32 replies to this topic

[AdamB]

just heard the developer ran out of cash and they are trying to get the city to go in on this!

[Willy1]

on what? i've heard of mercardo, but know nothing of the project...

[mosteijn]

It's that mexican market thingie going up on N. Main. I just saw it on channel 11, and WOW I really hope the city can find a new developer, because it definately looks like the best thing going up outside downtown in terms of street interaction. I mean, that thing barely even leaves room for a sidewalk it's so close to Main...and at 3 stories too, wow.

[AdamB]

yeah this is very disappointing. I saw this as one of the beginning projects to link downtown to the Stockyards. I really hope they can find someone to pick this up!

[pmburk]

I was just about to start a thread about this!

On Saturday we were driving through northside and saw the project on North Main. I seemed to remember something in the paper quite a while back about opening a market in the northside with tons of small shops and such, and maybe it was even something that area of the community was trying to start up on their own with local markets and shops, but I couldn't remember the details. Then, this morning I heard something on the radio about how the project had gone bankrupt and another financer came in to have it finished by December, and that it will be sold upon completion.

[jubjubking]

well,answers my question....I think the only mercados we're gonna see on the northside are those dirt mall flea markets and PACCO carlots. Too bad really, this project had alot of opportunity to revitalize the northside,bring the neighborhood into its own.

[mosteijn]

No, the city is going to own it now (at least until construction is finished):

Fort Worth takes control of unfinished Mercado

By Mike Lee and Anna M. Tinsley

Star-Telegram Staff Writers


FORT WORTH - City leaders agreed Tuesday to take over ownership of a north side Mexican-style marketplace after its developer walked away from a federally funded loan, but they said they want to make sure that future projects don't fall apart.

Developer Deyla Guadiana received a $3.1 million loan from the U.S. Department of Housing and Urban Development but was unable to come up with private financing to cover the rest of the construction costs.

On Tuesday, the City Council voted unanimously to take ownership of the building and spend $1.3 million from a special economic development fund to finish it.

The total cost could run as high as $4.7 million, but the city hopes to recover most of those costs by selling the facility when it is finished, officials said. A preliminary appraisal valued the building at $4.2 million.

"Obviously we are in a situation we'd prefer not to be in," Councilwoman Wendy Davis said. "But the buck stops here.

"I want us to look back at this, see where we could have done a better job ... and put in place some procedures to ensure this doesn't happen again."

Councilman Clyde Picht agreed.

"If we're going to be saddled with a white elephant, it might as well be a completed one, rather than a piece of one," he said.

The project is about 60 percent complete, and the city money should allow it to be finished by November or December, Assistant City Manager Joe Paniagua said.

Paniagua said two potential buyers have already called the city.

The three-story, 58,000-square-foot building was expected to be the crown jewel of the $6.5 million Mercado project, a three-block stretch along North Main Street.

The city has spent about $1.5 million in federal grants to pave an alley behind buildings in the 1400 block of North Main and to renovate the Rose Marine Theater. About $2 million in federally subsidized loans were offered to businesses in the area.

Guadiana had said the building would include a bank branch, offices and shops, and a third-floor meeting room for weddings and other functions.

Guadiana was not required to make payments on the loan until after the building was complete, and her contract prohibits the city from going after her other assets, which include a nearby upholstery store and other real estate.

Paniagua said the city agreed to those conditions because of the project's risk.

"Most folks don't want to invest in North Main," he said. "If they did, they'd already be there."

HUD has been auditing the Mercado and other redevelopment projects that the city has funded with federal money. Paniagua downplayed the audits as "bureaucrat to bureaucrat" but said the city might have to pay some money back.

Councilman Jim Lane praised Guadiana for her efforts and said he wants to make sure that future owners retain the building's character.

"I want to be sensitive to what the dream was -- to showcase the wonderful Mexican-American heritage and culture," said Lane, whose district includes the Mercado. "This is very special to north Fort Worth, to the north side."



Oh, and if you kind of want to see what it looks like now, click this link to cbs 11's video (click on 8/31/04 6pm top stories): http://cbs11tv.com/cbs11video/. It's the last story, and since it won't let you fast forward, find something to do for about 5 minutes while it plays out.

[Urbndwlr]

RE: Mercado Feasibility, Implications of this news

A "mercado" could really work in that neighborhood, although I'm not sure it would alone be able to pay the rent to justify the new construction. I don't understand the full space needs of a mercado, however I would imagine that the project's most conservative course of action would be to lease the 2nd floor as office space (and/or professional space like dentists, etc), and lease the 1st floor to office/retail tenants (e.g. title companies, residential real estate firms, and hopefully retailers selling Mexican art and crafts).

