Financing the Future: Downtown leaders envision the next phaseApril 5, 2013
Downtown construction will be complete in October, but leaders are looking for the next phase. Photo by Glen E. Ellman
By Martha Deller
Special to the Fort Worth Business Press
Downtown leaders have a vision of a future that would add a downtown high school, increase affordable housing, fund park improvements and link the central business district to growing residential areas.
To pay for those improvements, the leaders are proposing to raise the cap on the TIF for the area.
The Tax Increment Finance (TIF) District board is proposing that the five participating taxing entities raise the cap again – to $100 million – to continue projects such as the Third Street pedestrian corridor and the Central Plaza in Sundance Square.
Andy Taft, president of Downtown Fort Worth Inc. which manages the TIF, said the additional $28 million also would allow the TIF to fund more affordable housing, parks, parking and pedestrian walkways and maybe a downtown high school.
The TIF board, comprised of representatives of the five taxing entities, is expected to vote May 15 on the proposal, which also includes some changes in how the tax money is collected.
Taft said the TIF now receives 100 percent of taxes on increased property values of the new developments – up to $5 million. The proposed change would remove the $5 million cap but would take smaller percentages of those taxes each year. That means the taxing entities would keep more of their taxes each year but the TIF funding would last longer, he said.
The proposal must be approved by the TIF board and the taxing entities – the city of Fort Worth, Tarrant County, Tarrant County Hospital District, Tarrant County College and Tarrant Regional Water District.
Tax increment financing freezes the taxable value of a property before it is improved. Once a hotel or office building is built on the property, the increased property tax proceeds that result from the increased value of the property are returned to the TIF board, which then repays bonds used to help get the development off the ground. The TIF financing usually lasts for a fixed period or for a fixed amount.
Jay Chapa, the city’s housing and development director, said he can’t see any reason why increasing the cap of the downtown TIF would be rejected.
“The city and county staff are recommending it as far as I know,” Chapa said. “This is not a new idea. It’s just how to get there and what makes the most sense.”
Ten years ago, participants in the then 7-year-old Downtown Tax Increment Finance District voted to raise its $50 million cap on public improvement funds – largely to help restore the Bank One building all but destroyed by a 2000 tornado.
The additional $22 million did more than just bring new life to the 35-story glass building, now home to nearly 300 luxury condominiums in The Tower at 500 Throckmorton Street.
The additional funds also helped pay for a variety of downtown projects, from restoring historic buildings to providing infrastructure needs for new housing to underwriting free parking for evening and weekend visitors.
Taft said the TIF board began looking at raising the cap again about four years ago when they realized they would be left with no money once some major projects were funded.
“We were looking into the future, projecting if the Central Plaza happened, that would probably obligate itself up to the cap,” he said. “Then the question naturally rises, is that the end or do we want to keep this tool available for other efforts?”
The recession put an end to the discussion, at least for a while, Taft said.
“It just seemed with the world in chaos wasn’t the right time to do it,” he said.
Taft said some of the 2008 ideas were resurrected last year when the city, Downtown Fort Worth Inc. and the T boards began updating the 10-year strategic plan.
By that time, the money committed to the Central Plaza project, brought TIF’s balance down to $2 million, Taft said.
Johnny Campbell, president and CEO of Sundance Square, a member of Downtown Fort Worth Inc., supports raising the TIF cap.
“This is one of the most successful TIFs ever implemented because it exceeds its annual income cap every year,” Campbell said. “We’re very much in favor of that. We see it as a positive for downtown.”
During hearings on the strategic plan, residents said housing and schools were high priorities, he said.
“A very small percentage of people who work downtown can afford to live downtown,” he said. “As more developments come into downtown, we’d like to try to figure out how to have more mixed use and mixed income.”
Tom Struhs, who developed the Pecan Place and Trinity Bluff projects on the northeast edge of downtown, said that more TIF funding might also help future commercial
Struhs, who used TIF funding to put in underground utilities and more attractive sidewalks and antique lighting for the condominiums and townhomes, said expanding public funding should help private developers deliver nicer projects.
Without the TIF money, developers would have to reduce the quality of the amenities, which makes it less attractive or spend more money, making it unviable for some, he said.
“I think it’s a great idea,” he said. “It encourages development because it creates economy to allow developers to move forward. It benefits the whole community.”
Taft said TIF supporters also want to pay for a pedestrian walkway from the core of downtown to Samuels Avenue where almost 1,000 apartments have been built.
“It’s not the most pleasant walk,” he said “The sidewalks are in a poor state of repair. The lighting is poor. Pockets of redevelopment have helped but we want to make the gap from downtown to Samuels Avenue pedestrian friendly.”
Taft said the board also wants to help fund a science, technology, engineering and math [STEM] middle or high school or perhaps one that also includes the arts. He said the lack of downtown schools drives many young couples out of downtown.
The Fort Worth school district no longer helps fund TIF because of a change in state law, Taft said.
But Superintendent Walter Dansby is pleased that the TIF board is considering funding a downtown school.
“We already have Nash Elementary and the Girls Academy downtown,” Dansby said. “We’re interested in a downtown high school if we can get the money. If the TIF is willing to give us money, that would be great.”