By Scott Nishimura snishimura@bizpress.net
Fort Worth’s Southside tax increment finance district board on Wednesday approved a $3.9 million incentive for a California trust that plans to buy the 50-year-old Westchester Plaza assisted living tower on the Near Southside, demolish it, and redevelop the site.
The board voted 3-1, with one abstention, in favor of the incentive, which will reimburse developer HCP, Inc., an Irvine, Calif., real estate investment trust, for infrastructure costs after completion of the project, expected in 2017.
Alex Bryant, of Transwestern, a real estate services firm that’s part of the HCP team, represented the REIT at the board meeting and declined a request for an interview after the vote. “I don’t have any comment,” he said.
Separately, the board voted unanimously to approve a $1.475 million incentive for a $28 million, 217-unit, five-story apartment complex at 400 S. Jennings to be developed by Rob McConnell, one of the development partners in The Phoenix, a new apartment property on the Near Southside. Construction on that project is expected to start in July next year, with completion in two years.
HCP, which is working with VLK Architects, Transwestern, and Balfour Beatty Construction on the Westchester redevelopment, plans to implode the residential and retail buildings on the site and redevelop it to include apartments, retail, medical-office, and parking. HCP is calling the development 424 Summit.
The total project value is estimated at $108.7 million, excluding land. HCP is expected to begin construction in June next year, allowing time for the relocation of tenants in the tower, with construction estimated at two years. The tower has 167 residents, according to the most recent Texas Department of Aging and Disabilities data.
Paul Paine, president of the Fort Worth South economic development nonprofit and administrator of the TIF, said the project plan fits the Near Southside’s substantial demand for apartments.
Surveys show the area has demand for more than 4,000 new apartments, Paine said, with more medical district workers wanting to live in the area and younger people interested in its restaurant and entertainment venues.
Board member Linda Christie, who voted for approval of the incentive, asked whether it was possible developers were building too many apartments on the Near Southside.
Paine responded it’s important to ensure various oncoming projects are staggered.
“I’m very comfortable with the numbers,” Paine responded. “I think we just don’t want them all opening at the same time.”
Board member Steve Townsend, who voted against the incentive, questioned during the meeting why the project budget contains an allowance for asbestos abatement, after Bryant verified that the building underwent a renovation and complete abatement in 1997.
“We feel like we’re being real conservative,” Bryant told the board.
HCP plans to replace the 12-story, 282,000-square-foot Westchester with a six-story mixed-use building that has ground-floor retail and 250-300 apartments; an eight to 10-story medical-office building, and a seven-level parking garage. The garage will be connected to the apartment and medical-office buildings.
The mixed-use building would be about 300,000 square feet, and the medical-office building would be about 200,000 square set. The site would end up with more than 1,700 parking spaces. USMD would be the anchor tenant for the medical-office.
The TIF isn’t subsidizing the medical-office piece or the project, but is tying the start of payments to its completion.
The TIF reimbursement will be repaid in three equal installments, with the first upon completion of the apartments, garage and medical-office, the second a year later, and the final two years after completion.
The project value includes $40.2 million for the apartments, retail and garage, meaning a public-private ratio on the TIF reimbursement of 10.3 to 1.
The 5.28-acre site – bounded by Pennsylvania Avenue on the south, 8th Avenue on the west and on the north, and Summit Avenue on the east – includes eight lots that HCP, which specializes in healthcare properties, has been acquiring.
Under the plan, the medical-office building would sit on the north side of the property, overlooking Interstate 30 on a triangular piece bounded by 8th, Summit, and West Peter Smith Street on the south.
USMD will consolidate Fort Worth operations in the new building, and its signing of a letter of intent earlier this year to enter the project was a “major step” in the development of HCP’s plan, Paine said in documents to the TIF board ahead of its Tuesday vote.
With market-rate apartments, which Paine estimated would bring rents of $1.55 to $1.60 per square foot, the property would begin generating taxes, he said in an interview. The property, because of the level of federally subsidized assisted living in it, is tax-exempt today.
The project, after completion, is expected to generate $2.3 million in property taxes per year, including $854,000 annually for the piece covered by the TIF reimbursement, according to the TIF documents.
HCP representatives at the California headquarters did not respond to requests for an interview. Representatives of WGH Heritage, a nonprofit that owns Westchester Plaza, did not respond to requests for an interview.