Big D

Park and Recreation Department

City Hall of Dallas is surprisingly an extremely accessible place; one can park and get to where they need to with great ease.  Our first meeting was with Mr. Paul Dyer, Director of Dallas’ Park and Recreation Department.  It is difficult to convince city officials that downtown parks are important; they want to help only their precincts.  But $32 million has been allocated for three downtown parks, Main Street Garden, Woodall Rogers Deck Park, and Belo Garden Park.  Golf courses are the only non-governmental source of income for the parks department, where a third party runs the courses and makes their profit on the amenities of the course.  Amenities on park grounds like restaurants are on 20 year land leases.

A third party has been hired to purchase properties for city for future parks.  Dallas was the third party’s first customer to have them purchase urban land.  Another way The Park and Recreation Department procures land for its parks system is through the use of eminent domain, or at least the threat of it.  It is one of their tools and helps to keep the acquisition cost down.  Though, when word gets out that the city is assembling land, prices go up.  A lot of parks are in the flood plains because this is usually all the parks department can afford.

It has been proven that proximity to a park can increase property values.  For instance, once news broke that the Deck Park was going to happen a planned 24 story tower became a 42 story tower.  The Deck Park is a 5 acre project that bridges over Woodall Rogers Freeway, connecting uptown Dallas to downtown.  It will use $20 million from bonds, $16.7 million from the Federal Stimulus, among other means to fund the $106 million project.

With the help of a master plan, the Park and Recreation Department came up with a three tiered   program.  Tier 1 addresses the current need to update and repair existing park conditions.  Tier 2 would add “infill” needs, like soccer fields and recreational centers to areas that need them.  The final tier is a wish list.  The city liked aspects from all three tiers and has started to implement them.  Future initiatives are trying to tie Fair Park back to downtown or at least to Deep Ellum and widen the overpasses 0ver I-30 for the addition of public plazas connecting to Old City Park.

Mr. Mayor

Mayor Tom Leppert was kind enough to take time out of his busy schedule to talk with us about the city’s approach to real estate and development.  He emphasized the need for a more balanced tax base, stating that more was needed from the commercial side, that the city is too dependent on the residential for tax revenues.  The city has sustainable initiatives that include a green fleet of 2,000 vehicles and using renewable energy (wind).  All new city buildings are to meet LEED or other sustainable standards.  The Trinity River project will be a boon to Southwest Dallas.

South Dallas seems to be the new frontier, where North Dallas is pretty much built out, the south has a lack of development and copious amounts of available land.  However TIF Districts typically haven’t worked in South Dallas, because it hasn’t been able to generate tax revenue.  So, one an irregular TIF was created by combining a North and a South Dallas neighborhood and since TIF Districts must be contiguous, they were connected along the DART light rail line.  The city is anticipating that this new district will generate $10 million over the next 15 years.

These are just a few of the topics the Mayor was able to discuss in such a short time.  We were able to get a couple of photos with him before he headed off to his next meeting.

Sustainable Development and Construction

Ms. Theresa O’Donnell from the Sustainable Development and Construction department joined us after the mayor.  Her first comments were on how development has been a huge economic driver for all of North Texas since the late 1960’s.  But the current market has seen declines of around 80%, specifically the housing industry.  Publicly financed projects are the only projects in construction at this time. 

Since Dallas is a land locked city, meaning it can’t expand its borders, it is starting to emphasize redevelopment and trying to increase density in the core (CBD & surrounding areas).  Redevelopment doesn’t have a master developer, so the city is stepping in, especially with regards to transit and infrastructure.  They will use bond money to purchase existing “bad” properties to have redeveloped.  Other than the parks department, the city views eminent domain as poor public policy.  So, it pays market value for properties.

Issues of displacement because of gentrification are also addressed.  TIF Districts have a provision that any new housing development must provide 10% of the units for the newly displaced residents and provide services that help the other families find comparable housing in the immediate area. 

Dallas offers many incentives for development; TIF Districts, Tax Abatements, MMDs, and bond programs to name a few.

City Design Studio & Economic Development

Mr. David Whitley of the City Design Studio joined us prior to Ms. O’Donnell’s departure.  The City Design Studio is the Dallas’ office urban design that advocates good public design, internally and externally.  It is part of the Trinity River project

Much discussion was on the area just across the Trinity River, where the new Calatrava Bridge will terminate.  The community wants to be a destination, a reason for crossing the bridge, a place to go to.  With the help of the City Design Studio, a general master plan has been formed and potential industries are being discussed for the area. 

