When the City Council approved special incentives last December to encourage residential development in the State-Thomas area, it launched the first city effort to foster inner-city housing since ground was broken for Bryan Place fifteen years ago. But property owners and potential developers greeted the move with a collective yawn. Tom Lardner, president of Lehndorff USA, the largest landowner in the State-Thomas district, says part of the reason is that ?’the development community has not seen a central business district housing project that has succeeded on its own.” The city subsidized Bryan Place by promising to buy back any unsold lots.
The problem with the city’s incentive package, dubbed the “State-Thomas Tax Increment Financing District” plan, developers say, is that it offers too little. The plan calls for freezing tax values for twelve years and applying future tax income over and above those values directly to the area in the form of street improvements, landscaping, etc. But apparently that carrot doesn’t outweigh the risks involved in building condos and apartments in what essentially is an unproven market. “If the city is serious.” says Lardner, “it will offer some public funds to match with private funds” to build the first high-risk residential developments.
But John Crawford, project manager of the State-Thomas district for the city, defends the plan, insisting that the city is paying much of the pre-develop-ment costs-and after that, it’s up to the market, he says. “What will probably happen,” Crawford says, “is that one of the landowners will make someone a pretty good deal on the first couple of blocks so they can show by resulting sales that there’s a real market acceptance of this type housing. It’s a step-by-step process that sort of snowballs.”
Critics of the city efforts, however, point to San Diego, where tax increment districts have been in effect for a decade. For a similar project, San Diego floated bonds and acquired a federal grant so it would have more than $20 million to improve the property up front, and even to subsidize land costs, in an effort to attract development. San Diego city planner Max Schmidt says he “can’t imagine” going about it the way Dallas plans to. “San Diego has done an about-face.” Schmidt says. “I don’t know if we could have done it” without the bond money up front.
And why was bond money never an option for Dallas? Ac-cording to attorney Susan Mead, who worked for Lehn-dorff while the tax increment plan was under discussion, a pay-as-you-go plan was considered more palatable to the conservative politicians of Dallas. “It accomplishes the same thing as the San Diego bond plan,” Mead insists. “It just takes longer.”
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