Investing in East Lancaster

Scott Nishimura

Bob McCarthy remembers the conversation with his banker when he wanted to buy a building on Fort Worth’s East Lancaster Avenue – the city’s emergency shelter district just east of downtown – for his police and fire uniform business several years ago.

“They didn’t want to loan me the money, they didn’t like the location,” McCarthy says. “I said I’m not asking you to live there.”

So McCarthy, an investor who had given his banker first right of refusal on all of his deals, threatened to take his business elsewhere. He got the $400,000 loan. These days, the uniform business Got You Covered is thriving, and McCarthy is taking another bet on the street.

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Earlier this year, he purchased the historic three-story Parker-Browne building next door, with plans to move Got You Covered into two floors of it with double the space, relocate an investment company he owns, and maybe even build a rooftop deck overlooking downtown – and the array of social services that have come to dominate the short stretch between Interstate 35 and U.S. 287. Finally, McCarthy will move a construction company he has into the existing uniform store.

“I’m not going to make a lot of money on the real estate,” McCarthy says. “It’s going to simplify my operations.”

McCarthy has a bit of new company on the street these days. Texans Can Academy, which operates public charter high schools that accept students who have struggled in traditional schools for reasons such as teen pregnancy, two weeks ago bought a building at 1316 E. Lancaster next to McCarthy’s holdings, with plans to open a campus this summer.

Those developments are occurring at the same time the social services continue a significant expansion on the street to centralize resources for the homeless and others and meet growing demand by single women and children.

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That’s heightened debate on the Near East Side and in downtown and across the city over whether Fort Worth should continue to devote more resources to emergency shelters, or divert them to finding permanent housing elsewhere in the city for the homeless. A city commission recently criticized the lack of public resources devoted to the problem, and a new City Council task force last week began reviewing the distribution of services.

Critics say the cluster of social services – the East Lancaster shelters serve 1,200 people on a typical day – dampens real estate values on what could be a valuable extension to downtown.

“It’s just created an economic dead zone,” Douglas Henderson, president of the East Fort Worth Business Association, said.

“It’s finding a balance, and right now, there’s no balance,” Will Northern, a Fort Worth zoning commissioner and owner of Northern Realty, which brokered the Parker-Browne and 1316 Lancaster sales. “I think East Lancaster can be an extension of downtown.”

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Toby Owen, executive director of the Presbyterian Night Shelter, one of three major shelters on East Lancaster, said the system needs a strong mix of emergency shelter space, time-limited “transitional housing,” and permanent, supportive housing. The latter are not classified as homeless.

“You need the front door, and the back door,” Owen said. Presbyterian, which typically houses 600 people daily, has seen a significant increase in single women and their children, and its three classrooms are often full at night with overflow, he said.

Don Shisler, president of the Union Gospel Mission, said it makes sense to centralize much of the offerings, to make them more accessible. Many homeless have chronic health conditions, mental illness or substance abuse, and an increasing number are single women and children.

“There is merit in having it all in one place if we can get all the needs addressed,” he said.

Union Gospel Mission has been on East Lancaster since 1979, and Shisler notes downtown interests hatched a plan then to move it to East Lancaster and out of the Central Business District.

“We’re only following the plan of our forefathers,” Shisler said.

Union Gospel Mission won City Council approval in December to replace a one-story women’s building with a controversial $8.2 million, four-story, 40,000-square-foot center for women and children. Construction went underway in March, with completion scheduled for April 2015, and it will increase the mission’s capacity to about 400 from the current 325.

Among other projects, the Fort Worth Foundation is completing plans for a $10 million center that will house a John Peter Smith Hospital clinic and offer a panoply of services catering to as many as 500 people daily. Opening is expected September-December 2015.

More projects may be in the offing. Presbyterian has retained an architect and is studying the possibility of a new women’s center.

“We’re continuing to determine how we can respond,” Owen said.

And the Day Resource Center, founded in 1999 to give the homeless a place to receive basic services like obtaining identification, could see its service absorbed by the new Fort Worth Foundation building. Union Gospel Mission, which owns the Day Resource building, is interested in reclaiming the site.

