Why Can't a Nonprofit Do a Downtown Project Cheaper Than a For-Profit Developer?
In the paper version of Unfair Park this week I took a longer look at Re:Vision Dallas -- you know, that self-sustaining development John Greenan and Brent Brown want to build on a parking lot behind Dallas City Hall sooner than later. Right, that one. Anyway. In the piece, Greenan (founder and executive director of nonprofit Central Dallas Community Development Corp.) and Brown (head of bcWORKSHOP) talk about how for-profit developers get their pretty conceptual renderings on the front pages of business sections all the time -- about a year before they fall into foreclosure. Meanwhile, most folks think their edible abode is but a water-pipedream: "Dallas doesn't believe in the capacity of the nonprofit to do anything significant," Greenan says.
Which prompted me to write this sentence: "If those with money can't make a go of their European crossroads, such as the Glen at Preston Hollows project promised for Walnut Hill Lane and North Central Expressway, or their mini Manhattans, like the one stillborn near the Galleria Dallas, then how in the world will a nonprofit make a go of a highfalutin hilltop in the shadow of City Hall?" Which prompted Greenan to write this response today on his blog, where he uses the city's all-of-the-sudden ginormous investment in Forest City's Continental Building to show that, look, nonprofits do it cheaper -- which ought to be a T-shirt. Writes Greenan, in part:
I can build the building 4% cheaper and Central Dallas CDC doesn't need to make a ROI of 38.55%. Somewhere in the briefing documents, I would bet, there is also a Developer's Fee (probably buried in the $11,295,000 of soft costs). A typical fee for the developer on a project this size would be about $4 million. That's ten years operating costs for Central Dallas CDC. We don't need more than that.
I know not everybody is willing to work out the math, but the truth is that a well run nonprofit ought to be able to put a project together much cheaper than a for-profit. Giving up the 40% profit on the deal is a heckuva cost savings. Or, to look at it another way, it would cost a for-profit developer $70 million to build the same project -- Re:Vision Dallas -- that we'll do for $50 million.