June 02, 2005
Mercantile deal may not be dead yet
Dallas officials going to D.C. to try to salvage downtown project
08:53 PM CDT on Tuesday, May 31, 2005
By DAVE LEVINTHAL / The Dallas Morning News
The most sweeping downtown redevelopment project in recent Dallas history may yet live on – after its developer declared it all but dead last week.
Top city officials are scheduled to fly to Washington, D.C., Wednesday to meet with executives from Forest City Enterprises, and they say they're primed to reach an understanding with the Cleveland urban development firm. The company last week pullled the plug on a tax incentive-laden deal that would convert the vacant Mercantile Bank complex into residential units and retail space.
The nearby Continental building and former TXU Gas Co. buildings, which Atmos Energy of Dallas recently donated to the city, would also be redeveloped as part of the proposal.
"There's a lot at stake in this meeting," Mayor Laura Miller said. "You'll have an eagerness on both sides to get something done."
Said Forest City executive David Levey: "It's very complicated, but it's in the city's power to get this deal back on the table."
Ms. Miller will join City Manager Mary Suhm, City Council members Ed Oakley and Mitchell Rasansky, Interim Assistant City Manager and Chief Financial Officer David Cook, Economic Development Director J. Hammond Perot and Housing Director Jerry Killingsworth for the one-day, let's-make-amends summit.
"But I'm bringing some extra underwear because I'm willing to stay as long as it takes to get this done," Mr. Rasansky said. "Nobody's heard me talk like this before, but this project is a tipping point of redevelopment downtown. I do not want to just see this go down the drain, because what happened last week was a tragedy."
What happened last week, says Forest City's Mr. Levey, is that Assistant City Manager Ryan Evans reneged on the city providing an extra $8 million in lost federal tax credits on top of an already established offer of $60 million in city tax incentives. Mr. Levey also panned the city for not showing proof that it could secure at least $50 million in backing from a financial institution.
Last week, Mr. Evans defended his actions – which drew Ms. Miller's fire, too – as fiscally prudent. By providing Forest City with what he estimated as more than $75 million in tax breaks as subsidies, Mr. Evans said, he doubted that Dallas would ever have enough money to seed other projects in the underdeveloped downtown area.
Dallas developer Ted Hamilton has expressed interest in entering negotiations with the city if Forest City pulls out for good.
But Mr. Evans, a key project negotiator for nearly two years, won't be traveling with the delegation. Ms. Miller declined to say why and referred the question to Ms. Suhm. Neither Ms. Suhm nor Mr. Evans could be reached for comment.
The council's finance and audit committee had a special meeting Tuesday to discuss the Mercantile project, and Mr. Oakley, a committee member, said the council "realizes that it's one of the most important deals we've ever done."
Mr. Levey says the city must simply understand that Forest City can't undertake such a large project without adequate public-sector assistance. Unless Dallas proves to him that it can pay his company, no amount of additional negotiations are likely to change matters, Mr. Levey said. He acknowledged Dallas' tenacity, however.
"I'm impressed. They're making a very concerted effort. But they've got to prove that the money is there," Mr. Levey said.
Said Ms. Miller: "We came back really fast and said we wanted to salvage the deal. We're going to do our best."
Posted by lumi at June 2, 2005 07:47 AM