If the mercado is to get a couple of high quality Mexican art galleries, it would really set the tone for the building. I am not aware of a place in North Texas that sells fine Mexican Art. Perhaps that is a niche that can be exploited by a tenant in that building. Ancillary retailers would benefit from the traffic generated by such leading tenants.

The mercado would probably operate like a weekend farmers' market - with temporary displays on weekends in addition to perminant retail tenants.


The implications of the bankruptcy is probably, unfortunatly, that the City and lenders will get a bad taste in their mouths when considering any optimistic community-based development deals with inexperienced developers in the future. This might be a setback for the Hispanic entrepreneurial community (a failed public/private deal) - but hopefully not.

[redhead]

"Look back and see where we could have done a better job?" Like maybe check some credit references or get a letter of credit instead of granting a NON-recourse loan when she has very tangible assets right across the street!!! One more example of why the city should not be in "business."

[360texas]

If matching funds were the issue or not available..... I would thought they would have never issued a notice to proceed to start work until 80% full funding had been secured. Depends on what contract form was in place. Deficient funding a project is not a good thing. A contract termination, or at least a notice to terminate should have been issued 60 days before running out of existing funds. If part of the issue was contractors performance, I would have thought their performance bond agent would have taken over and would be looking for a follow on contractor to finish up the work.

But then what do I know? Maybe alot more going on here.

Dave

[Redshirt]

Just saw this article in today's morning paper.


Let's hope the city will learn from Mercado project

By Mitchell Schnurman

Star-Telegram Staff Writer


Maybe a failure can bring a bit of success, too.

That's the most charitable way to look at the Mercado project in Fort Worth, a private development with no private money and a predictable outcome: soaring costs and a government bailout.

This story began with good intentions to help a low-income neighborhood. And it will end with the north side getting a Mexican-style landmark that costs about $5 million.

But in between, Fort Worth has to pay for the building -- and relearn the lesson that it can't create a viable business just because it wants to.

Last week, the city took over the Mercado, allocating $1.3 million to complete the structure and saying $300,000 more could be needed later. The city plans to sell it and recoup what it can.

Investors are swirling around the half-finished building in the 1500 block of North Main, and officials hope to get away with a $500,000 loss. Don't be shocked if the hit is twice as high.

That doesn't mean the city shouldn't do risky projects in needy neighborhoods. It just means the city should do them better.

Insist that the private developer put up some real money, for instance. Or at least watch the public pennies closely. It's too easy for a bold idea to become a boondoggle when the government is picking up the tab.

The first problem was that local leaders wanted the Mercado more than the marketplace did.

Fort Worth has been trying to improve the decaying north side for years, targeting a depressed area between downtown and the Stockyards, primarily along Main.

The city initially bought a tract of land there and tried to turn it into a park-and-ride lot. Mass transit never caught on.

The next idea was to create a distinctive building with retail shops, offices and some public spaces. It was supposed to become a focal point for the Hispanic community in that part of the city.

Sounds great, except that there aren't enough prospective tenants who can afford the rent to cover the note on such a building.

Still, Fort Worth wanted to make it happen, and it had access to a pool of federal funds for low-interest loans. So city officials approached a local businesswoman, Deyla Guadiana, and floated the idea.

"They said, 'If we loan you the money, will you do it?' " Guadiana said in an interview late last week. "I told them, 'If you make it appealing.' "

Guadiana was a big booster for the neighborhood and one of its bright successes. She moved her fabric and furniture business, J&D, to Main Street almost 30 years ago.

She expanded that site several times and rehabbed the historic Googins Building a few doors down the street.

Across from both properties was the parking lot where the city wanted to put the Mercado.

Guadiana was intrigued by the offer, but she didn't let her enthusiasm get out of hand.

She would do the deal only if the city agreed to several conditions: First, she wouldn't put up any of her own money until late in the project, after half the federal loan had been spent.

Second, she wouldn't put up any of her personal assets as collateral. Not her business, not her home, not her commercial property.

Nor would she make any interest payments on the loan for a year, a time frame that would later be extended.

She wouldn't pay loan fees, sewer and water fees, or for construction inspections. The city had to handle all the environmental requirements.

The city would keep the land, and Guadiana would pay $1 a year to lease it, with the option to buy it at any time. She could also sell the project and transfer the terms to the buyer.

To get an idea of how sweet this deal is, imagine trying to get an expensive house built with no down payment, no interest payments for more than a year and no personal collateral.

