STRATEGIC PRIORITY: Economic Development
AGENDA DATE: December 11, 2024
COUNCIL DISTRICT(S): 14
DEPARTMENT: Office of Economic Development
EXECUTIVE: Robin Bentley
______________________________________________________________________
SUBJECT
Title
Authorize an economic development incentive agreement and all other necessary documents with West End Lofts LP and/or its affiliates (“Developer”) to include: (1) a tax increment financing (“TIF”) subsidy in an amount not to exceed $28,275,676.00 ("TIF Subsidy") payable from current and future City Center TIF District Funds; and (2) a Chapter 380 Economic Development Grant in an amount not to exceed $20,724,324.00 (“Grant”), in consideration of the West End Lofts Project, a mixed-use, mixed-income, and transit-oriented development project proposed on real property currently addressed as 805 Elm Street, 711 Elm Street, and 211 North Austin Street, within and adjacent to Tax Increment Reinvestment Zone Number Five (City Center TIF District), in accordance with the Economic Development Incentive Policy - Total not to exceed $49,000,000.00 - Financing: City Center TIF District Fund ($28,275,676.00) (subject to current and annual appropriations from tax increments), Public/Private Partnership Fund ($7,357,605.00), Economic Development (G) Fund (2024 General Obligation Bond Fund) ($7,724,324.00) (subject to current and annual appropriations), and Economic Development and Housing Development Program Fund (2012 General Obligation Bond Fund) ($5,642,395.00)
Body
BACKGROUND
In February 2024, West End Lofts LP submitted an incentive application to the Office of Economic Development for gap funding to support the proposed West End Lofts Project (“Project”), a mixed-use, mixed-income, and transit-oriented development to be located on approximately 1.1 acres in the West End Historic District and within a High Opportunity Area.
On January 22, 2024, the Housing and Homelessness Solutions Committee was briefed by memorandum regarding the proposed Project and the Developer’s request for a Resolution of Support related to its application to Texas Department of Housing and Community Affairs (TDHCA) for competitive 9% Low Income Housing Tax Credits (housing tax credits or LIHTC) in the 2024 application cycle, and, on February 14, 2024, City Council authorized a Resolution of Support for the Developer related to its TDHCA application by Resolution No. 24-0255. On July 25, 2024, the TDHCA Board awarded housing tax credits to the proposed Project (3rd highest scoring/top-ranked application out of 15 total applications in Region 3/Urban).
The proposed Project site is comprised of three properties currently addressed as 805 Elm Street, 711 Elm Street and 211 North Austin Street totaling approximately 1.1 acres and is further described below (collectively “Property”):
1. 805 Elm Street: historic 5-story building constructed in 1904 in the Dallas West End Historic District and the National Register of Historic Places West End Historic District, and a surface parking lot (currently on 0.66 acre parcel);
2. 711 Elm Street: historic 5-story 140 space parking garage constructed in 1925 in the Dallas West End Historic District and the National Register of Historic Places West End Historic District (currently on 0.23 acre parcel); and
3. 211 North Austin: currently unimproved 0.23 acre parcel located between the DART West End Station and 711 Elm Street.
The Project will consist of the following:
1. rehabilitation and redevelopment of the historic 5-story building at 805 Elm Street in compliance with the Secretary of the Interior’s Standards for Rehabilitation & Illustrated Guidelines for Rehabilitating Historic Buildings and a new, ground-up construction of a 6-story building to create:
a. 154 mixed-income residential units (approximately 205,000 square feet) that will include 56 efficiencies, 25 one-bedroom, 69 two-bedroom, and 4 three-bedroom units. Of the 154 residential units, 63 units (41%) will be income-restricted and leased solely to those household earning at or below 30%, 60%, 70%, and 80% AMI. Pursuant to the Land Use Restriction Agreement placed on the Property in accordance with LIHTC requirements, of the 154 residential units, the 63 units will be set aside as affordable units as follows:
• 23 units will be set aside for household earning a maximum of 30% AMI,
• 23 units will be set aside for households earning a maximum of 60% AMI,
• 4 units will be set aside for households earning a maximum of 70% AMI, and
• 13 units will be set aside for households earning a maximum of 80% AMI.
