Prescott continues progress on Lake Highlands Town Center

Next Phase - Commencement of Vertical Development

(Dallas, Texas-June 23, 2011) - With the Lake Highlands Town Center infrastructure construction officially complete, Prescott Realty Group is focused on kicking off Phase I of the vertical development. Despite a protracted recession over the last two and a half years that caused many developments in Dallas to be shelved, Prescott continued ahead with infrastructure construction to make the project a reality.

Eighty-six ($86) million dollars has been invested to date into Lake Highlands Town Center of which $73 million has been funded directly by a private investment partnership led by Prescott Realty Group and $13 million funded directly from 2006 City of Dallas bond funds, Dallas County, and the North Central Texas Council of Governments (NCTCOG). DART has invested at least $10 million in the new Lake Highlands Light Rail Station bringing the total new investment to date in the community of Lake Highlands to $96 million. In addition to the direct public funding, TIF financing is also a key financing component for Lake Highlands Town Center.

In TIF arrangements, the developer takes the up-front risk and makes the capital investment in public improvements which the City owns, such as streets, utilities and other infrastructure. Then, if tax revenues actually increase in the future as a result of the development, the developer is eligible for cost reimbursements for the public improvements from a portion of the incremental increase in tax revenues. Depending on the timing of completion, final build out and density of the project, Prescott could be eligible to receive up to $40 million in TIF reimbursements from the Skillman Corridor TIF.

"Many people mistakenly believe that TIF funding is an immediate incentive payment to the developer. It is actually the opposite. The investment is first made by the developer in the TIF-related project. If the development is ultimately successful - making a significant economic impact and generating sufficient increased tax revenues for the TIF's coffers, then the developer gets reimbursed a portion of its out-of-pocket costs. That reimbursement can take many years to occur," says Vance Detwiler, President, Prescott Realty Group.

ACCOMPLISHMENTS

Infrastructure Improvements
Extensive infrastructure improvements have been completed in preparation for vertical construction.

  • More than 1,330 dilapidated apartments were demolished.
  • More than 100 mature trees were transplanted into two on-site tree farms and then replanted throughout the development.
  • Lakes were created and the dredged dirt was used to balance areas that were formerly flood plain.
  • More than 30,000 tons of concrete from the apartment slabs and streets were crushed and re-used as fill material for off-site road projects.
  • Underground public utilities were installed including sanitary and storm sewer, fresh water, electricity and gas lines.
  • A 20-acre, fully landscaped park with hike and bike trail, amphitheater with stone-tiered seating, and fountains was constructed and recently dedicated to the City of Dallas in March 2011.

"It's been a case study on successful public/private partnerships and I'm proud of the whole team for what we've accomplished," said Stephanie Colovas, Senior Managing Director at Prescott Realty Group, development officer for Lake Highlands Town Center. Weekly onsite construction meetings and monthly task force meetings were held over the last few years with key team members from every agency partnering on the project, including the City of Dallas, DART, Dallas County and NCTCOG, as well as key contractors and sub-contractors working on each particular construction phase.

Transit Components
DART opened a new, multi-modal Light Rail Station for Lake Highlands Town Center in December 2010. The station is a key anchor in making LHTC a successful transit-oriented development. "DART opened the Lake Highlands Station in the midst of tough economic times for new development. We are excited to see that Prescott is moving forward with the project and responding to the realities of the new economic environment," says Jack Wierzenski, Director of Economic Development, DART. Transit improvements built by Prescott in partnership with the City of Dallas, COG and Dallas County include:

  • Creation of all public streets and streetscapes throughout the site
  • Demolition of a single-lane bridge crossing the creek north of Walnut Hill and construction of a new, two-lane bridge to accommodate DART buses leading to the station
  • Creation of a hike and bike trail connecting the DART station to the southern boundary of LHTC.

$2.8 Million COG Sustainable Development Grant Award
In a public-private application to the North Central Texas Council of Governments' Call for Projects, Prescott together with Dallas County and the City of Dallas applied for and were awarded a Sustainable Development grant totaling approximately $2.8 million for two public construction projects adjacent to Lake Highlands Town Center. Prescott and Dallas County will provide matching funds totaling $700,000 for a total project cost of $3.5 million. These monies will be utilized as follows:

  • Extension of the hike and bike trail from the southern property line of Lake Highlands Town Center to White Rock Creek Trail, providing direct connectivity to White Rock Lake and the greater Dallas trail system.
  • Improvements to the Skillman and Walnut Hill intersection including east/west alignment of lanes and pedestrian enhancements.

"It was a big coup for Lake Highlands to win this award in competition with many other North Texas communities. We are integrating transit into the fabric of Lake Highlands Town Center. LHTC is all about connectivity, whether by walking or riding on the hike and bike trail, by DART light rail, bus or car. The trail connection will allow people to get from LHTC to White Rock Lake and eventually to downtown, the arts district, Victory and American Airlines Center," says Detwiler. Construction design is anticipated to begin in late 2011 with construction to begin in 2012.

Public Art
In connection with the City of Dallas bond funds allocated to LHTC, Prescott worked with the City of Dallas' Department of Cultural Affairs to commission three pieces of art to be installed at the entrances of the park later this year. The park is a public space, open to all. The goal is to create a vibrant public green space which truly sets Lake Highlands Town Center apart from other urban, mixed use developments."We are in the business of place-making and over the next several months hope to work with the community and announce several events in the park area for everyone to come and enjoy," says Jud Pankey, CEO, Prescott Realty Group.

Communication
Over the last few years Prescott has made over thirty presentations to the community and local organizations updating them on the progress of LHTC. "We've tried to be as transparent as possible about the status of the project, our accomplishments and challenges over the last few years and our long term commitment. We hope to re-establish that consistent connection with the Lake Highlands community in the months ahead as we move forward with Phase I vertical development. A development of this magnitude takes a long time to complete, even in prosperous times. We really appreciate the continued support from the Lake Highlands community," says Pankey.

PREPARATIONS FOR VERTICAL CONSTRUCTION

Design Review Process and TIF Modification
Because it has been four years since the original TIF Development Agreement was completed, some of the provisions required modification to reflect the economic realities of the market. Prescott and the City of Dallas just completed a modification to the agreement for the purpose of resetting completion deadlines and the eligible TIF reimbursement amounts. In connection with the modification, the TIF Board requested a comprehensive design review be conducted for LHTC.

  • A third-party development consultant engaged by the City of Dallas took a fresh look at the design of the project, the proposed build-out, uses, densities and economics.
  • The consultant's recommendations were reviewed by the TIF Board's Design Review Committee (DRC). On June 1st, the Board unanimously approved the DRC's recommendations and the proposed TIF Development Agreement modifications recommended by City staff.
  • The TIF Development Agreement modifications were unanimously approved by the Economic Development Committee of the Dallas City Council on June 20th and unanimously approved by the Dallas City Council on June 22nd.
  • The next step includes a more comprehensive design review in collaboration with the third-party consultant and the City that will occur over the next several months. Upon completion of that review the recommendations will be reported back to the TIF Design Review Committee and TIF Board for approval.

"Some people misinterpreted Prescott's work with the city as our requesting design modifications to Lake Highlands Town Center. In reality, we were participating in a review process initiated by the City that was all connected with the modification of the TIF Development Agreement. We appreciate the support of the TIF Board and look forward to a collaborative review process over the next several months," says Detwiler.

Phase I Retail
Prescott has been working on several initiatives related to kicking off Phase 1 on LHTC's vertical construction, including a grocery anchored retail block. The retail block is planned to consist of 75,000-100,000 square feet including a grocery anchor. Obtaining construction financing has been a challenge because of the economy, as has signing a grocery anchor."We have talked to and pursued all major grocers. We do not yet have an anchor lease executed but we are working diligently on that aspect of the project. We will get there, but we are going to take our time to get it right - to create an authentic experience for the Lake Highlands community to enjoy," says Detwiler.

Phase I Multi-family
When the credit markets collapsed, Prescott turned to a financing program called the HUD 221(d)(4) program for a construction loan for the first multi-family block of 200, Class A units. This program offers conventional financing from the Department of Housing and Urban Development in Washington D.C (HUD). Prescott submitted final application documents for the financing in March 2011 and is waiting for final approval by HUD.

There is no requirement for affordable housing under this HUD program. As clarification, this HUD program is not Section 8 housing, assisted-income or low income housing. The TIF Development agreement with the City includes a twenty percent requirement for affordable housing which is measured as eighty percent of median income. Other key points about the HUD 221(d)(4) financing are:

  • Timing. Once HUD approval is obtained, construction can begin in 60-90 days. Prescott hopes to begin construction later this summer.
  • HUD 221(d)(4) program is a construction loan that converts to a permanent 40-year fixed rate loan upon completion of construction.
  • Recent guidelines by HUD under this program place emphasis on projects that are urban, infill, sustainable, and transit-oriented, all elements provided by LHTC.

Prescott is pleased with the public/private accomplishments to date and is eager to get started with the first phase of vertical development. District 10 Councilman Jerry Allen says, "Great things continue to happen in Lake Highlands. It has taken longer than we wanted but the project is on track. We have a strong and committed developer in Prescott Realty Group, dedicated public partners in the City of Dallas, Dallas County, the North Central Texas Council of Governments and DART and of course an active and organized community that is eager for a successful town center to call their own."

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