Blog Archives - ROWLETT RAMBLINGS

The gift that keeps on giving.

4/30/2014

Today, The Dallas Morning News is reporting again about the unique housing market evolving in the Dallas area. There were two articles in today's issue written by Steve Brown, DMN's real estate editor.

The two new articles addressed again the increasing housing prices, and increasing demand. Of course, the Toyota news is forefront in these discussions. People, this recent news is big news. It is coming right on the heels of positive residential real estate news we have been discussing on this blog for the past two months. Dallas area residential prices are already 5% above pre-resession prices, increasing 24 months in a row and exceeding annualized 10% each month over the past three months. There is additional news about the previous "hot" areas of Las Vegas, Southern California, and Florida increasing prices exceeding 22%, but you must remember, their markets fell off by 50% or more during the recession. I'll take Dallas anytime.

I have a young friend that recently complained to me, " I'm a college graduate and after I deduct my housing expenses, my house is making more money than I am."

Rowlett "officialdom" is dogfast steady in proceeding down a path that is going to bring attached housing, form based codes, and office/warehouse development to Rowlett, specifically north Rowlett. Every piece of evidence I have found has suggested this is an incorrect path, given current market conditions. Officialdom seems to be saying, "Okay, we'll wait." Is that what you want? Why wait for 10-20-30 years for something that will not be worth as much as upscale mid-density housing?.......let alone loss of 10-20-30 years of earning capacity while waiting on the presumed commercial development. What makes you think it will ever come? If you're such an expert, send me the numbers. I'll report them.

I have to chuckle when a city hall "swell" drags out the soapbox, gets on it, and announces to Rowlett citizens we have just one chance to get this right. Therefore, we must stay the course. I agree that we must "get it right," but the navigational hazard is on the soapbox.

And the evidence keeps comin'

4/29/2014

All last night on local TV news and this morning in the Dallas Morning News was the story about Toyota coming to Plano. It was even on national news. By this time, I'm sure you have heard Toyota and 4,000 employees are moving to the Dallas area from California and Kentucky. In the same DMN issue was an article in the Business section about a Chinese company expanding their facilities and adding new space in McKinney to add to their other facilities in Carrollton. In the same article, the writer told of the attractiveness of the Dallas area to a whole host of international business enterprises......... for a long list of reasons. The Dallas area is a solid target of international commerce.

Rowlett should be providing upscale housing for the middle and upper management personnel of these new companies. McKinney is a little bit of a stretch for a comfortable commute to Rowlett, but Plano is not. It is very easy for me to understand why management personal, after a hard day's work, would look forward to driving home on a new toll road for 20-30 minutes to arrive home to a pleasant small town setting and a lake right in the middle of it. This is easy for me to accept and visualize. I feel Rowlett could put $1 million a month in the tax base. This is revenue the town sorely needs.

Opposing the above concept, Rowlett's "officialdom," with advice of consultants, is marching pell mell to an industrial park in which no convincing evidence has been made there is even a need. Excellent upscale housing is being blocked in favor of commercial development that may never come. Housing typically only asks for concessions that can be recovered in about three years, but a large office building or warehouse may ask for concessions lasting for 10 years easily. And, that's assuming this type of development comes to north Rowlett at all. I have pointed out that there is a fair amount of very civilized competition to the north of us that will take quite a few years to be absorbed into the marketplace. We may be 20-30 years away from receiving any serious tax benefits from commercial development in north Rowlett.

And "officialdom" is stepping along with a maniacal drumbeat to take them straight to building townhouses interspersed amongst office and warehouse development immediately next to a cow pasture.........just exactly what someone wants to come home and see......particularly someone from Texas. I am not against townhouses........provided they are where they are supposed to be.

Rowlett's big time commercial future is overwhelmingly along the lake in south Rowlett.......not north Rowlett where housing for the mid and upper management should be.

The evidence is everywhere.

However, "officialdom" is steadfastly proceeding with Rowlett's earlier city manager doctrine. It is firmly embedded in the current city culture. It ought to be. It wasn't long after the consultants started that it became apparent they were working for the city manager, not the city council. We are getting concepts she wanted. Our city manager at the time was the worst real estate analyst I had ever seen. Remind me to tell you some time about what current cap rates would have done to the value of some land she was working on. It's downright scary. Also, her knowledge of lien priorities was awful. It's all documented, but you gotta know what you're looking for.