Two other major issues are also being addressed, though implementation of remedies may be decades away.  The first is how to maintain the existing community and addressing the destination problem at the same time.  The second and more difficult to remedy, is the lack of public transportation to the community.  The latter may not have an answer for quite some time.

Mr. Karl Zaritkovsky, Director of Economic Development, spoke briefly on the subject before moving into other areas of his expertise.  He stated that the City of Dallas has put together four (4) types of financing for private development.  Brownfield programs have halted and even the position in charge of brownfield development was terminated.

The bulk of the conversation was about the CDRC’s (City of Dallas Regional Center) initiative with the U.S. Citizenship and Immigration Services, to bring foreign capital to U.S. markets, specifically Dallas in this case.  The premise is to give green cards to foreign investors, their spouses, and their dependants under 21 years of age, when the invest $500,000 in regional projects that create 10 new jobs within 2 years.  This idea initially started in the real estate industry to finance projects when the markets collapsed two years ago.  A fund manager oversees the financials.  Korea, China, and Mexico are the biggest players in this initiative.

aLoft

The aLoft Hotel, Owned by Mr. Suhas Naik and Mr. Ted Hamilton, is housed in an 8 story, 158,000 sf historic warehouse/manufacturing building directly above the old Santa Fe Railroad.  aLoft is under the W Hotel umbrella, which is owned by Starwood.  The project was helped financed by a grant from the TIF district for $4.2 million and historic tax credits, sold to Chevron for $5 million.  Half of the equity came from the tax credits.  The total project cost was $42 million, which included the purchase of land behind the hotel and an added floor (making it 9 stories total).  Approximately $50,000 went into remediating the lead paint and asbestos, minimal compared to the total cost.

Prior to the current TIF regulations, TIF money could only be used toward public right-of-ways.  These included, streetscape features, such as sidewalks, benches and street lamps, elevation work on a building, and any remediation to the project (viewed as a benefit to the public.  The new regulation allows almost any use for TIF money, because the money is viewed as going toward a project that will increase tax revenue and thereby benefitting the public.

To remain competitive, the hotel must change its rates daily.  OTAs, Online Travel Agents like Travelocity & Expedia, have created a whole new way for hotels do business and stay competitive.  About 30% of their business comes from the OTAs, but this rate would be higher, say around 60%, if the hotel was located in a more suburban, highway adjacent market.

Besides speaking with Mr. Naik and Mr. Hamilton, we had the pleasure of discussing the project with the architect, Mr. Gary Murphree, the hotel manager, Mike, and the sales manager, Mr. Andy Osborne.  Mr. Osborne gave us a personal tour, showing us the rooms and amenities aLoft offered.  They are falling short on the desired room rates.  However, the hotel has an occupancy rate higher than the rest of downtown hotels, approximately 65% per night, despite only being open for 8 months.  Also, the hotel is looking at being LEED silver and possibly gold.  The paperwork is still being processed.

Craig Ranch

The Craig Ranch, developed by Mr. David Craig and a “quiet giant” for a partner, Mr. Cecil Van Tuyl, is a 2,200 acre all inclusive, self sustaining, new urban master planned community.  A Tournament Players Club, the PGA’s pension fund, golf course creates the spine of the development, running along Rowlett Creek.  Mr. Craig built quality of life venues, such as ball fields, ice skating facilities, and fitness trails first to entice would be residents and companies.  He wanted to create a Regional Employment Center, where medical facilities and corporate headquarters make up a large percentage of the areas employment opportunities.  Despite the economic downturn, Mr. Craig is still able to sell his dream.  Currently over 7,000 residential lots and homes have been sold.

The entire project is within the City of McKinney and within the Allen and Frisco school districts.  Two Ch. 380 agreements were reached with the city, where Mr. Craig would build all the roads and necessary infrastructure, and the McKinney would waive all the impact development fees.  Millions of dollars in ad valorem tax has been paid to the city, and this trend does not show signs of stopping, as areas of Craig Ranch are developed.  Mr. Jason Kessel, Executive Director of Development Services, joined us and discussed the project from the city’s point of view.  He expressed that the city shared Mr. Craig’s objectives (dream) for the project and how this is an example of a great public/private partnership.

In all honesty, the development was overwhelming.  I of course mean this in the most flattering way.  It is a Texas sized dream for a Texas size tract of land.  But if anyone can make it happen, I am sure Mr. Craig can.