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HomeMy WebLinkAbout2005/08/16-Minutes-Fort Worth Local Development Corporation (FWLDC) CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED-SPECIAL SESSION MINUTES TUESDAY,AUGUST 16, 2005 Present: President Wendy R. Davis Vice President Chuck Silcox Secretary Becky L. Haskin Treasurer Salvador Espino Director Mike Moncrief Director Donavan Wheatfall Director Jungus Jordan Director Carter Burdette Director Kathleen Hicks City staff- Assistant City Manager Dale Fisseler City Attorney David Yett(arrived at 1:45 p.m.) Assistant City Attorney Cynthia Garcia City Secretary Marty Hendrix Economic and Community Development Director Tom Higgins Other City staff: City Manager Charles Boswell Assistant City Manager Joe Paniagua Assistant City Manager Mark Ott Acting Assistant City Manager Richard Zavala Robert Stun-is, Business Development Coordinator Call to Order (Agenda Item 1) With a quoram of the Board Members present, President Davis called the meeting to order for the Board of Directors of the Fort Worth f_.ocal Development Corporation at 1:3)0 p.m. on I_r Uesday, August 16, 2005, in the Pre-Council Chamber of the Fort Worth Municipal Building, 1000 rhrockmorton. Fort Worth, Texas. President is ovened the fl of Dav or or a motion on the -approval of the minutes. CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY,AUGUST 16,2405 Page 2 Approval of Minutes of the June 28,2005 Meeting (Agenda Item 11) MOTION: Upon a motion made by Director Burdette and seconded by Director Espino, the Local Development Corporation Board voted nine (9) "ayes" and zero (0) '*nays * to approve the minutes of the June 28, 2005 meeting as presented. The motion carried. Adoption of Resolution Authorizing the Transfer of Up to $60,00 to the City of Fort Worth in Order to Fund Change Order 9, Change Order 10 and Six Months of Operating Expenditures for the Fort Worth Mercado Project (Agenda Item 111) Mr. Robert Stums, Business Development Coordinator in the Economic and Community Development Department, presented a PowerPoint Presentation to the Board regarding the Fort Worth Mercado Project. He advised that the purpose of the briefing was to provide an update on the Fort Worth Mercado Development Project. He presented the project description, which showg1that the building is a two and half story mixed-used development. The total building square footage is 59,000, with the first level consisting of 16,000 sq. ft. of retail/restaurant space and the second level consisting of 19,000 sq. ft. of office space. He pointed out that the third level is a 6,700 sq. ft of multi-purpose banquet hall. The common area consists of 17,300 sq. ft. Mr. Sturns pointed out that the property is zoned Mixed Use 1. Mr. Stums advised that the project was built on land previously used as the North Main Park and Ride lot. He stated that the City reimbursed EDA for the land and improvements of 1.26 acres with an appraised value of $286,000. He stated that the Local Development Corporation provided funds to reimburse EDA in July of 2002. Mr. Stu ms presented the original construction contract as follows: Uses: Contract Amount $33,698.1000 Sources: Section 108 $3,132,000 Developer Equity 5566. $3,698,000 Constriction Equity Percentage 18% CITY OF FORT WORTH, TEY 4S FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, AUGUST 16,2005 Page 3 Mr. Styrts pointed out what happened with the project. He stated that the developer last financing, i- the project and was unable to secure alternate funding. The contractor notified the City of�intention to terminate-construction contract. Mr. Sturns presented the project costs (August 2400 Construction Contract $3,698,000 Pre-Construction $522,000; Net Change Orders $133,000 Loan Admin Fees $52,000 Section 108 Funds $3,132,000 Project Gap $1,273,000 Mr. Sturns presented the risks if the project was shut down. He stated that the restart cost of the project would range from $600,000 to $1 million. The building would be at risk To weather damage and the building could be vandalized. He added that the building pose k significant safety risk to the community. Mr. Sturns presented photographs of the exterior of the building's front elevation and rear elevation in August 2004. Mr. Sturns explained the follow-up when the project became a City-owned project. He explained that the recommendation was to complete the building and place on it on the market for immediate sale. He added that the developer assigned all rights and tide to the City. The City's Transportation and Public Works Department's management staff assumed the completion of the project. The staff initiated construction and financial audit of the project. Mr. Sturns