Enough for now. Go vote.

Market and elections (Part 2)

4/27/2014

In Part 1 I wrote that Rowlett commercial development was considerably below performance of the Dallas area in general. That could be from a number of influences. In the early days, say 30 years ago, Rowlett did not have a good location. The Rowlett location hasn't changed, but the infrastructure and demographics did. In my opinion, Rowlett became some place that should have reacted quite favorably to the new events that complimented the town. For some reason it didn't. One can't criticize only the sitting city council. There were mistakes made many years ago in which this council could not change. However, I feel we (including myself) did not do as good a job as we should and could have done. There were not enough questions asked. I was/am not against Rowlett 2020. I thought 2 and 1/2 years ago that consultants were necessary and I still do. However, there should be oversight and I don't think there is any, or not much. Sometimes, I thought a second opinion would have been appropriate. Or, at the very least, a dumb question that may have triggered a little different look at things.

We have an election coming up. Carl Pankratz is running unopposed. Whatever he is, he still is. No change here. We have a new fellow on the scene. I don't know anything about him. He, too, is running unopposed. He doesn't have to say anything about himself. Once he votes for himself, that council place is filled. I have heard reports that he is a good guy and I would give him benefit of the doubt. However, I know nothing about his politics. I would think that he would be pro-business.

The only contested race is for Place 5 between Rick Sheffield and Pam Bell. Rick has been around city hall for a long time and has served as Chairman of the P&Z Commission.  He is one of the "swells" around city hall and I am sure is totally supported by "officialdom."  Rick is probably an OK guy, but he probably feels a little more important than some might think. I have watched Rick vote on P&Z and I have viewed his comments from the meetings. There is no doubt in my mind, if you like the way things are going in Rowlett, Rick's your guy. He will vote without disrupting the status quo. His vote will neither be yea or nea, but "whatever you guys want."    He will be a member in good standing of the mutual admiration society.   On the other hand, Pam Bell is a voice of opposition. I have met her twice and I know her feelings about most things. She is a real estate agent. She knows real estate marketing. She is a moderate about Rowlett 2020. She feels, as I do, that in some places high density and the new form base codes will work..........but not everywhere. The current regime is going to try to make townhouses work next to a cow pasture. That won't work. They will work in the downtown area. Rick will vote to try to make city designed townhouses work in the country. Pam won't.   Pam will be a dissenting voice in such real estate miscues.   She may be the only one.

Now it's time to vote. You have very little control over the course of Rowlett from the outcome of the election. The course of Rowlett is going to stay the same ole' same ole.'   The majority remains uncontested. However, in this election you can send a message to council and set the stage for the next election in two more years.   If Sheffield is elected, you are saying, "Everything's cool." If Bell is elected, you are saying, "Wait just a minute. I want to know what's going on."

It's your call.

Markets and elections (Part 1)

4/27/2014

Got a couple of thoughts and they go together.  I'm going to write in two parts.

Above is a news paper article published in the Dallas Morning News on April 25th.....last Friday. The article was about job growth and how it was effecting new commercial development in the Dallas area. The charts above depict new development in Industrial, Office, and Apartment construction from 2011 to present.

In the Dallas area, Industrial development increased from about $2 million in 2011 to $16.5 million, about 800.25%. Office development increased from about $1 million to $5.9 million, about 500.9%. Apartment construction increased from 5,000 units to about 26,971 units, about 539%. The source data was from Cushman Wakefield MPF Research. Strangely, retail development was not reported, however I will address retail below.

I don't think its necessary to get into a very deep discussion on Rowlett's performance when compared to the above stats for the Dallas area in general. Let's look at Office development, first. Rowlett had a couple of office buildings that completed at about the same time the above charts started. Therefore, all the planning started before. I think the developers accurately forecast the Dallas market in general, but probably missed the Rowlett market by a considerable margin.

