISD to dedicate 50% of its contribution to school projects in TIF
County caps contribution at $4 million
Hospital District caps its contribution at $3.5 million
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CHAPTER 2
INTRODUCTION
Tax Increment Financing
A Tax Increment Financing District (TIF District) is an economic development tool used by local governments to finance public improvements within a defined geographic area.
TIF Districts are created to strengthen existing positive conditions and attract new development. The purpose of Fort Worth TIF No.4 is to:
Attract new investment and encourage revitalization of the near southside of Fort Worth which is an area that will continue to decay without TIF financed infrastructure.
Create redevelopment momentum that will create substantial financial gains to local taxing jurisdictions both during and beyond the life of the TIF.
Recreate an economically viable, mixed-use, central city neighborhood.
Leverage the resources and energy of an existing community based revitalization initiative, Fort Worth South, to recognize the goal of revitalizing the District.
Serve as a catalyst for the revitalization of areas adjacent to the TIF.
The tax increment financing technique was first used in the 1970s in California to revitalize deteriorated central city neighborhoods. TIF No.4 has been created for the same purpose.
Chapter 311 of the Texas Local Government Code is the legislation that governs Tax Increment Financing.
A City may make an area eligible for tax increment financing by designating a reinvestment zone, also known as a tax increment finance district. Designation of a TIF district usually occurs after petitions from the owners of 51% of the assessed value of a certain geographic area ask the City to create the district. A TIF district may also be created without a petition of the owners by direct action of the City Council. TIF 4 was created by such an action to avoid the time consuming task of securing endorsement from the 1,330 affected property owners.
A TIF district allows for the tax increment generated from appreciating property values within the area to be dedicated to new public improvements within the same area. As the assessed value of property within a TIF district increases over time, an increase in the taxes collected from the additional value is captured in a tax increment fund. These funds are then used to finance new public improvements with in the district.
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As specified by State law, a TIF District Board of Directors must be appointed to oversee the administration of the TIF district and fund. Additionally, State law requires that project and finance plans be developed as planning and information tools in the administration of the TIF district.
Project and Finance Plans
The Tax Increment Finance District Project and Finance Plans represent a study that projects the potential sources and uses of tax increment dollars. An economic impact study and overview is provided in the Finance Plan along with estimates on the potential revenue that will be available to fund projects. The Finance Plan also outlines how TIF District increment may be used and shows the time over which expenses will be incurred.
A project plan provides information on the current land uses within the district and provides information of the development to occur. It also provides information on relocation of individuals affected by the TIF District and costs associated with non-TIF District public improvements. General, the items discussed in the Project and Finance Plans meet requirements specified under State Law that govern Tax Increment Financing.
TIF Increment
TIF District Tax Increment is created when new taxable development occurs within an established TIF District. After its creation, the appraised value of the TIF District property becomes the base value for the purpose of Tax Increment Financing. All taxes collected from that base value continue to flow to the local government entities that tax within the district. Taxes collected from new taxable value within the TIF District become the source of the TIF District tax increment. This increment flows into the TIF District Fund which is managed by the Citys Finance Department.
The amount of increment that is captured in the TIF District Fund in dependent on the participation of local taxing entities. A local taxing entity may choose to participate in Tax Increment Financing by dedicating a portion of its tax increment to the TIF District Fund. The participation of an entity in Tax Increment Financing is accomplished through an inter-local agreement between the entity and the City.
Financing the Project
New public infrastructure investments within TIF District #4 are expected to be funded on a pay-as-you-go basis using available cash increment as it is created. At this time the District does not expect to use public debt instruments to finance improvements.
The District will enter into development agreements with investors, property owners, and developers to reimburse over time the cash investments they make in new public infrastructure associated with private development.
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CHAPTER 3
PROJECT PLAN
Background
In May 1995 the City Council adopted the Southside Medical District Strategic Plan (see Appendix A - Southside Medical District Strategic Plan - Executive Summary). This Plan established the framework upon which the revitalization of 1,400 acres commonly known as the Medical District, located immediately south of the Central Business District, would move forward.
The Plan was sponsored by the City of Fort Worth, the Fort Worth Transportation Authority, and many private businesses located within the District. This $150,000 two-year planning initiative was significant in many aspects including the amount of input and review from citizens, businesses, government, property owners and community stakeholders. It profiled the history, trends, opportunities and challenges of the neighborhood, and most importantly established a strategy for implementing the revitalization plan.
The plan envisioned the need to create a TIF to support and encourage private investment. It would allow the City to use its power of condemnation to acquire private property in order to carry out an area-wide redevelopment strategy for the district. The principal activities of the TIF District were to provide funding for major capital improvements and to provide funding for public infrastructure which encouraged private investment.
