On a wednesday in late June, dallas assistant city manager Ryan Evans walked the City Council and Mayor Laura Miller through an upcoming $3 million appropriation. The money was earmarked for Cityplace Company towards a tax increment finance district, or TIF, commitment for the proposed Fairfield at McKinney, a $100 million 20-story high-rise combining retail, office space, and luxury apartments, along with adjacent nine- and five-story towers. (A TIF is designed to help offset developers’ infrastructure improvements in an area considered higher risk by paying them back, later, the cost of their investment in infrastructure.)
The mercurial mayor’s wheels were turning. It wasn’t vindictive and it wasn’t with outwardly manifested malice. She’s had nothing bad to say about Cityplace Company or its president, Neal Sleeper. But she didn’t want to spend that money. No way. The Cityplace TIF covers the 160 acres that include West Village (though West Village received no direct financial assistance from the TIF), the Mondrian high-rise, Gables Turtle Creek, and no end of other condos and residences that have blossomed in that tony garden. In her view, Cityplace had been successful enough, and they didn’t need the money or the TIF anymore—commitments be damned.
Sleeper couldn’t have been more surprised if the mayor had reached up and pulled off her face to reveal that she was actually a robot. For the past decade and a half he had been working to turn the Cityplace blight and poverty into nightlife and prosperity. To his mind, he was close to fulfilling those goals when along comes the lady in pearls, tugging at the rug under him. It could have put the kibosh on the whole Fairfield deal, and all those planned after it.
Fortunately for him, it wasn’t to be. A 14-1 vote a few weeks later, and Miller’s proposal went down in flames. The balance of the TIF—six years and about $13 million—appears safe for now. The mayor is not seeking reelection, and the Council included a resolution that in the future, the city should keep its commitments. A deal’s a deal.
It was the most unanticipated and unwanted lesson that could have been forced on him—something about not suffering fools, gladly or otherwise. The rise, fall, and rise again of Cityplace had already taught him plenty.
Lesson #1: Be Risky
Step back almost 20 years and much of the 60 acres now called Cityplace was a field of weeds and broken bottles. But Southland Corporation, fresh off a series of good years and optimistic the go-go ’80s would continue into the ’90s, bought the land and started construction on the $187 million Cityplace Center. The 42-story, Brazilian Royal Red Granite building was to be the company’s world headquarters, and the tallest building outside of the central business district. It was completed in January 1989, and plans for a matching twin tower across Central Expressway that would be connected by a sky bridge were put to paper.
And left on paper.
Not long after the topping out of Cityplace Center, Southland—and then the whole North Texas economy—went south. Southland had gone through a leverage buyout in 1987 and interest rates shot through the roof, leaving the company strapped.
“They were advised by their accountants that if they had something they could take a loss on, then before they went into bankruptcy they should do so to offset gain from the sale of Citgo Oil,” Sleeper says. Oak Creek Partners, Ltd., an investment group including both institutional investors and people like Robert Bass of Fort Worth, stepped in and bought the Cityplace land through Merrill Lynch at the end of 1990 for a fraction of what Southland paid—basically everything but the high-rise and some nearby apartments.
“I joined them and we formed Cityplace Company because it looked like a great deal to plan out something really important. Despite the times, we were ambitious. We wanted to build something that would change the city,” Sleeper says.
Lesson #2: Partner Well
It helps to have good backers, including and especially people named Bass. They understood from the get-go it would take time and money to make Cityplace work.
“Every year it was a question of going back to the partners and saying, ‘We need you to ante up again,’” Sleeper says. “That wasn’t easy.”
For planning, Cityplace retained the firm of Cooper, Robertson & Partners as the master plan architect. The firm had racked up stunning successes planning large urban infill areas including Battery Park City in New York. The overall plans were good, but how to attract retailers when the land cost basis was too high?
