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Jun 10, 2008

Comments

Robert

Situated on about 30 acres of land, if Woodbine exercises their option agreement, the Reunion Arena property should add about $130 million in rateables to the Dallas tax roll, assuming the district assesses it at the $100/SF value we know the convention center hotel site is worth.

Angela Hunt

This is right on target. Upon closer examination of this issue, it looks to me like the city has shot itself in the foot, not once, but twice, with two contracts that are in direct opposition to its best interests: Certainly with the "non-compete" agreement with American Airlines Center, but also with the 1975 Master Agreement between the City of Dallas and Hunt.

It had seemed to me that rushing to sell this property was a bad idea in a market unfavorable to sellers (unless you're selling hotel land to the city). Why not hold on to the property and wait for it to appreciate? Particularly when the city is planning to build two projects that would arguably improve the value of the Reunion Arena property: the convention center hotel and the Trinity River Park.

Now I'm reviewing the Master Agreement with Hunt, and it appears to me that no matter what, Hunt has first crack at buying this property at a set price (there is some arcane arithmetic spelled out in the contract). So I don't see how the city can possibly recoup its investment, let alone see a profit by holding onto the property.

I'm going to be asking these questions in the Economic Development meeting today, but it looks to me like the city is damned either way: If the city tries to use the Arena for events, the AAC agreement essentially prohibits profitable ones. If the city tries to sell the Arena property, the Hunt Master Agreement could force a sale at an unprofitable price.

Is no one reading these damned contracts before the city signs them???

Robert

It is my understanding that the Appraisal District is methodically increasing the land value assessments of all downtown properties to reflect the $100 psf benchmark of the Chavez sale.

So the city runs the risk of being out manuvered by the very capable folks at Woodbine (who are flush with cash since Hunt Oil is being sold for a whopping $3+ billion)into a sale which reflects a low value. Woodbine will use that sale to force valuation by the Dallas Appraisal District to a less than market value assessment. The less than market sale will be translated to assessments of other downtown properties, diluting the rateables.

Angela Hunt

It looks to me in the Master Agreement that the price to sell to Hunt is not based on market value, but on the city's original purchase price plus interest paid, along with some multiplier. I'm going to have this clarified in the Econ meeting. If I am correct, then it doesn't matter when we sell to Hunt because they will get a hell of a deal, and it's not based on the property's actual value (which will arguably appreciate).

Desert Rat

C'mon, Angela, this is the way that the City of Dallas has always done business & always will (go read about the fleecing that the City took when Annette Strauss sold the City out when Starplex was built). This city's slogan should be whatever is good for business (especially real estate) is good for the City of Dallas. It's not going to change unless, & until, the people demand that it stop. That day is coming quickly because our infrastructure is crumbling.

mark cahill

By the way... Victory Park is NOT successful and nobody has made any money. In a recent panic Perot canceled Victory Tower and the Mandarin Oriental. Retailers are closing. Ghost Bar was the talk of the town regarding Victory Park, now - it's Ghost Town.

The odd part of all of this is it's very shortsighted. Victory Park had the chance to become a "place" in Dallas. Now, it's stuck as The nice hotel next to the arena... Yeah, it was supposed to be a really cool place, but it didn't work.

It's a shame, because VP could have been a good connector for Uptown, Downtown and the West End. It could have been a safe place to go for entertainment and shopping, hopefully spreading into downtown.

Observist

Wait a sec - am I missing something here? The city just paid above-market price for a piece of land on one side of the convention center, when they already owned a piece of land on the other side of the convention center? And now they're going to sell it to Hunt for a below-market price? And I'm paying $500/month in taxes to subsidize this idiocy?

russell hull

If what mark says is is true, I might revolt. Without knowing where Dallas is building the new hotel, how far is this from the arena? If we were really going to close it down (based on June 30, it is known), Then why not use that land?

Rick Wamre

Russell, Reunion Arena is located next to Reunion Tower. Moving east, you'll find a parking lot, the Dallas Morning News complex, and then the land/vacant structure that comprise the convention center hotel land. Between the two pieces (Reunion Arena and the land chosen for the hotel), the land is the better choice if the city has any hope of ever linking the convention center activity to the rest of downtown. My point in the original post was that the Reunion Arena land is close enough to the convention center complex that it will definitely benefit in terms of increasing value from the city's $500 million expenditure on the hotel.

Rick Wamre

Also an update: The council's economic development committee voted unanimously today to permanently close the arena. However, the property won't be immediately declared "surplus", keeping Woodbine's option to purchase from kicking in. The DMN reported that council members were briefed on exactly how much Woodbine would pay for the property (apparently, some type of valuation calculation was agreed to years ago as part of another deal), but that valuation formula hasn't been made public. Yet. As for why the formula hasn't been made public, or why it would need to remain private, I don't know that answer, either. Yet.

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