One question I often hear is, “Are tax increment funds districts successful?” With all of TIFs in place in the central business district and surrounding areas (the Design District, Deep Ellum, Downtown Connection, etc.), I decided to do some research and explore this topic.
The purpose of a TIF District is to use future gains in taxes to subsidize current improvements in a designated area to stimulate new private investment. TIFs are managed by the city and are intended to cause private investment to occur earlier than would otherwise happen, or which may not otherwise happen at all.
The city of Dallas currently has 18 TIF districts. Before their creation, the collective appraised value of the districts was $2.4 billion. Today, the appraised value is estimated at $5 billion—a $2.6 billion improvement. So, I’d have to say they’re having the intended effect!
One success story with which I’m particularly familiar is the Cityplace TIF. Since its inception in 1992, the property in the Cityplace TIF has appreciated 938 percent … yes, 938 percent!
Here are some historical milestones relating to the site:
• 1970s and 1980s: The Southland Corp. (now known as 7-Eleven) purchased more than 1,000 individual pieces of property around Haskell Avenue, straddling Central Expressway.
• 1984: Southland began construction on The Tower at Cityplace for their headquarters.
• 1990: Southland was strapped by large interest payments from a 1987 leveraged buy-out and entered into prepackaged bankruptcy. As a part of the bankruptcy settlement, Southland elected to sell all of the Cityplace property, except its 42-story office tower and the 10.4 acres surrounding the tower. Oak Creek Partners Ltd. purchased the remaining land and buildings.
• 1992: The Dallas City Council declared Cityplace as a “reinvestment zone,” and established the boundaries for the TIF, which includes 238 acres of land around Haskell Avenue on both sides of the expressway.
When the Cityplace TIF was created, aside from the Tower at Cityplace (which is not actually in the TIF, since the building was developed beginning in 1984 prior to the formation of the TIF), the 238 acres located in this area were comprised mostly of dilapidated housing and industrial buildings. In just a 21-year timeframe, it has become one of the most successful redevelopment projects in the city.
Anchored by West Village, the Cityplace TIF now boasts 2,987 residential units and 724,438 square feet of retail and commercial space. Of the 238 acres in this TIF, just 29 remain undeveloped. Forest City recently purchase 3 of those remaining acres (a portion of the former Hank Haney site) and is developing a 20-story residential tower with retail on the first floor. There is also a 250,000-square-foot tenant eyeing one of the last parcels of land for a corporate build to suit.
With just a few remaining parcels of developable land on the west side, we are starting to see one new trend: a burst of mixed-use development on the east side.
With the newly constructed Cityville Cityplace, the east side of Central Expressway now has an additional 68,000 square feet of retail and 281 high-end apartment units. The Tower at Cityplace has plans for the remaining 9 acres surrounding the property to add additional multifamily, hotel, and retail uses to the area.
One of the greatest benefits of a TIF is that, once new developments of the TIF are in place, the impact begins to reach beyond the boundaries of the actual district. We have seen this for quite some time on the west side of Central Expressway, as the success of the Uptown area outside of the Cityplace TIF has been tremendous. We are now seeing this success span across the Central Expressway to the east side, even extending beyond the boundaries of the TIF.
For example, Xerox Services (formerly Affiliated Computer Services) is in the process of rezoning 26 acres just east of Central Expressway and north of Haskell Avenue. A planned development will include 2,000 residential units, a hotel, retail, commercial buildings, medical facilities, and office space.
If history is any indication of the future, I think the recently created TIFs for Deep Ellum, the West End, and the Design District, just to name a few, will be hugely successful—just as the Cityplace TIF is proving to be. It will certainly be exciting to watch.