Fort Worth-based Trademark Property Co. is seeking to recover more than $1.4 million the company says it will lose in economic incentives on its Waterside project from an apartment developer that failed to meet required percentages of minority- and women-owned businesses during construction.
Trademark wants to recover the money from Houston-based Transwestern Acquisitions, which bought property in Waterside to develop the RiverVue apartment community at 5828 Arborlawn Drive.
Waterside is the $185 million 63-acre residential, office, hotel, shopping and restaurant development on land once owned by the Lockheed Martin Recreation Association. Trademark bought the land in 2013.
Under the sales contract, Transwestern was supposed to comply with the Chapter 380 Economic Development Agreement with the city that spelled out that at least 25 percent of construction costs be spent with certified minority- and women-owned businesses.
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The Transwestern arm that developed the apartments, CH Realty, hired Collum Construction Partners, according to the suit filed May 21 in State District Court in Tarrant County. Collum is not a certified minority business enterprise, the suit says.
Transwestern spokeswoman Stefanie Lewis said the company has "no comment at this time."
Jim Scott, the attorney representing Trademark, also did not want to comment on the case.
Trademark issued a statement saying, “We are terribly disappointed the city’s goals for business diversification were not met and hope that we can resolve this amicably.”
In March, the city's Internal Audit Department conducted an audit on the economic agreement, awarded Trademark in 2014.
The incentive package includes a Chapter 380 grant of 75 percent of the 1-cent sales tax revenue generated at the development and 75 percent of the incremental real and personal property tax to be paid out over 15 years.
Under the incentive package, Trademark is eligible to receive $18.5 million in tax abatements. The audit covers a three-year time frame, but was done this year because construction milestones were required at this point, including dollar amounts and square footage.
According to the audit, construction spending within Waterside with Fort Worth companies reached 22.9 percent of the required $18.7 million, or $17.1 million, and, 13.13 percent of the required $15.6 million with minority enterprises, or $8.2 million.
As a result, in the first year of the abatement, Trademark will only receive 86 percent of the incentive. That amount has not yet been set by the city. Trademark won't receive any money until 2019, after tax bills are calculated and the audit percentages applied.
It is unclear in the suit how Trademark determined the $1.4 million figure, but it is only related to the apartment project. Trademark was notified by the city in March of the default and Trademark in turn told Transwestern which "has failed and refused to resolve the matter," the suit said.
The audit shows Trademark had spent a little more than than the required $90 million on Waterside construction in the first phase. Under the deal, 325,000 square feet was required for 400 apartments and 140,000 square feet for offices, shops and restaurants. Trademark exceeded those square-footage requirements.