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DALLAS-The dreamers and doers of Downtown Dallas last night toasted the construction start of a $250-million, mixed-use project to pump new life into nearly two million sf of center city space.

“Tonight we celebrate the beginning not the end of a deal,” David Levey, senior vice president with Cleveland-based Forest City Enterprises Inc., told the gathering atop the roof of a CBD high-rise overlooking blocks of empty buildings. To mark the occasion, he and Dallas Mayor Laura Miller turned on lights to the Mercantile National Bank Building’s four-sided tower clock, ending 17 years of darkness for the landmark property and launching a new holiday light-up tradition for the city.

“It’s the culmination of 24 months of work between us and the city and bringing together a complicated entitlement process,” Levey told GlobeSt.com. In all, local, county and state officials bundled $70 million in abatements and a Tax Increment Financing district to guarantee the 1704 Main St. project would become a reality.

Forest City will retool the 1.1-million-sf Mercantile Bank Building into 225 rental units, 30,000 sf of street retail and 400 parking spaces. The 31-story building will total 400,000 sf after the retrofit. The plan also calls for the 14-story Securities Building, 22-story Mercantile Dallas Building and five-story Securities Annex to be razed and the site rebuilt with a 15-story, 150-apartment structure.

Forest City’s project area includes another one million sf of neighboring space, some dark for years and others just emptied last year when TXU Gas was merged into Atmos Energy, its headquarters relocated to North Dallas and four buildings donated to the city’s redevelopment property till. The plan is to put 160 condos into the Continental Building while uses for the Atmos complex are still under discussion. Levey says the Continental will have about 200,000 sf and the Atmos complex about 300,000 sf when the project is completed in spring 2008. According to Levey, about $110 million will be spent on the Merc redevelopment and $140 million on the neighboring buildings.

Last night’s gathering included state representative Will Ford Hartnett, whose family’s law firm was the last tenant to leave the Merc in 1992, and Jack Gosnell, executive vice president for Dallas-based United Commercial Realty/ChainLinks, the broker who convinced Forest City to look at the project after four other developers failed to make deals work.

“Forest City taught the city a lot. We really don’t know the mechanics like they do for finding entitlements and fast-tracking development,” Gosnell said. “The other thing they brought to the table was a long-term patient investment. I just did a lot of watching and praying. That’s what my job was.”

BGO Architects of Dallas designed the redevelopment project. Hensel Phelps Construction Co., also from Dallas, is the general contractor.

Earlier in the day, Levey and Miller unveiled plans to save at least part of the historic mosaic artwork in the 63-year-old Merc, built as the bank’s headquarters by founder and former mayor R.L. Thornton. The 523-foot tower, once the tallest structure west of the Mississippi River, is architecturally significant because it was the only skyscraper completed during World War II.

The Merc’s groundbreaking is the latest milestone for monumental plans either started or forged this year for the CBD revitalization. Last week, work began on the first of three Santiago Calatrava bridges and officials 10 months ago announced a $45-million plan to build a deck over the Woodall Rodgers freeway to connect Downtown and Uptown, opening the door for 6.1 million sf of additional center city development.

“We’re about to get a lot of people back on the streets,” Miller told last night’s crowd atop the Davis Building at 1309 Main St. “This is the most important bowling pin to fall in Downtown Dallas.”

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