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ROWLETT RAMBLINGS

380 Grants

5/31/2014

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I am beginning to develop a slow burn.  The more I research the "380 Grant" program, the angrier I am getting.  Below is Texas  Title 12, Subtitle "A" of the local government code.  It's not very long.  The italics and underscoring are mine.  Please read, then read my notes at the end.  This is a most important "post."  I admit that I have been uninformed about 380 Grants, but I am becoming informed.  If you reach the same conclusion as I seem to be heading toward at this time, you are going to be very angry.  If you find me to be in error, I would  hope that you would let me know, and that I believe you.

__________________________________________________________________

LOCAL GOVERNMENT CODE
 AND DEVELOPMENT

SUBTITLE A. MUNICIPAL PLANNING AND DEVELOPMENT

CHAPTER 380. MISCELLANEOUS PROVISIONS RELATING TO MUNICIPAL PLANNING AND DEVELOPMENT


Sec. 380.001. ECONOMIC DEVELOPMENT PROGRAMS. (a) The governing body of a municipality may establish and provide for the administration of one or more programs, including programs for making loans and grants of public money and providing personnel and services of the municipality, to promote state or local economic development and to stimulate business and commercial activity in the municipality. For purposes of this subsection, a municipality includes an area that:

(1) has been annexed by the municipality for limited purposes; or

(2) is in the extraterritorial jurisdiction of the municipality.

(b) The governing body may:

(1) administer a program by the use of municipal personnel;

(2) contract with the federal government, the state, a political subdivision of the state, a nonprofit organization, or any other entity for the administration of a program; and

(3) accept contributions, gifts, or other resources to develop and administer a program.



(c) Any city along the Texas-Mexico border with a population of more than 500,000 may establish not-for-profit corporations and cooperative associations for the purpose of creating and developing an intermodal transportation hub to stimulate economic development. Such intermodal hub may also function as an international intermodal transportation center and may be colocated with or near local, state, or federal facilities and facilities of Mexico in order to fulfill its purpose.

Added by Acts 1989, 71st Leg., ch. 555, Sec. 1, eff. June 14, 1989. Amended by Acts 1999, 76th Leg., ch. 593, Sec. 1, eff. Sept. 1, 1999.

Amended by:

Acts 2005, 79th Leg., Ch. 57 (H.B. 918), Sec. 1, eff. May 17, 2005.



Sec. 380.002. ECONOMIC DEVELOPMENT GRANTS BY CERTAIN MUNICIPALITIES. (a) A home-rule municipality with a population of more than 100,000 may create programs for the grant of public money to any organization exempt from taxation under Section 501(a) of the Internal Revenue Code of 1986 as an organization described in Section 501(c)(3) of that code for the public purposes of development and diversification of the economy of the state, elimination of unemployment or underemployment in the state, and development or expansion of commerce in the state. The grants must be in furtherance of those public purposes and shall be used by the recipient as determined by the recipient's governing board for programs found by the municipality to be in furtherance of this section and under conditions prescribed by the municipality.

(b) A home-rule municipality may, under a contract with a development corporation created by the municipality under the Development Corporation Act (Subtitle C1, Title 12), grant public money to the corporation. The development corporation shall use the grant money for the development and diversification of the economy of the state, elimination of unemployment or underemployment in the state, and development and expansion of commerce in the state.

(c) The funds granted by the municipality under this section shall be derived from any source lawfully available to the municipality under its charter or other law, other than from the proceeds of bonds or other obligations of the municipality payable from ad valorem taxes.

Added by Acts 1991, 72nd Leg., ch. 16, Sec. 13.06(a), eff. Aug. 26, 1991. Amended by Acts 1991, 72nd Leg., 1st C.S., ch. 4, Sec. 25.02, eff. Aug. 22, 1991; Acts 2001, 77th Leg., ch. 56, Sec. 1, eff. Sept. 1, 2001.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 3.26, eff. April 1, 2009.



Sec. 380.003. APPLICATION FOR MATCHING FUNDS FROM FEDERAL GOVERNMENT. A municipality may, as an agency of the state, provide matching funds for a federal program that requires local matching funds from a state agency to the extent state agencies that are eligible decline to participate or do not fully participate in the program.

