Fort Worth City Council members unanimously authorized the staff on Tuesday to move ahead with the planned $100 million purchase and renovation of the former Pier 1 headquarters building west of downtown as the new City Hall.
Council members authorized City Manager David Cooke to buy the property at 100 Energy Way and close the transaction by Feb. 1; make a $5 million down payment from the city’s unencumbered General Fund balance; and finance the purchase and renovations with $100 million in tax-exempt notes.
The transaction was already moving ahead quickly. “The purchase contract was signed yesterday” with the California partnership that owns the property, Jay Chapa, deputy city manager, said in an interview Tuesday.
The city is paying $69.5 million for the 20-story Class A tower and 11.9-acre tower, a sharp discount off of the $80 million list price. Pier 1 built it for $94 million in 2003 as its corporate offices, with finishes such as imported eucalyptus on the walls of the top-floor executive suite and Italian marble on the floors. The building has a cafeteria, gym, parking for more than 1,000 cars, and easy access to the Trinity Trail. When Pier 1 hit a downturn, it sold the property to Chesapeake Energy, which later sold it to Hines. The California group bought it in 2018 for $87 million, Chapa said.
With Pier 1’s bankruptcy and demise, the 410,000-square-foot building has about 260,000 square feet of vacant office space available for lease, and its owners were looking to sell.
“They bought the building, they didn’t see COVID coming,” or Pier 1’s departure, Chapa said. “They had been trying to lease it.”
The city, which for years has been discussing ideas for a new city hall to replace its outmoded and outgrown one downtown, initially offered to buy the building using certificates of obligation it could close on in April or May, Chapa said.
“The seller said we can’t do that, we have loan payments, can we move quicker,” Chapa said. The staff came up with the idea of using tax notes, which allowed a much faster timeframe, Chapa said. The city will wait until the fall and refinance the notes with longer-term financing. The tax notes require council approval, but not voters’.
The staff plans to quickly begin a review of how it fits into the new building. It wants to hire the project manager, architect and contractor by summer, with renovations potentially beginning next fall, Chapa said.
“Best case,” a full move by the city into the building could occur by summer 2022, he said. But because the building is relatively new and modern, some departments could move before then. “There might be some floors that are ready to go,” he said. “It’s going to be phased.”
But, he stressed, “we don’t have a place yet. We need to buy the building first.”
The new City Hall will be about 160,000 square feet larger than the current one, with better, modern amenities and parking.
The “building meets city organization needs immediately and for the next several decades,” city staff said in a report to Mayor Betsy Price and council members ahead of Tuesday’s vote.
In 2006, the city made an unsuccessful attempt to purchase the U.S. Post Office on Lancaster Street downtown for a new City Hall. In 2011, it tried again. “it’s been going on for at least 16 years,” Chapa, the city’s longtime economic development executive before his promotions through the city manager’s office, said.
The Pier 1 purchase will enable to city to make its move several years ahead of any other scenario, city officials said.
Functions from the main city hall, three annexes downtown, and La Gran Plaza in Fort Worth’s Seminary neighborhood, will move to the new building. Fort Worth Police Central Division headquarters, now at Jones and Hemphill streets on the Near Southside, and police administrative support on Calvert Street near downtown could eventually move, city officials said.
The city, which has been considering a future central library to replace the one it has downtown, which is significantly larger than what users demand, will include that question in its review of Pier 1’s space, Chapa said. If the library eventually moves out of downtown, that site would likely hit the open market. “That property is worth a lot of money,” Chapa said.
The staff wants to retain the Pier 1 building's cafeteria and gym, Chapa said. "That's the plan."
The city will retain the current City Hall downtown for city offices, required by covenant to maintain the property for municipal use.
The city would end its leases at La Gran Plaza, Jones and Hemphill, and Calvert Street, for a total annual savings of $1.1 million, and existing tenants in the Pier 1 building would provide $3 million in annual rent through the expiration of their leases.
The city won’t ask those tenants to move out before their leases expire, Chapa said. But long term, “we ultimately will use that entire building,” he said. “We might have leases with outside groups, but they will be city-affiliated groups,” like Sister Cities, he said.