Title
Conduct a public hearing and consider a resolution approving the terms and conditions of a program to promote local economic development and stimulate business and commercial activity in the City, affirming termination of a prior Economic Development Program Agreement (Chapter 380 Agreement) with LF Gateway LP (“Company”) for development of the property located at 3201 East Cartwright Road in the City of Mesquite, Texas (“Property”) and waiving a $100,000.00 payment owed to the City by the Company, authorizing the City Manager to finalize and execute a new Economic Development Program Agreement (Chapter 380 Agreement) with the Company, regarding development of the Property, and authorizing the City Manager to finalize, execute and administer the new Chapter 380 Agreement on behalf of the City.
Body
In 2017, noting a market need in the area for new commercial development and in anticipation of future residential development in Southeast Mesquite, LF Gateway LP purchased a 6.787-acre tract at 3201 East Cartwright Road. The site is located at the southeastern corner of the intersection of Cartwright Road and Faithon P. Lucas, Sr., Boulevard, adjacent to John D. Horn High School.
The development includes approximately five freestanding retail buildings to be leased and/or sold to medical office, local retail and restaurant concepts. Exceptional costs of developing the site to improve ingress and egress include modifications to East Cartwright Road and the entrance to John D. Horn High School from Faithon P. Lucas, Sr., Boulevard.
A Chapter 380 Agreement, executed on July 14, 2021, provided an incentive package consisting of Grants based upon Real and Business Personal Property Tax paid to the City as a result of the development over ten years, as well as Water, Sewer and Roadway Impact Fees paid to the City during the development process. Roadway Impact Fees would be granted back to the developer 100 percent during the first five years of the project and 50 percent years six through ten. All other tax and fee-based Grants would have a performance-based cap of $500,000.00 or $600,000.00 (a $100,000.00 increase if a Fast Casual or Table Service Restaurant is constructed within the first five years). Additional terms:
• Minimum combined square footage of buildings: 42,500
• One building to be completed prior December 31, 2023
• Subsequent improvements (remaining buildings) to be completed prior to July 13, 2031
Due to market conditions and infrastructure projects, construction of the project was delayed. A First Amendment to the Chapter 380 Agreement, approved by the City Council on December 18, 2023, provided the following updated terms:
• Minimum combined square footage of buildings: 32,500
• One building to be completed prior to June 31, 2024
• Subsequent improvements (remaining buildings) to be completed prior to December 31, 2031
• Deadline to earn 50 percent reimbursement of Roadway Impact Fees extended from July 31, 2031, to December 31, 2031
Due to a delay in construction of the first building, the amended Chapter 380 Agreement was terminated, and a new Chapter 380 Agreement is proposed.
The proposed new agreement applies to the original 6.787-acre tract at 3201 East Cartwright Road. The estimated capital investment remains $16 million. With offsite infrastructure improvements complete and accepted and the first building constructed and operational, the new performance measures include a minimum of Building One or Building Three receiving a building permit by July 31, 2025, with subsequent improvements causing a total square footage on the property of 32,500 by December 31, 2031. The agreement term would allow grants to the developer equal to ad valorem taxes collected by the City as a result of the development from 2022 through 2031, as well as 100 percent of water and wastewater fees between 2023 and 2031, 100 percent of roadway impact fees between 2023 through 2028, and 50 percent of roadway impact fees between 2029 through 2031.
A bonus of $100,000.00 would be paid to the developer for obtaining a fast casual or table service restaurant opening by December 31, 2026.
The incentive components of the new agreement, like the original agreement, have a not-to-exceed of $500,000.00 plus the potential bonus of $100,000.00. The primary difference is the qualification trigger for incentives being the construction of Building One or Building Three. The completion of the square footage of the entire tract by year-end 2031 mirrors the original agreement.
The new agreement also affirms the City’s waiver of a $100,000.00 payment by the developer which would have been owed to the City due to the termination of the first agreement.
Recommended/Desired Action
Following the public hearing, staff recommends approval of the resolution.
Attachment(s)
Resolution
Drafter
Kim Buttram
Head of Department
Kim Buttram