A $4.8 million incentive package that was earmarked for a Dallas developer to help build on vacant land along Broadway across from the Pearl was delayed on Wednesday.
The Midtown Tax Increment Reinvestment Zone board (TIRZ) unanimously voted to table the vote because it needed financial details on an even larger, big picture project it’s being asked to help fund: the burying of overhead power lines on Broadway from Interstate 35 to East Mulberry Avenue.
Dallas-based Encore Multifamily plans to build a 386-unit apartment building on 3.4 acres of land on the northwest corner of Carson and Austin streets, which it purchased from local GrayStreet Partners last July. Construction was expected to begin some time this year, Encore Spokeswoman Amy Dunaway told the Heron in an email late last year.
But the Midtown TIRZ board declined to even hear a presentation from the city or Encore on the details on the incentive package, calling instead for a more detailed cost estimate and fleshed-out plan on the initiative to bury overhead power lines on Broadway before it could allocate funding toward other projects. Board member Marise McDermott, CEO of the Witte Museum, called it a “pivotal moment for the Midtown TIRZ,” which has aided in the completion of housing projects in the Pearl and Tobin Hill region north of downtown.
“Issuing debt from the TIRZ is going to become an issue we’re going to have to figure out, otherwise we’re going to be strapped for the next couple of years on anything large,” board member Suzanne Scott said.
In a presentation that was more of an update rather than an official request for funding, officials with the city and Austin-based consultant TXP described the power lines project as costing $8-$9 million. They expected future property tax revenue over 20 years to exceed the cost of burying the lines. In a TIRZ in San Antonio, the rise in property tax revenue is collected and reinvested into infrastructure upgrades and affordable housing initiatives within the zone.
David McBeth, an engineer with the city’s Public Works department, told board members that 70% of the design to bury lines was completed.
“What I’ve heard from city leadership is there needs to be a clear direction on construction funding, as well, before we determine if we’re going to continue with design of underground conversion,” McBeth said.
Christina Ramirez, a city attorney, said a formal request from the city to the Midtown TIRZ board would have to be made for both the design and construction of the power line project. City officials said they would expedite the funding request, with more details on the plan.
TXP Vice President Travis James showed Midtown TIRZ board members stretches of Broadway where power lines still hung above ground. They also showed clusters of vacant land that could potentially be redeveloped, especially if the costly task of burying power lines was already completed by the time construction began on future developments.
A financial summary of the Midtown TIRZ showed Encore receiving a total of $2 million directly from TIRZ coffers in 2022 and 2023. Between 2024 and 2031, Encore would receive rebates on city property taxes worth an estimated $2.8 million total. During the same time, Encore would also pay an estimated $954,441 into the city’s affordable housing fund.
It’s one of the largest incentive packages the Midtown TIRZ has considered in recent years.
Most recently, the Midtown TIRZ awarded a $4 million incentive deal to Embrey Partners Ltd. for the $100 million mixed-use Borden Park, the redevelopment project under construction at the former Borden Diary Co. plant at East Ashby Place.
Before the Midtown TIRZ board was to vote on tabling Encore’s incentive deal, Christina Ramirez, an attorney with the city, warned board members that a delay could jeopardize Encore’s willingness to build the apartments. She said she didn’t know when the city would formally request funding from the Midtown TIRZ board for the power line project.
“That could mean we would be tabling this project (Encore) indefinitely,” Ramirez said.
Dunaway of Encore did not respond to a request for comment.
During the meeting, board members said the Midtown TIRZ could approve both projects at once, essentially phasing out when each one would receive reimbursements from the TIRZ. But, again, it needed more financial details on the power line project before it could make a call.
The Encore property is surrounded by roughly 20 acres of land GrayStreet Partners purchased in recent years in anticipation for a $560 million master development it called Broadway East, which it envisioned as rivaling the Pearl in scope. At one point, GrayStreet Partners brought on Midway of Houston to help build more than 1.6 million square feet of mixed-use space over the next 10 years.
Last month, however, the San Antonio Express-News reported that Midway had sued GrayStreet Partners over the properties. In a lawsuit, Midway claims GrayStreet breeched a contract which Midway claims gave it first right of refusal on the sale of the land; GrayStreet was in the process of selling it to local Fulcrum Development.
Strangely enough, in May, GrayStreet Partners and Midway, in an unrelated project, received a $24 million incentive package for the redevelopment of the former Lone Star Brewery site south of downtown.
The Midtown TIRZ board had to be reminded that the Encore property is not under legal dispute between GrayStreet and Midway. Encore purchased it outright from GrayStreet a year ago this month.