The Plan recognized that improvements in public infrastructure would be needed to attract new investment. The cost of the required infrastructure exceed the Citys normal funding amounts and the improvements are needed in advance of the Citys normal funding cycle.
See Exhibit A - Aerial Photo of Fort Worth South.
Tax Increment Reinvestment Zone Number Four - Established November 25, 1997
On September 23, 1997, The Fort Worth City Council passed Resolution No. 2338 which set November 25, 1997 as the date for a public hearing to be held before the City Council regarding the designation of this property as a reinvestment zone. At the conclusion of the public hearing on November 25, 1997 the City Council passes Ordinance No. 13259 creating Fort Worth Tax Increment Reinvestment Zone Number Four.
Prior to the City Council approval, the Zone received support and resolutions of intent to participate from other taxing entities, including the Fort Worth Independent School District, Tarrant County, The Tarrant County Hospital District, Tarrant County Junior College System, and the Tarrant County Water Control District #1.
The 25 year term of the District took affect on January 1, 1997. It is scheduled to terminate on December 31, 2022 or when the incremental tax revenues contributed to the District reach $60 million, whichever comes first.
See Exhibit B - Map of TIF Boundaries.
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TIF District #4 has been created to provide funding for new public infrastructure to support the revitalization and redevelopment of this area. The boundaries of TIF District #4 are slightly smaller than the Development District, but for practical purposes the two are congruent. Fort Worth Southside Development District, Inc. is a 501(c)(4) non profit development company that carries the same name as the geographic district. The organization is commonly known as Fort Worth South, Inc. It was created in May 1995 to drive the revitalization of the area initiated the creation of Reinvestment Zone 4.
Existing Uses and Conditions
The near southside is one of the oldest neighborhoods in the City, and has experienced significant changes to its original characteristics.
The natural topography of the District is generally flat, with no major land forms or drainage patterns that would provide significant limitations or constraints to development. The physical attributes of the District are therefore influenced almost exclusively by the historic development patterns and other human-related factors. Following is a summary of these characteristics:
Land Use
The Southside Medical District is a large area consisting of a diversity of land uses ranging from single-family homes to high-rise medical facilities to industrial and warehousing uses. Exhibit C (Land Use Map) identifies generalized land-use zones. Following is a summary of these land uses:
Major medical institutions and associate support uses are generally located in three core areas as described below. Uses in these core areas include high-rise medical facilities, emergency rooms, doctors offices, medical supply establishments and other support services.
The northwest area is the largest and includes Plaza Medical Center, Cook Childrens Medical Center, Harris Methodist Fort Worth Medical Center, Vencor Hospital Fort Worth, and Medical Group of Texas. Located in the southwest quadrant of the District are All Saints Hospital and the Moncrief Cancer Center. John Peter Smith Hospital and Heritage St. Joseph Gardens are located in the southeast quadrant.
Retail uses are generally limited to restaurants and small shops in one and two-story buildings with a noticeable absence of major grocery and department stores. Smaller retail uses are generally located along major arterials.
Recent revitalization along Magnolia Avenue has resulted in the development of significant retail/restaurant uses along this corridor.
Office uses are generally associated with and located in close proximity to the medical institutions. Uses range from small office buildings to larger, mid-rise office buildings.
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Industrial uses are concentrated along the northern and eastern sides of the District. Uses include light industrial and warehouse uses.
Single-family residential uses are generally concentrated in two zones, one south of Rosedale and the other north of Rosedale.
The area south of Rosedale, particularly that area encompassed by the Fairmount Historic District, has shown recent signs of revitalization and includes the most stable neighborhoods of the District. Designation of this area as a National Register Historic District has contributed to the recent revitalization. While single-family homes are the predominant land use, multifamily buildings are scattered throughout the area.
The northern residential zone is generally less stable and has experienced significant decline and intrusion of incompatible uses such as industrial. This is particularly true for the residential area between Main Street and the railroad tracks, where vacant land and abandoned buildings predominate. Residential uses are generally limited to single-family homes.
Single-family uses are also located east of the Burlington Northern Sante Fe and Union Pacific Railroad tracks as well as east of Interstate 35.
Multifamily residential uses are scattered throughout the District and range from small, independent apartment buildings to a high-rise apartment towers.
Community facilities are public and semipublic facilities which serve and promote the safety, educational welfare, recreational, entertainment and spiritual needs of the community. These uses include the numerous schools and churches that are scattered throughout the District. Public schools included Trimble Technical High School, Van Zandt-Guinn Elementary School, DeZavala Elementary School, and Lilly B. Clayton Elementary School, and the Accelerated High School.