The office building down by Dalrock Road and I-30 never did rely on Rowlett tenants. That building's market was clearly aimed at I-30 and the lakeview ambiance. It apparently worked. I don't know their exact occupancy, but their parking lot is full every morning. The other office building was clearly aimed at Rowlett tenants. It is right in the middle of main "stuff." I really don't know much about that building. It is a rather eclectic design. I am not sure what it's supposed to look like, but I would not be surprised to see some sheets, pillowcases, and underwear stretched on a clothesline across the front. It just seems like a clothesline would fit. I have no idea what the occupancy is. We have other fairly new space that could be either retail or office. However, much of that space is still vacant after being built for quite some time. I think there is enough empty space to suggest that the office/retail market is a little "soft" in Rowlett. However, there is a modest amount of "pre-leased or owned" retail space being constructed along Lakeshore Parkway. It is important to note that all this space is on Lakeshore Parkway or a small amount on Liberty Grove,   just outside Waterview. It all equals about the right amount of new development that one would expect from Dallas "spillover." In other words, it was going to happen no matter what Rowlett did or did not do to help development. Interestingly, no commercial development is happening near the lake, DART, or the tollway. DART was the last arrival, and its been here a year. However, recently two apartment projects are contemplated along the shoreline between Rowlett and Rockwall. Another is being planned along the border of Sachse.

Industrial and Apartment development is easy to analyze. Other than remodels, none has been done, to my knowledge anyway, altho some apartments are planned.

So........Rowlett office development is a little fuzzy. Retail development still has a lot of "spec" space sitting empty. Industrial is practically nil. Apartments are in the planning stage. This performance is less than spectacular when compared to the Dallas area increase of Industrial development of 800%, increase of Office development of 501% and Apartments of 539%.   Our surrounding cities of Murphy, Sachse, Wylie, and Rockwall have contributed heavily to the Dallas numbers above. They're "blowin' and goin."

So........under any yardstick I can find, we ain't doin' so well. Did you ever ask yourself, "Why? There is a reason. It won't be Rowlett's location anymore.

I will "post" part two later today.

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Election pending

4/23/2014

We have an election coming up.........kinda. Of the three city council seats to be determined, only one is contested. Two seats are uncontested. I will have some thoughts that I will post in the near future.

Of the seat that is contested, there is a very clear division between the two candidates regarding the future growth of Rowlett. One is for almost total urbanization of Rowlett, a la Rowlett 2020. The other is for selected urban type development only in suitable areas and the balance of Rowlett's development as determined by market conditions.

I will soon post the two opposing views and my opinion of how the candidates will fit into their position, if elected. The citizens of Rowlett will have an excellent opportunity to cast their vote on the future of Rowlett. It will not be divisive in immediately changing the course currently in practice. However, it can certainly provide a signal of any displeasure in the way things are going and change the course in the next election. Any message that change is desired is going to have to involve more voters than the 1500-2000 that usually control Rowlett. This would be a great time to "get involved." Important voting is good heart medicine and you feel a part of your community. It keeps you young. You begin to whistle while you work. And, if you can't whistle, go buy a new Corvette. .........right after you vote.

A happy asterisk.

4/21/2014

I have a happy asterisk to report. In my last post I mentioned that Rowlett was "working with" a company to acquire Robertson Park. My particular concern was that when I "googled" Donahue Development, the only thing I got was a blank page with Donahue Development Corp on it. I tried to find some info on LinkedIn, but that was a bust. I didn't know who they were and so reported.

A friend of mine decided to do some further checking. He found some info about the company in a Dallas Morning News article in July, 2013. It was a good story. It would appear that Donahue is involved in the purchase of some land on LBJ between the Galleria and Preston Road. That, dear people, is a high dollar neighborhood.

I still don't know anything specific about Donahue, but I sure respect the neighborhoods they're hanging out in. The people that play in that neighborhood would be a good asset to Rowlett's needs.

I feel some relief on this very important piece of Rowlett's needs. In my opinion, the area in which Donahue is involved is the most important development site of Rowlett. I feel more comfortable. Donahue should have been introduced to the citizens.

I told ya so.

4/20/2014

Almost the entire issue of this blog site has been to question the management of Rowlett's tax base by Rowlett "officialdom." More than once I have characterized the rhetoric coming out of city hall as propaganda. You may, or may not, have believed my assertions. I'd like to revisit some "stuff" and look at someone else's data.

The below was reprinted from a staff report regarding a request for residential zoning at last City Council meeting. Altho the request was tabled until a future meeting, the below verbiage was lifted from the staff report.

