Accept Donation from the Lancaster Corridor Redevelopment, LLC of Proceeds from Sale of 250 West Lancaster, Fort Worth, Texas to Establish an Economic Development Incentive Fund for Certain Economic Development Activities, Accept Repayment of Funds from Lancaster Corridor Redevelopment, LLC, and Confirm All Obligations between the Parties for this Project have been Satisfied (ALL COUNCIL DISTRICTS)

It is recommended that the City Council:

1.  Create an Economic Development Incentive Fund;

2.  Accept a Donation in the amount of $2,575,896.00 in Net Proceeds from Sale of 250 West Lancaster, Fort Worth, Texas for Certain Economic Development Activities from the Lancaster Corridor Redevelopment, LLC for deposit into the Economic Development Fund;

3.  Designate the $2,000,000.00 repayment for the Lancaster Avenue project from the Lancaster Corridor Redevelopment, LLC to the City as funds restricted for the purposes associated with the Economic Development Incentive Fund;

4.  Confirm the obligation that the Fort Worth Local Development Corporation had to the City of Fort Worth to repay funds provided for the West Lancaster project under an Agreement Approved on November 11, 2011 has been satisfied; and

5.  Confirm the use of funds within the Economic Development Incentive Fund are subject to Mayor and Council approval and all internal and external rules regarding governance of said funds shall apply.

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 the LDC approved a resolution to authorize the sale of 250 Lancaster by its owner, Lancaster Corridor Redevelopment, LLC, (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 LLC, are $3,900,896.00.  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 ~ $425,000.00 (5 Years)
Marketing and Research Initiatives ~ $500,000.00 (5 Years)
Economic Development Incentive Fund $2,575,896.00

The LDC chose to transfer the funds for the Economic Development Incentive Fund 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 it implements the Economic Development Strategic Plan; however, costs associated with these additional activities may be available from the LDC on an on-going basis and included in the City's annual budget process as a reimbursement.

On October 23, 2018, the City Council received an Informal Report associated with this M& C. The final numbers transferred from the LLC have been revised to reflect updated estimates for capital gains tax.

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 $650,000.00 (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 $2,470,000.00. 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.

A policy for the Economic Development Incentive Fund will be presented to City Council for consideration at a later date.

This M&C does not request approval of a contract with a business entity.