Added by Acts 1995, 74th Leg., ch. 1051, Sec. 1, eff. June 17, 1995.
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The first thing that comes to mind above is that there is no mention of Federal or State funds.  However, apparently the 380 Grants can accept contributions.  That is different to anything I ever knew.  Secondly, only municipalities are mentioned as a government contracting party.......not the state or the feds.  However, at the end, there is a provision of "matching funds" if a state declined to act.  I have no idea what happens here, however it sure sounds like only half the money would become available.



I am of the opinion that the staff, the staff report, and the verbal presentations made to City Council on the evening of May 20, 2014, and regarding The Villages of Rowlett,  were somewhat less than straight forward to the citizens of Rowlett.  I am not suggesting anything criminal, but I am suggesting certain facts were  de-emphasized to keep the citizens of Rowlett of learning the true cost of subsidizing the developer proposed for this venture.  It is my opinion the citizens of Rowlett would have never supported a  subsidy program in which the city's cost would be $10-$12 million.  That number consists of the gift of the library, forgiveness of impact fees, reimbursement of infrastructure repairs, and 15 years of tax rebates.  That is fully a third of the $30 million total cost of project. 


It is my intention to go over every line spoken and written about this project.  I will do additional research on 380 Grants to learn more.  I will use Freedom of Information Act requests to get into the back room of city hall.  I am beginning to get angry. 




On the other hand, if Rowlett "officialdom" will step forward and explain satisfactorily what on earth the real costs are, that would shut me up.  However, now I wonder why the new consultant from Denver and a developer form Atlanta materialized.  As you may, or may not know, Rowlett sets amongst some of the best apartment developers in the world.   Our (DFW) market research representation is pretty good, too.  Texas developers are represented all over the world. 




As I have written before, I would like to see this project go into downtown.  I wish we could get more business ventures at this time, but look around.......we can't even fill the office/retail space we currently have.  However, if we put 400 people downtown,  we may awake some lethargic thought processes. 




BUT.......as much as I would like to see this deal go thru, Rowlett's "officialdom" must tell us the truth.  If anybody, ANYBODY, will step up and explain how 380 Grants works and how Rowlett doesn't have a $10 million downside risk, I will shut up.  Happily.




Plano gave up $7.5 million and 10 years of tax abatement.  But, they got Toyota and 4,000 jobs.  We seem  to have aimed a bit lower.










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New contacts

5/31/2014

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I have acquired a couple of phone numbers and extensions for persons in the State Comptroller's Office.  Maybe I can get some straight answers from them about 380 Grants.




Did you ever try to tackle a greased pig?   I never did get the hang of it.  I guess you have to be an insider and learn the tricks.

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How ignorant

5/30/2014

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Let me tell you how ignorant I am.  I always assumed that all grant money came from some obscure government agency that had lots of money to give away.  How wrong I seem to be.   It would appear that 380 Grant money is not what I thought it was.  It's beginning to look like its already our money........or soon to be our money.........that we promptly give back.  



In my ignorance, I thought some other agency gave funds to the city to replenish funds given away to developers.  Well, it seems that is not quite the case.  I am still researching it, but it would appear that we collect the taxes, put the money into something call 380 Grant, then give it back.  Such logic is beginning to make my non-political head hurt.  



Why would a municipality do that?  I have an ominous feeling.  The word deception comes to mind.  I think I'm beginning to get angry, but I must await some more research, before I say much more.  However, I have a suspicion you are not going to like what I have to say.

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Village appraisal

5/26/2014

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I  have done tax appraisal work in Indiana and Kansas.  State laws vary on appraising tax exempt properties.  For example, in Indiana tax appraisers must appraise tax exempt  properties, but in Kansas they don't.  Apparently, Texas does.  Below is the DCAD appraisal for our library:



http://www.dallascad.org/AcctDetailCom.aspx?ID=440150800A0030000



Therefore, it becomes obvious the DCAD appraisal was not used for the Village negotiations.........so whose appraisal did we use?.  For this purpose, remember the building value does not contribute to the "down payment."  It will be torn down.  Only the land value is used here. 

