PILLAR: Growing
AGENDA DATE: June 24, 2026
COUNCIL DISTRICT(S): 2
DEPARTMENT: Office of Economic Development
PRIORITY: N/A
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SUBJECT
Title
Authorize the acceptance or rejection of an offer received from TEOF Hotel LP (“Borrower”), a Texas limited partnership to (1) pay the City $5,707,000 (plus any pertinent accrued interest) and the City’s legal fees upon the sale and title closing of the Lorenzo Hotel (“Property”) located at 1011 South Akard Street, owned by Borrower, in exchange for the release of the City of Dallas lien on the Property; (2) execute an agreement not to pursue any additional funds owed by Borrower or Lawrence E. Hamilton, III, as trustee of the Lawrence E. Hamilton Living Trust (“Guarantor”) to the City approved as to form by the City Attorney; and (3) execute any other documents deemed necessary by the U.S. Department of Housing and Urban Development (HUD) and/or the City Attorney’s Office (the execution of all such and aforementioned documents contingent on HUD’s final approval of terms) - Financing: This action has no cost consideration to the City (see Fiscal Information)
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BACKGROUND
The U.S. Department of Housing and Urban Development (HUD) provides communities with access to financing for large-scale community or economic development projects through the Section 108 Loan Guarantee Program (Section 108). Under Section 108, the City pledges current and future Community Development Block Grant funds as collateral for the guaranteed loan.
On January 14, 2015, the City Council via Resolution No. 15-0147 authorized an $11,000,000.00 Section 108 Loan agreement with HUD, the source of funds which was used to enter into a separate loan agreement between the City and TEOF Hotel LP (“Borrower”) to rehabilitate the blighted and vacant Plaza Hotel structure at 1011 South Akard Street into a new, 12-floor, 237-room hotel which currently operates as the Lorenzo Hotel (“Property”).
Earlier this year, the Borrower’s representative informed the City that it would be unable to make a $1,082,093.45 principal and interest payment due to the City on May 1, 2026. The Borrower’s representative also notified City staff of the Borrower’s intent to sell the hotel by the end of the summer. On April 8, 2026, via Resolution No. 26-0681, City Council authorized the use of up to $935,101.50 in unspent, prior year CDBG funds to cover loan payments due to HUD through February 1, 2027. The City has a final $5,707,000.00 principal payment due to HUD on or before August 1, 2027.
The City’s loan is secured by a second priority lien on the Property (“Junior Lien”). There is also a first lien (“Senior Lien”) from Huntington National Bank (“Senior Lender”) and a super-priority tax lien on the Property. The Borrower is currently in default of both the Senior Loan and the Junior Loan.
The City through its outside legal counsel has presented the Borrower and Guarantor with an offer to recover all amounts due to City.
The Borrower has provided a counteroffer to pay the City $5,707,000.00 (plus any accrued interest due to HUD related to City’s final principal payment to HUD) as well as the City’s outside counsel legal fees at title closing in exchange for the release of the City of Dallas lien on the Property and agreement not to pursue any additional funds owed by Borrower or Guarantor to City. HUD has reviewed and preliminarily approved both the City’s proposal and the Borrower’s counteroffer. Execution of all documents is contingent on HUD’s final approval of terms.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On January 14, 2015, the City Council authorized the acceptance of $11,000,000.00 in Section 108 Loan Funds from HUD; a loan agreement with HUD (Section 108 Hotel Project Loan B-12-MC-48-0009) for the rehabilitation of a vacant commercial building known as the Hotel Project and to provide an $11,000,000.00 development loan to TEOF Hotel LP for various costs associated with the Hotel Project using Section 108 Loan Funds by Resolution No. 15-0147.
On December 9, 2015, the City Council authorized an amendment to the loan agreement between TEOF Hotel LP and the City to provide for loan refinancing by Resolution No. 15-2214.
On June 24, 2020, the City Council authorized the City to enter into a $504,000.00 deferral note agreement with HUD related to City’s Section 108 Hotel Project loan with HUD by Resolution No. 20-1036.
On November 11, 2020, the City Council authorized the use of up to $1,800,000.00 in CARES Act funds to make interim payments of interest and principal on Section 108 Hotel Project loan agreement (B-12-MC-48-0009) between the City and HUD by Resolution No. 20-1845.
On June 14, 2023, the City Council authorized a Forbearance and Loan Modification Agreement with TEOF Hotel LP, an Amended and Restated Promissory Note with Borrower, a Guaranty Agreement with Lawrence E. Hamilton, III as trustee of the Lawrence E. Hamilton Living Trust by Resolution No 23-0795.
On April 8, 2026, the City Council authorized final adoption of Reprogramming Budget No. 2 (Substantial Amendment No. 2) to the FY 2025-26 Action Plan to use unspent CDBG Funds in the amount of $2,566,661 for public improvement projects and Section 108 debt payments by Resolution No. 26-0681.
FISCAL INFORMATION
This action has no cost consideration to the City. Accepting this offer would result in City’s forfeiture and forgiveness of approximately $1,983,253.10, including $1,225,600.00 in default principal and $757,653.10 in default and uncollected interest amounts.
OWNER/EXECUTIVE
TEOF Hotel LP
Lawrence E. Hamilton, Chief Executive Officer