Westchester Plaza at 424 Summit.
Photo by Kelly Weatherbee
(Correction: this story has been changed to include the correct boundaries of the site. That information was incorrect in the earlier version.)
By Scott Nishimura snishimura@bizpress.net
A California real estate investment trust plans to buy the aging, 50-year-old Westchester Plaza assisted living tower on Fort Worth’s Near Southside, demolish it, and redevelop the site into apartments, retail, medical-office, and parking.
HCP, Inc., of Irvine, Calif. is seeking a $3.9 million reimbursement for infrastructure costs from the Southside tax increment finance district. The total project value is estimated at $108.7 million, excluding land. The TIF board will consider the proposal at its meeting Tuesday.
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.
“We have demand for over 4,000 (new) apartments from surveys,” Paine said in an interview Monday, re-iterating Fort Worth South data that reflect continued interest from younger people who want to live on the Near Southside, close to medical employment and entertainment.
HCP would replace the 12-story, 282,000-square-foot Westchester with a six-story mixed-use building that has ground-floor retail and 300 apartments; an eight to 10-story medical-office building, and a seven-level parking garage. The garage would 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.
Construction start for the project, to be called 424 Summit, is estimated in June 2015, allowing time for the relocation of the Westchester’s tenants, with completion in June 2017.
The TIF reimbursement would 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.
About 1,000 new apartments are in the works on the Near Southside, including the ones proposed in the Westchester redevelopment.
The TIF isn’t subsidizing the medical-office piece or the project, but is tying the start of payments to its completion, Paine said.
“We don’t need to subsidize medical-office,” he said.
But “they’re telling us it’s an integrated project; we want the complete package.”
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.
VLK Architects of Fort Worth and the Transwestern real estate services firm, two members of the HCP project team, helped secure the USMD agreement, according to the documents.
HCP and its representatives could not be reached Monday afternoon by The Business Press.
The 5.28-acre site – bounded by Pennsylvania Avenue on the south, 8th Avenue on the west and north, and Summit Avenue on the east – includes eight lots that HCP, which specializes in healthcare properties, has been acquiring. The medical-office building would be on a triangular piece facing Interstate 30, bounded, by 8th, Summit, and West Peter Smith Street on the south.
WGH Heritage owns the Westchester Plaza. HCP and WGH opened negotiations in August 2013 about a potential redevelopment of the site.
“The building is antiquated, and it has issues” and would likely have required redevelopment at some point soon, Paine said.
Moreover, the site has a much higher use than its current one as federally subsidized assisted living, he said. The level of subsidy means the property is tax-exempt today.
But 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.
The project 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.
The project cost includes $40.2 million for the apartments, retail and garage, meaning a public-private ratio on the TIF reimbursement of 10.3 to 1, according to the documents.
The TIF reimbursement would go toward demolition, grading, drive approach, landscaping, sidewalks, streetlights, and relocation of utilities.
Balfour Beatty Construction of Fort Worth will be the contractor.