Dedicated park land and recreational facilities are limited to Fire Station Park (1.5 acres), north of Allen and west of Hemphill, and Fairmount Park(.75 acres) in the Fairmount Historic District.
Vacant and undeveloped land is scattered throughout the District. Vacant parcels tend to be fewer in the areas to the south and immediately adjacent to the hospitals and in greater number in the industrial and single-family areas to the north and east. This is particularly true for the area between Main Street and the railroad tracks. About 30% of the 1,400 acres is vacant land.
Transportation
The Southside Medical District currently exists with a framework for roadway, public transportation, and parking facilities that offer both challenge and opportunity for the future. The proximity to the CBD, the reconstruction of Interstate 30, the creation of a rail mass transit terminal at the T&P Depot, and the
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continued redevelopment of the District itself, suggests a significant transition period.
Public Transportation in the District is provided by the Fort Worth Transportation Authoritys five primary bus routes and by MITS vehicles.
Parking in the northwest quadrant is considered adequate, but future growth in the medical sector is requiring consideration of additional parking structures. There are parking deficiencies around John Peter Smith Hospital and at scattered office or restaurant locations within the area.
Visual Characteristics
The visual and landscape quality of an urban environment contributes significantly to the quality of that environment and the image that people have of that area. Following is a brief summary of the visual and landscape characteristics of the District.
The most significant view within the District is of the downtown Fort Worth skyline.
Significant landmark buildings within the District are limited to high-rise medical facilities, particularly Harris Methodist, Cook Childrens, Plaza Medical, John Peter Smith and St. Joseph Gardens. In addition there are a number of significant historical structures.
Along most arterial streets, inconsistent land uses, architectural character, building set backs, and streetscape treatment contribute to the lack of quality street environments and the inability of these streets to establish strong urban form.
Overall, the District lacks consistency in landscape treatment, resulting in the absence of readily identifiable image or identity. Significant landscaped spaces are limited to areas within the campuses of the medical institutions and on a limited number of tree-lined street in the older residential neighborhoods.
Historic Resources
The District has more than 100 structures selected or eligible for the National Resister of Historic Places.
Development Concepts
Lack of a strong land use policy and supporting zoning has contributed to deteriorating land values and substantially declining residential base within the District. The conceptual plan for the revitalization of the Development District is based on the need for a rational land use pattern, reinforced by zoning. It will provide a foundation for growth and stability, as well as a framework within which both short- and long-range decisions are made about physical
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development of the District. Elements addressed in the plan include land use and redevelopment opportunities, urban design and open space, and transportation and parking (see Exhibit D - Development Concepts).
The Strategic Plan has been developed as a guide for the revitalization and future development of the District and surrounding neighborhoods. The physical planning concepts that serve as the framework for the plan are as follows:
Reinforce existing medical institutions by providing opportunities for expansion and encouraging the development of medical-oriented services in close proximity.
Stabilize and enhance existing viable neighborhoods by encouraging infill or appropriate uses and prohibiting development of incompatible uses.
Provide additional opportunities with the development of a mixed use/residential district at Hemphill Street and Rosedale Street.
Provide an economic stimulus for the existing Magnolia Avenue commercial corridor by encouraging the development of office and residential uses in areas immediately adjacent to the corridor.
Provide for the development of a community-oriented retail center to serve the needs of District employees and residents.
Encourage the development of high-quality, freeway-oriented commercial development along the planned realignment of Interstate 30.
Provide for new business growth and job creation within the District through the establishment of a Technology Park and Vickery Business District.
Provide for long-term, moderately priced hotel accommodations.
Encourage a stimulus for economic revitalization of the Evans Avenue Corridor by encouraging freeway oriented development at the Rosedale Street interchange with Interstate 35W.
Establish redevelopment opportunities that will serve as a catalyst for the revitalization of the District and surrounding areas.
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Projects by Category
The following list of projects has been compiled from information in the Southside Medical District Strategic Plan (Sasaki & Associates - May 1995) and from the ongoing work of Fort Worth South, Inc.
It is a list of potential public infrastructure projects that support the redevelopment of the Reinvestment Zone and could be financed by the increment projected over the 25 year term of the TIF. These investments would serve as an incentive for private sector investment.
The nature of this revitalization project will require project and financing flexibility to effectively stimulate reinvestment. They are grouped by category to suggest the scope of planned investments.
