Victory Park's German Owners and KC-Based Co. At Odds Over Development That Wasn't

Victory Plaza.jpg
An interesting case, originally filed a few weeks ago in Dallas County District Court, showed up at the federal courthouse yesterday: Victory Park UST Joint Venture I, L.P., v RED Development, LLC, which involves "the development of certain commercial property located near the American Airlines Center." The plaintiffs are the German-and-Florida-based owners of Victory Park; the defendant is a Kansas City-HQ'd developer of shopping centers. And the fight stems from a proposed development at Victory that never happened and probably never will.

According to the initial complaint, filed in late August, RED Development and its Dallas offshoot told Victory Park UST back in July 2010 that it had the money lined up for the development -- around $1.5 million, which, says the suit, was to come from the Dallas Police and Fire Pension System via its relationship with CDK Realty Advisors. According to the suit, after RED Dallas said the deal was good to go in the summer of '10, Victory Park UST "agreed to contribute certain commercial real estate in Victory Park to a newly formed partnership in exchange for RED Dallas's agreement to purchase an interest in that new partnership, all for the general purpose of retail development in Victory Park."

But the plaintiffs insist RED Dallas never lived up to its end of the bargain. Attempts were made to revive and/or rework the deal up till May of this year, when it was revealed RED didn't have approval from the police and fire pension fund after all. RED Development and RED Dallas not only deny the allegations, but it's the party that asked for the case to be removed to Dallas federal court. All the relevant docs follow. Victory Park Suit
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19 comments
Sharon Boyd
Sharon Boyd

It would be easy to say "I told you so", and I will.   Victory iss Jr.'s concept of human interaction -- stiff, cold, uninviting, overpriced  -- and paid for by people who were not intended to ever go near it.  Said it in 1998, and it's still true.   Ross Perot, Jr. is the ultimate welfare baby. 

Name anything he's done without tax incentives, rebates, etc.  

All he can do is suck the air out of other people's develoments and then walk away.   We told the West End Merchants Assn the deal would kill off their business.   ---  Jr. absolutely was behind JWP's assault on the Inland Port.  

When people get caught up in the myth of some big shot's accomplishments, disaster is right around the corner.   Dallas taxpayers will eventually be tapped to do something about the empty storefronts in Victory with more empty promises of future windfalls.

Ayn Rand
Ayn Rand

Victory is exhibit A for why public dollars SHOULD NEVER be used to pay for professional sports venues.  The claims of a windfall in increased taxes never appear. 

Exhibit B - the failed development by Cowboys Stadium and The Ballpark.

Exhibit C - the lack of development around what was Reunion Arena.

Exhibit D - the lack of development around what was Texas Stadium.

Yet, there are still FOOLS on Unfair Park who cry that Miller lost Cowboys Stadium.  Lucky she did, as Dallas saved a large sum of money and still reaped most of the few rewards from the Super Bowl.

Downtown_worker
Downtown_worker

The last thing Victory Park needs is more retail space. Isn't there plenty of empty retail surrounding the plaza and along Victory Park Ln? Luckily some developers get it and plan on building apartments there: http://www.dallasnews.com/busi...

Robert, if you could find a rendering for these new apartments, that would be awesome.

Rooster
Rooster

Ok, let me see if I have this right.....

1)  Victory once had some retail development.2)  Every bit of it failed because Victory is one of the worst designed developments on the planet for retail and a ghostown on non-game days.3)  They have done dinky-doo to fix #24)  And they're shocked no one wants to invest down there?

Have the Germans even SEEN their own development?

heelsoftar
heelsoftar

when does the new Mandarin Oriental hotel open down there?

Oak Cliff Townie
Oak Cliff Townie

around $1.5 million,

1.5 million ? Really ? Who the "F" are they trying to kid ?

That is chump change .

Was it going to be prepacked in suit pocket size envelopes .

