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[PFC Board of Directors]
MY NAME IS KEITH PAL, PRESIDENT OF THE DALLAS PUBLIC FACILITIES CORPORATION.I'D LIKE TO CALL THE, UH, APRIL 25TH, 2023.
CITY OF DALLAS PUBLIC FACILITIES CORPORATION BOARD OF DIRECTORS, REGULAR MEETING TO ORDERED AT 12:02 PM SORRY TO DELAY DUE THE TECHNICAL DIFFICULTIES CALL THE ORDER.
YEAH, WE'RE NOT, I'M NOT SEEING BASED ON THAT SCREEN WE FACES, UH, WHICH SCREEN IS RECORDING THE MEETING? UH, IT SHOULD BE MY SCREEN.
SO WE HAVE, THAT SCREEN IS LOW BANDWIDTH, BUT I SEE, UH, DIRECTLY DIRECT, DIRECT LINES ONLINE.
I, YEAH, THEY'RE, THEY'RE VISUAL ON HERE.
SO IF YOU GUYS CAN JUST, UH, SAY HERE, WHEN I CALL YOUR NAME.
JENNIFER CORTEZ, DIRECTOR RONALD STINSON.
PRESENT DIRECTOR VICTOR POLITO.
VICE PRESIDENT KEN MONTGOMERY.
POSS, ARE YOU HERE? OH, THERE YOU ARE.
CAN YOU HEAR ME NOW? EXCUSE ME? CAN YOU HEAR ME NOW? YEAH, WE CAN HEAR YOU.
DID YOU SAY SOMETHING TO ME WHILE I WAS MUTED? I JUST SAID YOU WERE MUTED.
ITEM NUMBER THREE, PUBLIC TESTIMONY, PUBLIC COMMENTS ON ITEMS FOUR THROUGH SEVEN.
DO WE HAVE PUBLIC TESTIMONY ON ITEMS FOUR THROUGH SEVEN IN THE ROOM OR ONLINE? AND ERIN, I'M GONNA YOUR ASSISTANCE, UH, TO RECOGNIZE THE ONLINE INDIVIDUALS.
I DON'T SEE ANYONE ONLINE WHO WANTS TO SPEAK.
ITEM NUMBER, ITEM NUMBER THREE.
ITEM NUMBER FOUR, DISCUSSION AND APPROVE OF THE MINUTES FOR MARCH 28TH, 2023.
SEE, DALLAS PUBLIC SUSTAINABILITY CORPORATION MEETING.
I DO HAVE A COUPLE OF MINOR CHANGES, UM, JUST BECAUSE I WAS TAKING NOTES DURING THE MEETING.
UM, AND I'LL HAVE THESE TO YOU, ERIN, AFTERWARDS.
UH, LORENA VAUGHN HAD GIVEN ME HER ADDRESS AS 92 59.
MARK HANEY, MARK ANN, AND, UH, SWEET HANSON HAD, UH, STATED HIS ADDRESS WITH 99 25 LAKEVILLE DRIVE AND AN ADJOURNMENT, UH, I BELIEVE I SHOULD STATE, UH, DIRECTOR AL MOVED TO ADJOURN THE MEETING.
ANY OTHER? I HAVE ONE OTHER CLARIFICATION AS IT RELATES, EXCUSE ME, TO THE RESOLUTION, UM, IN CONNECTION WITH THE CYPRESS CREEK PROJECT, UM, AS IT READS, IT SAYS THE, UH, RESOLUTION WAS APPROVED ON THE CONDITIONAL APPROVAL AND EDIFICATION BY CITY COUNCIL.
TECHNICALLY, IT SHOULD BE AMENDED TO READ INDEMNIFICATION FROM THE CITY OF DALLAS AS AUTHORIZED BY THE CITY COUNCIL, ALL OF WHICH IS ACADEMIC RIGHT NOW.
BUT THAT'S WHAT HAPPENED THEN.
SO DO YOU HAVE THAT CORRECT, SIR? YEAH, WE ACTUALLY, HE EMAILED THAT TO US.
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CORRECTIONS OF THE PRESIDENT PUBLIC CALL, UH, DIRECTOR CALLIS, DO WE HAVE A MOTION TO APPROVE THE MINUTES? SO MOVE BY DIRECTOR CALLIS, DO YOU HAVE A SECOND? SECOND.ALL IN FAVOR SIGNIFY BY SAYING AYE.
MINUTES FROM MARCH 28TH ARE APPROVED.
