Council to vote on possible Mercado sale
By Aleshia Claunch

Fort Worth Business Press

Over the Christmas holidays, city council members were given time to consider a cash offer of $2.5 million for the Mercado de Fort Worth – a city-owned Mexican market that cost the city nearly $5 million to construct and has sat empty since its completion in April 2005.

Fort Worth Business Development Coordinator Robert Sturns told council members Dec. 20 that Jose Legaspi, the owner of the California-based Legaspi Co., has agreed to purchase the Mercado for $2.5 million in cash with a refundable $700,000 down payment. Legaspi also recently invested in Fort Worth’s Hispanic community when he purchased La Gran Plaza, the former Fort Worth Town Center, in south Fort Worth.

Though city officials have discussed the sale of the Mercado with interested developers throughout the year, Sturns said city staff will recommend council members approve the sale of the building at the Jan. 10 council meeting.

“We think that the success of this project will spur more development in this corridor,” Sturns said. “As this comes along and is successful, we will see more development along North Main.”

The city of Fort Worth will maintain mineral rights on the property.

Sturns said Legaspi has already invested $19 million in renovations at La Gran Plaza.

“We hope for a synergy between the two projects,” Sturns said.

Legaspi stood in front of council members and said the proposed transaction is a “win – win,” situation.

“Our selfish effort of saying La Gran is a sister program is a wonderful marketing program so we can interface both projects,” he said.

Legaspi said property values across the street from La Gran Plaza have increased over the past year and he hopes the same happens near the Mercado.

District 5 Council Member Donovan Wheatfall said the Mercado de Fort Worth and La Gran are the poster children for inner city redevelopment.

“ … Today, the fruit of our labor is paying off not only with a tangible $2.5 million, but in life to a community,” he said.

Construction began on the Mercado de Fort Worth in 2003 when local developer Deyla Guadiana secured a $3.1 million loan from the U.S. Department of Housing and Urban Development. Guadiana promised to secure private financing as well, and city officials agreed to allow her to begin construction of the project on city-owned land at 1550 N. Main St.

Guadiana’s original loan for the project, Sturns said, was to create a Mexican-style marketplace complete with shops, a bank and a restaurant inside the crown jewel of the development, a three-story, 58,000-square-foot structure.

The second floor of the building was to include office space available for local business, and the third floor – a 6,000-square-foot banquet hall – was to be available as a reception area for north-side residents.

When Guadiana’s private financing fell through in September 2004, the city took possession of the development, then 60 percent complete

To date, the city has pumped $1.7 million into the construction of the project, in addition to picking up the tab on the $3.1 million Housing and Urban Development loan originally made to Guadiana.

After racking up nearly $5 million in construction costs, the Mercado was appraised at $4.1 million in August 2004 only to fall to between $2.25 and $3 million at a later appraisal in June 2005.

In an earlier interview with the Fort Worth Business Press, Sturns said city officials expected the sharp decrease in value because of unfinished areas and under-estimated completion costs.

“The city has spent a lot of money on this project, and we know we won’t get back all that we’ve put into it, but we hope that we can get the number we want,” Sturns told the Business Press in June. “We have always had a dollar amount in mind and that hasn’t changed – even with [the] new appraisal.”

Sturns said one of the problems the city experienced with the sale of the Mercado dealt with parking for patrons of the building. According to findings in the building’s last appraisal, which was completed by Fort Worth’s Integra company, only 49 of the 197 parking spaces in the lot behind the Mercado are dedicated to the building.

Sturns told Integra Appraisers Ben Loughry and Kelly Brechel that the original Mercado agreement created in the 1990s, when the parking lot was constructed, states that the parking lot would be for public use.

“When we originally appraised the property, we were given a site plan showing the improvements and parking lot and no mention was made, nor any written agreements provided, regarding this fact,” Brechel and Loughry wrote in the appraisal concerning the 148 parking spaces not dedicated to the Mercado. “It was our understanding at the time the original appraisal was prepared, that the Mercado had exclusive use of the parking lot.”

Because many streets in the vicinity of the Mercado are already congested with cars parked along the streets, Loughry and Brechel suggested additional land should be purchased to provide adequate parking for the customers and workers of the Mercado.

“If the lack of parking proved to be detrimental to the subject’s operations, the owner of the Mercado would have to acquire additional land for parking,” the appraisal said.

Loughry and Brechel estimated the additional parcel of land for parking would cost $750,000.

Sturns said the lower sale price for the Mercado took the parking concerns into account.

Under the terms of the proposed contract, Sturns said the city will commit to not build any future projects on the public parking lot and Legaspi will have the option of purchasing the lot on or after 2014.

“From the beginning, this has been an important building and we have worked hard to see that we find the right buyer for it,” Sturns said.

District 9 Councilwoman Wendy Davis said though the project was criticized in the beginning, it is now a success.

“When you look at what we invested here and we are realizing today, there is clearly a shortfall there, but I think that an important way to look at it is … in the long term, this will emulate the vision we have for that area.”

Per HUD requirements, Legaspi must create 109 new jobs at the Mercado, 50 percent of which must go to low to moderate income Fort Worth citizens.

Sturns said Legaspi also made a strong commitment to the North Side community by agreeing to hold at least four cultural events at the Mercado’s third floor banquet facility during the year. Legaspi also agreed to work with the Fort Worth Hispanic Chamber of Commerce to identify potential tenants for the development.

Legaspi said he will keep the first floor of the Mercado predominately retail – a promise that was important to council members, Sturns said.

Fort Worth Mayor Mike Moncrief said he feels Legaspi is the right buyer for the project.

“I urge this council to support it,” Moncrief said, turning his attention to Legaspi. “The only thing I suggest is as you look at Mercado, picture what the courthouse looks like when it’s all lit up and what the Mercado could look like.”