There are good reasons that lenders demand a healthy piece of equity in a risky project. It lowers the loan amount, making it easier to cover the monthly payments, and it gives the lender some breathing room if the project fails.

More important, it pushes developers to keep a lid on costs. If the project falters, they lose their stake before the bank takes a hit. And that "skin in the game" is a great motivator to keep the deal alive.

Guadiana said the Mercado's costs swelled by about $1 million, more than 25 percent, in part because she added some elaborate features to a building that already had 58,000 square feet. The more expensive changes included a huge paseo, or indoor plaza, and a rooftop restaurant.

Four months after construction began in October 2003, Guadiana was in the city manager's office in a panic.

"Can you find some more funds? Some SBA loans?" she recalls pleading.

She originally had a bank commitment for a loan to cover her share of the deal, which was $600,000. But the bank balked because the feds had the first lien position, having lent $3.1 million to the project.

She says she offered her fabric business as collateral, but lenders still wouldn't bite.

She had tenant agreements to lease just 25 percent of the space, she says, and the projected cash flow wasn't close to covering the loan.

Guadiana now wishes that she had made the Mercado simpler, smaller, less expensive.

That may have been the result if Fort Worth had required her to put up money to get into the deal. So why did the city let Guadiana slide?

"I don't remember enough about it," said Jim Lane, the councilman whose district includes the Mercado project and who helped recruit Guadiana.

Guadiana offers one reason: She wouldn't have done the Mercado if the city had required a down payment.

Then maybe the city should have looked for other developers. If nobody would touch the deal, even with a low-interest loan and other forms of public help, isn't that a strong sign that the project isn't viable?

I posed that question to Lane, who said he was the wrong guy to answer.

"I'm a dreamer," the councilman said. "I dream that these things will work out."

Fair enough. But when it's public money, somebody needs to trot out the reality check.


--------------------------------------------------------------------------------

[Redshirt]

In fact, given the stupid deal the city made on the Mercado project we should demand that the new CC Hotel arrangements be opened up for careful examination.

I have to agree with you on that one. Why on earth shouldn't we expect them to botch something else along the way? Seems to me when you're talking about that kind of money you should check out the water before you jump in, unless of course someone is getting significant kickbacks, like the FWISD deal. Heck if they're just handing out money downtown, I could use a few bucks.

[DKM]

It is the lack of that understanding that gives us the Rail Market and was heading us into a Convention Center Hotel fiasco. In fact, given the stupid deal the city made on the Mercado project we should demand that the new CC Hotel arrangements be opened up for careful examination.

Hello,

I'm new here and was wonder what the Rail Market is/was?

DKM

[John T Roberts]

Welcome to the forum, DKM. The Fort Worth Rail Market is located at 1401 Jones Street inside the old Santa Fe Freight Depot Building. The Rail Market was modeled after Seattle's Pike Place Market, but hasn't become nearly as successful. I think many of us here have felt that it was in the wrong location. Anyway, the facility is now having problems, and is struggling.

For more architectural and historic information on the building with a link to the Rail Market site, go to: http://www.fortworth...com/santafe.htm

[DKM]

Now I kind of remember it. Seems they were hoping it spur more redevelopment in the south end of downtown. Of it would have been better if it had been closer to Sundance since most people I know don’t travel far from Sundance.

DKM

[John T Roberts]

Three companies are offering plans to purchase and further develop the Mercado. The story ran in this week's Fort Worth Business Press. Here's a link to the story: http://www.fwbusines...ebath=&subname=

[John T Roberts]

It appears that the City of Fort Worth has been negotiating with a buyer. That person is the current owner of La Gran Plaza de Fort Worth, or Fort Worth Town Center.

Here's a link to the Fort Worth Star-Telegram Article:
http://www.dfw.com/m...ss/13377489.htm

[safly]

Good, because I am interested and that lady over there was REALLY messing this one up. Still think that it should be closer to the Trinity or in DTFW.

[Urbndwlr]

Perhaps I'm missing something, but it can't be that difficult to get some leases in place to attorneys, real estate agencies, and a couple of restaurants/cafes on the ground floor. Are there constraints placed upon the leasing driven by the financial incentives received? (e.g. must lease certiain % to non-profits, or is something else holding it up?)

[redhead]

I'm surprised no one jumped on this. Didn't the Mercado sell a few weeks ago at a loss of 1.5 million? There was an article in the ST, but I don't remember the date. I read it while I was out of town and can't recall the details---except to think it was another reason the city should quit trying to be in the develpment business!