presented the results of the audit. He stated that the payments to the contractor matched construction progress. The contractor insurance and bonding requirements were met. The receipts totaling $124482 were unaccounted for by the de toper. The developer reimbursed the City in June 2005. Mr. Sturns reviewed the Tart sho wing the project costs as of August 2004 as follows: Construction Contract $3t698,000 Pre-construction $522,000 Net Change Orders $12 W 0 Loan, Adniin Fees $52.000 CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, AUGUST 16, 2005 Page 4 Total $4,405,000 Section 108 Funds $3,132,000 Project Gap $1,273,000 Local Development Corp $600,000 CDBG Funds $700.00 Total Additional Funds $1,300,000 Mr. Sturns presented photographs of the completed building, showing the building's front elevation, along with interior shots of various areas. He then reviewed the project costs at current status as follows: Architect C/A $12,000 Building Alarm $10,000 Utilities $13,000 Pending Change Order $19,000 Pending Final Change Order $8.000 Total: $62,000 Total Project: $4,467,000 Total Project Funding $4,432,000 Project Gap ($35,000) Mr. Sterns presented the sale of the building timeline as follows: November 2004 RFP released December 204 responses received January 2005 Selection of Panel Interviews February 200:5 Negotiations begin April 2005 Prqject re-appraised May 2005 Deadline for negotiations June 2005 R_--inteniew Developers August 2005 Final Offers received Mr- Stums shovved the prm Ject appraisal ast Hows- CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, AUGUST 16, 2005 Page 5 Project appraised in August 2004 $4,080,OONpon completion $4,200,000�tabilized occupancy Project re-appraised in April 2005 S3,000,000''as is" value Reasons for reduction Original appraisal assumed 35%to 45%pre-leasing Interior finish out not completed He presented the current proposals: Total of five (5) proposals under review by the City staff Purchase price range from $2.05 million to $3 million Down payment of$700,000 Parking situation needs to be resolved Estimate 45-day review period Closing within 90 days Mr. Stums advised that the City staff is presenting an additional funding request until the building is sold as follows: Project Gap $35,000 Glass Repair $5,000 Fence Rental (6 months) $3,000 Utilities (6 months) $17_000 Total: $60,000 He reviewed the City's investment in this project- Section 11 08 S3,132,000 LDC---ff,and $286 OOO LDC —Construction $600,000 L — Pending Funds $60,000 1(_'DBG Const-uction $7OO.000 1: $4,778.000 CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED-SPECIAL SESSION MINUTES TUESDAY,AUGUST I6,2405 Page 6 (Director Wheatfall left the room at 1:44 p.m.) Mr. Sterns advised that the City staff is requested that the Local Development Corporation Board of Directors approve the resolution to fund up to $60,000 for completion of the building construction and six (6) months of operating expenses for the project. Director Moncrief requested further clarification about the parking for this building and if there was sufficient parking. He pointed out that parking in this area is already a problem. City staff advised that it would depend on the mixed uses placed in the building. Staff advised that the parking issue pertain more to the retail uses. Staff also stated that this was the option of the buyer to look into the parking issue. L e-gf Wa Director Espino olnted out t4a"-hen this project was started the uses were to be retail in this building and the plan-to-siay true with that type of use. He/added that ik-the staff og looking into the financial backgrounds of the proposed purchasers into their uses and their availability for cash flow for this project. o Mr. Sterns explained 'at he was fe 'arful with putting too many constraints on the proposed buyers as to whatfhe building could be used for. Director Espino expressed his concern that the building will go totally/'Office uses. He pointed out that the surrounding neighborhoods would not be pleased with that use. In further discussion, Director Burdette suggested that this building be used for City offices until a buyer is found. Mr. Sterns stated that the City staff had considered this as well as hiring a retail management firm to pursue the retail uses; however, it was determined that this was not a director'to pursue. Director Burdette expressed his support for the use of this building for City offices and that it might be a stopgap benefit for the City until the appropriate buyer had been identified. Assistant City Manager Fisseler explained that the City staff has considered that suggestion. He pointed out that one of the problems is that the Section 108 funding rec6ved for this project has job