The following list includes most of, but not all, likely projects:
1. Residential
30,000 people work in the Medical District. 2% of that population also live in the area. A survey of workers indicated that 17% would live in the area if suitable accommodations were available. This factor places new residential construction high on the list of priorities for the TIF. If we are able to bring back residents the other elements of the master revitalization plan will also begin to develop. TIF expenditures will be made on public infrastructure placed in the public right of way that supports the construction of new residences, ie curbs, sidewalks, landscaping, lighting, utilities, etc.
Multi-Family, New / Moderate Income Rental Apartment Communities
Multi-Family, New / Market Rate Rental Apartment Communities
Townhomes for Purchase - Oleander Walk - Hurley to College
Single Family Homes - Vintage Collection
2. Retail
As the number of people living in the District grows the need for retail services will also grow. Actually these two sectors will develop together. TIF resources dedicated to the retail sector will focus on encouraging investors to develop those services needed by the residents and employees of local businesses.
Rosedale / Hemphill Neighborhood Shopping Center
Grocery, fast food, & retail
Infrastructure, utilities, parking
Village Square - One acre park with surrounding 10-20,000 sf retail
Plaza with fountain, landmark, landscaping, etc.
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3. Business Development Sites
With the enticement of financial support from a TIF we anticipate interest from developers who see value in developing vacant and underutilized land. Three high potential projects are identified below.
Vickery Boulevard Business District - between Henderson & Main Hotel/conference Center
Technology Park - East of South Main Street
4. Streetscape / Boulevard / Parkways / Gateways
Magnolia Street - Hemphill to South Main
Oleander Street - Hurley to College
South Main Street - trees, lighting, sidewalks
Rosedale Street - landscaped median & parkway, irrigation, utilities
Vickery Boulevard - landscaped median and parkway
Hemphill Street - landscaping
Pennsylvania/Hattie Streets - landscaping
Henderson Avenue - Intersection & boulevard improvements Pa. & Rosedale
Other Streets - Summit, Eighth, Jennings, Allen, & Evans
Street Furniture
Benches, Public Art, Sculptures, Trash Receptacles, Transit Shelters
Decorative Lighting not included in other projects
Gateway features and signage to signify entry into the District at:
Summit Avenue overpass of I-35
Henderson at railroad underpass
Hemphill at railroad underpass
Jennings at railroad underpass
South Main at railroad underpass
Hattie at I-35
Rosedale at I-35
Allen at South Main
Hemphill at Allen
Eighth at Allen
Rosedale at Forest Park
5. Parks Goal to create 50 acres of new public & private green spaces
Pocket and linear parks throughout the District incorporated into projects
Plant It 2000 treescape - John Denver Foundation, Cancer Survivors Park
Village Square - Plaza features, Gazebo and Landmark Tower
Trimble Technical High School - Recreational Park / Playing fields
Trolley Stops - Within transit linkages to Downtown
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6. Schools
The quality of the facilities on the school campuss and in the areas immediately adjacent to the schools within the District need to be improved. TIF funds can be used to supplement FW Independent School District capital spending to expand, improve supplement these facilities.
7. Signage
Employ city wide arterial directional and informational signage as suggested in the Linkages Study within District.
8. Parking Structures
Village Square - Shared residential & retail parking facility to support Magnolia retail activities.
9. Administration
Expenses in this category reflect the cost of managing and administering the TIF District.
Proposed Changes in Municipal Ordinances
At the current time the TIF District does not envision changes in building codes, zoning categories, or other municipal ordinances. However, the City is developing a new Comprehensive Plan which will reflect the development concepts and land use suggestions of Fort Worth Southside Development District.
Non-Project Costs
The nature of TIF District #4 is that there will be purchases and investments made across many use categories and over a large geographic area. TIF #4 is the largest reinvestment zone in Texas. Almost all of the investments made by the TIF will have non-project costs, ie expenditures on related projects that will be receive financial participation from either public or private entities.
However, it is not possible to quantify the non-project costs at this time, other than to say that they are expected to be far greater than the TIF costs on any single project.
An example of a specific project that will serve to further define the challenge of identifying specifically non-project costs is the State/City project to widen West Rosedale Street from a four lane street to a six-lane divided boulevard between Forest Park Boulevard and I-35. The $36.6 million project is funded 50/50 by the state and city. Funds are not available to landscape the median and parkway along the new street, estimated to cost $1.6 million. The TIF could chose to participate in the cost of landscaping the new boulevard, but this is an
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issue for future consideration by the TIF Board of Directors. If the TIF agreed to assume a portion of the cost of landscaping on this project the related non-project costs would be $36.6 million.
