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Saturday, February 24, 2024

Looking Back at Town Center

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Looking back a few years…
The History of Town Center by Craig Hughes 

This popped up in our Facebook Memories flash back.  It was shared from a Facebook page that is no longer active, so the name of it has been omitted. The info really shows how some things change and then again, some things stay the same. 
 
It’s Fact Check Friday! This week we reached out to Craig Hughes of Kennedale Development Partners for a detailed explanation of the Town Center Development. We’ve heard a lot of rumors but Mr. Hughes was kind enough to give us the real deal in his own words.
 
HISTORY
Back in 2008 the North Texas region was coming off a robust building boom. Development was occurring all around Kennedale—in Arlington, Ft Worth and Mansfield—but not IN Kennedale. Kennedale was known for a toxic combination of SOBs, junk yards, and race tracks. Developers were passing Kennedale by for better, less risky, opportunities. 
 
During that time the City of Kennedale built a new City Hall, Police Department, and Library next to an outdated retail development in desperate need of repair. Neglected buildings dating back to the 1950s and 1960s era retail were situated haphazardly on an 8 acre tract. The Kennedale Economic Development Corporation (KEDC) wanted to do something to revive the failing retail center. They implemented a search for a developer to partner with the KEDC. After much due diligence, the KEDC found a planned railroad-themed retail development in Cedar Park, Texas—developed by David Johnson of Cypress Properties. It was a concept they wanted to replicate in Kennedale.
 
DEVELOPMENT AGREEMENT
The KEDC decided to purchase the tract of land next to the new City Hall and use it to attract an investor/developer to make a substantial, potentially high-risk, investment in the project. In 2009, the Board entered into an incentive and development agreement with David Johnson and his firm. The KEDC provided economic incentives to Cypress Properties in return for OBLIGATIONS for substantial investments of both capital and time on the part of the developer. The purpose of Economic Development groups is to use incentives permitted by State statute to stimulate economic improvement. The Agreement OBLIGATED Cypress—with their decades of experience in the retail development and leasing business—to develop, construct, and lease a total of seven (7) retail buildings in an agreed upon timeframe. In return for this high-risk, multi-million dollar investment, and the anticipated years of work required, KEDC would provide a PERFORMANCE incentive to Cypress in the form of a Purchase Option to to buy the land and the one original building that was retained from the prior development (Building 1) ONCE THE OBLIGATIONS UNDER THE DEVELOPMENT AGREEMENT WERE MET.
 
Over the next five years Cypress Properties built one building – Building 5. They missed several development deadlines per the Development Agreement. The Development Agreement had to be modified as a result of their failure to meet their obligations. In 2015, the KEDC decided to terminate their partnership with Cypress Properties and seek a replacement developer. 
My partners and I interviewed with the City Manager and the KEDC Board about stepping into Cypress Properties’ position in the Development Agreement. I have over 25 years of experience in commercial development and leasing, and in conjunction with my partners, we possessed the financial wherewithal to fulfill the OBLIGATIONS under the Development Agreement. In July 2015, the relationship with David Johnson and Cypress Properties was formally terminated with unanimous approval of the KEDC. The OBLIGATIONS AND RESPONSIBILITIES under the Development Agreement were assigned to Kennedale Development Partners, LLC (KDP), a joint venture formed between me and my financial partners. 
 
PERFORMANCE OF KENNEDALE TOWN CENTER
KDP purchased the existing Building 5 from Cypress Properties in July 2015. With the exception of Subway, every existing tenant in Building 5 has since gone bankrupt or terminated their lease due to a lack of foot traffic and business. Community Med Urgent Care had six locations and all were doing very strong business with the exception of the Kennedale location. They left. Ace Cash Express did not have enough foot traffic. They left. Town Cleaners went bankrupt, and we had to terminate their lease. Elegance of Beauty could not make due it to a lack of customers and foot traffic. We had to terminate their lease due to non-payment of rent. Zany Cuts went out of business because they also could not attract enough foot traffic and customers. We had to terminate their lease due to non payment of rent. Even Subway is struggling with the lack of foot traffic, with Kennedale lagging far behind the performance of other locations. Retailers MUST have foot traffic to survive. 
 
KDP BUILDING MOMENTUM
Since entering into our partnership with KEDC and the City of Kennedale, KDP has invested over $6,500,000 to date. We built Building 7 and leased it to Chicken Express, Dickey’s BBQ and Kennedale Bar and Grill. [Dickey’s BBQ and the Kennedale Bar & Grill are owned by one of my KDP partners, Mark Wong.] I AM HAPPY TO REPORT THAT ALL THREE TENANTS HAVE BEEN GENERATING SALES TAX REVENUE FOR THE CITY OF KENNEDALE. 
We have spent a lot of time and energy cleaning up Building 1. We secured a lease with V-Fit Martial Arts. KEDC did not have available funds to cover the leasing and renovation costs. It was imperative for all parties involved to revive TownCenter by creating foot traffic. KDP suggested a loan of $20,000 to the KEDC to cover the required tenant improvements to make this very important lease. KDP assumed full risk on the loan in the event of a default by the tenant. For the first time in many years, there are lights on and activity after dark. Many Kennedale residents have signed up for V-Fit’s martial arts training, and foot traffic has increased substantially as a result of their presence in Kennedale TownCenter.
 
KDP has continued to build momentum for the KEDC by securing a lease with City Electric Supply Company, a billion-dollar electrical supply retailer and wholesaler. The KEDC did not have available funds to make this very important lease with a credit-worthy tenant, and as it was imperative for all parties involved to revive TownCenter and create foot traffic, KDP loaned the KEDC $60,000 under the same terms as the previous loan. In addition, City Electric Supply has made a substantial investment in their space (over $100,000 in additional tenant improvements over and above the basic improvements that KEDC approved to make the space code compliant). They are scheduled to open for business later this month, bringing between 30 and 50 customers per day to purchase electrical supplies, increase all-important foot traffic, AND generating sales tax revenue for the City of Kennedale.
 
Kennedale Development Partners has made significant investments in the City of Kennedale generally—and in Kennedale TownCenter specifically. My partners and I have the OBLIGATION to construct three more retail buildings and will have over $15,000,000 invested and at risk when all of our obligations are met. Our investment in new facilities and efforts to secure tenants for Kennedale TownCenter has created—and will continue to create—sales tax revenue for the city. When we exercise the Purchase Option, our $15,000,000 in investment will go on the tax rolls, generating over $420,000 per year EVERY year in property tax revenue for the City of Kennedale and the Kennedale Independent School District. When all is said and done, the overall economic impact of KDP’s activity will far exceed the millions of dollars of our capital investment. The KEDC and KDP are cooperating in a development that will continue to benefit the city for years to come.”
 
Town Center is now a buzz with shoppers and folks eating great meals, on most days you go up there. The buildings all have tenants and are experiencing good business. What are your views on this look back on Town Center?
 
 

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