STRATEGIC PRIORITY: Economic Development
AGENDA DATE: November 13, 2024
COUNCIL DISTRICT(S): 7
DEPARTMENT: Office of Economic Development
EXECUTIVE: Robin Bentley
______________________________________________________________________
SUBJECT
Title
Authorize (1) a Conditional Chapter 380 Economic Development Loan Agreement with Southfair Community Development Corporation in an amount not to exceed $1,190,354.00, sourced from the South Dallas/Fair Park Opportunity Fund; and (2) a Chapter 373 Conditional Grant Agreement with Borrower/Recipient in an amount not to exceed $312,500.00 sourced from the Public Private Partnership Fund, for capital improvements and construction costs related to the development of the Malcolm’s Point Retail Project to be located at 2807 Al Lipscomb Way, Dallas, Texas 75215, in accordance with the City’s Economic Development Incentive Policy and the South Dallas Fair Park Opportunity Fund Program Statement - Total amount not to exceed $1,502,854.00 - Financing: South Dallas Fair Park Opportunity Fund ($1,190,354.00) and Public Private Partnership Fund ($312,500.00)
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BACKGROUND
Malcolm’s Point Retail Project (Project) is a new ground-up development project that consists of a 4,859 square foot building located at the corner of Malcolm X Blvd and Al Lipscomb Way, led by Southfair Community Development Corporation (Southfair). Southfair is a community development corporation with a long history of operations in the South Dallas Fair Park neighborhood, investingt more than $35 million in the South Dallas Fair Park area over the past 30 years. The Project is located within the boundaries for the South Dallas Fair Park Opportunity Fund and is also within an Economic Development Target Area.
The Project will provide new office and restaurant space, plus additional small retail and office spaces to be used by neighborhood entrepreneurs. Initial tenants will include Southfair (3,009 sq ft and may be later divided) and Aunt Irene’s Kitchen restaurant (1,800 sq ft). The total Project cost is approximately $2.3 million, which includes $121,500.00 for the land (contributed as owner equity) and a construction budget of approximately $1.9 million.
The initial incentive application was submitted with senior and subordinate debt letters of intent from Vista Bank and Texas Mezzanine Fund. However, upon staff and underwriter review, the Project could not support the debt under the terms offered by the senior bank lender. To address this issue, staff recommendation includes SDFPOF loan of $1,190,354.00 to serve as senior loan with a 2.5% interest rate and 25-year amortization, 10-year term (during the construction period the loan is interest-only). The loan will be disbursed into a construction management account and disbursed through a construction management process in partnership with Texas Mezzanine Fund (subordinate lender) through a single draw process to Texas Mezzanine Fund.
Staff also recommends a conditional community development grant of $312,500.00 (sourced from City’s Public/Private Partnership Fund and deployed pursuant to Chapter 373 of Texas Local Government Code and the City’s Community Development Plan).
The grant would be paid in two installments:
• Installment #1: fifty percent (50%) of Grant ($156,250.00) shall be payable: (1) after construction of the Project improvements are completed and verified, (2) after the Project has obtained final certificates of occupancy (or equivalent evidence of completion issued by the City) and (3) upon satisfaction of relevant Grant terms and conditions in the executed incentive agreement.
• Installment #2: remaining 50% of the Grant ($156,250.00) shall be payable: (1) after the retail and office space is open to the public, (2) after the building is 80% leased and occupied, and (3) upon satisfaction of relevant Grant terms and conditions in the executed incentive agreement.
The other funding for the Project includes a $675,000.00 subordinate loan from Texas Mezzanine Fund and owner equity of $121,500.00 contributed as the land.
ESTIMATED SCHEDULE OF PROJECT
Begin Construction December 1, 2025
Complete Construction December 31, 2026
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On September 30, 2024, the South Dallas Fair Park Opportunity Fund Advisory Board reviewed the proposed Project and unanimously recommended approval of a SDFPOF senior loan in an amount not to exceed $1,190,354.00.
The Economic Development Committee was briefed by memorandum regarding this matter on November 4, 2024. <https://cityofdallas.legistar.com/View.ashx?M=F&ID=13513470&GUID=E55ADE9D-1D0F-42B3-9114-118DA64ACCDB>
FISCAL INFORMATION
|
Fund |
FY 2025 |
FY 2026 |
Future Years |
|
South Dallas Fair Park Opportunity Fund |
$1,190,354.00 |
$0.00 |
$0.00 |
|
Public Private Partnership Fund |
$0.00 |
$312,500.00 |
$0.00 |
|
Total |
$1,190,354.00 |
$312,500.00 |
$0.00 |
OWNER/EXECUTIVE
Southfair Community Development Corporation
Annie Evans, President
MAP
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