"The applicant was informed before they submitted the rezoning application of the intent of the Realize Rowlett 2020 vision for the Area B-1 and the North Shore Master Planning Initiative. Staff explained up front that a conventional zoning request would not be supported by Staff, as that would not further the City’s goals of providing diversified housing types and that the subject property is intended for future commercial development."

Clearly the Zoning Department and the P&Z doesn't want anything to do with single family detached residential in Northshore. Townhouses might receive a very limited okay, if they look like South Philly. They must be urban.........suitable for street ball. There are infinite reports saying that Rowlett is "over built" with this single family detached type of product .There are infinite stand up presentations by staff on Rowlett's website whereby the term "over built" is used. I have set in many meetings in which "over built" was used to propagandize the concept that Rowlett needs office and warehouse development in Northshore rather than the $350K homes that have been rejected in the area. We are led to believe that the development of sfd homes contributes less value to the tax base than office/warehouse development. That is simply not true......at least in Rowlett's case. I have already given an example whereby a rejected residential development contributed double the value to the tax base than a typical suitable commercial development. That doesn't even calculate the increased spending power of the residents occupying the new residential development and the effect it has on any other retail demands.

I wish that you would talk to any real estate agent, or any residential appraiser that you may know. Ask one simple question: "Is Rowlett over built with nice residential homes?" It a very easy question and a very quick answer will come to you.

Any regular reader of this blog knows I think "officialdom's" assertions of "over built" are just hogwash, designed to divert attention from residential development to commercial development. "Officialdom" presumably feels this way because they think commercial development contributes more to tax base per acre in Rowlett than commercial.   That may be true in some other community........but not Rowlett's. The evidence is overwhelming. You have seen my evidence, but lets look at other's opinions/facts.

  On April 14, I wrote that on that date the Channel 11 evening news reported that 10% of Dallas area houses sold within 72 hours.  Channel 11 News further announced that 40% of the homes sold within two weeks. That is an outstanding absorption (sales) rate.  That certainly is not an "over built" market.

On April 18, the Dallas Morning News reported that a true housing shortage existed in the Dallas area. The sales rate is down, but that is because there is nothing to sell. The News further reports that Scott Schueler of Keller Williams says, "It's insane. They (houses) are moving super quick." The newspaper article quotes Dr. Ted Jones, economist with Houston based Stewart Title, said, "home prices  in the Dallas area are being fueled by the area's strong economy and the demographics." The Dallas Morning News further reports that Dr. Jones said, "In the last 12 months, the D-FW market added more than 86,000 new jobs. In that same period, new building permits totaled 39,620. There is massive growth and demand--all job driven--for the D-FW area." In a chart, Rowlett and Sachse are in Section 8. Section 8 is enjoying a median salesprice of $178,750......not the $136,000 that some of Rowlett "officialdom" is putting out. Of the 40 submarkets listed by the Dallas Morning News, Rowlett/Sachse was the 24th highest in average sales prices.....right in the middle. The average days on the market for each listing was 48 days and the number of months in inventory was 1.3 months. Inventory is considered "in balance" by real estate professionals when 6 months of inventory exists. Rowlett is ridiculously better than that.

Rowlett's "officialdom" has thrown at least two 1st class residential developments, totaling $160 million when developed, right on the trash while not presenting any valid argument that cost effective commercial development will take it's place. I wrote that I did hear about a ghostly credit card processing development. I think that came from someone's dream after heavy coffee drinking.

Once again, will someone explain to me how Rowlett staff is reporting the term "over built" accurately? If not accurately, what is the purpose? Why? Why? Why? Our tax base is suffering massively from ill conceived concepts. Most economic cycles run for seven years. We are setting this one out.

Changing topics just a bit, the Lakeshore Times reported that Rowlett is once again working on the acquisition of Robertson Park. I am please to report that I think that is one of the smartest things I have seen come out of city hall recently. This acquisition is extremely important to Rowlett. If successful, followed by very intelligent development strategies, it will catapult Rowlett from backwater to near the peak of "places to go in the Metroplex." If some yet unknown economic influences further enhance the area, Rowlett could become an outstanding place to go. A proposed industrial park would absolutely pale in comparison. I am worried about the word "intelligent."

