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Fort Worth Star-Telegram:

FORT WORTH -- Without open bidding, the Trinity River Vision Authority signed a 10-year lease with Tim Love and spent $970,000 building a restaurant structure at the most popular riverbank trailhead, hoping that the celebrity chef's Woodshed Smokehouse will generate hundreds of thousands of dollars annually in a profit-sharing rent arrangement.

J.D. Granger, the authority's executive director, said he personally vetted several companies that expressed interest in a concession at 3201 Riverfront Drive, owned by the Tarrant Regional Water District, which oversees the authority.

The scenic location overlooks the bike-and-jogging trail along the river and is close to the Fort Worth Zoo, the Colonial Country Club and the University Park Village shopping center on the busy corridor that links the Cultural District to Texas Christian University.

Unlike municipal lease deals, those offered by water districts do not require competitive bidding under Texas law, said Anthony Magee, a Dallas attorney with Gruber Hurst Johansen Hail Shank who is familiar with such issues.

Still, some North Texas restaurant owners criticized the deal, saying they were not given a chance to offer their proposals.

Gruber Hurst Johansen Hail Shank Attorney Anthony "Tony" Magee in Star-Telegram article

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The lease agreement, made available to the Star-Telegram after a Texas Public Information Act request, has the Woodshed paying 6 percent on the first $500,000 of sales, 5 percent on the next $500,000, and then 4 percent on sales over $1,000,001.

"That lease is great -- for the tenant," said Stephen "Duffy" Oyster, whose Dallas-based Rock Bay Properties III owns 15 restaurant properties in Texas, New Mexico, Oklahoma and Arizona. "I am shocked. There are no personal guarantees there, which is wonderful for the tenant. A sweet deal."

Granger disagreed, saying that if the Woodshed closes before the end of the lease, the district would get some $400,000 in restaurant equipment and improvements.

And with so much interest now surfacing, finding a new tenant would be no challenge, he added.

Love said the first rent payment will be figured on gross sales at the end of 30 days. He said such rent arrangements are increasingly common.

After examining the agreement, Oyster called it "a real cheap lease. A typical lease would say 6 percent versus some kind of minimum rent based on the value of the property."

"If he does $2 million or $3 million in sales, the water district wins, he wins. It's the best of all worlds," Oyster said.

"If it goes south, the tenant is in a better situation than the water district," he added. "It was stupid on the water district's part not to bid it out because I think they could have gotten a lot more favorable lease.

http://www.dfw.com/2011/11/25/542852/restaurant-deal-comes-under-debate.html

© 2011 Fort Worth Star-Telegram