STRATEGIC PRIORITY: Growing
AGENDA DATE: May 14, 2025
COUNCIL DISTRICT(S): 5
DEPARTMENT: Office of Economic Development
EXECUTIVE: Robin Bentley
______________________________________________________________________
SUBJECT
Title
Authorize an economic development incentive agreement and all other necessary documents with Palladium Buckner Station, Ltd. and/or its affiliates (“Developer”) to include: (1) a Chapter 380 Economic Development Grant in an amount not to exceed $8,316,907.16 (“Grant”); and (2) a Chapter 380 Economic Development Loan in an amount not to exceed $6,183,092.84 (“Loan”), in consideration of the Palladium Buckner Station Project (“Project”), a mixed-income and transit-oriented development project proposed on real property currently addressed as 8008 Elam Road, Dallas, Texas 75217 in accordance with the Economic Development Incentive Policy - Total not to exceed $14,500,000.00 - Financing: Economic and Southern Area Transit-Oriented Development Funds (2006 General Obligation Bond Fund) ($1,583,815.53), ECO (I) Fund (2017 General Obligation Bond Fund) ($1,738,275.42), Economic Development (G) Fund (2024 General Obligation Bond Fund) ($4,994,816.21), and Public/Private Partnership Fund ($6,183,092.84) (subject to current and annual appropriations)
Body
BACKGROUND
In December 2021, Dallas Area Rapid Transit (DART) and the City executed a Memorandum of Understanding to give the City the ability to solicit transit oriented development (TOD) proposals for six DART-owned sites adjacent to DART light rail stations, including Buckner Station.
In September 2022, the City issued six Requests for Proposals (RFPs) to solicit TOD proposals (one RFP for each of the six DART-owned sites).
On June 14, 2023, by Resolution No. 23-0792, City Council authorized (1) selection of the recommended most advantageous proposal submitted by Palladium USA International, Inc for City Solicitation BVZ22-00020443 (Request for Proposals for Transit-Oriented Development of Property Owned by DART at the Buckner Station), most advantageous proposer of two, and (2) the City Manager or designee to execute an exclusive negotiation agreement, approved as to form by the City Attorney, with Palladium USA International, Inc. or an affiliate. On August 2, 2023, an Exclusive Negotiation Agreement was executed between the City and Developer by Resolution No. 23-0792.
On August 13, 2024, the Developer held a community outreach meeting at Pleasant Grove Branch Library (7310 Lake June Rd, Dallas, Texas 75217). On August 24, 2024, the Developer hosted a tour of the Palladium RedBird development for any interested community member.
On October 8, 2024, the Board of Directors of the Dallas Housing Finance Corporation (“DHFC”) considered and adopted an inducement resolution declaring intent to issue bonds, in an aggregate principal amount not to exceed $50,000,000, for a loan to Palladium Buckner Station, Ltd. to provide financing for the development of the Project; authorizing the filing of an application for allocation of private activity bonds with the Texas Bond Review Board (“TBRB”); and containing other related provisions.
On October 17, 2024, the Developer and DHFC submitted an application to the TBRB to secure a bond reservation for the Project in the Private Activity Bond Allocation Program lottery.
On November 13, 2024, by Ordinance Nos. 32917, 32918 and 32919, City Council authorized a zoning change pursuant to Case Z234-226 to allow the Project to be developed at 8008 Elam Road.
On November 13, 2024, the Developer and DHFC received a lottery number in the Private Activity Bond Allocation Program.
On December 10, 2024, the Developer held a community outreach meeting (in English and Spanish) at Pleasant Grove Branch Library (7310 Lake June Rd., Dallas, Texas 75217).
On January 28, 2025, the Developer and DHFC received a bond reservation from the TBRB (with DHFC as bond issuer).
On January 30, 2025, the Developer submitted application to the Texas Department of Housing and Community Affairs (“TDHCA”) for 4% Non-Competitive Low Income Housing Tax Credits (“LIHTC”) for the Project (“Application No. 25442”).
On February 25, 2025, the DART Board approved an Exclusive Option Agreement to Lease the Property to Developer (or its designated affiliate, including a housing finance corporation) for a period of no less than forty-five (45) years for the Project.
On February 26, 2025, the City Council held a public hearing to receive comments regarding Application No. 25442; and at the close of the public hearing, authorized a Resolution of No Objection, related to Application No. 25442, for the development of the Project by Resolution No. 25-0415.