I'm concerned about our resident real estate development expertise. The image of "the gang that couldn't shoot straight" comes to mind. In the Lakeshore Times article, it is reported that Rowlett is teaming up with, or "working with" the Donahue Development Corporation. Well, I kinda hang out in some pretty good development circles, and I had never heard of Donahue Development. I called a couple of lenders I know and they hadn't heard of them either. So I resorted to the test of all tests........Google.

www.donahuedevelopment.com

Well, that was enlightening. I found a few little equally uninteresting things, but nothing about what the corporation does. We are "working with" a company on a $35-$40 million deal, of which Rowlett may take the financial risk, and they don't have a website with more than their name on it. Who the heck are they? How did they know Rowlett? Did they just walk in off the street? Did someone on staff bring them in? Did the city send out RFQs (Request for Qualifications)? Did a panel select them over others? Who were the others? There are a million questions that come to mind.

I guess I'm getting a little cynical in my old age. Being a real estate guy, can you begin to understand my concerns? The Donahue Development Company may be a great company, but if so, someone should loan them enough money to build a website. Someone else should tell us who the heck they are. Who did they beat out in the competition to "work with" Rowlett?

Will someone besides me stand up and ask some questions? I would prefer someone on council, however that doesn't seem to be much of a probability.

We have a consulting firm that thinks only an office/warehouse industrial park is feasible in north Rowlett. Yet, I haven't seen any proof to substantiate that recommendation. We have a zoning staff that is bloviating with the language and clearly is pumping out propaganda. We have a P&Z that won't approve anything that even suggests residential in a logical location. They are convinced that $350K homes are bad Karma. I suppose they are satisfied to wait 10-15 years for the "right" deal and they will recommend to give away 10-15 years of "freebies" to get the "right" deal. We have a city council that seems to rubber stamp anything that has the consultant's name on it. We are doing business in which about $35 million is involved, and we don't know anything about our partner. We have a $30 million bill for a water line from Lake Texhoma that we have to pay for. Let's see........what could possibly go wrong? We could be mortgaging the tax base of our grand children......maybe even great grand children.

A 5% increase in city tax rate is being discussed. The seniors have been reported to have been stealing from the city for years.    Therefore, the Seniors are "on the bubble." The Rowlett real estate should be raising in value at least 10% a year..........and this is coming on the heels of a tax increase. The water rates have already headed north a whole bunch.   General Obligation bonds are on the horizon. I can easily see tax money flowing out of your pocket at a rate of approximately 20-25% faster than today. Perhaps more.

Several years ago, I wrote a column for the Dallas Morning News in which I said Rowlett was approaching a critical moment in their history. What we do would influence Rowlett for the next 100 years. We had to do it right. The above is where we are and what we're doing about it. I really don't like the way we're handling this. I am remembering Dante's "Inferno" and he wasn't even working on a tax base.

While sitting on council, I had a couple of occasions to interview people applying for positions on various committees. The one resounding fact that emerged in my head was the incredible talent that was present in the city of Rowlett.  It was quite impressive. We desperately need those thinkers to step up now.

I have always tried to present the facts. They are all over this blog site. If those facts aren't enough to help you think this thing thru, then I don't believe I can help you.

All the important people in Rowlett have email addresses on the city's website. Elected officials are there because you elected them. If you're in need of some answers, write and ask the questions.

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A little reflection

4/16/2014

Ya know, I had occasion to drive around the tollway from North Central to Rowlett today.   I reflected a bit about what I had written in these posts. I decided to take another look at the land and the buildings on both sides of the tollway and make a special effort to be as objective and analytical as I know how.

I saw an enormous amount of Class A office space being built at the Farmer's Insurance building on the SE corner of #75 and the tollway. Continuing east, I saw hotels, office buildings, restaurants, medical buildings and major shopping stretching all the way to Fire Wheel.   There were service roads, cross streets, sewer, water, electrical service everywhere. Inter-disbursed within these areas were hundreds and hundreds of acres of clearly commercial land just sitting there waiting to be developed. Believe me, there was enough land to absorb many, many years of commercial development.

After I passed Fire Wheel heading south, I entered a "dead zone."  There were no major developments, service roads, cross streets..............nothing until reaching Merritt Road.........a road that goes nowhere.  This is kinda in the middle of Rowlett's "officialdom" and their consultant's opinion of where Rowlett's Office and Warehouse Industrial Park is to materialize.

