CTroyMathis
21 February 2002, 02:26 PM
Developer threatens to walk over subsidy
Council split on paying $43 million to secure arena-area project
02/21/2002
By DAVE MICHAELS / The Dallas Morning News
The company developing the land around American Airlines Center told the City Council on Wednesday that it would not undertake the $600 million Victory project if the city does not agree to fund $43 million in public parking, streets and plazas.
The Palladium Co. said it could not afford to fund the new infrastructure. Several City Council members seemed torn between granting the new subsidies or losing the prospect of new retail shops and restaurants.
"Had this been part of the original equation, I think there would have been a lot of happy, enthusiastic people," council member Lois Finkelman said after a briefing that lasted more than two hours.
"It's close," said Mayor Laura Miller, who has opposed the funding. "If we voted today, I think half the council would vote for them."
The council will be briefed on the matter again March 20.
Palladium intends to bring apartments, hotels and retailers such as FAO Schwarz and ESPN Zone to 20 acres that sit between the arena and the West End – but only if the city chips in the $43 million. A principal investor in Victory previously threatened to pull out of the project if public money is not used for the infrastructure needs.
Council member Mitchell Rasansky called the request corporate welfare. But several other council members, including Mary Poss and Maxine Thornton-Reese, said the city could not turn down the chance to secure a massive retail development during tough economic times.
"Can we find a better opportunity anywhere, colleagues?" Ms. Poss said. "It would be a disservice to the citizens if we did not do this, particularly in this economy."
But Mr. Rasansky said he was not convinced that Palladium, or the developers of the arena, could not cover the cost of new infrastructure.
Palladium has contracted to buy the 20 acres from Hillwood and Southwest Sports Realty, the companies that initiated the arena project. They negotiated an agreement with the city in 1998 that gave them $125 million to build the arena and bound them to develop the land around it.
In a separate deal, the city agreed to reimburse Hillwood and Southwest Sports Realty about $25 million, derived from the increased property taxes that Victory generates, to cover the cost of building the streets that encircle the arena. That arrangement is known as a tax increment financing district, or TIF.
"I will not support another project out there, especially when Hillwood signed an agreement that they would do it, and then they turn around and flip that land to you [Palladium] to get around that obligation," Mr. Rasansky said during Wednesday's briefing.
To raise the $43 million, Palladium has proposed creating a municipal management district that would issue bonds to reimburse the developers for building the additional infrastructure.
The company intends to repay much of that debt with property tax revenue raised in the TIF, but it needs council approval.
Palladium's project is supported by most property owners in the West End, who believe that a completed Victory development will be a blessing for the restaurants and shops there.
But some public and private officials engaged in the city's concurrent effort to revitalize the downtown core – Main, Elm and Commerce streets – worry that Victory will lure retailers and office tenants away from downtown.
At least one council member, Veletta Forsythe Lill, said that concern gave her pause about approving Palladium's request.
"Your [Victory] development would certainly be more enticing than potentially coming downtown," Ms. Lill said.
Downtown officials are also asking the council to approve more funding for their revitalization needs. That money, about $39 million, would come from increasing the amount of property tax revenue returned to the developers in an existing downtown TIF.
A developer, Madison Retail, and a nonprofit corporation, the Downtown Partnership, are spearheading that request at City Hall.
Most council members are sympathetic to the request. But several said Wednesday that they had reservations, since the downtown TIF has raised funds it has not spent and has had only modest success in attracting retail tenants.
Council split on paying $43 million to secure arena-area project
02/21/2002
By DAVE MICHAELS / The Dallas Morning News
The company developing the land around American Airlines Center told the City Council on Wednesday that it would not undertake the $600 million Victory project if the city does not agree to fund $43 million in public parking, streets and plazas.
The Palladium Co. said it could not afford to fund the new infrastructure. Several City Council members seemed torn between granting the new subsidies or losing the prospect of new retail shops and restaurants.
"Had this been part of the original equation, I think there would have been a lot of happy, enthusiastic people," council member Lois Finkelman said after a briefing that lasted more than two hours.
"It's close," said Mayor Laura Miller, who has opposed the funding. "If we voted today, I think half the council would vote for them."
The council will be briefed on the matter again March 20.
Palladium intends to bring apartments, hotels and retailers such as FAO Schwarz and ESPN Zone to 20 acres that sit between the arena and the West End – but only if the city chips in the $43 million. A principal investor in Victory previously threatened to pull out of the project if public money is not used for the infrastructure needs.
Council member Mitchell Rasansky called the request corporate welfare. But several other council members, including Mary Poss and Maxine Thornton-Reese, said the city could not turn down the chance to secure a massive retail development during tough economic times.
"Can we find a better opportunity anywhere, colleagues?" Ms. Poss said. "It would be a disservice to the citizens if we did not do this, particularly in this economy."
But Mr. Rasansky said he was not convinced that Palladium, or the developers of the arena, could not cover the cost of new infrastructure.
Palladium has contracted to buy the 20 acres from Hillwood and Southwest Sports Realty, the companies that initiated the arena project. They negotiated an agreement with the city in 1998 that gave them $125 million to build the arena and bound them to develop the land around it.
In a separate deal, the city agreed to reimburse Hillwood and Southwest Sports Realty about $25 million, derived from the increased property taxes that Victory generates, to cover the cost of building the streets that encircle the arena. That arrangement is known as a tax increment financing district, or TIF.
"I will not support another project out there, especially when Hillwood signed an agreement that they would do it, and then they turn around and flip that land to you [Palladium] to get around that obligation," Mr. Rasansky said during Wednesday's briefing.
To raise the $43 million, Palladium has proposed creating a municipal management district that would issue bonds to reimburse the developers for building the additional infrastructure.
The company intends to repay much of that debt with property tax revenue raised in the TIF, but it needs council approval.
Palladium's project is supported by most property owners in the West End, who believe that a completed Victory development will be a blessing for the restaurants and shops there.
But some public and private officials engaged in the city's concurrent effort to revitalize the downtown core – Main, Elm and Commerce streets – worry that Victory will lure retailers and office tenants away from downtown.
At least one council member, Veletta Forsythe Lill, said that concern gave her pause about approving Palladium's request.
"Your [Victory] development would certainly be more enticing than potentially coming downtown," Ms. Lill said.
Downtown officials are also asking the council to approve more funding for their revitalization needs. That money, about $39 million, would come from increasing the amount of property tax revenue returned to the developers in an existing downtown TIF.
A developer, Madison Retail, and a nonprofit corporation, the Downtown Partnership, are spearheading that request at City Hall.
Most council members are sympathetic to the request. But several said Wednesday that they had reservations, since the downtown TIF has raised funds it has not spent and has had only modest success in attracting retail tenants.