The county appraisal values the building at $2,382,950, and the land is valued at $419,450.  The site the library sits on is 3.2 acres, therefore the land value per acre is estimated to be $131,078 per acre.   I think the total site to be developed is 15 acres.   Therefore, the same value on the complete site would be 15 acres x $131,078, or $1,966,172.   The above numbers reflect a square foot price of (43,560 sq. ft. in an acre) $3.00 per square foot.   I don't have any downtown vacant lot comparables to check, but that sounds fairly  cheap for downtown apartment   property yielding 15 units per acre.  Some of the residential land off Liberty Grove Road was priced and accepted at $2.00 per foot.  Apartment land usually runs a good bit more than residential land......say $4.50-$5.00 a foot.  Apartment land in this DFW market in good locations should be carrying  a premium price. I would think the land value for the 15 acres should be at least $4.00 per foot.....or $2,613,600.00.  Some of the language said "subject to appraisal."  Is someone expecting a lower appraisal?   I don't know where their appraisal number came from. 




I am still worried about the availability  of the 380 Grant money.  It would appear to me that the city will be obligated to pay for the $1,950,00 (altho earlier in the presentation it is referred to as $2.4 million) in utility improvements.....and to be reimbursed by 380 Grant funding.  Furthermore, the city is forgiving 15 years of real estate taxes, again to be reimbursed by 380 Grant funding.   Therefore, a total of 15 years of taxes, estimated to be  $225,000 per year, or $3,375,000, plus $1,950,000 to be reimbursed by 380 Grant funding for infrastructure improvements creates a potential 380 Grant downside risk of $5,325,000.00.   What if the 380 Grant funding never materializes? 



That means the city gave up property valued by DCAD of $2.802,050.00 (the library).  Also, another 12 acres is contributed  that would be valued at $1,572,936.00 (per DCAD), and a potential risk of not receiving 380 Grant reimbursements above of $5,325,000.00.  That makes a total investment of $9,699,986.00.   If the above worst case scenario develops, the city of Rowlett would be subsidizing the project an average of $646,665.73 per year for the next 15 years and receive no revenue for the project. 




At the very least, I think the City of Rowlett owes the citizens a discussion regarding the availability of 380 Grant funding.  The Staff Report and the verbal presentation only made a cursory reference to the 380 Grants.  I would think that $10 million in funding deserves a little more than a cursory discussion.......indeed, almost no discussion at all.     




What we know is we are going to contribute about $2 million in land, building, and impact fees.   What we don't know is whether we contribute another $9.5 -$10 million,  or not.




What does the developer risk?  Not much.  A little construction risk and no market risk.   The bank and Rowlett is putting in all the money.  The developer does not work out of a working capital account.   I know lots of people, including me, that know how to build apartments.  The Dallas area is filled with architects that can give the city exactly what they want.  Maybe we can do the next deal.























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(Part three)  The Village

5/21/2014

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I have watched the presentations made at the CC meeting last evening.    Generally speaking, I feel fairly comfortable.  However, I think some comments are in order.


I think the entire discussion can be broken down into four subgroups.  They are: 1) Developer, 2) Carl's camp, 3) Doug's camp, and 4)  City's Risk.  






Developer:  I like the concept of development as presented.  It looks good and captures the theme of what I believe most citizens want.  I think I like the developer.  I have never seen anything they have built, but I like his low key style.  I think he demonstrates thoughtfulness and he appears to attempt to satisfy the city's needs in addition to his own wants.   It seems apparent to me that a lot of thought went into the design.  



After all the above, what does the developer get?  The answer is "a whole bunch."  Essentially, he gets the friendship from the city in building apartments in one of the strongest apartment markets in 40 years.  In fact, the city is making the down payment requirement to the banks.  Most banks want 20% down on any new development projects.  This project is estimated to cost $30 million, and Rowlett's proforma contribution  in cash or kind is $6 million.  There's the down payment.   Furthermore, the developer is getting 15 years in which no city taxes are collected at all.  If the city offered the same deal to all the developers in the DFW area, the line of developers would stretch to the horizon with apartment developers lining up outside city hall. 




Carl's camp:  Carl made an accurate observation during the two public meetings.  He essentially said the city was getting no guaranty that commercial space would be developed.  He is right, and in fact, that is a shortcoming of the Rowlett 2020 vision.  The only thing the city is sure to get is an apartment project and space for a library.  That, by itself, will not generate downtown traffic and commerce.  As discussed elsewhere in these posts, the apartment is a surefire chance of success.  But, that's all the citizens are promised.  Carl wanted more of the vision.  That's okay.  It's a legitimate objection.




