Council Report: City prepares to revamp Convention Center

As the new Dickies Arena opens later this year, the city’s meeting and entertainment focus is shifting toward the Fort Worth Convention Center.

On April 9, at its work session, the Fort Worth City Council received a briefing on development going on in the Convention District from Assistant City Manager Susan Alanis.

Among the recommendations are the straightening of Commerce Street, the demolition of the 50-year-old arena and creation of a new connection to the rest of downtown. City staff recommends a phased approach to minimize business loss and impact on the area.

The first phase of the projected changes would include the design and straightening of Commerce Street which currently makes a curve around the east side of the Convention Center. That phase would also include a ballroom level kitchen and the demolotion of the south annex and the north annex. Cost of that part of the project is estimated at $48 million with an annual debt service of around $3 million with a start date of 2022 and completion by 2024.

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Work on the second phase would begin in 2024 and be complete by 2027 and would cost more than $328 million. That phase would include taking down the storied arena, building the northern expansion and a strategic renovation of the existing building and site.

One item the council will have to tackle is a convention hotel, expected to be about 1,000 rooms and cost an estimated $350 million. But, Alanis said, that may be optimistic. Cash flow supports debt of $225 million, leaving a potential gap of $125 million. There are a variety of factors to consider in the hotel, among them private versus public ownership, she said.

Alanis presented an update of a 2014 market and financial feasibility study for Convention Center expansion by the Hunden Strategic Partner Team. Among the updates new information:

*Peer cities have renovated/expanded their convention centers and added walkable or major headquarter hotels.

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*New hotels in downtown have been immediately absorbed into the market, demonstrating pent-up demand.

*Group planners continue to be frustrated by facilities and the number of separate hotels required to accommodate larger conventions.

*Events, event days and total attendance at FWCC has remained level or decreased over the past five years.

*Simultaneous development of a 1,000-room convention hotel is recommended.

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Next steps include:

*City council considering a resolution authorizing staff to proceed with a multi-year plan for convention center expansion, set priorities for funding from Project Financing Zone and other Culture and Tourism capital funds for (1) Convention Center expansion, (2) Convention hotel, (3) maintenance and renovation of existing facilities at the Will Rogers Memorial Center campus, and assert that additional hotels within the Project Financing Zone may be incentivized only if they provide sufficient net proceeds from the State HOT and do not inhibit the successful initiation of the Convention hotel.

*Assemble a stakeholder committee for architect selection, design of Convention Center expansion, and evaluation of options for managing construction.

*Appropriate funds and engage firm for design of straightening of Commerce.

*Conduct analysis of models for hotel development and provide recommendations to city council within the next year.

“Everybody at this table recognizes that people love coming to Fort Worth,” District 6 Councilman Jungus Jordan said. “I think it’s important we show that this is being paid for by the visitors coming to Fort Worth.”

District 3 Councilman Brian Byrd added, “Let’s just make sure we’re not underbuilding this. Obviously, we don’t want to go too big and outspend. But my initial reaction is I wonder if we’re not making this big enough, given the pent-up demand that’s there?”

District 5 Councilwoman Gyna Bivens said she likes the prospect of more walkability in the area, along with more hotel rooms for conventioneers. However, she added, “I’d be fine if the spaceship just left and we had something that was modern-looking.”

Mayor Betsy Price said she’d like to see the project in the area done sooner than later, though she understands the financial configurations.

“Oftentimes, people come to a convention and think, ‘Maybe we should think about going there with our business,'” she said. “Cities that are doing new convention centers are high-tech in today’s market, and we have to be able to compete with that.”

Related to the Convention Center discussion was an informal report concerning the transaction that resulted in the city selling the land which the Omni occupies at 1300 Houston St. to the company for $13.8 million – of which all but $1 million will be returned to the company in the form of an Economic Development Program grant agreement.

The hotel project was originally a public-private partnership under which the city provided a number of economic development grants and an amended agreement that allowed for a series of rebates of state sales and hotel occupancy taxes. State law allows for such an agreement if the hotel is located within 1,000 feet of a convention center and the land is owned by the city.

The ground lease gave Omni an option to purchase the property after the 10-year state rebate period expired, which it now has. While the land was sold at fair market value, under the economic development agreement, the city agreed to pay Omni an additional grant equal to the sales price, less $1 million.

The city’s general fund was the source of the 380 Agreement rebates that were transferred to the Omni.

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.

Although the state rebates have expired, the Economic Development Program Agreement requires the city to continue making grants to Omni for the next five years based only on local ad valorem property taxes and local hotel occupancy taxes, and then for the three following years based only on local hotel occupancy taxes.

With the upcoming efforts to expand and renovate the Fort Worth Convention Center, city staff has recommended the net proceeds be deposited into the Culture and Tourism Fund.

“The Omni Hotel, along with the previous expansion of the Fort Worth Convention Center and the numerous renovated and new hotels in the downtown Fort Worth market, has lifted Fort Worth’s competitiveness in the convention and meetings market,” said Kirk Slaughter of the city’s public events department.

“It is now time for Fort Worth to begin moving forward on the next Convention Center expansion and explore future convention related hotels to continue to attract and retain tourism spending in this great city.”