[vjackson]

I totally forgot about this project. I know there's a thread on it, but I can't find it. Last time I saw the building, it was really beautiful. If you haven't seen the FW Weekly article, the photo shows a homeless guy asleep in front of the building.


A Move at the Mercado
By JEFF PRINCE


The big white elephant known as the Fort Worth Mercado has drawn more transients than tenants, but that may be changing.
The beautiful but long-dormant Fort Worth Mercado finally got its first tenant — more than four years after speakers at the groundbreaking ceremony gushed over its potential for sparking Northside redevelopment.

Nobody said urban renewal was easy.

“Hopefully it will create a domino effect,” Fort Worth Hispanic Chamber of Commerce president Rosa Navejar said of H&R Block’s decision to lease permanent space in the controversial building.

A recent visit revealed that old habits are hard to break. A wino was sound asleep on the sidewalk even though the tax preparer’s office was open for business.

The Mercado was built on a large and seldom-used city-owned parking lot in the 1500 block of North Main Street. The neighborhood for years had been home to blue-collar businesses, bars, restaurants, and transients, and in the late 1990s and early 2000s the city tried to spur renewal by offering low-interest loans and a building site to anyone willing to take a risk. Few were. After a host of problems and wasted taxpayer money, the city ended up owning the albatross for a year before finally selling it at a big loss in 2006.

H&R Block has settled in at the north end of the ground floor of the three-story building just in time for tax season. Acquiring a first tenant is cause for celebration, but the tax company’s 1,200-square-foot office space barely makes a dent in the 58,000-square-foot building and does little to remove the stigma that the Mercado has been, at least so far, a towering disappointment.

Don’t tell that to the new owner, Jose Legaspi, who has high hopes that the building will attract its first “professional user” in the coming months — apparently a health provider of some sort, although he declined to provide details until negotiations are complete. “We do have a couple of different restaurants — actually three restaurants — that are looking at the site and to take over the space that is designed for a restaurant,” he said. “Some are doing studies, some have given us an offer, and we are looking at what kind of possibilities we can create there.”

Enticing Northside business owners to the Mercado has been a chore. The city’s original intent was to provide local merchants with attractive space, fill some gaps in the neglected portion of North Main, and provide a stronger tie between downtown and the Stockyards. However, business owners stayed away in droves from the low-interest loans being offered. That led the city to make a questionable deal with Deyla Guadiana, who owned other nearby properties. She secured almost $4 million in loans from HUD and the Fort Worth Economic Development Corp. and spent it all before the building was close to being finished. Unable to come up with her own financing to complete the project, she walked away from a deal that allowed her an easy exit.

The city took back the property and spent more money to finish the work. Finding a buyer turned into a drawn-out process, and by the time Legaspi came courting, he was able to negotiate a cherry deal — a $5 million-plus building bought for half the price. Taxpayers got hosed, although city officials vow that the Mercado’s property and sales taxes will eventually offset the loss.

Legaspi spent part of 2006 talking to community groups and stakeholders to attract Northside businesses. Entrepreneurs showed interest, but the expenses and risk involved in moving into a new, unfinished, and unproven building scared some of them away. A couple of banks considered leasing space until it became clear that the site’s layout wouldn’t accommodate a drive-through window. Legaspi aligned himself with organizations such as the Fort Worth Hispanic Chamber of Commerce to get the word out to merchants about leases and loans, but had trouble sealing deals.

“Part of our effort is to bring a first-class asset into an urban setting,” he said. “We’re having to go through an educational process.”

H&R Block district manager Linda Murphy said she was delighted to open an office there and to make inroads into the thriving Hispanic market. Another H&R Block office farther north on Main Street has been booming, and “we wanted to win over the Latino community in this area,” she said. She loves the building’s large windows and natural light and the storefront location that looks out on Main. And, like city officials, she predicts the Mercado will prompt renewal and create a destination point between downtown and the Stockyards.

“This could be really advantageous for the city,” she said. “I wish more retail people would look at this.”

The third-floor meeting room has been attracting groups almost every weekend for quinceañeras, weddings, and other functions. Otherwise, the Mercado has been a ghost town. Part of the problem is that the building, while attractive on the outside, still needs interior finish work. Finding tenants means finding someone willing to take on renovations.

Legaspi said he paid cash for the building and is not under financial stress due to a lack of renters, but the time has come to attract tenants, regardless of whether they have Northside ties.

“As we ... were seeing a delay in decisions by the local community merchants, we began to look for other local prospects, and that’s how H&R Block came up,” he said.

