Fort Worth’s Lancaster tax increment finance district on Wednesday approved a $4.7 million incentive to the developer who plans to convert the former Hilton Annex downtown into apartments.
The project, estimated at $33 million in city documents disclosed with the presentation on the incentive to the TIF board, would include a minimum $1.5 million in utility upgrades and sidewalk, streetscape, and landscape improvements; $1.5 million in facade and historic restoration improvements; and $1 million in asbestos removal.
The building “has a humongous amount of asbestos,” Farukh Aslam, a Hilton and Marriott hotel franchisee and minority shareholder in the Annex’s ownership group, said in an interview after the TIF board vote. “That’s why it’s not been able to be redeveloped.”
The planned conversion of the former hotel into at least 125 apartments will require power upgrades, Aslam said.
“It needs a lot more power,” he said.
The 13-story, 230,000-square-foot building includes five floors of garage and eight floors on top. The Annex was built in 1967 atop the circa-1928 Biltmore garage and connected by skybridge to the historic Hotel Texas, where President Kennedy spent his last night before heading the next day to Dallas, where he was assassinated. The Hotel Texas today is the Hilton Fort Worth. The Annex has been vacant since 2006.
The initial plans for the project were first disclosed earlier this year during a meeting of the Downtown Design Review Board. More detail about the proposed project emerged in Wednesday’s TIF presentation.
The 260-space garage will have 135 hotel valet spaces for the nearby Sinclair and 515 Houston St. buildings. A partnership that Aslam also is a minority shareholder in are renovating the historic Sinclair into a Marriott Autograph Collection hotel. Another Aslam-involved partnership is renovating the neighboring 515 Houston telecom hotel which will include banquet facilities connected by skybridge to the Sinclair.
The Annex will have 6,000 square feet of ground-floor retail.
Its apartments will be 80 percent market rate, including furnished and unfurnished corporate apartments.
As part of the incentive agreement with the TIF, 20 percent of the apartments will be affordable-rate. Half of those units will be available to tenants earning 80 percent or area median income or less, the city’s target. The other half will be available to tenants earning 60 percent of area median income or less. Although 80 percent is the city’s target, local officials estimate the highest need for affordable housing is at significantly lower incomes.
The project would have to create a minimum 10 permanent jobs and be completed by Dec. 31, 2017. The developer would have to use minority and women-owned contractors for at least 25 percent of the project. It must secure the state or federal historic tax credits it’s pursuing.
To receive the incentive, which will be paid after the developer receives its certificate of occupancy, the other related partnerships must also complete the Sinclair and 515 Houston Street projects.
“At the end of the day, we end up getting three buildings redone,” Jay Chapa, the city’s economic development director, said after the TIF board vote.
TIF board members unanimously approved the project, with few questions. “There’s a lot of activity in the downtown area,” the board chairman, City Councilman Jungus Jordan, said.
The Chapter 380 incentive, allowed under state law, would be paid in six annual payments starting in fiscal 2017 and ending in 2022. The first payment would be $1.83 million, and the final one would be $586,667.
The net present value of those payments is $3.6 million.
Aslam said the ownership hasn’t yet determined how much total incentive money might be coming back to the group. “It’s a moving target,” he said.
The partnerships are working on plans for all three buildings. City staff is preparing proposed incentive agreements for the Sinclair and 515 Houston buildings that will go through the Downtown tax increment finance district board, Chapa said.
The Annex apartments will be high-end, Aslam said. The documents suggested a blend of standard rentals and apartments aimed at the corporate market. Aslam, who said earlier this year the building would be renovated into corporate apartments, said Wednesday that’s still the focus. Those units will come furnished or unfurnished and be aimed at the relocation, training, and long-term medical treatment markets, he said.
The Annex will have a small bar for residents, and “it’ll have services that other hotels don’t have,” he said, declining to elaborate.
Sinclair Holdings, LLC, owner of the 1930-era art decor Sinclair office building at 512 Main St., plans to convert it into a 165-room hotel, with a basement restaurant and rooftop bar, in plans that first surfaced publicly earlier this year at the same Downtown Design Review Board hearing as the Annex’s.
Aslam said Wednesday the partnership is talking to two potential operators. The final choice will run the basement restaurant and rooftop bar, he said.