The City's Trying to Figure Out How to Save the Deal to Save Deep Ellum
Every so often for about the past month or two, someone will whisper to me in hushed conspiratorial tones, "So, did you hear? That Deep Ellum deal is dead." Then, they will slink back into the shadows, no doubt to giggle their told-ya-so's into someone else's ear. Because, frankly, for every person who thinks Scott Beck's plan to buy up and redevelop some 14 acres in the heart of Deep Ellum is a godsend, there's some other party -- a rival land owner or developer, a club owner, a resident -- who'd prefer to see Beck, pictured above, back away from Deep Ellum and let the neighborhood go about its business without an interloper remaking it in his image.
Which is fine, except, for the second time, the deal has not fallen through -- not yet, anyway. As we said in October, yes, one or two of the property owners with whom Beck contracted to buy land have backed out, pending his closing the deal with everyone else. But Karl Zavitkovsky, director of the city's Office of Economic Development, tells Unfair Park that as far as the city is concerned, it's still a go. Even if the green light's a darker shade of yellow given the current credit market.
"What the city is doing is looking at what tools we have available and how much they can be applied to the Deep Ellum project," he tells Unfair Park. "A lot of this is stuff we're working through with the council in terms of different funding vehicles. We have had very open conversations with the Becks and have been working together on this, so I don't know where you would have heard that" the deal is dead. "We're still having conversations."
Now, even some folks close to the project have been troubled by the delay; Beck had hoped to go before the city council next week to present the project and get approval on alternate funding. But, as Zavitkovsky puts it, "there aren't many banks looking to make real estate transactions at the moment." Which is why the Office of Economic Development and Scott Beck are trying to find alternate funding routes.
In September, Mayor Tom Leppert told the Observer that Beck's project would no doubt be the reciepient of bond money -- not only $6 million in 2006 bond money earmarked for Deep Ellum street improvements, but also money from the 2010 bond election. Of course, the latter can't be relied upon -- and the city so far isn't counting its pennies before they're OK'd by voters.
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And while the area Beck's buying -- "90 percent" of Elm, Commerce and Main streets from Good-Latimer Expressway to Malcolm X Boulevard, as he puts it -- will likely be put back into the Deep Ellum Tax Increment Financing District, a source of public funding that went into effect January 1, 2006, that too isn't a viable option at the moment.
"The TIF reimbursements are really on a reimbursement basis," Zavitkovsky says. "So they don't do you much good as a front-end vehicle."
Which leaves ... what?
"What the city would look at would depend on what percentage of the units would involve affordable housing, and so there may be funding available from different sources," Zavitkovsky says. "There's Section 108 monies that are essentially mezzanine funding tools that the council is considering now, not just for Deep Ellum but as a tool that might be used throughout the city."
Indeed, only two weeks ago the city council's Economic Development Committee discussed this very thing: using Housing and Urban Development grants to facilitate development. As it said in the committee's briefing package on the subject: "This deteriorating financial climate leaves the City with the crucial decision: Should we wait it out on the sidelines, or develop creative solutions to keep momentum going in the growth prone areas and stimulate investment in more challenged areas?"
And Deep Ellum isn't the only area of town being discussed for Section 108 money. Also mentioned during the November 20 meeting: Fair Park, the Lancaster Corridor and North Oak Cliff. Zavitkovsky says the city qualifies for $80 million in HUD loans.
"And I think we would request -- at least, the way it was presented in the meeting -- the $75-million level, and each project would have to be approved individually."
No doubt, Zavitkovsky is frustrated by the delay in Beck's venture. "It's frustrating for everyone," he says, including Beck, with whom the city was discussing the Section 108 option only days before Thanksgiving. And while the project isn't likely to close as soon as Beck had hoped -- which is to say, before the end of the year, which is but days away -- the city still thinks it will happen. Because, as far as the city's concerned, it has to happen in order to revitalize Deep Ellum.
"Scott's been very straightforward with us, and we've been straight with him, and we're looking for everything we can do to make this work out," Zavitkovsky says. "But it clearly hasn't been made any easier by the credit markets. And it's also made difficult by the critical mass he's trying to assemble in Deep Ellum, which is necessary, because without it, it makes redevelopment that much harder. In all these situations, the city is looking for ways to be a positive force in finding the solution. But we can't be the whole solution, and everyone here is aware of it." --Robert Wilonsky
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