Fort Worth council approves $70M purchase of iconic downtown tower for City Hall
See full Fort Worth Star-Telegram article by Luke Ranker here.
Cheering the decision as a financial win and a sign of a new era for Fort Worth, the City Council on Tuesday approved the purchase of the former Pier 1 headquarters for $69.5 million.
The iconic high rise at 100 Energy Way will be City Hall by late 2022.
City Manager David Cooke and Mayor Betsy Price announced Dec. 2 the city’s intention to buy the 20-story tower on the northwestern edge of downtown. The sale should close on Feb. 1. The council approved $100 million in tax notes to cover the purchase and potential construction costs. The city will make a $5 million down payment.
City officials say the move will give Fort Worth a modern city hall for half the cost and in half the time as building a new one. A commercial real estate expert told the Star-Telegram earlier this month the transaction would likely be a boon to downtown office owners as a massive amount of space comes off the market.
“This is a legacy vote,” Councilman Dennis Shingleton said.
No one spoke during public comment before the unanimous vote.
The idea of a new city hall has existed for decades, including a discussion to buy the historic U.S. Post Office building at 251 W. Lancaster Ave.
Cooke last year floated the idea of consolidating city offices into a new city hall. The proposal included a brand new building fronting Lancaster Avenue on the south end of downtown that would cost $151 million to $200 million.
That option would have provided more than 200,000 square feet for city offices in an eight-story building with a large parking garage. The city would not have completed construction and the move until 2028.
The Pier 1 tower provides about 410,000 square feet with a parking garage that can be expanded, according to the city.
There was some discrepancy about the height of the tower. It’s billed as 20-stories, but is missing two floors in the elevators: there is no button for the 4th floor, which is seen as bad luck in Chinese culture, and no 13th floor, an bad omen in Western culture.
Council women Gyna Bivens, Kelly Allen Gray and Ann Zadeh agreed the modern office tower would be more accessible to the public than the current city hall at 200 Texas St. Visitors to the building that opened in 1972 often have a hard time finding public offices and its design and lack of parking are not friendly to those who have trouble walking, Bivens said.
“I think once it is the official City Hall, they will come to love the building versus the building that we are currently in,” Gray said.
Zadeh said Tuesday she wanted to see 2% of the cost devoted to public art on tower’s 12 acres.
The purchase will be made with $100 million from two sets of seven-year tax notes, both with interests rates below 1%. The first, $74 million, are non-taxable notes to cover the cost of purchasing the vacant portion of the building. Because part of the tower is occupied by private businesses, another $26 million in taxable notes is required. Around September the city plans to refinance with a certificate of obligation for 20 years, Deputy City Manager Jay Chapa said.
The roughly $30 million beyond the purchase price will be used to cover construction, he said. The tower will need remodeling, including the construction of a public council chamber and the addition of security measures. The city estimates that will cost $20 million to $40 million.
The tax notes required a council vote, but not a public referendum. Chapa said the financing should not lead to a tax increase.
The city can take on roughly $500 million in debt without raising taxes, he said, using a tax formula that accounted for a potential economic slow down. Every four years the city asks voters to support about $400 million in debt, which Chapa said is about the limit of work the city can accomplish.
When Cooke first pitched exploring a new city hall last year, he projected spending about $200 million. Those funds likely would have come from the 2022 bond referendum. The city can now take on additional projects, Chapa said. Proposals for the 2022 bond package are still being made, but it’ll likely include work to the former city hall and additional street projects
Councilman Jungus Jordan celebrated the financing as “a deal that comes once in a lifetime ,” saying the low interest rate was “basically free money.”
“I cannot find a reason not to do this,” he said.
Chapa said the city plans to move the police department’s Central Division and some administrative offices into the former city hall at 200 Texas Street. The department has three leases worth a little more than $1.1 million.
Officials say the city will see other revenue and savings through the purchase of the Pier 1 tower.
Leases remain on the top five floors of the tower but will begin expiring from 2024 to 2031. The city estimates the leases will generate about $3 million in revenue.
After the city moves into the tower, officials will explore selling several public buildings downtown, including the Central Library at 500 W. Third St., if the right buyer is found, Cooke has said. The city estimates all of its downtown property to be worth around $35 million based on a 2018 calculation. That number may change if the city chooses not to sell some property or if the market shifts.
Cooke has cautioned that the city hasn’t committed to selling individual properties, but high on the list are the Gordon Swift and Lone Star Gas buildings, directly across from City Hall as well as the Taylor Street parking garage. Those properties are valued at more than $10.4 million, according to the Tarrant Appraisal District. An “L” shaped property on Taylor and Lancaster has a market value of more than $1 million. The Central Library property is worth more than $14 million, according to the appraisal district.
Part of the original plan to build a new city hall on Lancaster included moving the Joint Emergency Operations Center and building a new facility. The command center can stay in it’s current location, Chapa said, saving the city additional dollars.
Councilman Cary Moon, who is typically hesitant to spend city dollars, said the deal would be a win if the city sold much of it’s unneeded property.
“Over all this is a good deal,” he said.
“We never have enough money for road projects,” he said.
Location Mentioned: Central Library