That would  go to the usual suspects ?

primi timpano
primi timpano

So who is the Red Development Texas citizen.  Their web site still has this as a successful deal:

June 2011CDK REALTY ADVISORS ANNOUNCES NEW VENTURE WITH RED DEVELOPMENT — Forms Real Estate Holding Company  [more] CDK Realty Advisors announces its newest venture with RED Development. CDK, on behalf of one of its institutional clients, and RED have formed RED Consolidated Holdings, LLC, a real estate holding company that owns twenty-two retail and mixed-use properties totaling more than nine million square feet in twelve states. This new venture consolidates properties owned by CDK’s client with the operating companies and retail projects of RED.

Since the relationship with RED began in 1999, CDK has invested $280 million, on behalf of its client, in select RED development projects, including CityScape in downtown Phoenix. CDK and RED continue to develop projects under their previous joint venture.

“This has been a very successful venture for more than twelve years and this new agreement will allow our client to further benefit from RED’s relationships and track record in the real estate industry” said Jon Donahue, principal with CDK. “This new company allows us to shift the portfolio from an Opportunistic to a Core Strategy.”

“We have enjoyed our relationship with CDK over the years and trust that this deeper relationship will allow us to focus on executing our strategic business plan to acquire and reposition additional properties as well as maximize the potential of existing assets. The new holding company structure will allow us greater access to debt and equity capital markets,” said Steve Maun, President of RED Development. “Importantly, this new level of partnership demonstrates continued confidence in both our projects and our business model.”

The newly-formed, RED Consolidated Holdings LLC, will continue to operate as a private company with a new emphasis on its stabilized retail and mixed-use projects and acquisition where value can be created using RED’s extensive expertise in repositioning properties. The new venture has acquired three new assets since forming: Woodbury Lakes, Beach Village and Aspen Place as part of this new strategy.

Mavdog
Mavdog

Not so fast there....

First, the project that is the subject of this article is NOT the public/private development known to us all as the AAC. The AAC was provided $137 Million in public money, the Victory development around the AAC did not receive any public money. The AAC has been a huge success, has more than returned the public investment back to the community, and has already paid off the bonds issued to provide the public money given to it.

Second, your comments of "failed development by Cowboys Stadium and The Ballpark" is not accurate. The projects that are there, and they were there before the stadiums were built btw, have benefited, and have allowed the City of Arlington to pay off the bonds years before they were due. These bonds were retired by the City's increased reciepts of sales tax revenues that were generated by the visitors to these facilities spending their money. And there hasn't been any "failed development" by The Ballpark, as Hicks was never able to get the projects going, there is just land still there waiting for development.

The money invested in the AAC has provided a good ROI for our community.

NotTheSuburbs
NotTheSuburbs

Ask the people in Seattle what happens if you don't use public dollars to fund a stadium.  Someone else will.

If you're a world class city, you need major sports teams and the economic reality is that you need to pay for them.  I guess some people would have preferred Victory not be built but I personally think it's better than the lead tainted electric substation that it replaced.

Sybils_Beaver
Sybils_Beaver

well the retail is turning into a radio HQ and studio, and another spot is going ot be some FanCave or what not where RmehAGE will broadcast.  The place has been a death hole for anything retail or restaurant.

Rooster
Rooster

But the question is could you have gotten a better ROI investing in something else?  Just because you were able to pay the bonds off doesn't mean you wouldn't have been better off placing your dollars elsewhere.

Also, spin it any way you want, but the development promised around these arenas is what sold the projects to voters.  You can't seperate the two.

Rooster
Rooster

LA is as world class as it gets.  They have no football team, and could give two shits about having one.  The only organization on the planet that cares about having a pro sports team in LA is the NFL....because they're missing out on a major media market and the associated $$.

The question for any city isn't "Does a sports team generate revenue for the city".  We all know it does.  The question is, "Where are civic dollars best spent to provide a city the most bang for their buck?"

For example, are you better off building a sports arena, or are you better off investing $135 million so TI can build a plant that will provide 1000 well paying jobs ($135 million that incidentally, TI wanted earmarked for UTD)?

Just like any investment, you put your money where it provides the highest return.

Ayn Rand
Ayn Rand

Pro sports does not make a 'world class city', which is a useless phrase.

