HomeMy WebLinkAboutCFW__Proposed_EDP_Agreement_with_MWG_Enterprises_-1000_Weatherford1000 Weatherford St.
Work Session
Economic Development Department
August 20, 2019
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Site Located at Weatherford St. and Lexington St. Downtown
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Existing Property
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Proposed Project
•MWG Enterprises and Transwestern Development Company
•$78 Million Investment
•19-story, 310 unit high-rise rental residential tower
•Potential future commercial addition
•First downtown high-rise residential project in approx. 30 years
(new construction, non-senior living)
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Proposed Project Overview
•Despite strength / growth in downtown residential market, investors
reluctant to support high-rise projects in Fort Worth
•Primary reason: Lack of Comps / Unproven market
•Untested market for high-rise residential adds to perceived risk
•Resulting options:
a)Wait for a comp to arrive
b)Finance project with risk premium (require higher return or higher rents)
c)Scale down project
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Challenges
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Alternative Project
•Encouraging new downtown residential a key component of ED Strategy:
•3.1.1. Rapidly increase the density of residential development in downtown Fort Worth and surrounding urban districts.
•3.1.1.2. Create incentives to encourage high-density residential development in downtown and surrounding districts. These incentives should address:
•New high-rise residential
•Redevelopment of surface parking lots
•Downtown office owners, brokers, FW Chamber, others increasingly emphasizing importance of downtown residential to business recruitment and talent attraction
•Important for projects to be accurate reflection of Fort Worth’s market
•Avoid unnecessary incentives that lead all future projects to rely on incentives
•Avoid risk premium from being baked into all future projects, artificially raising rent / return requirements
•Chicken-and-Egg situation: No Comps →No Development →No Comps 8
Impact on Economic Development
•Invest a minimum of $75 million for minimum 17-story, 300-unit
residential tower by 6/30/2022
•Prepare and submit plans by 12/31/2020 for adjacent commercial
component (subject to successful property acquisition)
•Min. 15% Hard and Soft Costs with Certified M/WBE firms
•Min. 20% affordable units (10% at 80% AMI, 10% at 60% AMI)
•Min. 6 Full-Time Employees by 12/31/2022
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Developer Commitments
•10-year, 80% Chapter 380 EDPA based on incremental ad valorem
•Requires exception to Policy that the project qualify as Catalytic Development
as defined
•Total value of 380 capped at $4.5 million
•Additional $2.8 million TIF support approved by Downtown TIF Board
•Combined $7.3 million total incentives (14:1 Private-to-Public Ratio NPV)
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Proposed Chapter 380 Agreement
Developer Commitment Potential Grant
$75 M Real Property Investment (Base Commitment)55%
15% Fort Worth M/WBE Contractors 10%
Affordable Housing 15%
TOTAL 80%
•Proposed agreement designed specifically to reduce perception of risk, provide adequate high-rise residential comp for future projects
•Provisions for early termination based on successful project performance
•Conditions for Early Termination (in any Program Year):
a)Rental Rates and Occupancy Rates achieve Developer’s original expectations for market without added risk premium (i.e. market confirmation),
b)Rental Rates achieve Risk Premium Levels, or
c)More than three downtown properties (min. 200 units) average higher rental rates
•Termination for conversion to condos during term of agreement
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Other Terms
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Development Summary
•Private Investment
•Minimum $75.0 Million in Real property
•Employment
•6 new FTEs by December 31, 2022
•10 year incentive proposal
•Max 80% Ch. 380 on City ad valorem (real and personal)
•Other public support
•TIF Reimbursement -$2,800,000
•Payback
•4 years
•Private/Public Ratio EDPA with TIF
(based on max. estimate / cap)
•Est. Benefit (10 yrs.)$4,315,916 $7,115,916
•NPV Benefit (10 yrs.) $2,968,452 $5,609,962
•City Participation 3.8 % 7.2 %
•Est. Ratio 26:1 14:1
•CFW Tax Revenue (10 yr. projection)
•Net New Property Taxes to City $ 1,592,779
•Full Tax Revenue Value to TIF $ 1,568,829
•Enter into an Economic Development Program Agreement with
MWG Enterprises
•M&C for City Council consideration to approve EDPA
Agreement on August 27th
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Recommendation/Next Steps
Thank you