“While the land cost basis of the Cityplace development wasn’t low enough to meet the expectations of the large discount retailers, it was at least within striking distance. We knew if we had another $14 to $20 million of infrastructure cost covered, we could move forward,” Sleeper says.
That’s where the TIF came in. It may come as a surprise, but the City of Dallas was once—and can be still—an excellent business partner. The success of Cityplace over the past decade and a half is testament. The city entered a 20-year deal with Cityplace Company, and along with Dallas County, DISD, and the community college district pitching in, created a $45 million TIF. Cityplace, for its part, promised at the end of 20 years they would have developed 2,550 units of housing, 850,000 square feet of office space, and 485,000 square feet of retail space.
And build they did. Working with retail developers Henry S. Miller and Robert Bagwell, along with Phoenix Properties, they overcame the problem of clashing specialists and laid out the site plans in detail.
Lesson #3: Be Patient…
To kick off the retail—long before anything else got going—Cityplace started sweet-talking Target. All their research indicated it was the right store with the right image for what they wanted to build. Other retailers showed interest, but Cityplace passed. It took almost two years, but Target agreed to what was then its first inner-city location, opened in late 1993.
“You see it now, you think it’s a no-brainer, but most in retail said you can’t get people to go shopping on the east side of Central back then,” Sleeper says. “Target was the lynchpin of what was necessary to get more housing.”
With that and a movie theater added a little later, next came the big step up in the housing development. Plenty of multifamily developers wanted to talk to Cityplace—it was now the mid 1990s and a growing optimism about the economy was in the air. But almost all wanted to build either typical garden apartments or four-story stick structures—same old, same old. Cityplace Company and its partners, though, wanted more.
“As we built each project we thought what it would do to the land next to it, and we sought a quality level far beyond what was within our reach,” Sleeper says. Cityplace passed on the easy money and held out for quality, even if they had to build it themselves.
Cityplace had never built apartments, but they built entirely on spec in 1994. You can see them just on the west side of West Village, with their urban-style stoops and complex styling. The Gables bought the property up quickly, and $1-plus-per-square-foot rents were established for the first time in the area. Other multifamily deals, not to mention West Village, followed.
Lesson #4: … But Strike While the Iron is Hot
Since the opening and wild success of West Village, a slew of new apartments and the Borders bookstore followed. Deals started turning faster as outside developers accepted that the area had reached a critical momentum. Cityplace wasn’t having to hold out for quality—quality was competing for their land. The Mondrian high-rise was the first of many towers to come.
Architect sketches and site plans call for more, including the contested Fairfield on McKinney. Another 43-story tower to rival the original Cityplace Center is on the boards. The biggest hurdle, still, is office space. The demand for it is unproven, so they’re easing into it—dedicating just a few floors of building for office space.
Today, the Cityplace TIF’s tax base is seven times what it was in 1992. By 2012 when the TIF expires, it is projected to be 20 times. When they started, the area generated $1.3 million in annual revenues for all four taxing entities. At the current value, that number is $10.7 million. By the time the TIF expires, the 160 acres are expected to be generating $28-29 million in tax revenues a year.
“The city ought to feel good about what they did and their role as a partner in this deal,” Sleeper says. “We couldn’t have done this without them. That was the most disappointing thing about Mayor Miller’s idea to blow this thing up. You have a partnership working as well as this is, why would you want to do that? Why not live with your success and feel good about them and keep them working?”
Why not indeed. Even some politicians get it.
“These are public infrastructure improvements that we’re doing for the city, not gold-plating faucets,” says Councilmember Angela Hunt, whose District 14 includes Cityplace. “These public infrastructure improvements are projects that will be paid fully by the city in the future, or we can share the cost with DISD, the county, and the community college now. The developer took a chance on this area. To suddenly on a whim decide we’re going to end this is wrong. We would have been saying that they’ve have been too successful at increasing our tax base and improving the city. We should be thanking these developers, not breaking our commitments to them.”
