Anybody believe this this will really be built?



http://www.newswest9.com/story/21874820/company-moving-forward-with-plans-for-new-high-rise-tower-in-downtown-midland

If they can sell the remaining 15% (last estimate I heard) or so they need to sell, they'll be breaking ground before the next spring.

I like the idea that it will resemble Midland is flipping off the rest of the country with its revamped skyline. The next tallest buildings in downtown Midland have 20 or so floors.

The tower is a project of Energy Related Properties and Wexford Capital. The promoter for the tower spoke at the Midland A&M club luncheon a few weeks ago.

At that time, he had around 1/2 of the commitments on office space he needed to supposedly make the project go forward.

Energy Related Properties owns the Fasken Center and the Western National Bank building. They made an acceptable offer to buy the TCTB buildings (the 24 story First National Bank building and the two buildings across Wall street) but their financing fell through.

I don't like that they're getting the land for free and that they're asking for taxpayers to pay for the parking garage. The promoter talks a lot about how they're spending $500 million or $550 million on this project, but they want the land for free and tax payers to pay for about 1/6th of it. The group that bought and renovated Midland Tower (where Cancun Grill is) hasn't gotten any financial help from taxpayers, but they haven't asked either.

I do like that the proposed building is in the middle of downtown. That area really needs more parking and maybe the taxpayer funded parking garage will solve that problem. Downtown also seems to be slowly dying. Fasken left downtown. EOG was not downtown, but decided to build their new building out by the sports complex. Pioneer is moving out of downtown.

Overall, I'd like to see it built even though I feel like they're asking for too much preferential treatment from the city/taxpayers. I'd like to see downtown Midland grow and expand into something that keeps going at night rather than shutting off at 6pm.

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land for free

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Did they?

By that I mean...the City still owns the courthouse. Until ERP sells out their target allotment, they will back out of the deal and pay nothing and the City will retain ownership of the land. No harm, no foul, no money lost.

But, if the project goes through, some interesting consequences will hit.

The current valuation of downtown property is near $200 million. The Tower itself will be close to $350 million (assessed value for taxes, not resale value). The TIRZ has said that they'll collect an additional $3.1 million in property taxes every year hereafter compared to their current revenues...and has stated they can/will reimburse the City the 2.2 million it gave the county for the property after the tower is built.

[This message has been edited by Predmid (edited 7/1/2013 7:14p).]

They will get the land for free.

The city has already been paid back from the county for over 1/2 of what they paid the county for the land in the form of fire department equipment.

The tower would be taxed the same whether they bought the land for $2.2 million or received it at no cost.

To answer your question:
Yes, ERP will get the land for free.

and the city gets a "300 million dollar" building and mega increase to property tax values and a boom to downtown for a mere $2.2 million.


Sounds like one heck of a deal.

Not $2.2 million. I can't say what the parking garage will cost (which is what ERP is going to request MDC pay for) but the city will end up paying 16-18% of the construction cost of the building.

Would it be cool with you of the city paid for 1/6th of my house? I mean, they'll eventually get it all back in property taxes anyway.

1. The 2.2 million was the price the City paid to the County for the land. That’s the only money that the City has spent thus far.

2. The rest of the funds as I understand are supposed to be coming out of the TIRZ & MDC funds. Not the city general funds. They are three separate kitties, so to speak. A parking garage is the exact kind of thing the TIRZ & MDC are supposed to fund.

The TIRZ was specifically set up for the exact purpose of supporting downtown infrastructure. It's not money coming out of the City's general funds.

There is a max cap of property values on downtown that the city draws revenues on property taxes. Any property taxes collected on property values assessed above that max cap (I believe it is 200 million) goes into the TIRZ funds. I am perfectly fine with TIRZ funds going towards this. Parking downtown is sorely needed. The TIRZ can also bond up to $50 million on future tax revenues.

As far as the MDC, their stated purpose is to promote and advance economic diversity in the Midland economy and to help develop areas in the city that meets the City’s development needs. It’s long been a goal to build and develop a “thriving downtown” and the tower with their commercial space will certainly do that. Their funding is also entirely separate from City general funds. The voters of midland in 2002 approved a sales tax increase to fund the MDC.

If you can believe wikipedia, this would be taller (in stories) than anything in Austin, San Antonio, Fort Worth, Albuqerque, Phoenix or San Diego. So it would be the tallest building between Dallas/Houston and Los Angeles!

Does anyone have a contact to reserve a spot? My company may be interested in some space there.

http://erpfunds.com/Contact.html

dat website....

I agree that parking is needed downtown and that the TIRZ and MDC were created for situations like this. I just feel that those millions could be put to better use than paying for the land and foundation/parking garage of the Energy Tower. As for the property tax argument, I will bet that, if the Energy Tower is built, they will be asking for several years of little to no property tax. I want improvements to downtown as much as anyone. I just think the MDC and TIRZ funds could be put to better use downtown than subsidizing such a large part of this building.

Why do you think real estate investors with backgrounds in California and Mexico, and a hedge fund out of Connecticut, decided they want to revitalize downtown Midland? I think they're opportunists and they see a way to make a good return on investment by having taxpayers pay for a large part of their building. I doubt they would even consider Midland if they didn't think they could get a large portion of their project funded by MDC and TIRZ funds.

[This message has been edited by TxAg20 (edited 7/15/2013 3:39p).]

Pardon my ignorance, but where are you getting that $90-100 million figure? I haven't seen anything close to that amount being requeseted.

Also... tirz and mdc don't have anywhere NEAR that amount of money. Last I checked they may have between the two only $6 million?

I'm not sure the final figure that will be requested is known yet. It is basically whatever the parking garage/foundation of the building cost is. It's going to be well into the 8 figures though. The numbers I've heard are confidential and I'm not sure how firm they are anyway.

The TIRZ and MDC would have to borrow the money to give them.

[This message has been edited by TxAg20 (edited 7/15/2013 3:40p).]

I think a thing to consider is that the tower owners will be paying a hefty property tax on whatever does go up and that the increased property tax valuation will be going to the TIRZ. So the TIRZ would bond some amount of money to go towards a parking garage and pay it back with property taxes collected on the tower.

Weird catch 22.

I think a better way to do it, at less risk to the city, would be to allow a property tax abatement on the building. Accomplishes the same result, but the TIRZ doesn't have to borrow money to do it.

I'm afraid, ERP needs the TIRZ & MDC equity up front to obtain financing for the building.

I'm not sure how much principal commercial real estate loans require, but if it's 20% (like a residential loan) and the TIRZ and MDC are putting up 15% of the equity, ERP is getting a $500 million building for only 5% down or $25 million.

Further, if TIRZ and MDC are going to borrow that kind of money, I think other investments need to be considered. They could purchase and tear down the Vaughn Building, the Building of the Southwest, and the Western United Life Building, build a parking garage or two, and make other improvements to downtown which may provide a better ROI than putting it all into the Energy Tower.

You will know the crash is coming when this building is completed.

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You will know the crash is coming when this building is completed.

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Amen!