Well, here you are again……facing a hostile crowd and having to make a decision. I know it’s not comfortable. My opinions differ from the hostile crowd. I don’t have a hundred people to make noise for me. There is just me…..and my keyboard.
I want to talk about the Chiesa Road zoning requested by AMTEX for developing a 114 apartment unit complex. The request was denied by P&Z.
Most of you know I spent 25 years with three major lending institutions engaged primarily in real estate development finance. Two of those lenders were nationwide, thus requiring preliminary research in many towns in which not much was known. The single best skill a loan officer could develop in these "out of town" loan requests was the ability to digest information about a new city fairly quickly in order to make a decision on whether to spend a good amount of time and expense to proceed...or reach a quick decision to pass. This is good policy. The second best answer a borrower can get is a quick "no." This allows the lender to go on to other deals, and the borrower to go on to other lenders.
As a loan officer, I always looked for the negatives, first. I did this because it saved time. There was no need to invest additional time and energy into an unmakeable deal.
I am putting my lender hat back on to look at the Chiesa Road project, which will come before you July 18. So, here we go.
Apartments in general:
The very first negative that pops into place is the well organized "anti-apartment" crowd that has created somewhat of a ground swell of resentment in what seems to be not only against apartments, but nearly everything along Chiesa Road and Miller Road. When this group of citizens appeared at P&Z, they offered a preview of what's coming to City Council. I understand there were 50 speakers. I have heard the same stories over and over again for dozens of times, in dozens of City Council meetings in dozens of cities. The stories do not vary by much.
But, let's dial it down to Rowlett. There seems to be a lot of skuttlebutt about Rowlett building far too many apartments. One of the road maps that Rowlett "officialdom" uses is a study named Rowlett 2020. In Rowlett 2020, it is forecast that Rowlett will have about 15,000 apartments when Rowlett is fully built out and containing about 120,000 residents. At at the present time, Rowlett is about half that population at 62,000 residents. Therefore, statistically Rowlett could be around 7,000 units built or being considered for development.
Rowlett is far below that number. I have heard some of "officialdom" say we had 5,000 units either built or under consideration. Where? What market strata are they designed to serve? Are they for very upscale? Are they for Seniors? Workforce? Market rate? Section 8? I have also heard that 1,800 units are in Bayside. Bayside is a totally different market than the Rowlett apartment market. The "apartment" market is a lot more sophisticated than a simple word. Citing urban legends or myths doesn't provide much room for academic discussion.
In the Rowlett market there are proposed apartments for Bayside (upscale), Apartments for market rate (Huffines, The Villages, Scenic Drive apartments, and new apartments at the base of the new GWBT). Senior apartments (Evergreen). Workforce (None). Subsidized as in Section 8 (none). The Huffines project filled up immediately. It's my understanding tenants are now moving in The Village. There is something wrong with the Scenic Road project. It has slowed for several weeks and I think construction has stopped at the present time. Somebody on Staff or Council needs to find out what's going on here.
Generally speaking, Rowlett is well behind the Rowlett 2020 plan for development of apartments. The very upscale apartment development is being served by Bayside. The Market Rate market is being served by the projects mentioned above. We in Rowlett have known that the Seniors have been under-served for at least 10 years. Evergreen apartments are underway to serve this market. It is not complete yet, but it is fully leased out with a full waiting list. I have been told they are not accepting any more reservations on the waiting list. Do you think that market has been poorly served? If you shut down "all apartments," you shut down housing for seniors, workforce, and literally render the newly created Housing Finance Corporation useless. Do you think the loud voices at the back of Chambers are advising you well on this?
Apartments fill different needs. It is quite possible a market could be overbuilt with Market Rate apartments and still be under-served for Senior housing. Ya gotta be smart enough to know the difference. Evergreen should prove something to you. Furthermore, Bayside is a completely separate market from other Rowlett apartment projects. Bayside's market extends as far away as Kansas City. To include Bayside's apartment unit count into Rowlett's count is a statistical error. It is only technically correct. I would suspect the Bayside apartment proforma does not even rely on any tenants from Rowlett. I would subtract Bayside's 1800 proposed units from the Rowlett count.
Apartments lower Real Estate Values:
We have all heard that apartments lower values of surrounding real estate. That is probably not true. In fact, in some cases, real estate values improve. Let's look at the proposed Chiesa Road project. The Chiesa Road project is currently a small and well maintained 37 unit mobile home park. I have lived in Rowlett for 42 years. The mobile home park has always been there. If there is anything with a lesser reputation than apartments, it is a mobile home park. The mobile home park was built many, many years before any of the surrounding homes........including the homes of all the protesters. If there was a devaluation of real estate values, it had already taken place when each of the protesters purchased their house. I have read hundreds of appraisals. I have never read an appraisal whereby the appraiser applied functional or economic depreciation to devalue a house because of a nearby apartment project. I have seen appraisals whereby a mobile home park had a negative influence on value. A really well done apartment project would be an improvement over the mobile home park and would probably improve surrounding real estate values!! The current mobile home project would probably appraise at about $200,000 from an income approach. The proposed apartment project will probably require an investment from $13 million to $15 million. Furthermore, the project's major marketing effort will be aimed toward the much needed Senior community. Which one do you think adds more to the Rowlett community?.
The protesters at the P&Z meeting focused on traffic. It was represented that the proposed Chiesa Road project would add significant traffic to an already overloaded Chiesa Road. The protesters cited 10,000 cars per day traveled Chiesa Road. I don't know where this number come from, but a couple of other traffic studies I have seen say 7,100 to 7,500 cars per day. Anyhow, let's use to protester's count to do a little analyzing work. The proposed apartment project has 114 units. The marketing will emphasize seniors. I would estimate perhaps 50%-60% of the tenants will be seniors. Many would be retired and some with only one car. The balance could be workforce and have two cars. I would estimate the seniors would average one car trip per day and workforce average two car trips per day. I know my assumptions are not scientific, but they are a legitimate attempt to estimate how much traffic would add to the 10,000 cars per day, as represented by the protesters.
Do the arithmetic, folks. Estimates above say that 114 units, 50% estimated as senior tenants and 50% workforce would add 74 senior car trips and 148 workforce trips on Chiesa Road over a 24 hour period. When measured against 10,000 car trips per day, as represented by the protesters, the Chiesa Road project would add 222 daily cars on Chiesa Road. Folks, that adds 2.2% to the traffic load. That is certainly not overwhelming Chiesa Road. In fact, it is almost immaterial.
However, other development is going to come to Chiesa Road. The above should give notice to Council that some road improvements are needed for the future of the area. I know from my term on City Council that a four lane divided road was proposed for future improvements to Chiesa Road. This is overkill. That is more than is needed and far more expensive than necessary. There already exists a 90 foot easement, and that is enough to widen Chiesa Road by one lane, thus making three lanes. The center lane can be dedicated to left hand turns and right turn lanes can be built at Miller Road and Schrade Roads. That relatively simple modification will relieve a number of "backups." True, still expensive, but nothing like the four lane divided highway.
The traffic issue is negligible particularly if the City of Rowlett improves Chiesa Road as suggested above. It will take the developer another 6 months to finalize plans and financing and another year to build. By that time, the City of Rowlett should have some definitive plans about the improvements to Chiesa Road.
It's my opinion that Traffic is an overblown issue, and fixable. It needs to be fixed, anyway, because of other development that is sure to happen on Chiesa and Miller Road projects.
Probably the ones most effected immediately by the Chiesa Road issue are the tenants of the mobile home park. To some extent, they are protected by the Federal Relocation Act. However, that is only if someone like the proposed apartment developer buys the land. In this case, the tenants would be entitled to some relocation financial aid. If someone buys the land that does not fall under the Federal Relocation jurisdiction, the tenants will be evicted without any financial aid.
I am not the real estate agent on this property. However, I know what the agent should now be thinking. The one thing the agent should know is that the property is much more "sellable" if the tenants weren't there. There is only very modest income being generated by the mobile home park. The sellers are interested in selling for a much higher number........and quickly. From a purely business point of view, the agent should be advising their client to vacate the park. The land will sell much faster without a tenant problem. This will place some tenants in a very vunerable position. There would be a high probability that the new purchasers would not come under Relocation jurisdiction. Some of you know tenants in this park. Some tenants would be in dire financial straights without financial aid. Some have expressed interest in moving back into the project if ever completed.
It has long been known that Rowlett has not done much for our seniors and young population. That has been a major criticism recognized by the Robert Charles Lessor Survey, and more recently under the Rowlett 2020 findings. More recently, workforce citizens have become under-served because of the rapidly escalating cost for homes. Rowlett never had much in the way of apartments. One of the reasons for the hue and cry rising up from the "anti-apartment" faction was because there weren't any apartments to begin with. Two projects are a "whole bunch" when there wasn't any before.
Anyhow, because of excellent growth in our local economy, cost of housing has created severe needs, particularly in senior and workforce populations. Costs have simply outdistanced their ability to pay. The proposed project on Chiesa Road helps relieve that need. There isn't a better example of that need than the success of Evergreen. Now we must add workforce to that need. Perhaps the HFC can help in this endeavor.
Amtex is the proposed developer of the Chiesa Road project. I will leave it to the Executive Director to provide information on the project and the company, but it should be sufficient to say that the company owns and operates $1.4 billion in rental units. Yes, that's a B. That number would suggest they know how to develop apartments. I know from talking to the developer that, learning from the P&Z hearing, they have added elevators to the buildings, reduced the building to two story instead of three story, and are engineering a new egress/ingress entry onto Chiesa Road to aid traffic. The developer is competent and well experienced in the types of projects proposed on the subject site.
So, here we are. I have used some experience and a little arithmetic to draw some conclusions. Those conclusions tell me that I could easily recommend to any of my previous loan committees that I think the Chiesa Road is a good deal for everybody. Nobody gets hurt. What do I know? Well, I've been doing this sort of thing for 50 years. Actually, everything above is abbreviated. I've identified the difference in the apartment markets, showing a need for the proposed product. I've proved up the need. I've discussed the probability that the apartments do not have an adverse effect of real estate values, and I have made a simple calculation that mitigates the traffic issue. The developer is very experienced and is quite capable of performing as represented. And finally, there is nothing the "anti growth" citizens of Rowlett can do to stop the Dallas metroplex from continuing to push out it's sphere of influence. To try to do otherwise will lead you down the path of Balch Springs 45 years ago.
I don't have 100 people to yell for me. I have just me.
I am appealing to your sense of intellect instead of your political urges. It's tough, I know. You need to approve this project for development.
Thanks for your time.