By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
I did get it.
In order to pay its share of the Merc deal, the city must borrow $73 million on the bond market. In order to borrow that money, the city must pledge as collateral all of the new tax revenues from all of the buildings included in a special downtown taxing district.
It all has to do with the Merc and what it is. The Mercantile complex is an enormous World War II-era asbestos-filled dead elephant rotting and stinking right in the middle of the picnic in downtown Dallas. Since the early '90s it has been a big ugly haunted house guarding the gates to Urinetown, ensuring that only homeless people seeking a place to relieve themselves will want to enter that whole end of the city's un-vibrant urban core.
It's that bad around there.
All the top local developers have thought about taking on the Merc--Henry S. Miller looked at it twice--and nobody local could get the numbers to work. But if the Merc doesn't get fixed or ripped and redeveloped, then nothing else anywhere near it has a snowball's chance on the men's room floor.
Mayor Laura Miller made a basic call on the deal: The Merc has to get done no matter what because otherwise it kills everything around it. The preservationistas on the council--not Miller but the rest of the council--declared that not only must the dirt beneath the Merc be redeveloped: The structure itself, a box with a fake rocket on top, must be preserved, for reasons that zip right over my head.
I mean, I sort of get it: The Merc is an important architectural link to an era when Dallas was ruled entirely by people with bad taste. If we lose that, if we start thinking we've always had good taste around here, well, then we've just lost our whole identity. Heaven forfend.
So Miller declared that if the only way to deal with the Merc is to preserve it, then it damn well better get preserved. And as somebody who used to office nearby and longed for a gas mask every time I walked the endless block it sits on, I fully understand. The city could have piddled away money forever "incentivizing" the sandblasting of darling little details all around the Merc, and you'd still need a gas mask to go look at them. And, by the way, a pair of running shoes and a police whistle on any given evening.
"Oh, look at the marvelous job they've done with detailing on that portico."
"Lovely, but I think we need to keep running and screaming."
One company could make the Mercantile deal work: Forest City Enterprises, associated with the Ratner family of Cleveland, Ohio. Forest City describes itself in press releases as a "$7.8 billion NYSE-listed national real estate company."
The investment required to remake the Merc is a quarter-billion dollars. A quarter-billion dollars to bet you can turn The Chateau D'Urine into Shangri-La seems pretty high-rolling. But put it in context: If you're worth $7.8 billion, it's 3 percent of your net worth. The trick is finding somebody worth $7.8 billion.
The Forest City deal was going great guns, and then it seemed to die after city staffers balked at the amount Forest City wanted the city to invest. The issue there is historic preservation of the central tower. That element alone--the preserving--adds a cost of something like $45 to $50 million above the value of the finished product.
Let me put it another way. The city council in its wisdom has decreed that somebody has to spend about $50 million for preservation alone, beyond what anybody could get for the place if they sold it after the renovation is complete. And you know how banks are. They try to loan less than the value of the finished deal, not more, because they want a way to get their money back if everybody scoots to Rio.
The Forest City deal was in the tank. Miller and council member Mitchell Rasansky went to Washington to meet with Forest City. And they paid the price. They put the deal back in the basket. Council members Don Hill and Ed Oakley tagged along with them; they were in the kitchen when the cake was baked; afterward Oakley and council member Bill Blaydes told The Dallas Morning News they thought it was a great deal.
It's an all-the-eggs deal. The Merc deal ties up so much money that the city won't be able to offer even small incentives to anybody else downtown for 10 years and won't be able to do major giveaways for 30. A big reason for that is that the council has been giving away money without counting it. Now they're at the bottom of the drawer. They have to count.
But this is also the kind of big-picture strategy the movers and shakers in Dallas are always saying we need. It's the DFW airport of downtown: one great big jolt of subsidy designed to jump-start the free market all around it.
But it means there won't be any little deals left for individual council members to do. Apparently most of them failed to pay enough attention to figure that out last August when the deal was shown to them. Karl Zavitkovsky, director of the city's department of economic development, told me it was all right there, fully transparent in the deal itself, and all of the deal was briefed to the council.