The Little Rock Technology Park Authority (LRTPA) on Wednesday unanimously adopted a measure to dissolve the local business incubator’s stake in the city’s Metrocentre Improvement District Commission, a nonprofit vehicle authorized by the Legislature in 1973 to burnish the city’s downtown area through tax-free bond issues.
In other business highlighting increasing activity at taxpayer-financed authority, LRTPA Executive Director Brent Birch told the board the authority would have to pay an out-of-state commercial real estate developer nearly $40,000 to get out of its current lease and that demolition work on the former Mays law firm building could push back leasing of the 40,000-square foot development to early 2017.
But before Birch gave his report, Stephens Inc.’s executive David Knight gave a brief presentation to Tech Park board members on the Little Rock investment banking giant’s efforts to end the Metrocentre’s long and controversial history. Since its beginning more than 43 years ago, the Metrocentre’s biggest accomplishment was the Main Street Mall concept, which envisioned a large multilevel shopping, office and restaurant district that would drive traffic back and tax dollars back to the downtown area.
Knight, executive vice president and general counsel for the Little Rock investment banking group, told the Tech Park board members that after the Metrocentre’s 30-year old bonds were retired several years ago, many of the districts more than 230 members thought that nonprofit entity’s operations would simply end.
The Stephens’ attorney said the district now owns a downtown parking deck lease at Sixth and Scott streets, a large Henry Moore sculpture at Fifth and Main, and “small amount of cash” from the parking agreement. He said Stephens, which owns the Capitol Hotel and the downtown skyscraper bearing the investment bank’s name, has a 15% stake in the district and has been recently approaching other larger property owners in the downtown area to get enough petitions to dissolve the district.
Following the $11.6 million sale of two real partnerships affiliated with Stephens Inc. CEO for nearly 142,500 square feet of building space, or 3.25 acres, in the downtown area, Knight said told Tech Park board members that the authority retained Stephens’ 3.1% stake in the improvement district.
“When happens when the district gets dissolved is the ownership of the personal and real property entitled to the (district) passes to the city (of Little Rock),” Knight said. “So the city would get the leasehold ownership of the parking deck …, and its 100% interest in the Henry Moore.”
Knight said the small amount of cash would then be distributed to all of the Metrocentre members, which he said would be nominal. The Stephens’ spokesman the Arkansas investment firm now desires to go ahead and fully dissolve the district so that it would not have any problems with tax liens and debt obligations tied to the property owned by the improvement district.
Following a brief discussion on the Little Rock Downtown Partnership’s stance on dissolving the Metrocentre district, the Tech Park board moved to side with Stephens. Knight said he has also approached other larger downtown property owners to get the 50% vote necessary to fully dissolve the nonprofit entity.
Knight said Stephens already has received more than 45% support for its proposal. With the Tech Park’s support, the city’s largest downtown property owner closer is closer to its goal to end Metrocentre’s mostly failed history.
“From a practical standpoint, we are just trying to collect the ‘50-plus-percent’ from the larger property owners rather than trying to go out and reach out to 232 property owners at these infinitesimal amounts,” Knight said. “We already have discussions underway with some of the other large property owners, so we don’t certainly there will be a problem getting above the 50% mark.”
Knight said Stephens hopes to present petitions from downtown property owners to dissolve the improvement district at Metrocentre’s upcoming meeting later this month. He also said told the Tech Park board that a $80,000 improvement district assessment the Downtown Partnership receives to clean up downtown property would also ago away.
“We clean up our own property and didn’t get much of a benefit out of it,” he said.
Tenant agreement costs $38,500 to leave Venture Center, leasing pushed back to early 2017
Later in the meeting, Birch and board member Dickson Flake gave a brief snapshot of the authority’s finances and shared that the taxpayer-financed group would likely have to pay a one-time $38,500 fee to out of the current lease agreement at the Venture Center by February 2017.
At last month’s meeting, the board voted to opt out of the agency’s lease at the downtown offices and apartment building that houses the Venture Center and office space for small startup firms and local entrepreneurs.
Birch also told the board last month that the Tech Park had a one-time option to end the current $9,000 per month lease in early 2017, but had to communicate its plans to the owner by July 31. Birch and Flake both expressed hope that the property owners, a limited liability partnership fronted by Monarch Investment and Management Group of Franktown, Colo., would eventually cut a portion of the fee.
“They are waiting on re-leasing that space,” said Flake, a local real estate developer. “We hope to mitigate some of that cost.”
Birch also told the board members that there would be at least a month delay in completing demolition work on the former Mays building. He said modifications are now being made to an outer wall of the former law offices that is not fully stable.
The work to brace the wall will add another month the expected completion of the former Mays building. However, the adjacent property, the former Stephens’ property, is on schedule to be completed before the end of the year, he said.
“I am really encouraged by the progress. It really is starting to take shape,” Birch said of the downtown tech village.
Board chairman Kevin Zaffaroni said the authority will decide later whether to move the target completion date to begin leasing office space at both properties due to the delay at the 415 Main office building. He would not divulge the level of local interest in the downtown property, saying that lease agreements have yet to be drawn up.
“I will just say that we feel comfortable with the amount of interest we are getting,” he said.