City Council member Kelly Allen Gray, who represents the Southeast district, views the projects in different ways. She objected to Union Gospel Mission’s plan for the four-story building, saying the community continues to commit too many resources to emergency shelter.

She believes the Fort Worth Foundation building will help draw the homeless off the street during the day.

“The visual will start to change,” she said.

The possible women’s center at Presbyterian “makes sense” within the organization’s business model, she said. Shisler says the shelter’s near-term plan is to raze the building and put a green space and parking on the lot; Day Resource Center director Bruce Frankel says Union Gospel is interested in expanding its men’s residential.

Gray doesn’t like that idea.

“That does not excite me, and I will cross that bridge when we come to it,” she said.

Social services and business have worked together for years to improve the street.

Flora Brewer, the street’s largest business property owner and the one who sold the Parker-Browne and 1316 buildings to McCarthy and Texans Can Academy, has been investing in the street since the mid-1990s and launched the Near East Side Neighborhood Association with Shisler and Bob Gallant, owner of a marble company on the eastern end of the strip.

The group secured the funding for streetscape improvements like sidewalks, lights and public art, created guidelines for matching wrought-iron fences, obtained a police storefront, and began paying the Presbyterian Night Shelter to have residents clean up trash.

“When I first started working here, it was like a snowstorm of trash,” Brewer said. “There’s a totally different approach by the shelters (today). They’ve really taken responsibility for their property, and they’ve taken responsibility for what happens around their property.”

The neighborhood and services have aggressively addressed loitering and camping.

Most recently earlier this year, Presbyterian began operating Unity Park, which opened in 2005, Monday-Friday instead of just on weekends, giving the homeless a place to go during the day.

Presbyterian also plans this year to erect a building that will allow guests a place to store their belongings, Owen said. And it’s changed its program model over the last four to five years to allow nearly 90 percent of its guests to stay in the shelter during the day, Owen said. That’s a reversal from before, when only about 10 percent could stay.

The city also implemented an ordinance in 2007 that called for stiff penalties for drinking within 1,000 feet of a shelter.

A security officer now patrols the Day Resource Center, to curb loitering. High police presence and a prohibition on most street side parking have helped deal with drug dealing, Brewer said.

“We’ve made lots of inroads,” she said.

Gallant, who took his marble business over from his father in 1989, said many groups come to the street to hand out free food, clothing and other items, even though the shelters provide those items. What results is trash, he said.

“There’s a guy they call the Chicken Man, and a burrito guy and a hot dog guy,” he said. The giveaways are so popular, they draw people from outside East Lancaster, he said.

Brewer has been trying to draw a restaurant to the street, and she believes the proposition is becoming increasingly plausible.

Texans Can Academy, for example, will open in two phases this summer and next year, bringing a maximum 700 students daily – split between four-hour morning and afternoon sessions – plus one teacher per 15 students. About 30 people now work for the building’s three tenants that are moving out.

“I drive by Arlington Heights High School all the time, and I know all those restaurants across from the school are there for a reason,” Brewer said.

Gray and some community leaders worry that a school will be ill-suited for the site, concerned for the safety of the students. “It’s just irresponsible to put a school in there,” Henderson said.

But Malcolm Wentworth, chief operating officer for Texans Can Academy, said the school has no doubt East Lancaster is safe.

Penalties are stiffer for crimes committed around a school, he noted. And the Fort Worth Transportation Authority (The T) has agreed to move a bus stop to be in front of the school; many of Can Academy’s students ride the bus, and the academy buys and gives out free passes to its students.

“We have homeless kids in our schools right now,” Wentworth said. “I believe it will be good for everybody.”

McCarthy’s three businesses employ more than 100 people. The uniform business, which sells everything from raincoats to holsters, thrives on its central location, McCarthy said. And he has no doubt that taking the store from its current 6,000 square feet to 14,000 will pay off.

“Business is successful here, and it’s going to be wildly successful next door,” McCarthy said.

Still, he acknowledged he’s relying heavily on tax incentives to make sure his numbers work.

