Before Council Votes to Up Lake Highlands Town Center TIF Dough to $40 Mil, a History
|What one corner of Walnut Hill and Skillman was supposed to look like by now|
Here's the PowerPoint council's about to be walked through, for those who forgot that the entire project -- a cities of Dallas and Richardson-Dallas County-North Central Texas Council of Governments-Dallas Area Rapid Transit joint -- was initially "envisioned as a catalyst development in the heart corridor that would redevelop obsolete apartments into a mixed-use, transit-oriented environment."
This morning's show-n-tell is in advance of Wednesday's vote on the TIF hike in front of the entire council, which is about to break for the entire month of July. On the other side is a project history-of prepared for Wednesday's vote -- which will have to do, since Prescott Realty Group's higher-ups still haven't returned our myriad messages left since mid-May. Says the briefing, the new plan is to make LHTC slightly smaller than originally envisioned, and to get the first phrase completed by no later than the end of December 2014, with future phases extended out till at least the end of 2019. And, no: Neither this morning's briefing nor Wednesday's agenda item mention the name of the grocery store developers are looking to anchor the project.
In 2007, PC LH Land Partners, LP (PC LH), an affiliate of Prescott Realty Group acquired and began redeveloping a 69 acre site at the northeast and southeast corners of Skillman Street and Walnut Hill Lane into the "Lake Highlands Town Center' (LHTC). The Skillman Corridor TIF District was created with the vision of having a town center with a new DART station at this location.
The project was to essentially have two components, 1) horizontal development involving vacating and demolishing the former 1,334 deteriorated apartment units and adding substantial infrastructure improvements; and 2) vertical development, with some development by PC LH and the remaining sites either sold or partnered with other developers.
In the fall of 2007, the existing apartments were demolished and remediation began. PC LH followed the TIF District Student Retention/Relocation Policy and efforts made to relocate tenants in the former apartment buildings at the LHTC site were successful and the impact on RISD schools was minimal.
Since then the horizontal work including public improvements such as new streets and 20 acres of park and trails has been completed. The park/trails now called "Watercrest Park" were conveyed to the City on March 31, 2011. Operations and maintenance agreements have been executed with PC LH with partial assignment to the Lake Highlands Public Improvement District to take on responsibilities for the park and non-standard public improvements such as special pavers and landscaping. The deadline to start demolition or construction was December 2008 and the milestones for this and other components of the horizontal development requirements were met.
TIF incentives, up to $23 million were recommended by the Skillman Corridor TIF Board in May 2007 and approved by City Council in June 2007. This funding allowed for reimbursement of a variety of TIF-eligible improvements necessary for the creation of a transit-oriented development (TOD) town center. There have been other public funds invested from the 2006 City bond program, $4.7 million and Dallas County, $3.4 million. The North Central Texas Council of Governments (NCTCOG) and DART committed $5.15 million for transit connections and other improvements. DART also invested $10 million to build the Lake Highlands DART Station which opened in December 2010 and was the first infill station on an existing line.
The project approved in 2007 had a minimum investment requirement for the agreement of at least 1,500,000 square feet of residential, retail or office space and a minimum of $230,000,000 in private investment for new property acquisition cost and hard costs for construction.
A phase I of vertical development consisting of at least 260,000 square feet was to be completed by December 31, 2010.This original deadline was extended by six months at the recommendation of the TIF
Board in order for PC LH to remain in compliance with the agreement while an amendment was still being negotiated. Vertical development has been delayed due to the downturn in the economy and constrained credit markets. This necessitates an amendment to the original TIF development agreement and staff has been working closely with PC LH on a potential restructuring of the agreement.
PC LH has been working diligently to obtain financing and begin construction on a Phase I project currently planned for approximately 85,000 square feet of retail including a grocery anchor and 200 multi-family units.
The overall project at build out is currently envisioned to contain approximately 1,744,825 gross building square feet comprised of 1,495,175 square feet of residential space with a mix of apartment, condo and for-sale units (approximately 1,265 units); 219,650 square feet of retail; and 30,000 square feet of office space.
Due to the complexity of the project, a changed economy of the last four years, and wanting to ensure the best chance of success given the public commitments already funded or pledged, the City hired Street Works, LLC (SW) a development consulting firm to do a preliminary independent analysis of the LHTC development plans from a physical/urban design and economic standpoint as well as market strategy. SW has provided some design observations and indicated some modifications, including additional public costs may be needed to better position the project for long term success. Allowing a Phase I of development to proceed quickly was strongly recommended so that LHTC can be viable in the marketplace.
Staff and the TIF Board have recommended that SW or a similar consultant be engaged by PC LH for a more in-depth study estimated at 90-120 days and report back to the City with a collaborative recommendation to the City and Prescott. The TIF Board also recommended that community input be included in this process.
The proposed amendments to the development agreement will allow the Phase I of the project to move forward, subject to follow up review by the TIF Board. It will also allow time to incorporate the collaborative recommendations from the SW process and restructure the development agreement to provide flexibility for Future Phases including additional infrastructure needs, if any. Total minimum requirements of the amended agreement would include a minimum of 1,500,000 square feet of development and $180 million in private investment for property acquisition, hard costs for construction, and soft costs directly related to construction.
Additional funding beyond the original dedication of $23 million is being recommended to address funding needs along with funding for other capital improvements identified and accepted in the SW process. The extent of these modifications to the project will not be known until this process is complete.
A portion of the TIF funding would also be in the form of an economic development grant, pursuant to the District's Grant Program approved in March 2011, to offset the costs needed to accommodate mixed-use, higher density projects such as parking structures, enhanced infrastructure, and higher costs for attracting diverse commercial tenants that may not be accommodated under traditional TIF budget categories.
All TIF public and private improvements have or will be funded up front and will be reimbursed solely from Skillman Corridor TIF District funds. PC LH, LP is only eligible to receive TIF funds upon satisfaction of contractual contingencies contained in this action and the availability of TIF funds in the Skillman Corridor TIF District in accordance with the district's Increment Allocation Policy.