Another set of potential investments are to improve facilities on or adjacent to public school campuses within the TIF District. TIF expenditures would be made in connection with other
expenditures by the Fort Worth Independent School District. The specific ISD related
projects have not been determined but will be made over time as TIF funding is available and ISD needs are matched to other developments in the District.
Relocation Plan
As set forth in Section 311.011 in the Tax Increment Financing Act of the Tax Code, the Project Plan for the Fort Worth Reinvestment Zone Number Four must include the following element:
A statement of a method of relocating persons to be displaced as a result of implementing the plan.
The project plan anticipates that there will be no residences or businesses existing in the project development area of the reinvestment zone when development activities commence. If actions by the TIF result in relocation of any persons, the Residential Anti-displacement and Relocation Assistance Plan for the City of Fort Worth will govern their relocation.
While the need for relocation is not envisioned, it is acknowledged that in the event such relocation becomes necessary in carrying out the public improvements funded by this TIF District, such expenses will be the obligation of the District. The relocation program is administered by the Citys Housing and Human Serves Department. Should such a need arise, persons may appeal their cases through the established appeals process.
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CHAPTER 4
FINANCE PLAN
Economic Impact Study
Fort Worth Southside Development District is located immediately south of Downtown Fort Worth. Its neighborhoods developed early in the Citys history and it is now home to Tarrant Countys largest concentration of hospitals and out-patient medical services. Manufacturing and distribution, residences, retail services and schools give the area a diversity of activities. It is the Tarrant Countys second largest employment center with over 30,000 employees (Fort Worth CBD has 40,000 employees).
Despite its location at the crossroads of regional freeways and dramatic growth of the health care industry, taxable real property values in the area have not yet shown the resurgence since 1994 of either Tarrant County or the City of Fort Worth. Exhibit F illustrates the divergence of taxable property values since 1994. From 1994 to 1997, Tarrant County taxable real property values rose 23%. City of Fort Worth values rose 16%. Fort Worth South values fell 8%.
Exhibit E
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Stakeholders in the revitalization project appreciate low real estate prices and appraised values. They see the prospects of economic growth in this sleeping market as developers and consumers become aware of economic opportunities and a community drive powering Fort Worth South.
Another measure of the depressed market and readiness for redevelopment in this significant part of the City and region is the high percentage of vacant land. Tax records indicate that 22% of the privately owned land area in the reinvestment zone is vacant land with no structures of material value.
The Fort Worth Southside Development District has created a owner-driven program to lift itself by the bootstraps. With organizational structure similar to Downtown Fort Worth, Inc., Fort Worth Southside Development District, Inc. has been in existence since 1996. Fort Worth South is a 501(c)(4) nonprofit, private, member funded operating corporation. It is associated with a 501(c)(3) nonprofit foundation, Historic Southside, Inc. founded in 1985, to support redevelopment.
A three party effort sponsored by the City of Fort Worth, the Fort Worth Transportation Authority, and the businesses in the Medical District funded and produced a strategic plan for the community in May 1995. Goals for Fort Worth South have included creation of a Tax Increment Financing program for financing of public improvements.
Owners of property in the Southside community believe the area will realize more of its strong potential for economic development then tax increment financing can be used to attract private redevelopment. With tax increment financing a developer may construct approved public improvement and anticipate reimbursement from the future tax flows generated by the associated development.
Tax Increment
Background
Exhibit F (TIF Increment Projection) presents the projected value of real property in TIF #4 over the 25 life of the reinvestment zone as well as the projected incremental cash flows that would flow to the TIF fund assuming full participation by the six taxing jurisdictions.
The exhibit reflects actual 1998 Tarrant Appraisal District (TAD) property values which exceeded 1997 values by .58%. This contrasts with a history of declining values in earlier years. It also reflects the feeling of the community that the trend of declining property values has turned positive.
The cash flows are a product of the following variables:
The base year value of real property in the zone, less the value of tax exempt properties;
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Annual changes in taxable value of the zone;
Participation of the taxing jurisdictions;
Annual changes in tax rates;
Collection rate.
Looking at the history of Southside appraised value trends and looking forward, it is possible to construct a forecast of rates of change in real property values. The change in market appraisal expressed in Exhibit F (TIF Increment Projection), and in Exhibits I through N (TIF Increment Projections for each taxing jurisdiction) which are presented in the Appendix C, reflect the following factors:
After years of decline, aggregate taxable real property values determined by TAD have risen each year after 1994 for Tarrant County and Fort Worth. Average annual value increase rates in the City since 1994 have exceeded 5%.
Real property valuations by TAD within the proposed reinvestment zone showed some recovery of values in 1995, but declines for 1996 and 1997.
