TIPPING POINT

BY 2010, FIVE YEARS AND $23 MILLION dollars of public sector time and treasure had been invested in the Lake Highlands Town Center. But the new economic reality that emerged as the real estate industry recovered from recession would jeopardize the core of the project.

While the public-sector work of abating asbestos, demolishing structures, building bridges, grading and paving streets, and installing landscaping and trails got underway, the private sector took a beating. The Great Recession struck in 2008, hitting the real estate business especially hard as projectfinancing sources dried up and demand from tenants evaporated.

Previous timelines, density considerations, TIF reimbursements and other elements needed to be reconsidered in light of the new normal. The City of Dallas hired

Street-Works, LLC, a nationally recognized development-consulting firm known for its transit-oriented developments, to do an independent analysis of the town center project.

At top is the first of two recently revised Lake Highlands Town Center plans Cypress submitted for the City Design Studio’s endorsement, which is required if Cypress aims to receive TIF funds. It was a drastic change from the 2007 plans, which officials and many neighborhood residents supported. The reviewing panel did not bless the plans, calling the changes too substantial and overly suburban in character. Cypress took a month to revise the plan, based on the panel’s suggestions, but returned with renderings that showed only slight changes (below) — some slight variations in building sizes, a shift of a clock tower from the east to the northwest corner of the property, and little else. It was not enough for the City Design Studio’s panel. Cypress “called a timeout” and representatives are determining their next step.

Like many ambitious real estate projects, the center was owned by a partnership of a local operator and institutional capital. Dallas-based Prescott’s partner and primary capital source was Austin-based investment firm Cypress Real Estate Advisors.

In 2012, after six years of involvement, Cypress asked Prescott to step aside, at which point it became not only the capital source but also the face of the project, and hired local resident Bill Rafkin to lead the way. There was a new sheriff at town center.

Working with the firm and the city, Prescott rehashed its plans. Among the agreed-upon changes were a slightly altered density mix, an extended timeline for completion, and an eligible TIF reimbursement increase from $23 million to $40 million.

THE HOLY GRAIL OF NEIGHBORHOOD RETAIL is a well-run, profitable grocer. Landing such a tenant would validate the site and draw other retailers hoping to draft behind residents’ regular grocery trips.

Cypress officials won’t confirm that the town center anchor is Sprouts, a successful

Richard Duge

Richard Duge is president of the White Rock Valley Neighborhood Association with its 1,300 homes, which are due east of the Town Center project, across Jackson Branch Creek and the DART rail line. The neighborhood association has taken a special interest in the town center’s progress because of its residential proximity and potential effect on the desirable White Rock Elementary. Duge authored and distributed a neighborhood survey on the town center that received more than 2,000 responses from Lake Highlands residents. Duge says he plans to share the survey results with Cypress and with Councilman Adam McGough in hopes of molding the direction of the project. To see the results, visit lakehighlands.advocatemag.com and search “survey says.”

Tip Housewright

Tip Housewright is a 20-year resident of Lake Highlands and president of the Lake Highlands Public Improvement District (PID). He is a principal with Omniplan, a nationally recognized architecture and design firm. Acknowledging that “nobody asked me to draw up my ideas on a plan,” Housewright’s longtime residency, neighborhood leadership and professional design expertise give him a unique perspective on Lake Highlands Town Center.

“Maybe the original vision overshot the neighborhood and placed too much emphasis on multi-family and structured parking. Lake Highlands needs a community gathering place, a ‘downtown Lake Highlands,’ not another strip shopping center. We have waited years for this opportunity and we need to get it right. Lake Highlands residents, myself included, all want more quality restaurants in our community. My plan creates a place that will activate Wildcat Way as a great place for restaurants and create a heart to the town center property. We need to create a strong phase one that will lead to an even better project in the future.” farmers-market style supermarket, but documents on file with the city name Sprouts on site plans and renderings. It’s no secret that Sprouts has committed to the project, as much as an anchor tenant can commit when all that exists are preliminary architectural plans.

Sprouts has its own ideas about where it wants to position stores on a site, and Cypress revised its plans to satisfy the grocer. But the new plans did not pass muster with the City Design Studio (CDS) and its appointed Urban Design Peer Review Panel, both of which must review projects that seek TIF reimbursements.

The revisions, including a 28,000-squarefoot Sprouts, were too dramatically different from the original design, the panel said, when the neighborhood and its elected officials had so enthusiastically backed the project.

A second, revised plan was presented to the panel a month later, with similar results. (See Cypress’ two renderings on p. 40.)

The developers and the City of Dallas reached a stalemate.

SENSING TEMPERATURES RISING, CYPRESS “CALLED A TIMEOUT” says Rafkin, the firm’s local representative.