Doug's camp:  Doug probably agrees with Carl, but feels that before any business or commerce will develop downtown, its going to have to be "seeded" with something.  Doug feels the apartment project is sufficient to generate new business, which in turn, will create other new business.  I don't know whether 219 residential rental units are sufficient mass to create very much interest in new restaurants, shops, clothiers, etc., but its a start.   I also agree with Doug that "jump starting" is probably appropriate and needed.  I think the new project will certainly spark interest in the community and hopefully new business.  Otherwise, I don't see much future in trying to sell an apartment project as a tourist attraction in charming downtown Rowlett.  


When taken in total, if I was on City Council, I would have voted for the project.  I agree with Carl that I wished there had been more commercial, but I guess I feel more strongly that we need to get underway.  




Risk Containment:   The one thing that was not discussed in any part of any discussion was risk containment.  Some things come to mind.  The city is to "sell" the land into the project upon securing the financing commitment.   In the fine print there is a provision for the land to "revert" back to the city in case of default during construction.  Chris Cobal says, "These are good guys.  They are not going to default."  "Good guys" have nothing to do with it.  I have been in this business a very, very long time.  Construction Finance is my specialty.  Even good guys default.  They don't want to.  It just happens.....quite often.  The bank is going to have a huge problem with that provision.  In the case of foreclosure, the bank is not going to agree to  start funding on $24 million of loan commitment, become partially funded, then run the risk of losing the land under the 2x4's and brick they have been funding.......unless the city offers to pay them back.  That is a big risk for both the banks and the city.  Somebody is going to have to address this problem.  I think the "reversion language" will go away.  Kiss the land goodbye.  



The papers I have seen are unclear about whether the city has a proprietary interest in the partnership deal.  If so, they're a part owner.  There is an "after school" program that the city has with school kids during the late afternoon hours.  Kids are all over the downtown.  If something happens, the owners will be sued......including the city.  



I don't like the answer given by the developer about the parking situation.  He's pretty smooth and disarming, but I don't think his street parking plans will work for any significant increase of business traffic.  Any new business contemplating downtown as place of business will be very interested in parking.  The proposed 400 parking places will accommodate the 219 rental units, but with many two car families, there isn't much parking for pizza shop business.  I think the city is going to have to address an important parking problem.  To save land, I think a 2-3 story parking building might work.  You can meter it if you need the revenue to pay for it. 



The biggest risk in the room, though, is the 380 Grants.  The city Staff Report is almost cavalier about the availability of 380 Grant funds.   The grants are flippantly referred to as a replacement for funding advanced or forgiven by the city.  Any "unavailability" of 380 Grant money changes the risk factor enormously.  Grant money comes and goes.  Will it stay for 15 years?




I am confused with some of the numbers as set out on the Staff Report.  Some of the numbers don't fit the presentation.  However, a down and dirty look at the 380 Grant numbers suggest that if these funds don't become available, Rowlett citizens will have to come up with another $5,325,000.  Now, they're getting a little cute.  They said the 15 year tax abatement would only be $2.2 million net present value.   They did a NPV to make the number smaller.  I don't think you're interested in NPV unless you're in a conversation including Internal Rates of Return (IRR), Yields (the financial kind), Discounted Rates, and other stuff that bean counters like.  The real number for the ad valorum tax forgiveness is 15 years @ $225,000 per year = $3,375,000.00.  This money is to be returned to Rowlett by 380 Grants.  Also, 380 Grants are to pay for $1,950,000 in infrastructure improvements.   What happens if there is no 380 Grant money?  I gotta hunch that the partnership agreement says that Rowlett has the obligation.  If 380 Grant money isn't available, the developer is still due his funding.


Perhaps the CC approved the entering into the contract, but has anyone seen the documents?  Are they already drawn up?  I hope someone reads them that know what the hell they're doing. 


I still think we needed a little more time.  I want to see the details of the contract.  I want to know if anyone has addressed the risk if things don't go right.  Liking the project and analyzing the risk are two totally different calculations.  I haven't heard one peep about risk if things don't go as planned.  Without reservation, I feel the City of Rowlett owes the citizens more information than they have.  This seems to be a continuing problem.




I like the project.  I want it to succeed.  As did the people that built the stadium in Allen.  











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(Part two) Questions about Village

5/20/2014

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well, I've reviewed the Staff Report submitted to City Council regarding the entering into a contract with the proposed developers of The Village of Rowlett.   I have a couple of observations and a few more questions.

