The Thing That Ate Downtown

Downtown’s real estate barons are terrified that Perot-Hicks’ slick Victory project could wreak havoc on their own tax-funded plans to fix the city’s core

Despite the mayoral race's accent on fixing neighborhood streets, parks and pools, Dallas is likely to be faced for years to come with major decisions on "public-private partnerships" and "innovative financing arrangements" on projects downtown. Typically, they are designed not to tap the public treasury directly, but they tend to diminish future receipts. (In a TIF district, new taxes collected as a result of rising property values are directed toward developers rather than going into the general fund. Defenders of the system say it's self-funding, because without the new projects, property values don't rise.)

"I'm not against business incentives, but we have to be very careful how they're used," says Councilman Alan Walne, chairman of the business and commerce committee. He is skeptical of both Victory's ideas and what has been done in the core. Walne says the city-center TIF was pitched five years ago as a way to finance parking garages. "So far, we haven't built a space."

Instead, there have been projects like the one the city approved in 1998 to buy the 95-year-old Wilson Building from apartment developer Post Properties, lease it back and exempt the handsome warren of stores and apartments from nearly all property taxes for 13 years. Eighteen months later, Post informed investors in a release that its $15 million investment in the building would yield a solid but not staggering 11 percent annual return. And that assumed it stays leased.

Signs of life: A one-block stretch between Main and Elm streets is being redeveloped into a quaint row of restaurants and shops called Stone Street Gardens. All it needs now is tenants.
Peter Calvin
Signs of life: A one-block stretch between Main and Elm streets is being redeveloped into a quaint row of restaurants and shops called Stone Street Gardens. All it needs now is tenants.
Ross Perot Jr. and Tom Hicks hired Palladium to develop their land at the arena. The company's Victory development, displayed above in an artist's drawing, would arrive as an instant cityscape--except one landlord would run it all.
Mark Graham
Ross Perot Jr. and Tom Hicks hired Palladium to develop their land at the arena. The company's Victory development, displayed above in an artist's drawing, would arrive as an instant cityscape--except one landlord would run it all.

Is that a bad deal for the city? Is it better the building sits empty and derelict? Dallas City Councilman Ed Oakley says those are always the multimillion-dollar questions posed by the high cost of building downtown. "It's popular right now to say you're against incentives and breaks for developers," he says. "The reality is, if you don't give them, nothing gets done."

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