requirements and the City cannot get credit fior the jobs held by city emnlovees in this boiling, There was furthff deliberation on the cost of this project. Director Silcox pointed out that the total cost of this project was $4.7 million and with the offer by a purchaser of$3.000,000, the City is look ingailt a loss of$1.7 million. There was ffirther claritication and discussion on where the - nding -m-,,oudd be obtamed to -pay back he Section 108 flunding. City staff clanitied tham, the CITY OF FORT WORTH, TEYA.S FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, AUGUST 16, 2005 Page 7 LDC funds would be used to reimburse the Section 108 funding. Mr. Sturn interjected that the LDC has a debt service fund of $5,000,000. He pointed out that revenue is received from the loan pool and there are sufficient funds available to pay on this amount. Director Jordan requested clarification on the issue of whether any tax abatements can be associated with this project. Mr. Sturns explained that the sales price would have to be higher than the estimated $3,000,000 and without incentives. City staff clarified also that there is no pre-existing abatement on this property. There was further deliberation on the amount of time needed to close on this property. City staff indicated that it would take approximately 30 to 45 days. Mr. Sturns reiterated the action need by the Board on this item and what action would be required in the future. Director Hicks requested clarification on the Section 108 funds for this project as compared to the Evans and Rosedale project where there would be public buildings constructed. Assistant City Manager Joe Paniagua explained that HUD was told that the City would create jobs at the Mercado project in order to get the Section 108 funds. He then explained that the Evans and Rosedale project was amended on the uses for that area and that some of the uses would be public facilities that would accommodate that area as well as the entire city. He reiterated that it just depends on the uses for the project. MOTION: Upon a motion made by Director Moncrief and seconded by Director Espino, the Local Development Corporation Board voted eight (8) "ayes" and zero (0) nays", with Director Wheatfall being out of the room, to adopt the resolution authorizing the transfer of up to $60,000 to the City of Fort Worth in order to fund Change Order No. 9 and Change Order No. 10 and six (6) months of operating expenditures for the Fort Worth Mercado Project. The motion carried. At the direction of Assistant City Attorney Cynthia Garcia, President Davis moved down the agenda to the Executive Session. Siie adjourned into Executive Session at 2:00 p.m. Executive Session (Agenda Item IV) In accordance with Chapter 551 of the Texas Govemment Code, the Fort Worth Local Development Corporation Board convened into Executive Session at .1,00 p,m, in the Pre- CoL-ncil Chamber of the For, Worth City Hall., -1000 Throckmor-ton. in order to discuss the '1-?111 o w i n g CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY,AUGUST 16,2005 Page 8 a. See the advice of its attorneys concerning legal issues regarding any current agenda items that are exempt from public disclosure under Article X, Section 9 of the Texas State Bar Rules, as authorized by Section 551.071 of the Texas Government Code; and b. Discuss the purchase, sale, lease or value of real property, as authorized by Section 551.072 of the Texas Government Code. Deliberation in an open meeting would have a detrimental effect on the position of the City in negotiations with a third party; and C. Discuss or deliberate negotiations relating to any other economic development negotiations, as authorized by Section 551.087 of the Texas Government Code. The Executive Session was adjourned at 2:05 p.m. President Davis reconvened the called-special session of the Fort Worth Local Development Corporation Board of Director at 2:05 p.m. Authorize the Sale of Property Located at 4600 Blue Mound Road to American IronHorse Motorevele Companv, Inc. (Agenda Item III-B) (Director Wheatfall returned to the meeting) Assistant City Attorney Cynthia Garcia advised that no action was necessary on this item at this time. Adjourn (Agenda Item V) With- no further business before the Board, President Davis adjoumed the called— special session of the fort Worth Local Development Corporation at 2.07 p.m. on Tuesday, August '16, 2005. These minutes approved by the Fort, Worth Local Develop lent Corporation on the day of 2005. APPROVED- CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, AUGUST 16,2005 Page 9 Wendy R. Davis President ATTEST: Becky L. Haskin Secretary Prepared and respectfully submitted by: Marty Hendrix, TRMC/CMC City Secretary