The below is copied from the Staff Report.
________________________________________________________________________



The following is a summary of the key provisions within the Development Agreement documents: 


Integral & Catalyst – Developer Roles & Provisions:  Commencement of Construction – April 1, 2015, subject to mutually agreed extensions  Completion of Construction – No later than twenty-four (24) months from Commencement of Construction  Shall obtain and secure appropriate financing to pay for the full design, engineering, development and construction of the Project, and shall demonstrate, to the City’s satisfaction, that appropriate funds or financing have been secured for the Project’s full development  Minimum Private Investment of approximately $24 million for improvements as per the Concept Site plan. (Attachment 1)  Construction and funding $2.4 million of infrastructure improvements for all roadways, water, wastewater, stormwater and public realm improvements for the project subject to reimbursement by the City through 380 grants  Shall install all public realm improvements in the project according to high standards as defined in the agreements and pay associated  Municipal Management District (MMD) special assessments for ongoing maintenance as levied  Construction, funding and completion of three-story mixed use building fronting Main Street to house the Rowlett Public Library in approximately 11,700 square feet of ground floor space  Enter into a Purchase & Sale Agreement for the appraised value of the property with the City through the Rowlett Chamber Foundation  Enter into a five-year lease for the Rowlett Public Library and provide $233,900 tenant improvement allowance to City for improvements of finishing space  Pay all other normal City fees, building permit and inspection fees, etc. 


City of Rowlett – Roles & Provisions:  Enter into a Purchase & Sale Agreement for the appraised value of property with Integral & Catalyst through the Rowlett Chamber Foundation and provide a 380 grant for said appraised value.  Waiver of impact fees in exchange for Integral & Catalyst constructing all public infrastructure improvements.  Reimbursement of infrastructure improvements for all roadway, water, wastewater, stormwater and public realm improvements for the project through 380 grants not to exceed $1,950,000.  Annual 380 grants equal to one hundred percent (100%) of City ad valorem property taxes paid by Integral & Catalyst for the property for a period of fifteen (15) years with a net present value equivalent of approximately $2,000,000.
 Recapture (claw back) provision should Integral & Catalyst breach or fail to meet any one or more of the performance obligations then they will refund all 380 grant amounts previously paid or waived.  Reverter provision in which the property would revert back to the City should Integral & Catalyst fail to commence construction or complete construction per the dates above.  Develop a transition plan for the Rowlett Public Library to include continuous operations in a short-term location until the Library space is completed on the ground floor in the project’s most prominent building on Main Street.  Develop a transition plan for the Rowlett Chamber of Commerce per our existing Cooperation Agreement and discuss the potential for relocation of the existing building.   
In addition to the above, Staff provides the following information as it relates to the partnership structure:  Partnership structure is performance driven, Integral & Catalyst must secure financing; make an approximate $24 million private investment; complete construction and annually pay 100% of City ad valorem property taxes before receiving annual 380 grant in the form of 100% rebate of ad valorem taxes over 15 year period.  $6 million public investment over 15 year period nets $24 million in private investment by early 2018, which equates to 4:1 return ratio.  Public investment represents 19.9% “gap” on $30 million project – at low end of the range for catalyst projects.  Property today (City owned) doesn’t generate any property tax revenue.   Catalytic nature of Village of Rowlett project expected to spur additional private investment throughout Downtown District of approximately $200 million over the next 10- 15 years which could generate approximately $1,500,000 annually in property tax revenue for the City.
FINANCIAL/BUDGET IMPLICATIONS Since this is a public/private partnership, the Development Agreement document structure is performance driven and the project’s financial impact is summarized above and in the charts below.   
The Village of Rowlett project will be a $30,000,000 single-phase investment generating nearly $225,000 annually in property tax revenue and $15,000 - $45,000 annually in sales tax revenue to the City; creating a significant number of indirect construction jobs; and providing a diversification of housing options and unique commercial/retail options for the citizens of Rowlett.  The charts below provide additional information on the public/private investment and direct economic impact of this project: 

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The above gives the jest of the deal.  Now we start.




I don't know about you, but if I have someone negotiating for me, I like to know who they are.  In reviewing the last CC meeting, I observed a new face.  He seemed intelligent and seemed to know what he's doing........but who is he?  His name is Chris Coble of Black Label Real Estate, from Denver.  He introduced the developer to the council.......but why didn't Jim Grabenhorst?  Jim was on the Staff Report as an author.  Coble seemed to be a consultant, therefore receiving a fee for his services, but what does he do.  We seem to be up to our eyeballs in consultants already.  Another questions is, Who is "third party real estate economists?"  They are mentioned twice in the Staff Report, but never identified.  Is staff ashamed of them?  Who the heck are they?  And Staff wonders why so many citizens complain of secrecy and back room dealing.  Well, these two questions get us started.




