Imagine if someone walked up to you and said:
“I want to give you $100 million to transform our neighborhood, but you have to invest the money so it generates enough cash flow to pay me back.”
That’s essentially the question we posed to Patrick Kennedy, an urban designer with RTKL, who has worked on the Mockingbird Station, State-Thomas and DeSoto Town Center developments.
But this isn’t just a money-dropping-from-the-sky scenario plucked from thin air.
Instead, this is the basic premise of revenue bonds, a term you may have heard recently in conjunction with the proposed convention center hotel, which the Dallas city council wants to build using $500 million in taxpayer-guaranteed money.
It’s not the norm for a government entity to get into the commercial real estate business — in a capitalist society, that’s usually left up to those in the private sector. But in this case, citing longterm economic benefits for Dallas, the city council appears to be channeling real estate developers.
So if the city has decided to pour $500 million into the convention center neighborhood, what’s stopping it from spending a chunk of change here in Preston Hollow?
According to council plans, revenue generated by the convention center hotel would reimburse the loan the city takes out to construct it — that’s how revenue bonds work. It’s not a novel idea: The DFW International Airport’s Grand Hyatt Hotel is one example of a privately operated project financed by public revenue bonds; another is the parking garage at Dallas Love Field. In both cases, fees paid by people booking a room or renting a parking space pay the mortgages, so to speak.
Maybe a government entity hasn’t embarked upon some sort of mixed-use, walkable, New Urbanism-style project in Dallas yet, but who’s to say it couldn’t? Or shouldn’t?
The important questions are: Would the revenues from the project be able to pay off the bonds? And would the public benefit justify the government’s financial contribution and exposure to risk?
In the case of the convention center hotel, the city believes the answer to both questions is yes. And if the city council believes it could work for the convention center, why not put taxpayer dollars behind projects in our neighborhood, right down the street from where we live?
To that end, we’ve asked leading architects and urban planners to pick a project in each of the five Dallas neighborhoods where we publish magazines (visit advocatemag.com to see the others).
Our charge: Use $100 million to create practical, neighborhood-friendly and walkable New Urbanism-style developments to help take our neighborhoods into the 21st century — exactly the kind of development the council is encouraging in Dallas these days.
A couple of caveats: We assumed that the land for this theoretical project would be acquired at a reasonable price, and we assumed the targeted land could be re-zoned, where necessary, without any complications — neither condition, of course, is a given.
Finally, we aren’t saying this is the best or the only alternative where $100 million could be spent improving our neighborhood. We aren’t saying it’s the most practical project. And we aren’t saying that having the city act as a real estate developer anywhere in the city — including Downtown — is a good idea.
But the council opened the door to this idea by committing $500 million to build a hotel Downtown, and this neighborhood proposal is certainly another option.
Here in Preston Hollow, RTKL’s Kennedy devised an imaginative, forward-thinking re-development at the Preston-Royal intersection.
It features homes for 500 families, a redesigned streetscape, more density, unusually high-quality construction, and upgraded retail and office space, all in the area on the corners surrounding Preston and Royal.
The overriding consideration in his design, Kennedy says, is to eliminate cars from the equation.
“You don’t want these projects to feel like they’re only for the car,” he says. “That’s the way we used to do it, with the big parking lots.
“This is the 21st century. It’s the end of the car culture. You don’t have to design something so people will drive to it. The car will always find its way.”
Instead, Kennedy says, design should focus on livability. Today, if we want to eat or shop at Preston Royal, most of us have to get in the car, drive there and park. That’s true even if you live just a couple of blocks away.
In Kennedy’s vision, you won’t need a car because you’ll live in the center or nearby. And if you don’t need a car, the center won’t need as much parking, not only lowering construction costs, but making room for amenities like parks. And if people spend time on the street — walking, window shopping, eating lunch in the park — the center becomes a more desirable place to live.
A new Preston Royal, as envisioned by Kennedy, could include:
• Four stories of mixed-use development, with 500 units of housing, 50,000 to 100,000 square feet of retail, and 50,000 square feet of office space. The latter, in fact, could be converted to housing if the demand increased, or the retail could be converted to office space. The housing would be priced and designed to target a variety of demographics, from lofts for singles to bigger units for families with children to something in between for retirees, Kennedy says. Currently at Preston Royal, all four corners have more than 300,000 square feet of retail, more than 12,000 square feet of office, no residential, and parking for more than 1,200 cars.
• Better construction, so the housing, office and retail will last decades. That might increase the price of building in the short term, but would guarantee the developers more profit in the long run, Kennedy says. Developers should try to reuse or adapt existing buildings before building new, Kennedy says, and exactly what the redeveloped buildings look like is not as important as the need to make them blend with existing neighborhood design.
• A redesigned, more pedestrian-friendly streetscape that turns Preston and Royal into neighborhood boulevards. That might entail narrowing each street from three lanes to two as each neared the intersection, and adding dedicated bicycle or streetcar lanes to replace the car lane.
• No fences and other barriers that separate the shopping center from the surrounding neighborhood. Currently, it’s inconvenient to walk to the center from nearby houses. Most of the streets, like Lavandale or Tulip, dead-end at the back of each corner of the intersection. This plan would open those streets and connect the center to the neighborhood, Kennedy says. The neighborhoods would still be buffered by what is called “proximity sloping” along the service alleys — the buildings around the perimeter of the project would be as tall as the shopping center’s buildings, and then height would slope down toward the single-family homes in the area.
• No parking lots as we know them. The parking lot entrances would become city streets forming a loop through the center. What used to be the parking lots, meanwhile, would have buildings and parks on them. Visitors would park on the streets and perhaps in some sort of small garage. It not only makes design sense to eliminate parking lots, Kennedy says, but financial sense. Parking can cost as much as 20 percent of a project for land that doesn’t generate any revenue.
• Improved landscaping and similar amenities, with green areas central to development on each quarter of the center. “Which would you prefer to do,” Kennedy asks, “sit in a restaurant outdoors overlooking a parking lot or a park?”
Everyone won’t like this theoretical plan, Kennedy says.
“But if you can assemble the land,” he says, “this is something the market could definitely do.”
This version of a re-developed Preston Royal shopping center is possible today, Kennedy says, and he believes it could cost about $100 million.
What’s lacking appears to be the vision and leadership to make it possible. According to individual council members, not even a “yes” vote on the May 9 convention center hotel referendum (a “yes” vote is a vote against the hotel) will stop the city from spending $500 million to build the hotel, so clearly the council is willing to jump into the commercial real estate development business.
And that’s why we thought the council might want to consider an alternative or an addition to their plans: Maybe we should begin a similar conversation about using revenue bonds to spur neighborhood-appropriate development, like Kennedy’s theoretical Preston Royal project, throughout the city.
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