For the first time since news broke that 1401 Elm was off the market, the city council got to hear all about the project -- one its new owner says could be a "tipping point" for downtown. Turkish investor Mukemmel "Mike" Sarimsakci, who purchased and plans to redevelop the 1.5-million square-foot former First National Bank building at 1401 Elm Street -- the largest vacant building in downtown Dallas -- presented his plans to a very receptive Economic Development Committee this morning. He was joined by Karl Zavitkovsky, head of the Office of Economic Development, who flipped through a slideshow of the building's history and future as Sarimsakci and architect Jerry Merriman chimed in with specifics.
And in the end, council members Tennell Atkins, Ann Margolin, Sheffie Kadane, Jerry Allen and Delia Jasso supported the city's allocation of $30 million in tax increment financing (TIF) redevelopment funds. City council is expected to approve the funding next week.
"I think this is a great opportunity," Atkins said. "People will be glad to live, work and stay in downtown."
The $30 million in TIF funding, plus another $21 mil in historic tax credits, brings the city's planned contribution to the project to more than $50 million. Some Friends of Unfair Park have chimed in with concerns that Sarimsakci may not fully realize or be able to sustain the planning and financial burden involved with a project like this.
Sarimsakci assured the committee that's not the case, insisting that his company, Polimeks, has diverse investments and the know-how to complete a project of this scope. Zavitkovsky said this project will fill in a sizable chunk of the 5.5 million square feet of vacant downtown office space, as well as create jobs and add living space.
Several times throughout the meeting, and afterward in a chat with Unfair Park, Zavitkovsky made it clear that this project presents very little risk to the city and to tax payers. The TIF dough, after all, is contingent on the project meeting certain conditions -- including an investment of $125 million, established square-footage for retail, office and residential space, and the restoration of public observation decks.
"The obligation of the city TIF ... doesn't go live until they complete what they're supposed to do," Zavitkovsky told Unfair Park. "They have to perform for the public to have any obligation."
Zavitkovsky said he's confident that the Turkish investor, with his fresh perspective, global contracting experience, and deep pockets, is the right man for the job. "It's a big building. Market conditions can change ... but right now, I feel good," he told Unfair Park.
Other investors backed away from the building because it needs significant asbestos abatement and because nine separate ground leases are difficult to negotiate, but Sarimsakci is negotiating with several of the building's lease holders and feels he has the money and the desire to do what it takes to revive 1401 Elm "as quickly as possible".
"I love that building," he said.
"We're trying to have a fast design and a fast construction," Sarimsakci told the committee. He hopes the ground-level retail spaces will be up and running in a year, followed by the floors of office space in 18 months, and, finally, the 520 or so apartments.
"We are used to large-scale projects," he said of his global contracting company. "When we make a promise, we deliver a product," he said. "I think a project like 1401 could be a tipping point [for downtown]."
"I think it's going to be great," Kadane said.
Atkins asked whether the required 10-percent affordable housing component would be spread throughout the building, adding that he'd prefer to see it dispersed. "We haven't made that decision yet," Sarimsakci said, but he added that he would be willing to disperse the affordable units that would rent for about $1,000 to $1,200, as compared to other units, which are planned to average around $2,000 to $2,500, depending on the market.
Margolin said she thought rents seemed "really, really high," but said, "This sounds like an exciting project."
"So, funding is basically in place?" Jerry Allen asked.
"Yes," Sarimsakci said, of the more than $130 million in private equity, loans, grants and tax credits it will take to get the building running.
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As for the building's restoration and environmental remediation, estimated at $30 million, which the city will repay incrementally, Allen asked, "Do you feel comfortable with those figures?"
Sarimsakci said he got the best rates he could manage and that he was comfortable with the amount. And if it happens to cost a little extra on his end, he joked, "What's a million dollars between friends?"
Allen described the building as a "jewel," using Sarimsakci's word, and said that his company is "poised to polish that jewel."
"We look forward to the grand opening," Allen said.