Real estate experts estimate that national values of real property have grown 3% to 5% in 1997 and 1998. More distant projections are anyones guess; if real estate is to remain an attractive investment alternative, property values need to out pace the consumer price index, which has been increasing approximately 3% a year.
Because the Fort Worth economy is anticipated to equal or better the growth rate of the national economy for the intermediate future, real property values in the area should continue to grow at or above national rates.
A reasonable forecast for property values in Fort Worth South is that taxable values will generally rise as regional values rise, but to a lesser extent, based on (a) recent history of value changes, (b) the aging public infrastructure in the proposed reinvestment zone and (c) current popular perception among consumers and developers that the zone is stagnant. A fair long-term forecast for the Fort Worth south area, with status quo conditions (no tax increment financing), is for average annual growth of taxable real property of only 1% into the indefinite future.
It is possible that market values of real property in the reinvestment zone will jump at the news of tax increment financing for public improvements within the zone, but a more conservative forecast is that zone values will rise at a slow 1% rate through 1999. If a positive cash flow for the TIF fund is established in 1998 and 1999, a new development using TIF funds coup appear on the tax roll in 2001.
From 2001 through 2010, average annual change in taxable values of the zone with tax increment financing is estimated at 5%. This represents addition of roughly $9 million (in 1998 dollars) of new real property value in addition to a
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1% appreciation of the previous years value of the zone. This added value could come from any combination of new construction or appreciation.
Exhibit F assumes that the annual growth rate slows to 4% from 2011 through 2015, as current cash flows to the TIF fund may have been obligated for debt service on notes of developers with previous projects. Hopefully, prior activity in the zone before this time will have started a trend of private investment and future developers will require diminishing assistance from the TIF fund. For the final five years of the TIF funds life, the annual growth assumption settles to a modest 3%, where it remains for the ten years after the sunset of the TIF fund.
Projections
This set of growth rate assumptions implies a conservative (and attainable) volume or real estate construction in the zone during the life of the TIF program. Assuming a background appreciation rate of 1% for real property, the forecast market value of taxable real property in the zone after twenty-five years can be achieved by taxable new construction during that time. The forecast cash flow to the TIF fund is approximately $51 million, measured in 1998 dollars.
This ratio of new construction to TIF cash flow is approximately 2.8:1. This ratio is conservative by comparison with the roughly 5:1 ratio of construction to TIF revenue for the State-Thomas TIF in Uptown Dallas or the 3.6:1 ratio for Mesquites Rodeo City TIF pro forma.
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With and Without the TIF
Although Exhibit F presents an accurate simple forecast of real property tax revenue from the reinvestment zone to the TIF fund and participating jurisdictions, Exhibit G presents a more thorough picture of how the reinvestment zone affects cash flow. Exhibit J introduces supplemental business personal property (BBP) tax flowing to taxing units from the zone.
Texas local governments levy ad valor em taxes on two types of property: real property and business personal property. A TIF fund is not entitled to any increase in BPP tax at any time. Consequently, when a TIF program succeeds at attracting new investments to the reinvestment zone, all increases of BPP value are taxable by the taxing units. The taxing units retain all the BPP tax.
Exhibit G & H (Tax Revenues With and Without Reinvestment Zone) present this information in both spreadsheet and graphical formats.
The estimated supplemental BPP tax flowing to taxing units is sufficient to limit the annual property taxes foregone by the five combined jurisdictions to less than $170,000 in any year. After twelve years, anticipated annual ad valor em tax flowing to participating jurisdictions will exceed the tax flows anticipated without the reinvestment zone and tax increment financing.
A more detailed assessment of the BBP factor is covered in the Preliminary Financial Plan prepared by Stein Planning and Management (Appendix B).
22
Project Financing
During the formulation of Fort Worth TIF #4, it was never anticipated that the incremental cash flow from the District would repay municipal bonds sold for the purpose of constructing new public infrastructure.
It is expected that the TIF District will enter into agreements with private developers to secure reimbursements for their cost of constructing public infrastructure associated with their private development project.
It was also anticipated that TIF funds would be spent as they were available to accomplish the elements of the Project Plan.
As of August 31, 1999 TIF District has entered into no agreements and has no financial obligations.
25
Project Elements by Category
The following list of projects (Project Elements) compose the Fort Worth TIF #4 Project Plan. It has been compiled from information drawn from the Southside Medical District Strategic Plan (Sasaki & Associates - May 1995) and from the ongoing work of Fort Worth South, Inc.and their stakeholders.
