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HOUSING The Biggest Piece of the Puzzle

By D Magazine |

WHY ARE APARTMENTS in Uptown and Deep Ellum leased out as quickly as they’re built, and at good rates? Why does the “Pitches Building downtown-under construction- already have a waiting list? We put the question to younger members of our own staff, and received in return a quizzical look. Hadn’t we seen “Friends”? For that matter, hadn’t we seen “Seinfeld”? Hello…

The urban lifestyle is cool, and young Dallas is going for it in a big way. One developer has estimated that 30 percent of Uptown residents are “reverse commuters,” traveling daily against the flow to jobs in Richardson and Las Colinas. They don’t want grass and a lawnmower; they want cappuccino at 2 a.m. Many of them are trying to recapture in Dallas the urban lifestyle they experienced in older cities. As many as 40 percent of Uptown residents have moved here recently, many from the East Coast. What is “unnatural” in Dallas is natural to them. And in the process, they’re helping to reverse decades of flight to the suburbs.

According to a 1996 city of Dallas study, while Dallas’ population grew by 19.2 percent from 1970 to 1990, the population intown, defined as downtown and die one-mile area surrounding it, declined by 38 percent during die same period. But since 1990, die study shows a new trend is at work: Residents are moving from the suburbs to the downtown area-74.3 percent of the current intown residents surveyed previously lived north of Northwest Highway or outside the city of Dallas.

A decade from now, intown housing developer Robert Shaw believes, 50,000 apartments and condominiums will support a thriving community in and around downtown. Today there are approximately 10,000 units downtown if you count the growing neighborhoods that circle the core of the city from Uptown to Deep Ellum to The Cedars and back. Shaw’s Columbus Properties alone has 2,400 units existing or under construction in the Uptown neighborhood along McKinney Avenue, and like other developers in the area? he has a healthy waiting list.

“The more people live downtown, the better it will be,” Shaw says. “There’ll be more retail, more interesting places to go. It builds on itself, and we end up with a diverse, exciting place where people can move about in their cars or on foot and be near work and near exciting things to do. 1 believe that is going to happen.”

Though he’s developed more intown housing than anyone else in Dallas, Shaw is a relative newcomer to the tevivalist soapbox. Pioneers like Bennett Millet and George Reeves have been converting old buildings to interesting residential spaces for 15 years, adding to the intown housing inventory in a slow, steady trickle, Entrepreneur Jeff Swaney, who also develops residential spaces in Deep Ellum and is perhaps best known for opening Club Clearview there in 1985, says it’s guys like Miller and Reeves who have been quietly proving the market for years for bigger developers like JPI Texas Development, whose 480-unit Jefferson at Gaston Yard is already 50 percent leased. The $30-million project at the southeast corner of Good-Latimer Expressway and Gaston Avenue will be complete in January.

Success for Uptown eventually came in the form of tax increment financing and zoning changes that allowed a layering of uses, including higher density residential. Working with the Central Dallas Association and area property owners, the city of Dallas created the State-Thomas Tax Increment Finance (TIF) district in 1989 to pay for public improvements in the area from the incremental taxes generated by any new development. Zoning attorney Susan Mead, now chair of the CDA and then a member of the CDA’s Housing Committee, was the primary architect of the plan. The city also provided the TIF with an initial $2.1 million seed loan for basic public improvements in the area. On the heels of the State-Thomas TIF was die Ciryplace TIF providing for similar investment in that northeastern sector of the neighborhood. Now a downtown TIF is on track to follow in those footsteps.

The first major Uptown project was the Meridian, a 133-unit luxury apartment project at State and Allen streets in State-Thomas. Joint venture financing for the project was provided by principals of The Lehndorf Group and a Japanese firm, Sumicon. The Meridian was completed in 1991 and has been 100 percent occupied ever since.

To continue to strengthen Uptown’s potential for housing, Tom Lardner (CEO of the L&B Group, a pension fund advisor and investment company), Robert Shaw and a consortium of property-owners in the area worked with the city to found the Uptown Public Improvement District (PID). The Uptown PID, officially created by the Dallas City Council in June 1993, is another way for tax money to be committed directly to the neighborhood. The PID allows the city to levy special assessments against property in the district and then turn over those proceeds to a nonprofit management entity to spend on special improvements such as landscaping, lighting and other services specific to the neighborhood.

With housing a hit in Uptown, Dallas officials are concentrating their efforts on the city’s central core, In May 1993, the City Council passed an Intown Housing Policy aimed at stimulating private development of about 6,000 housing units in and around the Central Business District. The key to the city policy is special financing through the U.S. Department of Housing and Urban Development (HUD), called the Section 108 loan guarantee program. The city borrowed $25 million from HUD to loan to developers of intown housing.

The loan program was announced in the spring of 1993, and the city got 10 responses. Eight of chose, says Cheryl Peterman, the city’s director of planning and development, were viable projects, and four of the original applicants are still viable after an arduous, three-year financing process. Two are under construction now: Majestic Lofts, which is Graham Greene, Jack McJunkin and Dan Boeckman’s Titche’s Building project at 1901 Main St.; and Pan American Capital Corporation’s Deep Ellum Lofts, encompassing the 3300 and 3400 blocks of Main Street along with 3311 Elm and 3401 Commerce. Deep Ellum Lofts is expected to be complete this fall and Majestic Lofts ready for occupation in the spring.

As D Magazine went to press, Peterman said the city was making progress on the last two of the final four. Cliff Booths Santa Fe II project at 1122 Jackson was expected to close “pretty soon,” and there was “some movement” on Hall Financial Groups Kirby Building project at 1509 Main St., Peterman said. Hall, however, has grown somewhat skeptical after all these years. In July, busy on a redesign for the Kirby Building project, he said that although he remains committed to the project, as far as impending loan closure and construction goes, he would “believe it when he saw it.”

The real deal-breaker, say Hall and some other downtown enthusiasts, could be parking. DART rail or no, this is still the kingdom of the car. Titche’s has underground parking-one reason it was first out of the box. But Hall’s Kirby Building project is stymied in part because of parking deficits; same with the Magnolia Building. Ironically, some worthy goals war against others: Pegasus Plaza, while a fine idea, took away a viable site for downtown parking. Providing adequate parking to support all the downtown housing being discussed could cost in the neighborhood of $15 million to $20 million. Developer Ken Good, for one, thinks developers ought to get together and build their own parking garage.

If problems like parking can be overcome, Hall does think downtown housing is viable. He is seriously considering a luxury high-rise for property Hall Financial Group owns in the Arts District. If that project happens, it’s big news for the CBD and the Ans District, where there has been no significant new construction since the real estate crash of the ’80s and no new high-rise residential construction since the Manor House was built in the ’60s.

For all the city’s good intentions, government can only do so much, The real news comes when private investors take the plunge into downtown housing-and they have. A Hong Kong consortium in June announced plans to convert the old Mercantile Securities building on Commerce into 140 apartments and a health club. A Toronto-based developer in July announced plans to turn the six-story warehouse at Elm and Record into downtowns first condominiums. The same month, Ken Good announced his planned conversion of the former Masonic Temple on Main Street into artists’ lofts and gallery space. A private investor group has bought the mammoth old Sears store on South Lamar, eyeing lofts, apartments and a possible hotel.

“Markers turn on a dime,” says broker Jerry Fults, “and this market just turned.”

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