Seattle is fine without a pro basketball team.  Two NFL teams left Los Angeles in the same year, and that had no impact on that city.  Houston lost the Oilers, and now has the Texans. Anybody notice a difference, one way or another?

If there is money to be made, then pro sports will open the venue.  Public subsidy of pro sports is not the role of government and never does it 'pay for itself' with greater development. 

Pro sports is the toy department.  People can pay for their own toys, instead of forcing taxpayers to subsidize them.

Mavdog
Mavdog

Public money is public money Rooster, it matters not which public trough it was taken from.

Most important, your question "are you better off building a sports arena, or are you better off investing $135 million so TI can build a plant" has been answered, and the answer is we have both. The investment in the AAC had no affect on investing $ with TI. The area benefits from the AAC, and there is a benefit from the TI/UTD investment.

There is a major difference in the tax incentives that the AAC was provided and the TI chip plant was provided. The AAC  concessions were in the form of a TIF, which directs tax monies that are owed in the future to repay a developer the costs of public improvements, not the costs of the building itself. The TI incentives were a substantial reduction in the property taxes owed for the initial 15 years of the building's use. Property tax abatements are tough to pencil, especially for the school district who must forego the income while at the same time spending money for the schools the worker's kids attend.

Didn't know ytou were a chinese fighter....http://www.americanairlinescenter.com...

BTW that TI chip plant has only hired 250 people so far....

Rooster
Rooster

Actually, the $137M of the $200M was state money invested in the University of Texas at Dallas.  DCCCD could not use the same investment?  The remaining was City of Richardson tax breaks.

The City of Richardson gave TI no cash up front.  There was no bond issue.  There was simply tax breaks......which Victory also received in addtion to the bond issue.

If AAC employs 6,000 people, then I'm a Chinese fighter pilot.  The place only holds 17,000.  I guess when full, 1/3 of the people in the building are actually employees instead of paying customers?  Balderdash.

If your 6,000 job number includes all jobs in the surrounding area created by the devolopment, then the estimate for the TI plant was 75,000.

Last, but not least, do you have any idea the difference in annual salary/benefits pocketed between a full-time employee building chips in a $3 billion TI plant, and a part-time employee pouring beer at AAC?

If it's your city investing in jobs, which one would you rather have?

Mavdog
Mavdog

What example? Oh, the assertion of better ROI on investing in a chip plant?

Newsflash to Rooster: there is a TI plant and it received 150% of what the AAC was given, yep $200 Million on public money. For $200 million the TI chip plant will employ 1000 people if fully operational, which is definitely uncertain as the chips being fabricated in Richardson are primarily used in cell phones. Take a look at last quarters TI filing and you'll see that their chip sales for cell phone were down by about 30%.

So for $200 million about 1000 jobs could be created. For the $137 Million that was loaned to the AAC (the money has been repaid) an estimated 6000 jobs exist.

As for the election, if you believe that a single issue was the reason it passed, you don't understand politics. Which is not surprising having read how you talk in absolutes.

Just stop rooster, your lack of intelligence is insulting.

Rooster
Rooster

I already stated an example of a better investment.  Read above. 

AAC passed by 1,000 votes.  You're saying none of the people who voted were duped by the promise of the development?

Please.  Just stop.  You're insulting everyone's intelligence.

Mavdog
Mavdog

Your question on what "could...of gotten a better ROI" begs other questions...one, what would that investment be that would have a better return, and two, what project was not invested in that the AAC took the $ from?

From what I can tell there weren't other projects that didn't get money because of the AAC, and it's complete conjecture as to if there were projects that could have been better investments than the AAC. The fact of the matter is the AAC has produced a positive return to the community, is an asset to the community, and will produce benefits to the community for years to come.

It's your opinion only that the idea of Victory was the reason the election won. Many people I know voted yes because they wanted a shiny new home for the Mavs. Others just liked the idea that a pollluted site of a former power plant would get cleaned up.

Yes, we can seperate the two as one, the AAC, received public $ and the second, Victory, did not.

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