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ROWLETT RAMBLINGS

Homestead at Liberty Grove

10/29/2015

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The Homestead project is now going into Rowlett Planning and Zoning for a Major Warrant to change the set-back lines, or in the language of Rowlett Planning, "Build-to lines."   

Staff is requesting that the P&Z Commission approve changing the set back lines from 15 feet to 10 feet on the "Village type" lots.  This would create a 10 foot front yard instead of a 15 foot front yard.  This is not too bad when used with patio homes or zero lot line homes.  Since these lots have alleys, all the garages are at the rear and attractive front elevations can be designed without the street looking like an alley.  ​This change also allows for a slightly larger house. 

Altho the proposed change doesn't have that much effect on the proposed production homes,
the language of the Staff Report seems to support fears I already had. 

I have long reported that two well known, very experienced and well respected developers were "turned out" by Rowlett officialdom in favor of this development.  These two subdivisions would now be producing $600K per week for our tax base.  This production would have started approximately one year ago for a total of about $31 million to date.  Instead of the $31 million, we have Homestead at Liberty Grove which seems to be floundering about. 

I am in the land development business.  I review development progress and determine the amount to be funded out of bank loans to pay for that progress.  ​This funding comes from development loans made by a number of banks that I have as clients.  I know how it all works and all the steps from financing, to physical development of the land, and the marketing strategies that provide lot sales and revenue to pay off the development loans.  In other words, I could do the work myself. 

I have had uncomfortable feelings with this project for some time.  First of all, "officialdom" seems to feel that because the development is controlled by Form Base Codes, that all the ills of modern society will be eliminated.  That is hogwash, but our "officialdom" believes it.  FBC works better in urban areas rather than cow pastures.  This type of development is good for some homeowners, but not all.  Maybe not even a majority.  This is an unproven market in Rowlett.  However, the developer got lucky with his timing.  You could sell a Montgomery Ward pup tent in this market.  However, the product must be upscale to protect the future values of the units.

Next, I was concerned about the development progress.  This project started in late June, 2014.  I attended the ground breaking ceremony and they were just moving the dirt moving equipment onto the site.  ​​ 

Now, everybody knows how much rain we had this Spring.  I certainly know because I was trying to get a restaurant started in Wylie some six months, or so,  behind Homestead.  Although Homestead had a six month head start on us, they had a lot more dirt to move than we did.  We were both trying to work in the mud.  Very hard to do. I know how many rain days I had to include in my schedule, therefore  I applied the same number of rain days to the Homestead production schedule.  I also have in my files several dozen land development projects in which I tracked job progress on many subdivisions.  In older files, I probably have a couple of hundred.  I know how long it takes to develop land.   During the  same time that Homestead has been developing, I have watched the completion of development of six subdivisions, four in McKinney, one in North Dallas, and one in Ft. Worth.  All started after Homestead.

I allowed four months of rain caused production delays to a typical production schedule for this project.  ​ A project of this size should be completed in about 8 months.  In seven months, builders should have started building their models while awaiting final acceptance of the subdivision by the city.  Then, permits could have been issued for the production units. 

If I add four months to an eight month development schedule, Homestead should have been completed by last June 30.  They didn't even have the streets poured.  At the time, our mayor wasn't mad at me and was still talking to me.  I called him and said Homestead was running well behind a normal schedule.  He apparently called the developer.  He called me back a few days later and said the rain caused the delay.  I said I allowed for that.  He then said the developer told him  that because of the rain the subcontractors were going to other projects and it was hard to get them back to Homestead. 

Now folks, I want you to think about that answer.  This Spring, can you think of any other projects in North Central Texas that were dry?  If anything, Rowlett got less rain than surrounding communities.  Either the developer lied to Todd, and Todd bought it hook, line, and sinker, or Todd dreamed up the story to satisfy me.  That story made no sense.

Okay, I'm a big boy.  I didn't say anything in rebutal and went on.  But,  I made a mark by Bill Getima (developer) and Todd's (mayor) names.  ​​​I knew one of those two weren't telling a straight story.

Soon after, a concrete batch plant was erected on the site, and they started pouring concrete streets and alleys.  It's about this time that promotional signs should be erected by builders announcing "What's coming here."  After the streets and alleys are poured in the model home area, models should begin to be constructed.  The models still haven't been started.  We have long been told that David Weekley and Cambridge Homes had bought all the lots and would be building homes.  Nothing's happened.  There's no evidence of Weekley or Cambridge being anywhere around.

A couple of months ago, I began to suspect that the developer had lost the two contracts from Weekley and Cambridge, or they weren't solid contracts at all.  Why did I suspect that?  That is because all really good, high quality builders think about their  lot needs a whole year in advance.  They know when their current inventory of lots will "run out."  Therefore, when they go to contract to buy additional lots, they have a default date whereby if the lots are not ready when needed, the contract becomes null and void; then they buy lots somewhere else.   Weekley and Cambridge are very sophisticated builders.  They know well in advance if the lots they want to buy will be ready in time to fit into their marketing program. 

