SUBJECT: A motion to set a public hearing date for December 16, 2015 regarding the termination of a Tax Abatement Reinvestment Zone for Breckenridge Group Houston Texas, LP.
RECOMMENDATION: (Summary)
A motion to set a public hearing date for December 16, 2015 regarding the termination of a Tax Abatement Reinvestment Zone for Breckenridge Group Houston Texas, LP.
SPECIFIC EXPLANATION:
State law requires cities to adopt tax abatement guidelines and criteria before entering into tax abatement agreements, and each approved abatement agreement must meet those guidelines. State law also provides that cities’ tax abatement guidelines and criteria expire after two years. City Council renewed the tax abatement guidelines and criteria on March 12, 2014 continuing the City’s eligibility to enter into tax abatement agreements as well as modified the language to provide for tax abatements on properties that have been the subject of an order issued by the Department of Neighborhood to secure, repair or demolish. Sec. 312.201 of the Tax Code requires that the governing body holds a public hearing before it can adopt an ordinance designating an area as a reinvestment zone.
Breckenridge Group Houston Texas LP, operating under the name Aspen Heights, is a national student housing developer and property manager and is headquartered in Austin, Texas. The developer contracted to acquire a site located at 1901/1905 Cullen Blvd, Houston, 77023. with plans to invest $63 million to develop and construct Aspen Heights – Houston, a 736 bed student housing development comprising 1-4 bedroom fully furnished units on approximately 7.7 acres of land. Aspen Heights submitted a tax abatement application to the City on April 4, 2014 with all supporting documentation.
The City approved the creation of Tax Abatement Reinvestment Zone on May 28, 2014 by Ordinance 2014-0478. The tax abatement was intended to meet an economic gap that the developer demonstrated in its financial proforma mostly due to the high financial risk to the lender and required equity returns. Subsequent to the approval of the Tax Abatement Reinvestment Zone, Breckenridge was unable to secure the needed resources to finalize the land purchase and did not acquire the site. The developer cancelled the plan to develop the site and invest in the student housing project and as such, the Tax Abatement Reinvestment Zone must be terminated. The Administration recommends setting a public hearing for December 16, 2015 to terminate the Tax Abatement Reinvestment Zone for Breckenridge Group Houston Texas, LP at 1901/1905 Cullen Blvd.
cc: Marta Crinejo, Agenda Director
Anna Russell, City Secretary
Donna Edmundson, City Attorney
Gary Dzierlenga, Senior Assistant City Attorney