HomeMy WebLinkAboutIR 10259
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10259
April 9, 2019
To the Mayor and Members of the City Council
Page 1 of 1
SUBJECT: SALE OF FORT WORTH CONVENTION CENTER REAL ESTATE
TO OMNI
The Omni Convention Center hotel project was the realization of a public-private partnership under which
the City has provided a number of economic development grants pursuant to an Amended and Restated
Economic Development Program Agreement between the City and Omni (City Secretary Contract No.
33139). One of the primary sources of funding for the grants under this Agreement has been a rebate of the
state sales and hotel occupancy taxes generated by the hotel. This funding was made possible by
legislation that allows for a rebate of such taxes for a period of 10 years for a hotel project, provided that
the hotel is (i) located within 1,000 feet of a convention center facility and (ii) is owned by or located on
land that is owned by the City.
The hotel was constructed on property owned by the City across the street from the Fort Worth Convention
Center. In order to benefit from the state legislation allowing a rebate of state sales and hotel occupancy
taxes, the City agreed to lease the property to Omni pursuant to a Ground Lease (City Secretary Contract
No. 31736, as amended). The hotel and all other improvements on the property are owned by Omni.
The Ground Lease gave Omni an option to purchase the property for a period of time after the 10-year state
rebate program expired. It also gave the City a mechanism to require Omni to purchase the property under
--year
state rebate program, there would be no reason for the City to continue owning the property; that the land
on which the hotel is situated should be owned by the same entity that owns the hotel; and that continued
ownership of the land might subject the City to liability it otherwise would not have.
Under state law, the City is required to sell City-owned property for fair market value. However, under the
Economic Development Program Agreement, the City agreed to pay Omni an additional grant equal to the
sales price, less $1,000,000.00.
The 10-year state rebate period has since expired, and Omni exercised the option to buy the property. The
transaction closed on March 15, 2019, and the City has transferred ownership to the Omni of the land-only
at 1300 Houston Street. The purchase price of the property was the fair market value of $13,800,000.00, as
determined by an appraisal, with all but $1,000,000.00 returned to the Omni pursuant to the terms of the
Agreement rebates that were transferred to the Omni, as previously approved by the City Council.
Additionally, the Culture and Tourism Fund provided $8.6 Million of hotel occupancy taxes and DFW
Revenue Share funds to support the garage costs related to the Omni Hotel. With the upcoming efforts to
expand and renovate the Fort Worth Convention Center, Staff recommends the net proceeds to be deposited
into the Culture and Tourism Fund. Although the state rebates have expired, the Economic Development
Program Agreement requires the City to continue making grants to Omni for the next 5 years based only on
local ad valorem property taxes and local hotel occupancy taxes, and then for the 3 following years based
only on local hotel occupancy taxes.
If there are any questions please contact Kirk Slaughter, Public Events at (817) 392-2501
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS