R78OFFICIAL CITY
SLCRUARTSS COPY
RESOLUTION qq
WHEREAS, CITY OF KENNEDALE a taxing unit in the Tarrant
Appraisal District that is entitled to vote on the election of the Board of Directors,
has received a resolution in accordance with the Property Tax Code, Section 6.051
from the Tan Appraisal District Board of Directors, and
WHEREAS, the resolution passed by the Board of Directors proposes the purchase
of real property and construction of an office facility for Tarrant Appraisal District,
and
WHEREAS, the Board of Directors has the responsibility to establish the appraisal
district office and is seeking approval of this proposal by the adoption of a
supporting resolution, and
WHEREAS, the Board of Directors and staff have supplied the taxing units with
cost estimates, alternatives, and other related information;
NOW THEREFORE, Be It Revolved by the governing body of Kennedale
that the proposal of the Tarrant Appraisal District Board of Directors to acquire
property and construct an office facility for District operations is approved.
Passed and Adopted this l2th day of March , 1998.
dv-�
Robert P. Mundy, or
Presiding Officer of Kennedale
Attest:
Secretary
TARRANT APPRAISAL DISTRICT
2316 Gravel Road • Fort Worth, Texas 76118 -6982 • (817) 284.0024
Board of Direclors
Mr. Joe Potlhoff
Chairman
Mr. Tommy Vaughn
secretary
Mr. Mike Davis
Mr. Gene Mien
Mr. 1i;(
Mr. Charles Rogers
Mayor
Mrs. June Garrison
City of
Executive Director
P
Chiefilppralser
Ke et
John R. Marshal]
268
. TX 76060
Mr. Mundy:
February 13, 1998
As you may be aware, the lease on our present Tarrant Appraisal District
headquarters building expires December 31, 1998. Because of this, our TAD Board and
staff have been exploring and evaluating a variety of options over the past several months.
After thoroughly examining extending our current lease, leasing other office space and
buildings, and constructing a new facility, our Board concluded that constructing a new
facility yields the best solution. While discussed in greater detail in the enclosed
informational packet, the Board's new construction recommendation provides these
benefits:
• Fixed annual lease (actually debt service) payments for the next 15 years, thereby
avoiding the periodic escalation normally experienced in standard lease
arrangements. Projected costs are somewhat lower than current costs.
• After the 15 -year pay out is completed, lease/debt service payments will be
eliminated altogether, further reducing TAD operating costs. Although not an
important consideration in public facilities, there would be an equity buildup over
the years.
• The layout of the proposed new building will permit better space utilization and
work flows, with those efficiencies benefiting both our public entity and citizen
customers. Also, the new structure would be more energy efficient.
• TAD's tax exempt status affords low cost financing (especially at this time) and
tax free ownership, saving additional future costs.
Pursuant to Section 6.051 of the Property Tax Code, our TAD Board of Directors
has adopted a resolution (a copy is included in the informational packet) proposing
construction of a new facility and seeking your governing body's approval of that
Letter to Taxing Units
February 13, 1998
Page 2
proposal. That same section of the code states that "three- fourths of the taxing units
entitled to vote on the appointment of board members" must approve of "the construction
or conveyance of a building" by an appraisal district. Timing is an important factor.
According to the code, on or before the 30th day after the date the presiding officer
receives notice of the proposal, the taxing unit governing body may (by resolution)
approve or disapprove the proposal. If a taxing unit either fails to act within the 30 day
timeframe or fails to file its resolution with the chief appraiser before the 10th day after the
30th day, that inaction has the effect of disapproving the proposal.
With this letter, we are formally notifying you of TAD'S proposed action and
asking that it be considered on your next agenda. To assist with this, a sample taxing unit
resolution, pertinent Property Tax Code excerpts, budding/site selection criteria, an
alternatives list, a project description, project cost/funding estimates, and other important
information can be found in the enclosed informational packet.
Our Board and staff are available to answer questions before your meeting and, if
desired, during the meeting. Please let us know if we can be of service in these regards.
We urge your approval of our proposal and appreciate your interest in and support of the
Tarrant Appraisal District.
Sincerely,
John R. Marshall
Executive Director
Chief Appraiser
JRM:mm
Encl. /
cc: City Managers✓
Tarrant Appraisal District
Supporting Documents
for
Construction of a New Office Facility
Statutory Authority
See. 6.051 of the Property Tax Code grants to appraisal districts the authority
to purchase, renovate or construct office buildings. However, any proposed
purchase, renovation or construction must be approved by the taxing jurisdictions.
Below is an excerpt from Sec. 6.051, with the critical requirements underlined.
Sec, 6.051. Ownership or Lease of Real Property
(a) The board of directors of an appraisal district may purchase or lease real
property and may construct improvements as necessary to establish and operate the
appraisal office or a branch office.
(b) The acquisition or conveyance of real property or the construction or
renovation of a building or other improvement by an appraisal district must be
approved by the governing bodies of three- fourths of the taxing units entitled to vote
on the appointment of board members The board of directors by resolution may
propose a property transaction or other action for which this subsection requires
approval of the taxing units. The chief appraiser shall notify the presiding officer of
each governing body entitled to vote on the approval of the proposal by delivering a
copy of the board's resolution, together with information showing the costs of other
available altematives to the proposal. On or before the 30th day after the date the
presiding officer receives notice of the proposal, the governing body of a taxing unit
by resolution may avnrove or disapprove the proposal If a governing body fails to
act on or before that 30th day or fails to file its resolution with the chief appraiser on
or before the 10th day after that 30th day, the proposal is treated as if it were
disapproved by the governing body
RESOLUTION
WHEREAS, the Board of Directors of the Tarrant Appraisal District has the
authority and responsibility to establish an appraisal district office; and
WHEREAS, the Property Tax Code Section 6.051 allows for the purchase of real
property and construction of improvements upon consideration of alternatives, the
adoption of a resolution and positive action by three- fourths of the governing bodies
entitled to vote on the appointment of board members; and
WHEREAS, the Board of Directors, through the staff, has researched the needs of
the taxing entities, taxpayers and staff, and determined that land should be
purchased and a building constructed for a price of approximately $3,167,850 upon
the terms and conditions set forth in Exhibit A attached hereto; and
WHEREAS, the Board of Directors has authorized the Chief Appraiser to provide
to the governing bodies considering this proposal a sample resolution for their
consideration and information to make an informed decision; to request that the
governing body act within the thirty (30) day timeframe allowed by the Property Tax
Code and approve the resolution; and to engage professional services as necessary
to carryout the purchase and construction proposed herein;
NOW, therefore, be it resolved that the Tarrant Appraisal District Board of
Directors has determined that the purchase of real property and the construction of a
building is necessary and prudent and the governing bodies are encouraged to adopt
the authorized resolution within the time allowed.
Chair an
Attest:
�TUri
Secret
Exhibit A
Land Purchase, Construction and Financing Terms
Summary
Purchase and Construction Terms
Property: Approximately 4.5 acres at the southeast corner of
Handley- Ederville and Sand Street, Fort Worth.
See enclosed map.
Seller: Robledo, Inc.,
Jim Paulos, President
Dallas, Texas
Sales Price: Estimated price, $304,881 or $1.55 per sq. ft.
based on actual survey. The sales contract
contains a ninety (90) day feasibility period during
which the contract may be terminated with no
finther obligation.
Construction Plans: Architects hired by Tarrant Appraisal District are
currently working on construction documents.
Pursuant to public bid laws, construction bids will
be advertised and received from qualified general
contractors. A payment and performance bond
will be required. Plans call for a tilt wall
office - type construction with an alternate bid for
limited brick veneer exterior finishes.
Construction Timeframe: Depending on the actions of the taxing entities, if
the construction is approved, the approximate
completion date would be December 31, 1998.
District's Obligations: If the taxing entities reject TAD'S proposal,
approximately $75,000 will be owed for project
related professional services.
Fiaancin¢ Terms
Leader/Lessor:
Structure:
Principal Amount:
LaSalle National Bank, Chicago, or another
acceptable lender
Tax exempt lease/lease back transaction or
another structure acceptable to TAD
Projected at $3,100,000
Term: Fifteen (15) years with interest only and principal
and interest payments in 1999, and semi- annual
payments of $158,812 thereafter
Interest Rate: Current quoted rate is 5.36 %. Rates may change
depending on date of loan closing. A not to
exceed rate of 6.17% has been quoted through
December 31, 1998
Prepayment: The loan may be prepaid after the initial 7.5 years
with a two percent penalty payment applied to the
then remaining principal balance
Other Costs:
Costs associated with the relocation to a new
facility are estimated to be $197,365. These costs
have been budgeted in TAD's 1998 budget and will
be paid from those resources
Office Site Criteria
Tarrant Appraisal District
In investigating office space for Tarrant Appraisal District, the staff and
Board of Directors consider the following important in office location:
1. Population and Geographic Center of County -- The population center
of Tarrant County is located in the general area of IH30 and Loop 820. The
geographic center of the county is located near the intersection of SH121 and
N. Beach Street.
2. Access -- Ease of access from major highways is important.
3. Adequate Parking -- Free parking for a minimum of 250 vehicles is
desirable. This would include visitors, employees, and Appraisal Review
Board members.
4. Competitive Total Cost -- Space at a reasonable price for the location,
land area, quality and appearance. Costs also would include energy
efficiency of structure, maintenance and insurance.
5. Functional and Efficient Layout -- The space should provide greatest
efficiency with the least amount of wasted space. A single story design is
desirable, if possible.
6. Adequate Contiguous Space -- Usable office space requirements for
TAD operation at one location range from 42,000 to 46,000 square feet,
depending on design, with possible room for expansion.
Existing Buildings Meeting Part of the Site Selection Criteria
1. 2315 Gravel Road (Current Location) Mapsco 66E
The current site meets most of the criteria for a good location. The age and
inefficient design, energy inefficiency, and rent rate seem to warrant looking
at other options.
See proforma for current and proposed rates.
2. 301 N.E. Loop 820, Mapsco 52X
Morrow I and 11
Only 16,000 sq.ft. available, inadequate parking, located on one way service
road with somewhat difficult access and multi story design. $14.00 gross per
sq. ft. rent quoted.
3. 1301 W. Pipeline, Hurst, Mapsco 52Q
Former Best Buy/MJ Design Building
This currently vacant structure has been scheduled for remodeling to retail
space with the additions to Northeast Mall on the north side of Pipeline Road.
Owner did not want to pursue rental at office rates.
4. 5328 E. Lancaster, Mapsco 79K
Former K -Mart Building
Cost to remodel and ease of access a concern. Stated price $695,000 as is.
5. 7124 Belton, Mapsco 65H
Former Bell Helicopter Research Structure
The location and design of building is a concern. Owner states he would
remodel for $7.35 to $8.75 net depending on actual costs.
There are other existing buildings with vacant space, but did not meet the
location criteria or other criteria.
Build to Suit
New Construction for Lease
As part of TAD's effort to explore all alternatives to present to the Board and
taxing entities, proposals were received from two landowners who were willing to
construct buildings. Both proposals were for sites on Handley - Ederville near the
present location and would propose to construct a facility to TAD's specifications to
lease for a 10 -12 year period.
Costs for triple net leases ranged from $7.00 to $7.50 for the first part of the
lease increasing to $7.70 and $8.80 per square foot for the last half of the lease
term. Taxes, maintenance, insurance and other costs to be paid by TAD increased
the rents to $12.18 to $12.90 per square foot.
These proposals are still available, but because of the higher costs, are not
currently being considered as a viable option.
PRIMARY ALTERNATIVE COMPARISONS
After thoroughly reviewing and analyzing the available alternatives, two
primary alternatives emerged — an extended lease of TAD'S current headquarters
building and construction (with eventual TAD ownership) of a new facility. More
information about each of these alternatives is provided below.
Extended Lease
When compared with other office lease rates, the rates being charged to TAD
for its headquarters space are competitive. Since the building was originally
designed and constructed as an office/showroom/warehouse facility and because it
basically retains that character, however, such rates do not entirely comport with its
rental class. The entire space was, as much as feasible, finished out for office usage
when TAD initially occupied it 11 years ago. Even with that, the building's 90 -foot
depth by 457 -foot width is inefficient, with considerable space being lost to long
hallways, large mechanical rooms, and poorly configured spaces for TAD'S
purposes. These spatial shortcomings have been compounded by energy inefficient
and operationally costly HVAC equipment installed when the building was
constructed. While not an optimum office building, the Gravel Road location has
provided an adequate home for TAD for some time.
Based on a proposal provided by the current landlord, TAD could continue to
occupy its present facilities for five more years at $7.26 per square foot and for
another five years for $7.76 per square foot. Additionally, if the landlord was
allowed to remove the carpet requirement from the maintenance section of the lease
agreement and install new carpeting over a four -year period, the lease rate for the
first two years of the extended lease would be reduced to $7.00 per square foot.
New Construction/Ownership
This alternative overcomes the functional, spatial, and operating cost
deficiencies TAD'S existing facilities present. Fewer hallways, better designed and
arranged spaces, and more efficient roof - mounted package HVAC units are all
favorable aspects of the proposed new office building. The biggest advantage,
however, is the stable annual lease- purchase cost accompanied by equity buildup
and eventual ownership. Currently low interest rates offer an attractive opportunity
to build and own an affordable, utilitarian, and permanent home for TAD.
Using a tax- exempt lease/lease -back financing structure, average annual lease
payments equate to $6.69 per square foot. Rather than being subject to the periodic
rate increases common to most standard lease arrangements, payments under this
alternative would be set for the 15 -year term of the financing. After eight years of
payments, TAD would (based on 1998 dollars) have a $1,341,470 equity interest in
the building. With the final payment in the 15' year, TAD (and the taxing
jurisdictions which support TAD) would be free of the $307,675 annual payments.
At the same time, TAD would become the lien -free owner of the land and building.
A "Present Vs Future Cost Comparison" spreadsheet follows on the next
page. It provides information which compares current lease (which expires
December 31, 1998), proposed new extended lease, and new
construction/ownership (lease/lease -back) costs. Along with the level payment,
equity buildup, and debt -free ownership advantages mentioned above, the
recommended alternative has ongoing cost benefits, with average annual expenses
and per square foot costs falling below the extended lease option.
TARRANT APPRAISAL DISTRICT
PRESENT VS FUTURE COST COMPARISON
Present
Present
Proposed
Location
Location
New Facility
Costs
New Lease
Lease /Lease-
Thru 1998
Proposal
Back
Building Square Footage (all office spaces)
45,015
43,800
46,000
Estimated New Facility Costs:
Property acquisition
Professional services
$ 310,550
$ 126,200
Construction
$ 2,729,500
Otherlmiscellaneous
$ 1,600
Total Capital Costs:
$ 3,167,850
Average Annual Debt Service:
($3,100,000 for 15 years at 5.36 %)
$ 307,675
Lease rate per sf:
Present (headquarters space)
$ 7.32
Years 1 -5
$ 7.26
$ 6.69
Years 6 -10
$ 7.76
$ 6.69
Years 11 - 15
$ ? ? ??
$ 6.69
Years 16 +
$ ? ? ??
$ zero
Lease amount - current/average annual:
$ 300,852
$ 328,938
$ 307,675
Utilities @ $2.08 sf
Utilities @ $1.90 sf
$ 85,488
$ 91,104
$ 87,400
Taxes/insurance over base year
$ 9,500
$ 9,500
Maintenance
$ 16,100
Landscaping/watering
Insurance
$ 5,000
$ 6,900
East Office expense
$ 19,884
West Office expense
$ 13,641
Total 1998 Costs
$ 429,365
Average Expense Per Year
$ 429,542
$ 423,075
Average Cost Per Square Foot:
9.81
9.20
(Inflation factors not included)
Revised 2/11/98
THE PROPOSED NEW FACILITY
The Location
While other acceptable sites are still being reviewed and considered, TAD
attentions are presently focused on an approximate 4.5 -acre site located on the
southeast comer of the intersection of Handley - Ederville Road and Sand Street in
Fort Worth. The property is currently owned by Robledo, Inc., a Dallas firm which
acquired the land two years ago for the now abandoned purpose of constructing a
company facility.
The site consists of three lots (4, 5, and 6) of block 10 of the Newell and
Newell Business Park. A map depicting the locations of this site and TAD's existing
leased building is included in this attachment.
TAD has a non - binding option for $304,88 or $1.55 per square foot to
purchase the Handley- Ederville/Sand Street site. The 90 -day option provides ample
time to conduct soils tests and environmental audits, perform surveys, and complete
other tasks as pre - conditions to proceeding with closing on the purchase of the
property. Within the 90 -day timeframe, the option can be canceled without penalty
or added expense.
The New Building
The proposed tilt -wall structure will contain approximately 46,000 square feet
with an adjoining parking lot providing 250 spaces. A preliminary site and floor plan
is included herein. In accord with state bid laws, bids will be publicly advertised and
opened, with the bid being awarded to the lowest responsible bidder meeting bid
specifications, performance and payment bond requirements, and other bid and
contract obligations. An alternative bid might also be considered, subject to cost and
budgetary constraints, to allow for brick veneer construction.
The Costs and Resources
As detailed on the attached "New Facility Cost/Resource Estimates" sheet,
the estimated overall cost of the proposed project is $3,365,215. Of that amount, the
largest dollar amounts are designated for construction ($2,729,500), property
acquisition ($310,550), and one -time moving /re- installation costs ($197,365).
The project will be funded from two principal sources, from monies already
provided in TAD'S approved 1998 budget and from a lease/lease -back financing
arrangement. The bulk of the $230,000 in budgeted TAD funds will be used to pay
moving/re- installation and probably small portions of the property acquisition and
professional services costs. The remaining project costs will be paid from loan
proceeds and escrow fund interest earnings.
Financine
Of the $3,365,215 overall project cost, $3,100,000 is anticipated to be funded
through use of the proceeds from a tax- exempt lease/lease -back or lease- purchase
transaction. Area representatives of LaSalle National Bank of Chicago, Illinois, and
its LaSalle National Leasing Corporation have proposed this financing structure:
• 15 -year term
• Currently quoted 5.36% interest rate, subject to change prior to closing. In no
case will the rate exceed 6.17% if acted upon by or before December 31,1998
• Principal amount is $3,100,000
• Semi - annual payments, with the first payment of $168,387 being due in
March, 1999 followed by 28 payments of $158,812 thereafter
• Loan prepayment may occur after the initial 7.5 years with a two percent
penalty payment being applied to the remaining principal balance
• A 50 -year lease (with LaSalle Bank as the lessee) of the real estate upon
which the facility is built will secure the loan. Upon full payment of the loan
(whether prepaid or paid off in 15 years), the lender's interest in both the land
and building will expire
The financing structure outlined above is a legally viable alternative to other
more commonly used public financing measures. Under state law, appraisal districts
are unable to issue bonds, certificates of obligation, or other debt instruments.
LaSalle National Bank has, or is in the process of, financing several appraisal
district buildings elsewhere in Texas. In addition to LaSalle, financing proposals are
being solicited from other interested financial institutions and firms.
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TARRANT APPRAISAL DISTRICT
NEW FACILITY COST /RESOURCE ESTIMATES
ITEM
Property Acquisition
Site appraisal
Site option
Site environmental audit
Site acquisition
Total Property Costs =
Professional Services
Architectural
Legal
Soils testing
Materials testing
Total Professional Services
3,000
50
2,500
305,000
120,000
3,500
1,500
1,200
Costs =
Construction
Facility construction /related costs
including site work, 46,000 sq. ft. tilt -wall
bldg., off - street parking, utilities, permits,
landscaping, bonding, etc.)
$
Total Construction Costs=
Other /Miscellaneous
Advertising
$
1,200
Recording fees
$
400
Total Other /Miscellaneous =
TOTAL CAPITAL COSTS
ONE -TIME MOVING COSTS
Movin /re-installation
Furniture /fixtures
$
40,000
Computer /copier equipment
$
18,000
Security system
$
58,000
Communications wiring/Gables
$
48,865
Fire suppressant system
$
10,000
Telephone system
$
15,500
Phone trunk line
$
7,000
TOTAL ONE -TIME MOVING COSTS
GRAND TOTAL CAPITAUMOVING COSTS
RESOURCES AVAILABLE
1998 TAD Budget
Architectural fees
$
80,000
Moving expenses
$
100,000
Contingencies
$
75,000
TOTAL BUDGETED FUNDS
Financin
Bank loan
$
3,100,000
Escrow Fund interest
$
35,215
TOTAL FINANCING FUNDS
GRAND TOTAL RESOURCES
ESTIMATES
CAPITAL COSTS
2,729,500
310,550
126,200
2,729,500
1,600
$ 3,167,850
$ 197,365
$ 3,365,215
230,000
$ 3,135,215
$ 3,365,215
:1
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Schedule
Office Space Proposal
February 13, 1998 Board of Directors' Resolution
Request for Entity Approval
February 18 Distribution to Taxing Entities Information
and Sample Resolution
March 20 Deadline for Governing Body Action on
Resolution
March 30 Deadline for Receipt of Resolutions by
Appraisal District
April 15 Construction Plans and Documents Complete
Notice to Bid Advertised
May 1 Bids Opened
May 5 Bid Award — Construction Begins
December 31,1998 Construction Complete