On April 8, 2025, the Board of Directors of the DHFC reviewed and approved the terms of a Memorandum of Understanding for a partnership between the DHFC and the Developer to effectuate the Project.
Approximately nine months ago, the Developer submitted a development incentive application to the Office of Economic Development for gap funding to support the Palladium Buckner Station Project, a mixed-income and transit-oriented development to be located on approximately 5.8 acres at the DART Buckner Light Rail Station currently addressed as 8008 Elam Road (“Property”) within a High Opportunity Area.
The Project will consist of the following:
1. new ground-up construction of two 4-story buildings and one 2-story building to create:
a. 304 mixed-income residential units (approximately 294,425 gross square feet) that will include approximately 90 one-bedroom, 147 two-bedroom, and 67 three-bedroom units.
• Of the total number of units, 244 units (80%) will be set aside for households earning a maximum of 60% Area Median Income (“AMI”), and 60 units (20%) will not be income-restricted.
b. tenant amenities, including clubhouse, community room, fitness center, courtyard, swimming pool, outdoor grilling area, dog park, playground, and sport court.
2. new ground-up construction of two 3-level parking garages with approximately 180 parking spaces each and approximately 15 surface parking spaces (providing a total of approximately 375 parking spaces for residential use).
3. construction of a publicly accessible approximately 40-feet wide promenade, with pedestrian connection to the Buckner Light Rail Station and bike racks, from the corner of Elam Road and Buckner Boulevard.
4. wayfinding signage placed near the intersection of Kipling Drive and Buckner Boulevard to promote Kleberg Trail connectivity.
The total Project cost is estimated at $107,110,742.00 and is comprised of the following components: (i) acquisition of the Property in the amount of $3,098,494.00; (ii) hard construction costs of approximately $69,539,369.00; and (iii) professional fees and soft costs of approximately $34,472,879.00 (including reserves and developer fee).
The Project was reviewed by the City’s Urban Design Peer Review Panel (“Panel”) on March 29, 2024, and the Developer has agreed to accommodate the Panel’s recommendations.
In consultation with the City’s independent outside underwriter, Office of Economic Development staff reviewed the Developer's development incentive application and structured the proposed incentive as gap funding to make the Project financially feasible. In late April, Staff and Developer reached agreement on the proposed development incentive in the form of a Chapter 380 Grant and Loan Agreement (“Agreement”) in a total amount not to exceed $14,500,000.00.
The Loan shall not exceed $6,183,092.84 and shall be sourced from the City’s Public/Private Partnership Fund.
The Grant shall not exceed $8,316,907.16 and shall be sourced as follows:
• An amount not to exceed $1,583,815.53 from the City’s 2006 General Obligation Bond Fund (Proposition 8: Economic Development/Housing), and
• An amount not to exceed $1,738,275.42 from the City’s 2017 General Obligation Bond Fund (Proposition I: Economic Development/Housing), and
• An amount not to exceed $4,994,816.21 from the City’s 2024 General Obligation Bond Fund (Proposition G: Economic Development)
Up to the first $3,098,494.00 of the Grant shall be disbursed at closing specifically to facilitate Developer’s acquisition of the Property
After issuance of a building permit and commencement of construction, Developer may draw down (in up to 3 draw requests) the remaining amount of the Loan and Grant funds, less 5% retainage, on a reimbursable basis, for capitalized costs related to construction of Project, including soft costs, but excluding developer fee. The 5% retainage shall be payable upon Substantial Completion and shall not count as one of the three draw requests.
The Loan’s interest rate shall be 3% simple non-compounding annual interest.
The term of the Grant shall be 15 years to comply with the 15-year City Affordability Period, and the term of the Loan shall be coterminous with the senior lender.
The Loan shall be a deferred developer loan fully repayable as set forth below:
• Principal and interest payments shall be deferred until the deferred developer fee is paid in its entirety. At such time, repayment of the City's Loan with accrued, simple non-compounding interest shall commence based on the lower of: (1) 30% of surplus cash flow, or (2) an amortization schedule that is coterminous with the senior lender (40 years).
• The first Loan payment shall be due within 30 days after Regions Bank and the senior lender have approved the cash flow distribution necessary to make the required Loan payment. Loan payments will thereafter be due annually on the anniversary date of the first Loan payment within 30 days after Regions Bank and the senior lender have approved the cash flow distribution necessary to make such required Loan payment. All unpaid principal and interest will be due on the final payment date.