I think the lots were not ready and I strongly suspect that Weekley and Cambridge walked their contracts, or  solid, binding contracts never did exist.  I think that is why there are no signs advertising their product, no construction shacks, and no model home starts.  I don't think the lots were ever sold under a "hard" contract.  But that certainly was the story being told by "officialdom."     Let's see now........who is the mayor, Todd Gottel,  always accusing of telling half truths or spreading misinformation?  Oh, yeah.   Larry Beckham and myself.

When I was on Council, the developer stated that he would come to Rowlett and bring his five builders with him.  Right away, I knew that was a fib.  I knew one of his builders had already filed for bankruptcy.  ​I used to inspect their product for Guaranty Federal Bank.  So, I knew the developer  was capable of not quite telling an accurate story.  Then, all I heard was "some builders" were going to build.  That fell thru.  Then, I heard that D.R. Horton was going to build.  That fell thru.  Then, I heard that Weekley and Cambridge "bought" all the lots.  As set out above, its my opinion that this deal was a long way from being "firm."

Now, I want to draw your attention to some language that appears in the Staff Report to the Planning and Zoning Commission. 

Under the paragraph
SUMMARY, the words, "Due to unique circumstances the developer is requesting a Major Warrant in order to secure the highest quality builder......."   Does this sound like a builder(s) has already purchased the lots?

Let me tell you what's really scary.  Under the following heading, ​the Staff Report states:

"BACKGROUND INFORMATION  

................The Planning and Zoning Commission approved the Preliminary Plat on January 14, 2014, and the Final Plat on August 11, 2015."    (Question?  How could two sophisticated builders go "hard" on a contract when it was not even determined that their houses would even fit on the l0ts?)   If that's true......these lots were never "sold."

Also, under the same heading, the following comments were written:​

"Over the last several months the developer has been working with high quality builders on the various residential product types........  It became apparent that the desired product types offered by the builders for the Village type lots would not accommodate their housing sizes without adjusting the Build-To Line. The Preliminary Plat established the lot and block size prior the selected builders’ involvement. The subdivision was designed and the construction of streets and infrastructure were based on the Preliminary Plat prior to finding and securing the subject builders. As a result, the developer was not able to anticipate the need for a slightly deeper lot (which then would have accommodated the required setbacks).

This means the builders did not even know whether their units would even fit on the lots.  ​

Now, one more paragraph from the Staff Report:​

DISCUSSION 

This paragraph is mostly gobblygook, but the salient points are:  "............The changes in builders and market conditions after the final design and construction of the streets and infrastructure has resulted in a unique circumstance.  Clearly, the Staff Report refers to "changes" in builders.  It also refers to changes in markets since "acceptance of the final plat on August 15, 2015."  People, the markets haven't changed.  The residential market is quite good and has been for a couple of years.  It hasn't changed in style or substance in three years.

Now, I'm ready to conclude.

First, if  a lender loaned money to develop a "spec" (speculative--no lots sold) subdivision, ​they are incredibly courageous. incredibly stupid, or the developer has $5 million of CD's in the bank and pledged as additional collateral. 

Second, if a builder buys lots before he knows whether his houses fits on the lots, he is incredibly stupid, incredibly courageous, and therefore has no money in the bank. 

I don't think any of the above even occurred to our "officialdom."  Can you imagine what an albatross a subdivision that won't sell because it is an "unproven" product would become to a city like ours?  We'd be the laughing stock of all the towns around.  ​​

Why did "officialdom" keep telling us that the lots were sold, when they weren't?  Lots are sold when a contract is drawn up, prices determined, delivery dates committed, and take down schedules worked out.  It would appear that none of this was done.  "Officialdom" let us believe, and furthered the thought, that the lot sales were a done deal.  People.......that is called manipulation and misleading.  Once again, "officialdom" is worming their way into Larry Beckham and my world.  We got there first. 

So........now they've changed the set back lines so the houses will fit.  That's nice.  The builders will like that.  Now, what else do they have to do to get the lots sold? 

Well, one thing is finishing the subdivision.  I drove thru it on the 27th.  It still has 2-3 months before it is finished.  That is unbelievable.  By the time the models are finished, it will have been nearly two years since it started.  That is an awful production schedule.

Now.......using the above as a guideline, how well do you trust our "officialdom" to wisely administer to our tax base?  They're probably okay on a free standing building on Lakeview Parkway, but I think the more sophisticated development​​​​ probably needs more help than we have. 

Now, you want a real scare on this Halloween season?  Think about our "officialdom" administering to the development of Bayview.  ​That scares the bejesus out of me.
  ​​
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