This is a $30 million deal.  Any bank making a development loan would want at least a 20% down, or $6 million.  That is the amount that Rowlett is proposing they put into this deal.  However, it is not all cash.  Some is land.  Some are infrastructure improvements, some is forgiveness of impact fees, and some are rebates of ad valorem taxes.  But it gets more complicated.




The land is estimated to be worth $1,650,000, however there appears to be some language that this would be traded for a five year lease for the library in one of the new buildings.  The library space needed is 11,700 square feet.  That equals to $330,000 per year in rent, or about $28.20 per foot per year.  People, that's pretty fancy space.  What happens if we don't have a place to put the library in five years? 




The city is to forgive $450,000 in impact fees.  I don't mind that.  That is not out of pocket cash.  However, there is mention of "Existing Impact Fee Fund Balance."  I'm not sure what that is........but it sounds like cash collected from other impact fees.  Also, CIP Funds are to be contributed in the amount of $700,000.  That is cash.




But, the biggest exposure seems to be the 15 year forgiveness of the ad valorem taxes.  This tax give away is supposed to be funded back to the city by 380 Grant Funds.  This makes me nervous.  The Staff Report makes light of this simple little endeavor.  The Staff Report treats the 380 Grants as no big deal.......kinda like picking up the phone and telling the state house we need another $225,000 each year, and the money is wired in in a few minutes.  I doubt that.  Grant funds have a history of appearing and then disappearing very quickly.  Maybe 380 Grants are different.  I just don't know......but I don't trust the Staff Report.  According to the above language, assuming I'm reading correctly, if the 380 Grants become "unavailable" after we cut the deal with the developer, the city is already on the hook for a 15 year vacation from any revenue from this project.   That is roughly $225,000 per year for 15 years......or $3,375,000.  That would be an ouch.  We would be literally subsidizing the developer's project for 15 years with no income.




Now I have many more questions.  However, the partnership agreement would probably yield more questions. 




The City Council may have answers to all the questions, but the citizens don't.  I don't think the citizens need to know every detail, but I think they need to know more than has been provided. 




I think it's too early to enter into a partnership agreement with the developers until some comfort level is provided to the citizens.  I'm going to keep looking for more questions.




As I said earlier, I want this deal  or a similar deal to work.......but we need some safety netting.......and I don't see any.  The developer is not taking any market risk and probably very little construction risk.  We have by far the biggest risk........and if only an apartment project is built, without any other businesses, the City of Rowlett didn't get any other benefits. 




I agree with Doug Phillips that we need to seed the project, but it seems to be a little lopsided.  If the 380 Grant risk could be mitigated, the risk potential changes a lot. 




There are some other questions I'm looking into, but this is enough to encourage another look.  We should pass on entering an agreement until we know a little more.  Here, I'm favoring Carl Pankratz. 










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The Village (Part 1)

5/19/2014

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Well, I've made my first pass at reading, watching, and listening to all the "stuff" about the proposed Village of Rowlett.   It's not all been digested, yet.  But, its a start.



I only had very cursory knowledge about the development proposed for downtown........not really enough to talk about.  However, after viewing the City Council meeting of May 6, I began to form up some thoughts.  



First, I am very much for what I understand to be as the vision  for downtown.    I think its good for business and for the citizens of Rowlett.  I think it would create some charm that we sorely need.   It may be new charm made to look like old charm........but its charm nevertheless. 



The developer's presentation was pretty good.  I think I liked the presenter. 



Now, if you took all the players in the room that was there for the presentation, that is staff, P&Z, if any, future tenants, city council members, consultants, developers, etc., they all fit into two catagories:  1.  People who are there because of money, and 2. People who are there as a civic duty.  The two groups do not have the same goals.  The developers, contractors, managers, and even tenants, are there because of some fiscal decision.  That is okay.  That is the way this great country works.  In the same room are civic motivated people that really don't care about construction costs, just so long as the project is built, but more importantly, produces what the city wants.  That, too, is okay.  Both are doing what they are supposed to do.  It sounds harsh and totally void of compassion, but that okay.  Each want the other to succeed, but they want their share of the pie, too. 




