Cherokee Investment Partners and the Texas General Land Office have completed a series of land transactions and legal agreements that pave the way for what has become known as the Imperial Sugar redevelopment project.
And while neither the state agency nor the North Carolina private equity firm will disclose financial details of their joint real estate development venture, documents obtained by FortBendNow show the two partners now each have a half-interest in the Imperial project, which the state has valued at $35 million.
Real estate records on file with the Fort Bend County Clerk’s Office show Cherokee Sugar Land L.P. (a partnership consisting solely of Cherokee Investment Partners) purchased about 223 acres of land in five tracts from Imperial Sugar Co. early last month, consisting of Imperial’s historic char house and property along U.S. 90A adjacent to Nalco Holding Co.’s industrial facility.
A few days later, the Texas GLO granted Cherokee one-half tenancy in common interest in what’s known as Tract 3, about 514 acres north of the Imperial property, which the GLO manages on behalf of the Texas Permanent School Fund.
The same day, Cherokee granted the GLO one-half tenancy in common interest in the land it had just purchased from Imperial.
“In a nutshell, the GLO contributed their property into the venture, and we contributed our property,” Cherokee Vice President Kyndel Bennett said Friday.
The completed real estate transactions move Cherokee and the state GLO a step closer to developing a project that general plans show could consist of up to 1,619 homes on 234 acres, 27 acres of commercial retail space, 36 acres of office or light industrial space and 46 acres devoted to a mix of uses surrounding Imperial’s historic sugar plant.
Bennett said the next step will involve conducting a “charrette” – a planning and design exercise in which Imperial project developers will work with City of Sugar Land officials and the public in an effort to reach a planned development agreement governing project details.
Bennett said he believes “people will start seeing activity on the site in early 2008.”
The development will be accomplished in part through a so-called “tax-advantaged” district created by the Texas Legislature in 2005, specifically to provide a funding mechanism for the Imperial project’s infrastructure.
Cherokee will act as manager and developer of the project, but the terms of its management and development agreements, a Tenants In Common agreement and other possible agreements it has with the state have not been disclosed – and may not be for years.
“We’re not disclosing all the financial details,” Bennett said simply.
The General Land Office has blunted media efforts to obtain the project’s development agreements. FortBendNow has attempted to obtain those agreements for more than a year, under the belief that a state agency charged in part with managing public school assets should disclose to the public details about how such assets are being managed.
Land office officials have said, however, that details of its development agreements must remain private if the agency is to be able to compete effectively in the private sector, in order to obtain maximum return on the land assets it manages on behalf of the state’s public schools.
In the spring of 2006, a GLO spokesman told FortBendNow that Cherokee would have to finish acquisition of the Imperial Sugar property and a final lease agreement would have to be signed before details of the venture agreement could be divulged.
In June of 2007, FortBendNow filed a request under the Texas Public Information Act to obtain any development agreements between the GLO and Cherokee, on belief that such agreements had been signed.
The GLO declined to release the agreements, asserting in a letter seeking a ruling from the Texas Attorney General’s Office that a change that the 80th Texas Legislature made to the state Natural Resources Code “makes all the submitted documents confidential.”
Under the belief that the code change, made in June as a result of Senate Bill 596, only applied to development and similar agreements until associated real estate deeds had been executed, FortBendNow made another Texas Public Information Act request on Aug. 23, seeking development agreements between Cherokee and the state because related property deeds had been executed since the time of the June TPIA request.
But, as a GLO attorney noted Thursday, new language in the Natural Resources Code also says such agreements are exempt from disclosure until “all substantive performance or executory requirements of applicable contracts have been satisfied.” The GLO contends that such “substantive” contract requirements have yet to be satisfied. The agency attorney declined to provide information on what those requirements are.
“This law was passed to allow the land office to compete in a competitive market,” a GLO spokesman said Thursday. “If we had to show everything with the transfer of the first deed on a multi-deed transaction, we simply couldn’t be involved in these complex transactions or be able to earn as much as we are.”
The attorney general’s office has not yet ruled on FortBendNow’s request for the development agreements.
But in the meantime, some financial information likely contained in those agreements already has been disclosed, by the Texas Permanent School Fund.
The fund’s most recent annual report, for the year ending August 2006, reveals that the fund has what it says is a $35 million one-half tenancy in common interest in the property associated with the Imperial Sugar redevelopment.
The annual report indicates that, in return for the GLO conveying one-half tenancy in common interest of Tract 3 to Cherokee, valued at $17.5 million, Cherokee conveyed one-half tenancy in common interest in the 223-acre Imperial Sugar property valued at $12.75 million. Cherokee also agreed to pay about $1.18 million in cash to the state, and $3.57 million more to the state in three equal annual installments “before the first, second and third anniversaries of the closing, plus interest calculated on the unpaid balance at a rate of 8% per annum.