I know the intersections of Merritt Road and Liberty Grove will develop relatively soon.....but the big "stuff" away from the intersections ain't gonna develop commercially for a very , very long time......if ever. Why do the consultants think it will? That's what I keep asking. Show me where I'm wrong. Do you think the land is so cheap in Rowlett that developers will jump over land to the north to come to Rowlett? I actually know the answer to that. It won't happen. Rowlett prices, when added to the needed infrastructure costs, are far higher than existing land with existing services in place.

So, people.........you get to pay the taxes that will be incurred because we have created a no growth policy (disguised as commercial planning), in which our tax base languishes while waiting for the tooth fairy. It is said we must protect this land from residential encroachment. When I read the gobblygook coming out of City Hall regarding residential encroachment, I retch. It is pure propaganda.

Rowlett needs charm.......badly. I was driving back from Haslet above. Haslet was nothing more than a dusty crossroads 10 years ago. Now it's a charming little town. All the older houses are very well maintained, indeed........all within walking distance of city hall and the library. There is new commercial development all up and down Highway #156, Haslett's main street. I go to Decatur and Granbury, charming little towns that are growing and making a statement. Closer in we have Murphy, Wylie, Sachse and Rockwall. It's everywhere. Is Rowlett not growing? Of course not. We are in the middle of the hottest residential market seen in years. However, we are growing from Dallas spillover.......not Rowlett ingenuity. I sometimes think we operate within a complete void of creativity and originality. That's what the consultants were to bring to the table. We have only had partial success.

Questions and answers

4/14/2014

This will give you something to do after you finish the crossword puzzle.

1. If the overall real estate values in Rowlett's tax base goes up 5%, and the city doesn't change the tax rate, I get a 5% reduction in taxes. Wrong. Your out of pocket taxes went up 5%.

2. If the appraisals of the tax base goes up 5% and the tax rate goes up 5%, I get a 5% raise in taxes. Wrong. You get a 10% raise in taxes.

3. If the appraisals of the tax base goes up 10% and the tax rate goes down 5%, my taxes didn't increase. Wrong. Your taxes went up 5%.

4. If you are told your tax rate is only going up 5%, you haven't been told the whole story. About 1/3 of the residential tax base is increasing about 10% every year......or should be. Therefore, the aforesaid 5% plus the year you get the 10% raise in the appraised value of your home, you just got a 15% increase in your taxes.

5. Your real estate was appraised at 10% higher, but the tax rate was cut 5% so my taxes went down. Wrong. Your out of pocket taxes went up 5%.

You've got to look at tax rate and tax base together to get a clear picture of your out of pocket tax expense.

Housing demand

4/14/2014

Just finished watching the local news on Channel 11.   They reported that:

In Dallas, 10% of the homes for sale sell within 72 hours. Also, 40% of the homes will sell within two weeks. Altho the numbers are for Dallas, they are certainly indicative of the North Texas market area.

Here we are in the middle of the hottest residential market in memory but our leaders are telling we of the unwashed that we are "over built" with these types of houses. What a bunch of hogwash!! And we continue to let tax base slip thru our fingers. Its a good thing we have consultants to tell us what to do, because no one else seem to have a clue.   Consultants know what they're doing, right?

The following language appears in the staff report of a 58 acre tract requesting residential zoning originally scheduled for tomorrow night's city council meeting: "The applicant was informed before they submitted the rezoning application of the intent of the Realize Rowlett 2020 vision for the Area B-1 and the North Shore Master Planning Initiative. Staff explained up front that a conventional zoning request would not be supported by Staff, as that would not further the City’s goals of providing diversified housing types and that the subject property is intended for future commercial development. Additionally, it was explained that the City’s long term goals for the North Shore Area is to provide for a diversified commercial tax base."

Of course, we are saving our land for the Class B offices and warehouses......on a tollroad.......with no evidence of demand...........for apparently years..............with no additional value to tax base.   I would settle for just one councilman/councilwoman to ask, "Show me a piece of paper that proves there is a market for Class B office space and warehouse space in Rowlett over the next 10 years." See if it adds up to what we're throwing on the trash pile.