In the meantime, areas around the Mercado have made slow but definite progress. The 1400 block of Main, which includes the Rose Marine Theater, Los Alamos Café, and an assortment of small businesses, is looking better than it has in decades. A law firm recently constructed a new building, the city has made improvements to streets and sidewalks, a quarter-million-dollar vaquero statue is slated for the area, and a group of business owners have begun discussing other possible improvements. The Mercado surely had something to do with the renewed interest, even while it has struggled to find its own tenants.

“I hope that [the Mercado] will be filled up completely in the next year and a half to two years, max,” Navejar said. “That’s not always feasible to have 100 percent, but to at least have it at 85 to 90 percent capacity. Once people see that there are tenants in there, they will start coming out to look at the opportunities that are available in this market.”

This isn’t the first large-scale project attempted by Legaspi in Fort Worth. He invested millions and did wonders with the old Town Center shopping mall, now called La Gran Plaza. Legaspi and his investment group are patient and confident that the Mercado will thrive despite its rocky beginning.

“We’ve been doing this for 30 years,” he said. “We expect a cycle like this, especially with an unproven asset. Like any asset, it goes through a life cycle, and [it hasn’t had] an opportunity to start yet. It takes time. We’re happy with it. There is always a time limit, but we are not yet there by far.”

[Fort Worthology]

I really hope the Mercado does well. It's a beauty of a building, and I think that strip of Main could really make a cool urban area as things progress.

[Keller Pirate]

The city took back the property and spent more money to finish the work. Finding a buyer turned into a drawn-out process, and by the time Legaspi came courting, he was able to negotiate a cherry deal — a $5 million-plus building bought for half the price. Taxpayers got hosed, although city officials vow that the Mercado’s property and sales taxes will eventually offset the loss.

It will take a long time to get the city's money back based on the 2006 appraisal of $200,000 for this property. A $5 million property sold for half price and only appraised for 10% of the selling price. Where can I get in line for a deal like that?

[safly]

^^^^ Right behind the big bankers my friend.

I like the picture for the story in the paper. Looks like they made an intern lay down on the sidewalk during broad daylight to CREATE a transient image problem. Judging by the kicks that were shown of course.

Glad I'm not the only one disinterested in city officials pleading VOWS to the public.

H&R Block is a seasonal building client, so how does that attract other businesses to pay "X" amount of dollars a sqft in rent in an unproven part of town for new buildouts? I guess CYCLES would explain it???

The group who purchased that slab of concrete for half it's value are the real winners and story here. I want to read an article about those guys.

[redhead]

ghughes, I agree with you. You should run for office.

[SLO]

Rail Market, Mercado, Omni?
The city needs to work on politics and infrastructure and leave business to the free market.

Politics are sooo boring though, building stuff is much more fun and good for public perception.

All cities do this though....

[texastrill]

Sure would of been nice to see this area come together a while back when one of my favorite restaurants from Arlington(Casa Jose's)opened a location there in hopes of good business.What a shame!

[360texas]

I have driven passed the Mercado several times last week on my way to the Stockyards.... besides the Tax Prep company.. the rest of the building seems vacant. What's it been - a year now since the City took it out of bankruptcy ?

I am working on a project for the Texas Trail of Fame - their temporary webpage on our site. It is promoting Western Heritage.

http://www.360texas....dexexchange.htm

[sierra]

The top floor of the Mercado has a beautiful banquet meeting room that seems to be staying booked up. The building is beautiful and hopefully they can make a go of it.

[John T Roberts]

The Fort Worth Business Press has an update on the Northside Mercado by P.A. Humphrey.

http://www.fwbusines...-Northside.html

[Doohickie]

Interesting article. I'll say this: The Stockyards is the Stockyards. It is an established tourist destination.

When we went to San Antonio, there is the River Walk and the Alamo, but we eventually checked out a mercado over there, and we really enjoyed the day we spent there.

I think the Northside Mercado could fill a similar niche, both in terms of tourism, but also in terms of geography. The Stockyards sells itself as American Cowboy stuff. I've noticed lately that there seem to be more restaurants, etc., on North Main that are catching my interest. It is primarily a hispanic area but there is also Byblos Lebanese (?) restaurant. I can see the Northside (and the Northside Mercado) easily becoming a tourist destination separate from, but adjacent to, the Stockyards. It's already well along that path. La Gran Plaza has live entertainment; I think bringing some of that up, especially for daytime events, would draw tourists. Maybe a week after they do the big weekends at the Stockyards (Pioneer Days or whatever), hold festivals. Once you get the people there, then feed and entertain them. Locals (like us) will get to know the area and start to patronize the local businesses there.

There's no reason the Northside couldn't be a natural complement to both Downtown and the Stockyards.