HomeMy WebLinkAboutIR 10188 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10188
To the Mayor and Members of the City Council October 23, 2018
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SUBJECT: ACCEPT PROCEEDS FROM SALE OF 250 WEST LANCASTER AND
rrn ESTABLISH AN ECONOMIC DEVELOPMENT INCENTIVE FUND
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The Fort Worth Local Development Corporation ("LDC") was an active party to the development
of the mixed use development located at 250 West Lancaster Avenue, Fort Worth, Texas ("250
Lancaster") with the purpose of promoting revitalization of the area and benefiting the citizens of
Fort Worth by creating affordable housing, retail, jobs and commercial opportunities in an area in
need of revitalization.
On January 23, 2018, the Board of Trustees of LDC approved a resolution to authorize the sale of
250 Lancaster by its owner, Lancaster Corridor Redevelopment, LLC, of which LDC is the sole
member, to Beachwold Partners, LP, and on August 9, 2018, the sale of 250 Lancaster to
Beachwold Partners, LP's sole asset entity, BW Lancaster LLC, was closed and the property
conveyed.
The net proceeds from the sale of 250 Lancaster, excluding an estimated reserve for capital
gains tax to be held by the LDC, are $3,900,896. As a result of the sale, staff from the Economic
Development Department, the City Attorney's Office, and the Department of Finance are working
alongside the City's external auditors to determine how best to complete the financial
components of the sale and transfer the remaining assets.
On August 21, 2018, the LDC adopted a resolution authorizing the transfer of the net proceeds
from the sale, less the amount for payment of capital gains tax, from the Lancaster Corridor
Redevelopment, LLC to the City of Fort Worth to fund (i) a new Economic Development Specialist
position focused on research, request for proposals and incentive analysis, and urban
redevelopment; (ii) marketing and research resources for efforts such as, but not limited to,
message development, target industry recruitment, trade shows, and international opportunities;
and (iii) incentives to compete with other communities to attract new business and economic
development to the City or to retain existing business via a new Economic Development Incentive
Fund ((i)-(iii) collectively, "Certain Economic Development Activities").
The financial breakdown for each activity is as follows:
Economic Development Specialist - $425,000 (5 Years)
Marketing and Research Initiatives - $500,000 (5 Years)
Economic Development Incentive Fund $2,975,896
The LDC chose to transfer the funds to the City of Fort Worth so that the City Council will have
oversight of the Economic Development Incentive Fund, including consideration of any potential
grants or loans. The additional funds provide operational support for the Economic Development
Department as we implement the Economic Development Strategic Plan; however, costs
associated with these activities may be available from the LDC on an on-going basis and included
in the City's annual budget process as a reimbursement.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10188
To the Mayor and Members of the City Council October 23, 2018
„ 4 Page 2 of 2
�i
�i5 Y
SUBJECT: ACCEPT PROCEEDS FROM SALE OF 250 WEST LANCASTER AND
rrn ESTABLISH AN ECONOMIC DEVELOPMENT INCENTIVE FUND
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In addition to the net proceeds described above, the City will also be reimbursed for the original
City land contributed to the project. On November 11, 2011, the City Council authorized an option
agreement for the sale of fee-simple properties owned by the City of Fort Worth to the LDC for
the 250 Lancaster development for the appraised value up to $650,000 (M&C L-15276). Funding
for the purchase was through LDC resources. One of the terms outlined was that the City of Fort
Worth receive Fair Market Value for the properties when the LDC sold the development. An
appraisal commissioned by Pinnacle Bank, dated 10/29/2014, listed the land value at $2,470,000.
Tarrant Appraisal District assessed the property at $1,770,508.00 for the land in 2017. LDC and
City staff negotiated a repayment of$2 Million.
An M&C will be placed on the City Council agenda on November 6, 2018 for consideration to
accept the proceeds from the sale of 250 Lancaster for Certain Economic Development Activities,
as outlined within this Informal Report, including the creation of an Economic Development
Incentive Fund. The M&C will also seek consideration of the City Council to accept the
$2,000,000 payment and then designate those funds to the Economic Development Incentive
Fund. A policy associated with the incentive fund will be presented for consideration at a later
date.
Upon approval of the recommendations, an Economic Development Incentive Fund will be
created for the purposes outlined within the forthcoming policy. The fund will have an initial
deposit of $4,975,896; $2,975,896 as a result of a donation from the Lancaster Corridor
Redevelopment, LLC resulting from the sale of 250 West Lancaster, Fort Worth, and the balance
of $2,000,000 from the repayment of funds between the Lancaster Corridor Redevelopment, LLC
and the City. As projects and needs are identified in alignment with the policy, appropriations will
be brought forward to the Mayor and Council for approval.
For further questions, please contact Robert Sturns, Director of the Economic Development
Department, at 817-392-2663.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS