Developer Throws Tantrum, Daily Newspaper Calls for Lollipops

Trammell Crow Co. is going to be very mad and very sad and maybe even do something very bad if the Dallas City Council doesn't give it every single thing it wants today.
Trammell Crow Co. is going to be very mad and very sad and maybe even do something very bad if the Dallas City Council doesn't give it every single thing it wants today.
Crimfants via Creative Commons

Today as the Dallas City Council returns from its summer slumbers, it takes up a number of prickly questions, none more so than the debate over asking developer Trammell Crow Co. to include some affordable housing in exchange for the company's getting an enormous grant of extra development rights from the council.

The zoning on the piece of property that Trammell Crow is developing on high-priced dirt next to Klyde Warren Park allows them to put up two 17-story buildings. They want to do a 19-story and a 32-story, which would be the equivalent of three 17-story buildings.

So, yeah. If the law tells me I can do two 17-story buildings on the dirt I just bought, I might say, “How about three?” I think we all get that. We understand how that increases the amount of money they can make on that same patch of dirt by some significant factor.

But it’s not cost-free for the rest of us. Look at the years of screeching back and forth we have had to endure over Museum Tower, the new condo building just on the other side of the Klyde Warren deck park.

Museum Tower, which met all of the required approvals and acquired all the votes it needed from City Hall before it rose an inch from the soil, was accused, once it was up and running, of architectural jihad, because it was deemed too tall and too reflective. Just think what it would be like if those developers had talked the council into letting them build three Museum Towers on the same dirt.

These development rights issues are serious business with serious repercussions. Limits are placed in the law for good reason. The limits shouldn’t be fiddled without careful consideration.

Always in the past in Dallas the mantra emblazoned over City Hall has been, “Ask, and Ye Shall Receive,” depending on who ye is. The old-line hard-wired developers have taken as birthright that they should be allowed to flout the law and juice the maximum possible profit out of every deal, unless, of course, the developer is someone unwashed like the Police and Fire Pension System, which built Museum Tower, in which case they should be required to tear it down even though it meets the law in every way.

The social/business system we’re talking about here is what is called, in rural East Texas, “an all-cousin town.” Want to get ahead? Be a cousin.

In the Trammell Crow case, Plan Commission member Paul Ridley and City Council member Philip Kingston have proposed a new approach. The city has needs, too, they say. One of the most urgent of those needs downtown is for affordable housing.

Last June, just before the city’s elected officials all went off to camp,  Ridley proposed that Trammell Crow agree to make 20 percent of its apartments affordable to people making about $50,000 a year in exchange for permission to erect the equivalent of an entire third tower on their land.

The “development community,” whom we will refer to hereafter as “the cousins,” went pretty much nuts, even though similar trade-off formulas are being used successfully in other cities all over the country to promote the creation of affordable housing.  After some heavy-handed lobbying, Ridley’s proposal was shot down, stabbed, boot-stomped and poisoned at the Plan Commission just before the summer hiatus. Now, bravely, it returns for a second chance before the City Council today.

Today The Dallas Morning News published an editorial  which is (surprise, surprise, knock us over with a feather) word-for-word the all-cousin line, even including the telltale tantrum threat that if the cousins don’t get every single thing they demand they just won’t build any apartments at all.

I say telltale because that’s how you know: Anybody might go to City Hall and ask, but only the cousins think it’s OK to throw a tantrum. By the way, I tried to reach Trammell Crow’s head lawyer, Susan Mead, but I never heard back.

When Rumpelstiltskin throws a tantrum, he knows what he's doing.
When Rumpelstiltskin throws a tantrum, he knows what he's doing.
Dik Brown via Wikipedia

Here is how our local Pravda put it:

Trammell Crow isn’t without options here.

Company officials are quite clear that if the council attempts to require them to include an affordable element in the proposed development, they won’t build any residential units. They will build nothing but office space. That would be the worst possible outcome.

First of all, if Trammell Crow’s planning is so damn sacred, why did they start a project on land that afforded them only two-thirds of the development rights they now say they need to make money? Guess they were planning on getting everything they wanted out of the City Council. 

But what makes the tantrum especially laughable is the paper’s assertion, straight from the mouths of the cousins I am sure, that this affordable housing trade-off that Ridley and Kingston propose might have been a good idea way back at the beginning, but it’s just way too late now for Trammel Crow Co. to even gets its head around.

The problem is that the development was in planning at City Hall for eight months before the idea of including affordable housing was ever broached.

The first mention came in June, on Trammell Crow’s third trip to the City Plan Commission about the project. During that hearing, Commissioner Paul Ridley suggested that the company set aside 20 percent of all housing units at a rate affordable for people earning 80 percent of the median area income, or about $50,000 a year.

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So it’s way way too late in the game for Trammell Crow to even consider devoting 20 percent of its apartments to affordable housing (understanding that the 20 percent is merely a bargaining position from which to open negotiations) even though Trammell Crow is asking to expand the total project by a third.

Just too late, the cousins and the News tell us. Can’t do the math. Great idea, maybe for somebody else later, but we got this one all penciled out already, and we can’t erase.

But they also say: If we don’t get our way, we can snap our fingers just like that and eliminate 100 percent of the apartments we had planned to build and still go ahead with the project.

That’s not an argument. That’s a tantrum.

A week ago I told you about an appraisal report for an apartment project in Fort Worth. The appraisal company looked at what the project would be worth and how much it would earn for investors with and without an affordable housing component. The difference was in pennies and single percentage points — almost negligible.

The reason was simple: The biggest fixed cost for an apartment complex going forward is real estate tax, which is figured on the amount of rent the landlord will be able to collect. Inclusion of X number of lower rent units greatly slashes the overall real estate tax bill, saving the owners a ton of money.

I’m not saying this is a one-size-fits-all magic formula. It may not work that way in the Trammell Crow project at Klyde Warren. Or it may work exactly that way. But it’s something that should be explored.

Remember, the City Council isn’t required to do a damn thing here except tell people to obey the law. They are not required to change the law for people, not even for the cousins. And the cousins are not required to say yes to the affordable units. All that is being proposed is a negotiation. You want something? We want something. Let’s talk. That’s all.

The idea that Trammell Crow can’t even enter a negotiation is absurd. Equally ridiculous is that the Morning News or the City Council should accept at face value and on blind faith every single thing the cousins tell them about the economic viability of these projects.

Prove it. If we’re going to throw numbers around, then pony up all the numbers. Let’s see the numbers for the project with no affordable, with 20 percent affordable and with zero apartments, all commercial. Wait. We need to see the numbers, too, for the project with only two 17-story buildings instead of three.

Klyde Warren is a hot area. The city is blessed with several hot areas near downtown. Our elected officials have a fiduciary and a moral duty to steward those areas to the maximum good of the community.

They shouldn’t just give away the store every time the cousins throw a tantrum. In the argot of parenting, I believe that’s called “enabling.”


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