So now the sophistication begins.  The two parties have to come together to help each other and still get what they want. 




I noticed during the presentation what the developer was saying intermix among some pretty clever sentences.  Long before the developer started his presentation, I knew the same thing he did.  I knew the rental project would  be a success.  He did also.  The apartment market is that strong.  Now, the developer was painting a very pretty picture about the new shops, offices, store front businesses........but listen carefully to his words and he was saying he was building apartments that had the ability to convert some units to office/business if the market ever proved up.  Therefore, he was covering his risk with apartments, which he knew would work.  He also knows he can "bank" an apartment deal in the Dallas area, but if you mix in some "speculative" business space, an additional risk is taken.  Bankers don't like to speculate with depositor's money.  Therefore, both parties have to realize that if the project contains too much risk, the bankers will pull the plug.  So.........the city's got to give a little bit. 



As a credit to Carl Pankrantz, he spotted all the above......except for the banking angle.  He posed some very valid questions to the developer.  His radar was on.




However, Doug Phillips made an equally valid observation.  He essentially said that the downtown area needed to reach a critical mass (my words) in which other businesses would risk starting new businesses in the area of the apartments because of the increased population and foot traffic in the area.  That would then benefit all of Rowlett, and create sales tax and shops and businesses for  other Rowlett citizens. 




The two City Councilmen framed the two questions above almost perfectly.  However, they must remember there is a banker out there, too.  The bank is looking at risk containment.  And, they have a big vote. 




Okay.......we know both sides are honorable.  We know there is a banker out there that hates the word "risk."  We know that both sides have legitimate purposes and due their rewards, provided that no one takes advantage of the other.  It's a symbiotic relationship.  We need each other. 




I have read the Staff Report on Tuesday's CC meeting.  Boy, do I have a lot of questions.  They will discuss the acceptance of the partnership.  Boy, do I have a lot of questions.  They will discuss the city's obligations.  Boy, do I have a lot of questions.




In concept, I like the proposal.  The details are extremely fuzzy.  I don't like that.  I would like mysterious and unnamed people identified.  I need to learn something about the probability of grants that is supposed to return 15 years of real estate taxes.  There is a whole bunch of math I want to do. 




I will try to post more on Tuesday before the CC meeting.  I do not feel the citizens of Rowlett know enough about the proposed business deal.

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Short note

5/19/2014

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I just learned of two families moving to the Dallas area.   The families haven't moved here yet, but they  were  in the Dallas area to buy a house.   They are part of the early vanguard of the Toyota transplants. 


They drove through Rowlett to purchase homes in Rockwall.  They each drove within two blocks of two subdivisions that had proposed $400K houses, which was in their price range, and declined by City Council.  It will take them 10 minutes longer each way to commute from Rockwall rather than Rowlett.


Rockwall must really love Rowlett.


This is really going to hurt.

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Tax Base

5/18/2014

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TAX BASE.....TAX BASE........TAX BASE.   In case anyone has forgotten what this blog is all about.

The whole world seems to be preparing for the increase of housing demand that is being launched by the news of Toyota and some other new industrial expansions in Plano, Frisco, and McKinney............except Rowlett.  In our infinite wisdom, we are denying upscale residential housing and we are preparing for..........what else?...........office and warehouse demand.....created by (what?)........and served by toll way.  How shrewd!!  No one will ever guess what we're up to!  This must be part of our "one chance to get it right" strategy.  




Now, back to my research on downtown.   

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Novice thinking

5/16/2014

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Been reading.  One of my pet peeves is "authorities" that specify "the best materials" to assure quality construction.  Let me tell you something.  Quality materials have little to do with quality construction.  Quality construction is far more determined by good  craftsmanship and good design and engineering.  Solid gold studs are poor construction materials.  The metal is too soft.   Keep moisture away from even #2 pine and hemlock studs and you will assure construction that will stand a very long time in a well designed building.  Moisture penetration and poor craftsmanship will destroy even the best materials of any structure. 




Yes, Virginia.  You still have to know how to write "spec" codes.  Form based codes are not heaven sent, and will not prevent this need.  Form based codes are not a solution to all code problems.  Some act that it is.  Inspections are a far better way to assure quality than someone setting at a desk considerable distances away.

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