• After repayment of the Loan, all deed restrictions and deeds of trust will continue to secure the Developer's performance of the requirements described in the Agreement until termination of the 15-year City Affordability Period.
• The Loan may be prepaid, in whole or in part, at any time and from time to time, without penalty.
• The remaining balance of the Loan (principal and interest) is immediately due and payable upon sale, refinancing, or transfer of the Project or upon maturity.
• Developer and its construction contractor shall name the City as Obligee/Co-Obligee in the payment and performance bonds Developer and its construction contractor must furnish for the Project.
The Chapter 380 Grant and Loan Agreement, a promissory note for the Loan, deeds of trust, and deed restrictions shall secure payment and performance. Deed restrictions shall be senior to all other project financing, subject to bond issuer restrictions and HUD restrictions, if applicable, and shall be recorded to secure the 15-year City Affordability Period, regardless of any prepayment of the Loan. The City’s Grant and Loan shall be subordinate to the construction and/or permanent financing for the Project only. In order to secure payment and performance of the City’s Grant and Loan, one or more deeds of trust shall be filed against the Property, including the leasehold and all improvements. The City’s lien or liens may only be subordinate to a financial institution’s superior lien or a loan in a greater amount. In the event, subordination agreements are required, the City agrees to provide in a form acceptable to the City and agrees not to unreasonably withhold them.
The Resolution accompanying this agenda item contains the detailed terms and conditions of the proposed Chapter 380 Grant and Loan Agreement.
ESTIMATED SCHEDULE OF PROJECT
Begin Construction July 2025
Complete Construction December 2027
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On June 14, 2023, the City Council authorized (1) selection of the recommended most advantageous proposal submitted by Developer for City Solicitation BVZ22-00020443 (Request for Proposals for Transit-Oriented Development of Property Owned by Dallas Area Rapid Transit at the Buckner Station), most advantageous proposer of 2, and (2) execution of an exclusive negotiation agreement with Developer by Resolution No. 23-0792,
On October 8, 2024, the Board of Directors of the DHFC considered and adopted an inducement resolution declaring intent to issue bonds, in an aggregate principal amount not to exceed $50,000,000, for a loan to Palladium Buckner Station, Ltd. to provide financing for the development Project and authorizing the filing of an application for allocation of private activity bonds with the TBRB.
On November 13, 2024, by Ordinance Nos. 32917, 32918, and 32919, City Council authorized a zoning change pursuant to Case Z234-226 to allow the Project to be developed at 8008 Elam Road.
The Housing and Homelessness Solutions Committee was briefed by memorandum regarding this matter on January 28, 2025. <https://cityofdallas.legistar.com/View.ashx?M=F&ID=13698061&GUID=B5BB1301-54AB-473F-AAA8-289B5FE74186>
On February 26, 2025, the City Council held a public hearing to receive comments regarding Application No. 25442; and at the close of the public hearing, authorized a Resolution of No Objection, related to Application No. 25442, for the development of the Project by Resolution No. 25-0415.
On April 8, 2025, the Board of Directors of the DHFC reviewed and approved the terms of a Memorandum of Understanding for a partnership between the DHFC and the Developer to effectuate the Project.
The Economic Development Committee was briefed by memorandum regarding this matter on May 5, 2025. <https://cityofdallas.legistar.com/View.ashx?M=F&ID=14145152&GUID=6DD991E0-6B11-4800-A3FC-E574B3EF9548>
FISCAL INFORMATION
|
Fund |
FY 2025 |
FY 2026 |
Future Years |
|
Economic and Southern Area Transit-Oriented Development Funds (2006 General Obligation Bond Fund) |
$1,583,815.53 |
$ 0.00 |
$ 0.00 |
|
ECO (I) Fund (2017 General Obligation Bond Fund) |
$1,738,275.42 |
$ 0.00 |
$ 0.00 |
|
Economic Development (G) Fund (2024 General Obligation Bond Fund) |
$4,578,971.05 |
$ 0.00 |
$415,845.16 |
|
Public/Private Partnership Fund |
$ 0.00 |
$5,873,937.84 |
$309,155.00 |
|
Total |
$7,901,062.00 |
$5,873,937.84 |
$725,000.16 |
DEVELOPER/EXECUTIVE
Palladium Buckner Station, Ltd.
Thomas E. Huth, President and CEO
MAP
Attached