McCarthy paid $480,000 for the Parker-Browne building, and he committed to investing $2.1 million in its rehab by December 2015 and moving into the building soon after to obtain a city incentive. McCarthy said he’s also seeking federal and state incentives, and if he obtains those, he said he could see a total $1 million – including the city incentive – coming back his way.

“It makes us less upside down,” McCarthy said.

McCarthy is also in talks to establish a training program with the Presbyterian Night Shelter.

“We can make this a real community,” he said.

The dampened real estate values haven’t been lost on Brewer, whose sales have driven much of the recent real estate activity on East Lancaster.

Brewer said she was surprised by Texans Can’s interest in her property.

Texans Can, searching for a site to relocate its River Oaks campus, wanted to be on a bus line, liked the condition of the property, and sees the location as central among nine or 10 high schools with high dropout rates.

“All that, and the price,” $1.1 million, substantially cheaper than similar other properties it scouted in the city, Wentworth said. Brewer says she’s had varying successes financially among her East Lancaster investments.

Texans Can offered her what she had tied up in the property, she said. Brewer’s father brought the family onto the street in 1990, when he bought a musical instruments company and its 1316 headquarters.

Among her other holdings, she renovated the historic Lancaster Lofts building at 1324 E. Lancaster into 22 apartments and artists studios, opening it in 2004.

The 20,000-square-foot Lancaster Lofts is regularly fully leased and averaging market rents at about $1 per foot per month, Brewer said. “We started at 60 cents a foot.”

She estimated she has about $2 million invested in the property, and she has listed it for sale through Northern Realty, asking $1.3 million.

“I haven’t made my money back yet,” said Brewer, who estimated she’s carrying about a $600,000 mortgage, paid down from the original $900,000.

“But it’s really achieved my goal of bringing people into the neighborhood,” she said.

Tenants – hearty bohemians who have to drive to West Seventh Street to buy groceries or the Home Depot on Bridge Street in East Fort Worth to buy hardware – include “every occupation you can imagine – sales rep, business and office managers, yoga instructors, theater directors.”

Among her other East Lancaster projects, Brewer is moving one tenant, the recording studio of Spaceway Productions, from the Can Academy building to a vacant one she owns at 1110 E. Lancaster.

She’s also renovating a building she owns at 1502 E. Lancaster for use by MHMR Tarrant County’s Community Addiction Treatment Services, and she owns another building at 1518 E. Lancaster that houses another addiction service.

Stakeholders on East Lancaster are waiting for the Fort Worth Foundation plans to take more shape.

The Fort Worth Foundation’s building will include a 15,000-20,000-square-foot JPS clinic.

The center will include space for six to 12 agencies – still to be determined – that ideally will address veterans, women and children welfare recipients, mental illness, substance abuse and employment, said Ted Blevins, the retired Lena Pope Home executive director who’s taken the foundation’s lead in shaping the building.

MedStar, whose ambulances make 10 calls per day into the East Lancaster area, has offered to post one at the foundation building if it can plug into a power dock, he said.

Many homeless suffer other health conditions, and “until you get your physical and mental health in order, it’s very difficult to be able to make other changes you need to make,” Blevins said.

The building could also incorporate services now offered by the Day Resource Center nearby, including mail, email, job research, free laundry, showers, and day storage, he said.

The building’s size is still being determined, he said.

“That’s a work in progress,” Blevins said. “You don’t want to overbuild, you don’t want to underbuild.”

The foundation’s architect, the Fort Worth firm Bennett Benner Partners, is designing a flexible, attractive building that could be marketed for another purpose if “15 years from now, we are successful” in significantly reducing homelessness, Blevins said.

Also still to be determined is whether the Fort Worth Foundation brings the Day Resource Center in to perform the services it already offers, or takes the task on itself, Frankel, who has been consulting the foundation, said.

In any case, it’s unlikely the Day Resource Center will continue on in its current small building on East Lancaster, given Union Gospel Mission’s wish to use the site for another purpose, Frankel said. The center is currently performing its services in only the 3,800-square-foot first floor of the two-story building.

“Our community needs a modern facility,” Frankel said. “If somebody else comes along and meets the need, we are very, very happy about that. If we’re invited to come and do that, we’re happy.”