Ninety-one units (59%) will not be income-restricted,
b. tenant amenities (approximately 40,000 square feet), including pool, pavilion, and recreational and social activity spaces, and
c. ground floor commercial space (approximately 22,215 gross square feet; 16,661 net rentable square feet);
2. rehabilitation of the garage at 711 Elm Street to provide approximately 140 parking spaces for the residential use and approximately 4,247 gross square feet of ground floor commercial space (approximately 3,185 net rentable square feet); and
3. construction of a 25,751 square foot publicly accessible plaza and promenade on 211 North Austin Street abutting the DART West End Station and spanning to Elm Street between the 805 Elm Street residential building and the 711 Elm Street parking garage.
The total Project cost is estimated at $103,224,085.00 and comprised of the following components: (i) site acquisition cost of $24,000,000.00, (ii) hard costs of approximately $49,377,420.00, and (iii) professional fees and soft costs of approximately $29,846,665.00, including reserves and developer fee.
The 2024 taxable value of the site is $4,721,320.00 according to Dallas Central Appraisal District (DCAD). The current owner of the 805 Elm Street property is Antioch Church (tax-exempt). Upon completion of the Project, the entire Property will be taxable, and the taxable value is projected to be approximately $14,300,000.00 (using DCAD methodology for LIHTC projects).
The Project was reviewed by the City’s Urban Design Peer Review Panel (“Panel”) on June 28, 2024, and the Developer has agreed to accommodate the Panel’s recommendations.
In consultation with the City’s independent outside underwriter, staff reviewed the Developer’s incentive application and structured the proposed incentive as gap funding to make the Project financially feasible. On November 13, 2024, Developer accepted the proposed incentive, and the associated terms and conditions were accepted in an executed Letter of Intent. The Resolution accompanying this agenda item contains the detailed terms and conditions of the proposed incentive agreement.
ESTIMATED SCHEDULE OF PROJECT
Begin Construction June 2025
Complete Construction March 2027
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On June 26, 1996, the City Council authorized the establishment of Tax Increment Financing Reinvestment Zone Number Five (“City Center TIF District”) by Ordinance No. 22802.
On February 12, 1997, the City Council authorized the Project Plan and Reinvestment Zone Financing Plan (“TIF District Plan”) for the City Center TIF District by Ordinance No. 23034.
On December 14, 2022, the City Council authorized amendments to the City Center TIF District Plan which, among other changes, shifted and modified the set-asides established within the City Center TIF District budget by Ordinance No. 32360.
On January 25, 2023, the City Council authorized a new Economic Development Incentive Policy (“Incentive Policy”) effective for the period January 1, 2023 through December 31, 2024 by Resolution No. 23-0220.
The Housing and Homelessness Solutions Committee was briefed by memorandum regarding the Project and the Developer’s request for a Resolution of Support related to its application to TDHCA for competitive 9% housing tax credits on January 22, 2024.
On February 14, 2024, the City Council authorized a Resolution of Support for Developer, related to its application to the TDHCA for competitive 9% LIHTC in the 2024 application cycle for the Project by Resolution No. 24-0255.
On November 19, 2024, the City Center TIF District Board of Directors reviewed and unanimously recommended approval of the proposed TIF Subsidy and associated agreement to support the Project, subject to Developer making best efforts to provide a minimum of two square feet per residential unit for pet relief facilities.
The Economic Development Committee was briefed regarding this matter on December 2, 2024.
FISCAL INFORMATION
|
Fund |
FY 2025 |
FY 2026 |
Future Years |
|
City Center TIF District Fund |
$0.00 |
$0.00 |
$28,275,676.00 |
|
Public/Private Partnership Fund |
$0.00 |
$0.00 |
$7,357,605.00 |
|
Economic Development (G) Fund (2024 General Obligation Bond Fund) |
$0.00 |
$0.00 |
$7,724,324.00 |
|
Economic Development and Housing Development Program Fund (2012 General Obligation Bond Fund) |
$0.00 |
$0.00 |
$5,642,395.00 |
|
Total |
$0.00 |
$0.00 |
$49,000,000.00 |
OWNER/DEVELOPER
West End Lofts LP
Jessica Krochtengel, Member
MAP
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