Fort Worth Housing Authority joins effort to buy Hillside Apartments
03/28/2014 6:52 PM
03/28/2014 6:53 PM
The Fort Worth Housing Authority has approved forming a partnership with Downtown Fort Worth Initiatives Inc. to buy the mixed-income Hillside Apartments on downtown’s near east side, a project that pioneered downtown residential development nearly 20 years ago.
The 172-unit development was built in 1997 and spearheaded by Downtown Fort Worth Initiatives Inc., which acquired 12 acres in the Hillside neighborhood, and then leased the land to St. Louis-based McCormack Baron Salazar, which developed the $14.7 million project, and a partnership of tax credit investors, which are local corporations.
Federal housing tax credits were used, in part, to finance the project. Several foundations and the city of Fort Worth made grants to the project and there was some conventional debt financing.
Sixty percent of the units are reserved for families making less than 60 percent of the area median income. The project is bordered by East First Street on the north, East Fourth Street on the south, Nichols Street on the east and the railroad tracks on the west. Although they are called apartments, the units give the area the appearance of a single-family neighborhood.
The partnership between the Housing Authority and Downtown Fort Worth Initiatives Inc. was initiated after some of the tax credit investors expressed interest in selling, said Jim Johnson, of Downtown Fort Worth Initiatives Inc. The tax credit compliance period ended in 2012.
The investor group that bought the tax credits included Tandy Corp., now RadioShack; Justin Industries, now Acme Brick; Banc One Community Development Corp., now JPMorgan Chase; Wells Fargo Bank, Pier 1 Imports, insurer Gainsco Inc., and McCormack Baron. McCormack Baron serves as the general partner and has managed the property since it opened.
“Tax credit investors will typically exit a project once the benefits expires,” Johnson said. “In this case, we were fortunate to find a new partner in the Housing Authority.”
Under terms of the deal, the Housing Authority will buy the residential units and Downtown Fort Worth Initiatives Inc. will donate the 12 acres to the project to form a new corporation. The Housing Authority is still negotiating a purchase price from McCormack Baron, Johnson said.
The deal is expected to close this spring, he said.
The new ownership group has agreed to maintain the affordability mix of the project for the next 24 years and use revenue from the venture to assist in the development of more mixed-income housing downtown, Johnson said. At the end of the 24 years, Downtown Fort Worth Initiatives Inc. will have the opportunity to buy the development for the amount of outstanding debt, he said.
“We see this as a legacy opportunity,” said Johnny Campbell, president of Sundance Square and chairman of Downtown Fort Worth Initiatives Inc., in a statement. “We want to be sure that this project stays in local hands and that the use of this land and these assets are held in trust by a group of people who will have downtown Fort Worth’s best interests in mind.”
Said Barbara Holston, Housing Authority president, “We’ve worked with Downtown Fort Worth Initiatives Inc. on a number of projects, and this is an opportunity for us to ensure the continuation of existing affordable units in downtown while creating a partnership and revenue stream that lead to the development of more in the future.”
Downtown Fort Worth Initiatives Inc. is a sister organization of Downtown Fort Worth Inc., a nonprofit membership advocacy group for downtown. Downtown Fort Worth Initiatives Inc. developed the JFK Tribute near the Hilton Hotel, maintains Burnett Park, and produces the Main Street Arts Festival and the Fort Worth Parade of Lights.
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