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Laying the Groundwork for a Move: Acme Brick Seeking a Tax Break to Relocate to Southwest Fort Worth

Posted on: Thursday, 19 January 2006, 09:00 CST

By Sandra Baker, Fort Worth Star-Telegram, Texas

Jan. 19--FORT WORTH -- Acme Brick Co., one of Fort Worth's oldest companies, is considering moving its headquarters from West Seventh Street on the city's near west side to an undeveloped 5.5-acre tract off Bryant Irvin Road and Vickery Boulevard in southwest Fort Worth.

But first, the company wants the city to approve a deal that would return an estimated $26.9 million in sales tax revenue to Acme over the next 32 years.

The brick manufacturer, which has been in Fort Worth since 1911 and located on West Seventh Street since 1952, wants to consolidate its headquarters operations under one roof.

Acme has been owned by Warren Buffett's Berkshire Hathaway Corp. since 2000, when the Nebraska-based company bought its former parent, Justin Industries.

Executives have been weighing their options for several months: whether to redevelop about 12.5 acres the company owns on West Seventh, find another Fort Worth location or move from the city. The company has 150 employees spread among six buildings on several blocks along West Seventh, including executives, senior managers and administrative personnel and other professionals.

Dennis Knautz, Acme's president and chief executive, said it's cheaper for the company to develop a new site than to build on West Seventh, where Acme would probably need a taller, more expensive building because of land constraints.

It would also have to build a parking garage, which would add millions of dollars to any redevelopment, he said.

The land is also in the path of residential development that's rapidly spreading between downtown and the Cultural District.

"Our preference was to stay on West Seventh Street," Knautz said. "But when we got into the details, it wasn't the highest and best use of the property."

Acme Brick has signed a letter of intent to buy the land off Bryant Irvin, and executives said they hope to close the deal by July. Construction would begin immediately after Acme sells its 70,000-square-foot headquarters, executives said. The total investment would be about $15 million, and Acme would move to the location in summer 2007.

Acme executives said the company has received incentive offers from surrounding cities to lure them from Fort Worth.

To keep the company in Fort Worth, the City Council today is being asked to consider a plan that would grant sales tax proceeds to Acme for 32 years. The grant would average about $840,000 annually. That number would not be capped and would vary, based on Acme's sales. The company said it averages about $84 million in sales in Texas.

Fort Worth-based home builder D.R. Horton withdrew a similar request it made to the City Council last fall that, if approved, would have granted the company about $86 million in sales tax payments over 30 years. In that deal, Horton was considering moving its purchasing unit to its City Center offices downtown, but it was not considering a new facility.

Council members said at the time that Horton was asking for too much.

Councilwoman Wendy Davis, who heads the downtown economic-development committee, said she believes that the Acme incentive package is justifiable because Acme wants to locate in a special tax district that will provide $200,000 a year to the Southwest Parkway tax-increment finance district. The company's proposal would also increase Fort Worth sales tax revenue.

"It's kind of a double benefit," she said.

However, Davis said that she wants to make sure that the tax break isn't too generous.

"It should be related to the legitimate gap [in funding] and also what it takes to keep Acme," she said.

Under the agreement with Acme Brick, the company would designate Fort Worth as its point of purchase, meaning that sales outside North Texas would be taxed at Fort Worth's rate of 8.25 percent.

The state will collect its 6.25 percent portion and the remaining 2 percentage points would go to the city. Fort Worth, in turn, would grant half of that back to Acme Brick. The city's 1 percent would be split between the Fort Worth Crime Control and Prevention District and the Fort Worth Transportation Authority, or about $420,000 apiece annually.

Acme has a similar incentive agreement with Euless, where Acme recently opened a showroom and Metroplex sales center. Euless is the point-of-purchase for sales in Tarrant, Dallas and several other counties. The deal with Fort Worth will not include walk-up sales, or people who buy bricks and take them with them. Acme has 33 sales locations in Texas.

State tax regulations allow cities to use sales tax proceeds as economic incentives.

The amount Acme can receive, though, could be reduced if the company does not meet requirements that at least 15 percent of the construction costs of the new headquarters is spent with Fort Worth firms, and 15 percent with women- and minority-owned businesses. Some businesses could meet both requirements.

"They'll determine if they get an incentive," said Tom Higgins, the city's economic development director.

Knautz said the company has talked with developers interested in buying its West Seventh Street property, near Foch Street.

The land, which was rezoned for multiuse a couple of years ago, is in one of the city's hottest real-estate markets and could bring as much as $12 million, according to real-estate brokers. It is near the Montgomery Plaza development anchored by SuperTarget and residential projects.

"We do think it could be something special," Knautz said of the property. "But we are not developers."

Judy Hunter, Acme's chief financial officer, said proceeds from the land sale will be rolled into the purchase and construction of the new headquarters under a federal tax code rule that allows capital gains on certain real-estate transactions to be deferred and not taxed.

Despite getting some better offers, Hunter said the company wants to retain its long history in Fort Worth.

"We feel like Fort Worth is our home, and that was worth some amount of money to stay here," Hunter said.

Bill Thornton, president of the Fort Worth Chamber of Commerce, said his organization has worked with Acme for several months to help it stay in Fort Worth. Although he said the deal with Fort Worth may not be the best Acme received, it is the best the city can do.

"They are viewed as quite a plum," Thornton said.

"When we found out there was a possibility that they would relocate out of Fort Worth, we were not surprised. We ended up being in a competition. I told Dennis and Judy there was no way the city could match dollar for dollar the incentives on the table. What they're considering is comparable, and it gets us close."

Higgins said Acme would be the first development in the tax-increment finance district that was established in the corridor for the proposed Southwest Parkway. The development would contribute about $200,000 annually to that TIF.

The land, near the Lockheed Martin recreation center and north of the Trinity River, is owned by the Cassco Land Co., which includes members of Fort Worth's pioneering Edwards family. It is among the last remaining undeveloped ranch land in the city.

Staff writer Mike Lee contributed to this report.

BRICK BY BRICK

1891

Chartered as Acme Pressed Brick Co.

1911

Moves headquarters to 824 Monroe St.

1919

Acme moves headquarters to Neil P. Anderson Building.

1952

Acme moves to its current address, 2821 W. Seventh St.

1968

Changes its name to First Worth Corp., merges with Justin Boot Co.

1972

First Worth becomes Justin Industries Inc.

1993

Troy Aikman becomes Acme spokesman.

2000

Berkshire Hathaway buys Justin Industries.

Sandra Baker, (817) 390-7727 sabaker@star-telegram.com

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Copyright (c) 2006, Fort Worth Star-Telegram, Texas

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Source: Fort Worth Star-Telegram (Fort Worth, Texas)

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