It is a list of potential public infrastructure projects could be financed by the TIF increment and would serve as incentives for private sector investment. The costing assumptions for these estimates are detailed in Exhibit 0 (Project Costing Assumptions).
The projects are grouped in categories of similar type. A summary report of costs is attached.
A comparison of projects to be initiated within the first eight years of the TIF District and the anticipated increment is reflected in Exhibit P (Project Implementation Timeline - 1998 through 2006)
26
Project Elements by Category
Exhibit O
1. Residential Development $2,700,000
Multi-Family, New Low Moderate Income Rental Apartment Community $860,000
Multi-Family, New Market Rate Rental Community
Village Square - 250 to 300 units ($2,500 / unit) $750,000
Boulevard Apartments - 150 units ($2,500 / unit) $380,000
Townhomes for purchase
Oleander Walk - Hurley to College
Public ROW, design, construction, irrigation, trees
Three pocket parks (60x60) @ $42,000 $130,000
Nine Block Faces on two sides of street @ $15,750 $300,000
Lighting $180,000
Single Family Homes - New Infill
Vintage Collection - 50 homes
2,500 lineal feet of Curb, Trees, Sidewalks, Lighting, etc. $100,000
2. Retail Development $900,000
Rosedale / Hemphill Neighborhood Shopping Center $500,000
100,000 sf total including a 35,000 sf Grocery Store and Fast Food Retail
Total Development Cost = $95 /sf
Vacate streets, Infrastructure, Utilities, Parking
Village Square $400,000
One acre Park space with surrounding 10-20,000 sf retail
Plaza with fountain, landmark, landscaping, etc.
Land acquisition plus improvements
3. Business Development Sites $10,000,000
Vickery Boulevard Business District $5,000,000
Combined blocks along new Vickery between Henderson & Main Hotel/Conference Center and Commercial Offices - 500,000 sf
Technology Park - 15 acres, 250,000 sf, 2 to 3 story structures $2,000,000
Total Development Cost - $20 million
Adaptive reuse of existing buildings along South Main with expansions
Public Structures $500,000
Other projects $2,500,000
4. Streetscape / Boulevard / Parkways / Gateways $12,800,000
Magnolia Street $1,000,000
Extent existing streetscape from Hemphill to South Main
27
Oleander Street $0
Between Hurley and College - pocket parks and landscaping
South Main Street $700,000
Trees, lighting, sidewalks - 14 Blocks 400 @ $25,000 on two sides
Rosedale Street $2,500,000
Landscaped median and parkway, street trees, and irrigation
Relocate utilities underground - TU Electric - TIF contribution unknown
Vickery Boulevard $800,000
Landscaped median and parkway - 16 Blocks @ 400 @ $25,000 x 2
Hemphill Street $1,300,000
Landscaping - 26 Blocks @ 400 @ $25,000 x 2
Pennsylvania / Hattie Streets $1,000,000
Landscaping - 20 Blocks @ 400 @ $25,000 x 2
Henderson Avenue - Total project cost $1.3 million $500,000
Intersection Improvements at Pennsylvania - $215,000
Construct four lane boulevard Pruitt to Rosedale - $200,000
Other Streets $1,500,000
Summit Avenue
Eighth Avenue
Jennings Avenue
Allen Avenue
Evans Avenue
Street Furniture $1,000,000
Benches, Public Art, Sculptures, Trash Receptacles, Transit Shelters
Decorative Lighting $2,000,000
$10,000 per Block on two sides of the Street
Lighting not included in other projects
200 Blocks @ $10,000 per block face
Gateway Features $500,000
Includes canopy and ornamental Trees, Signage, Monumental Gateway
Structures and Bollards to signify entry into the District.
Summit Avenue overpass of I-35
Henderson at railroad underpass
Hemphill at railroad underpass
Jennings at railroad underpass
South Main at railroad underpass
Hattie at I-35
Rosedale at I-35
Allen at South Main
Hemphill at Allen
Eighth at Allen
Rosedale at Forest Park
5. Parks $13,000,000
Goal of 50 acres of open green space $12,500,000
Land acquisition @ $250,000 per acre
Landscaping @ $100,000 per acre
28
Pocket and Linear parks throughout the District Incorporated into projects $250,000
Plant It 2000 - John Denver Foundation - treescape
Cancer Survivors Park
Village Square $250,000
Plaza Features such as Gazebo and Landmark Tower / Carillon
Trolley Stops $500,000
Within District on transit linkages to Downtown
6. Schools $15,000,000
Enhance public education facilities at the following locations:
DeZavala Elementary School
Trimble Technical High School
Lily B. Clayton Elementary School
Van Zandt Guinn Elementary School
Accelerated High School
New elementary school campus
7. Signage $100,000
Arterial Directional and Informational Signage
8. Parking Structures $3,500,000
Village Square $3,500,000
Shared Residential & Retail Parking facility associated with Village Square
350 spaces, Two Level, Free to User, Cost - $10,000 / space
9. Administration $2,000,000
Expenses associated with managing and administrating the TIF District.