“It became very apparent there were two different visions for the project and that with the passage of time and reflection,” some progress could be made, Rafkin says.

Cypress already fulfilled its TIF requirement to construct the Haven apartment complex and build and lease at least 60 percent of the ground-floor retail space, which is good for $8.6 million in reimbursement payments. Combined with $1.6 million it received in 2011 after the completion of the 20-acre Watercrest Park near The Haven, its TIF reimbursement total is now $10.2 million.

The town center stands to benefit a grand total of $40 million, however, thanks to 2011 amendments to the TIF agreement.

Of course, Cypress could reject TIF reimbursements and build whatever it likes under existing zoning, but that would mean foregoing roughly $30 million the town center could recoup by cooperating with TIF requirements.

So the larger question remains: What will the town center look like?

Developers Know What Neighbors

DON’T WANT: an uninspired strip mall reminiscent of McKinney. There have been long-standing promises that the project will be “urban,” a hip live-work gathering space; and will avoid “suburban” designs (i.e. strip mall).

The fact that urban planners are prone toward elitist vocabulary is unfortunate, says Kevin Sloan, an architect who cochairs the peer review panel that opposed Cypress’ most recent plans, because it keeps residents from feeling like they can engage in the conversation.

“Urbanism is somewhat hard to understand at a verbal level,” Sloan says, but whether or not neighbors know the terminology, “when they see it, they know whether it’s right or wrong.”

In the case of the Lake Highlands Town Center, the panel took issue with the “suburban character” of Cypress’ proposal. “There’s nothing close to urban about this

Cypress’

More rental properties could be constructed on Block C, where Cypress foresees some 250 units, and Block G1, which Cypress believes is well suited for 280 units plus ground-floor office and retail space.

Blocks H and I would be well equipped for assisted-living units, note Cypress plans, though the firm acknowledges there is limited demand for it at this time.

project,” Sloan says.

Rafkin argues Cypress’ revised plans are right for the Lake Highlands Town Center, and he is trying to steer the conversation away from urban versus suburban.

“Our design of the retail center at Lake Highlands Town Center has been unfairly labeled as too suburban … we need to change our vocabulary from ‘suburban’ versus ‘urban’ to ‘extraordinary’ versus ‘ordinary.’”

He says Cypress hopes to create a “village green” with places to shop, to gather, to play a place where people would want to linger.

But what exactly that looks like remains to be seen.

District 10’s new city council representative Adam McGough, a lawyer who has a background in mediation, has promised his constituents to listen to their desires for the town center, convene the stakeholders and push for an agreement that will launch the project into the next phase. He took a step ings attended and voiced support for action. McGough told the group he will convene a “community task force” to find a resolution the neighborhood can support, so construction can start. in that direction last month at a town hall meeting with representatives from the city, Cypress, Richardson ISD and about 250 interested neighbors. Even Mayor Mike Rawl-

Block E is suited for approximately 50 for-sale units that could be townhouses or a dense group of detached single-family residences.

Block D3 could accommodate a movie house, large restaurant and bar, or some form of entertainment retail. In all, Cypress anticipates about 1,000 residential units (down from the 1,719 residences called for in the 2007 plans).

Blocks A1 and B are ready to house Sprouts grocery store.

BUT NOTHING CAN HAPPEN UNTIL CYPRESS makes a move. The ball is in its court, and there are a few ways this thing can go.

One, Cypress can pick up where the stalemate started. Re-engage with the city’s design review panel. Is a compromise possible? Rafkin has his doubts. “We just have philosophical differences with city planners,” he says.

Two, modify and amend the TIF to allow Cypress more time and flexibility for design characteristics. Most TIFs are modi- fied in some manner during the course of their economic life. The Skillman Corridor TIF, whose current life is through 2035, already was amended once in 2011. (See Cypress’ ideas on what a modified site plan for the entire project might look like on opposite page).

A TIF modification would extend the 2019 deadline for Cypress to fulfill requirements making it eligible for the remaining $30 million in TIF funding. In this scenario, Cypress would still need to satisfy both the potential grocer, Sprouts, and the city’s design panel — otherwise, the project would head back to square one.

But will the new leadership at the TIF board support a modified plan?

“We need to take a step back and take a deep breath,” says John Dean, chairman of the Skillman Corridor TIF Board. “While Lake Highlands has changed significantly since the TIF was created 10 years ago, the TIF remains basically unchanged. I could support a modification of the TIF as long as we fully understand what is next.

“Let’s understand why the current plan is out of date but still protect the city and taxpayer investment.”

Finally, Cypress could end its participation in the Skillman Corridor TIF, meaning it would forego the remaining $30 million in TIF funding made available to the firm in the 2011 modification.