Feldman: Don’t give away the farm for Whole Foods
June 3, 2013
I think it is a good thing that Frisco may get a Whole Foods. However, after two years of working on the shopping center, the developer has not broken ground and Whole Foods has never publically announced they are coming. Neither has any other tenant, not one, announced they will be coming to the other 20-30 stores that will make up the center. Now with little or no performance under the land lease the developer signed a year ago, the developer is suddenly asking that the citizens of Frisco essentially give him the 9.4 acres for free so he can go out and try to make deals with town land that he hasn't paid a penny for. Once the land is deeded the developer could resell the land or sit on it for speculation and the Whole Foods might never get built.
Frisco residents should come to the town meeting at 7 p.m. tonight and find out why the town is so desperate and moving at warp speed. Residents will have a chance to voice their opinion as to whether or not the town should steam-roll ahead or slow down, step back and reevaluate.
Form your own opinion as to whether or not Whole Foods is really coming and see if any representatives from Whole Foods or any prospective tenants or the bank financing the development will be there to offer warm fuzzies. So far, all the public has heard comes from the town and the developer, who say "don't worry, be happy, everything is going to be okay." A key part of the council meeting will be devoted to explaining: why the town is "selling" the citizens' land that appraised at $6.75 million in 2011 for $4.5 million (66% of appraisal); why professional appraisals need not be considered; why the town is taking the risk with citizen money to subordinate their loan collateral to the developer's $5.45 million construction loan; and why the town is willing to do this with no assurance that a Whole Foods will ever be built.
The land sale is essentially a gift because the developer: puts no money down; gives a $4.5 million promissory note with 1.75-2.25% interest; makes no payments of any kind until June 2024 (11 years); makes his first interest payment in June 2024 (11 years); makes his first principal payment in June 2033 (20 years); gives a personal guarantee only until June 2016 (3 years when no payments are due); and gets to put the town's note and deed of trust in second place behind his $5,450,000 construction loan. The present discounted value of $4.5 million received 20 years from today is approximately $2.5 million.
Bringing Whole Foods to Frisco is good, but the business deal is bad and has lots of risk and little or no benefit to the citizens of Frisco. Something else to consider and ask about is will a new shopping center with 20-30 stores, right off the interstate, negatively impact established Main Street and Summit Boulevard businesses?
If the council is encouraged by the citizens to slow the process down and gets a little more aggressive, the town and the citizens will get a safer and better deal. If there really is a solid Whole Foods lease, they are not going away.
Larry Feldman has built and sold over 400 houses and condominiums in Frisco, Dillon and Breckenridge since 1982 and is also responsible for developing the Dillon Ridge Marketplace Shopping Center.
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