TOTAL $60,000,000
29
Project Cost Assumptions
Exhibit P
Multifamily Infrastructure Cost $2,500 per dwelling
Curbs / Gutters
Trees @ 30 spacing
Sidewalks
Irrigation (initially) to establish trees
Pocket Park Assembly (each) $42,000 each
Land Purchase 3,600 sf @ $8.00 per sf $30,000
Landscaping / treescape @ $2.50 per sf $10,000
Irrigation @ $.50 per sf $ 2,000
Parkway Landscaping $15,750 per 400 Block Face
Trees at 30 Centers 15 per 400 Block Face $ 6,750
Irrigation 400 Linear feet $ 2,000
Sidewalks 5 wide @ 400 LF $ 7,000
Parkway Lighting $10,000 per 400 Block Face
Lamps 8 per block @ $1,200 ea $10,000
Land Assembly - Parks
Park Land $2.50 per sf - Assumes streets / condemned excess land
Landscaping $2.50 per sf - Trees, irrigation, etc.
Parking Structures
Two Floor Simple concrete frame structure @ $10,000 per space including circulation
One floor above grade
Three Floor Concrete / Steel Frame @ $12,500 per space
30
31
32
CHAPTER 5
VALUATION UPDATE & INCREMENT PROJECTIONS
33
CHAPTER 6
ADMINISTRATIVE EXPENSES
34
CHAPTER 7
BOARD OF DIRECTORS
5/23/02
City of Fort Worth
Wendy Davis City Council Member (o) 871-8809
Chair 1000 Throckmorton Street (f) 924-6837
Fort Worth TX 76102
Ralph McCloud City Council Member (o) 871-8808
1000 Throckmorton Street (f) 534-7437
Fort Worth TX 76102
Jeff Wentworth CIty Council Member (o) 871-8807
1000 Throckmorton Street (f ) 871-6187
Fort Worth, TX 76102
Fort Worth Independent School District
Juan Rangel Board of Education Member (o) 923-5800
100 N. University Drive (f) 925-1655
Fort Worth, TX 761078
JPS Health System
Kristin Jenkins Compliance & Quality Officer (o) 927-3842
1025 South Jennings (f) 920-6908
Fort Worth, TX 76104-3218
Tarrant County
Roy Brooks Precinct Administrator #1 (o) 531-5600
3212 Miller Avenue (f) 531-5633
Fort Worth, TX 76119
Jon Ed Robbins Precinct Administrator #4 (o) 238-4400
6713 Telephone Road (f) 238-4403
Fort Worth, TX 76135
Tarrant Regional Water District
Nancy King Office Manager (o) 335-2491
800 East Northside Drive (f) 877-5137
PO Box 4508
Fort Worth, TX 76102-1097
Tarrant County College District
Bill Lace Executive Assistant to the Chancellor (o) 515-5001
1500 Houston Street (f) 515-5390
Fort Worth, TX 76104
35
STAFF & ADMINISTRATIVE SUPPORT
5/23/02
City of Fort Worth
Ardina Washington Department of Economic and Community Development
Administrative Liaison
City of Fort Worth (o) 871-8003
1000 Throckmorton Street (f) 871-6134
Fort Worth, Texas 76102
Peter Vaky Assistant City Attorney
City of Fort Worth (o) 871-7601
1000 Throckmorton Street (f) 871-8359
Fort Worth, Texas 76102
Linda Brown Deputy Treasurer
City of Fort Worth (o) 871-6030
1000 Throckmorton Street (f) 871-8647
Fort Worth, TX 76104
Tarrant County
Lisa McMIllan Economic Development Coordinator
Tarrant County (o) 884-2643
100 E. Weatherford, Suite 404 (f) 884-1702
Fort Worth, TX 76102
Fort Worth Southside Development District
Don Scott President
Fort Worth South, Inc. (o) 923-1649
1606 Mistletoe Boulevard (f) 923-1658
Fort Worth, Texas 76104
36
CHAPTER 8
MEETING AGENDAS & HANDOUTS
37
Appendix H
TAX INCREMENT FINANCING ENABLING LEGISLATION
Tax Code
Subtitle B Special Property Tax Provisions
Chapter 311 Tax Increment Financing Act