DALLAS-With a $20-million penalty clause hanging overhead, the Dallas City Council has cleared the first hurdle for a $51-million bond sale to fund a $250-million, mixed-use redevelopment of long-dormant space in the CBD. Yesterday's action keeps the city on track for its first payment to developer Forest City Enterprises Inc.
Council's 14 to 1 vote, with councilman Don Hill dissenting, directs the staff to begin preparations for the sale, which will need to take place in March to meet the April 1 deadline for Cleveland-based Forest City's first funding for the redevelopment of three Main Street blocks. "It's on the schedule that everyone agreed to," James Truitt, Forest City's new vice president of Texas, tells GlobeSt.com. The well-known residential developer ended a 14-year run with Irving-based JPI, most recently as its executive vice president, to take the reins for Forest City's residential developments in Texas.
Truitt says Forest City will complete the asbestos abatement and interior demolition of the 31-story, 1.1-million-sf Mercantile Bank Building at 1704 Main St. by summer. The structure will be retooled into 400,000 sf of residential space in 225 units, 30,000 sf of retail and 400 parking spaces. Also this summer, the developer will begin razing the 14-story Securities Building, 22-story Mercantile Dallas Building and five-story Securities Annex to make way for a 16-story, 160-unit apartment tower. "The new building will come out of the ground by the end of the year," Truitt says. The first deliveries begin in late 2007 and continue through spring 2008.
The Mercantile block is projected to cost $110 million. Another $140 million is earmarked for the redevelopment of a neighboring one million sf of dark office space."We're committed. We're moving forward," Truitt says. "We're finalizing designs for the Dallas Building and Mercantile Building. Everything's going well."
Yesterday's council action met with opposition from a camp concerned that the Downtown Connection Tax Increment Financing district will cause a fiscal drought for other in-town projects. In all, council has approved $70 million in public incentives with a 30-year shelf life for the Merc's redevelopment. Proponents, though, were equally concerned about the kind of message that would be sent nationwide if Dallas reneged or regrouped on a signed development agreement with a force like Forest City.
"I think it's a necessary to get the ball rolling. The bonds are very secure," says Jack Gosnell, executive vice president for Dallas-based United Commercial Realty/ChainLinks, who got Forest City to look at the Merc project after four other developers failed in their bids. "This is a great day for Woodall Rodgers Park and the CBD."
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