ITEM NUMBER FIVE, DISCUSSION AND APPROVAL OF A RESOLUTION AUTHORIZING THE NEGOTIATE AND EXECUTION OF A MEMORANDUM OF UNDERSTANDING FOR THE ELNS AND PARTNERSHIP WITH SMART LIVING RESIDENTIAL S L R TO BE LOCATED AT SEVEN TEN SEVEN FOURTEEN SEVEN EIGHTEEN AND 1802 MOR AVENUE AND 8 33 HUTCHINS ROAD, DALLAS, TEXAS, KYLE.
UH, THIS IS AN ITEM THAT WE'VE ACTUALLY RECEIVED, I THINK THE APPLICATION ABOUT AN OVER A YEAR AGO.
I, I THINK, AND WE'VE BEEN WORKING ON TRYING TO FIND THE, THE RIGHT STRUCTURE, GET THE RIGHT DESIGN AND, AND THE, THE RIGHT PROCESS FOR THIS AND, UH, GET THE, THE M MOU IN TERM SHEET THAT'S UNDER CONSIDERATION TODAY.
SO I'D LIKE TO ASK, UH, SWEET HANSEN FROM, UH, RESIDENTIAL TO COME UP AND, AND PROVIDE, UH, SOME BACKGROUND ON THE PROJECT AND ANSWER ANY QUESTIONS YOU MAY HAVE ON THIS.
WE, WE ALSO HAVE YOUR PRESENTATION LOADED UP HERE IF YOU WANNA.
I REALLY APPRECIATE YOU HAVING ME HERE TODAY.
WE CAN ALL AGREE THAT THERE'S A SHORTAGE OF ATTAINABLE WORKFORCE HOUSING IN THE CITY OF DALLAS.
THE SHORTAGE IS A PRODUCT REALLY OF OUR OWN SUCCESS HERE IN DALLAS, AND THAT REALLY EVERYONE WANTS TO BE HERE.
IT'S, IT'S THE AGE OLD SUPPLY AND DEMAND PROBLEM THAT HAS LED TO THE REMOVAL OF OLDER ATTAINABLE HOUSING STOCK TO MAKE WAY FOR NEW LUXURY PRODUCT.
BUT NOT EVERYONE FEELS THAT SUCCESS.
AND ACCORDING TO THE CITY'S COMPREHENSIVE HOUSING POLICY, SIX OUT OF 10 FAMILIES IN DALLAS ARE HOUSING COST BURDEN, BUT THAT IS LIKELY GROWN AS A RESULT OF WHERE INFLATION AND INTEREST RATES HAVE GONE OVER THE LAST YEAR.
AND SO, ON YOUR SCREEN RIGHT THERE, TAKE SHEILA, THIS IS AN EXAMPLE OF OUR TARGET TENANT.
SHE HAS TWO KIDS AND MAKES $66,000 A YEAR AS A NURSE AT THE VA.
THIS IS THE INDIVIDUAL THAT WE ARE HERE FOR TODAY.
SHE IS OUR TARGET TENANT AND THAT SHE SEEKS HOPE FOR A MORE FINANCIALLY STABLE SITUATION AND HOPE FOR A BRIGHTER FUTURE FOR HER KIDS.
AND WE FIRMLY BELIEVE AT SMART LIVING RESIDENTIAL THAT TOGETHER WE CAN REVERSE THE HOUSING TREND AND PROVIDE, UH, HOPE TO A LARGE SEGMENT BEING LEFT BEHIND.
AT SMART LIVING RESIDENTIAL, WE BELIEVE IN REVERSING NFS QUALITY OF H IN HOUSING DISPLACEMENT AND GENTRIFICATION, WHILE BRINGING HIGH QUALITY, WELL DESIGNED HOUSING TO MARKET THROUGH INSTITUTIONAL QUALITY EXECUTION WITH AN IMPACT DRIVEN MINDSET, WE BELIEVE IN DEVELOPING MIXED INCOME PROPERTIES, SPECIFICALLY TARGETING AMI BETWEEN 60 TO A HUNDRED PERCENT.
AND WE DO THAT BY EXECUTING ON THREE STRATEGIC PRINCIPLES NEXT PAGE, THE FIRST BEING ACCRETIVE FROM DAY ONE.
SO THAT MEANS FOR US BUYING THE RIGHT LAND AND, AND, AND, AND WE DO THAT BY PURSUING OVERLOOKED SUBMARKETS WITHIN DALLAS AND PURSUING OFF-MARKET TRANSACTIONS.
AND FOR US, A LOT OF THAT MEANS LOOKING SOUTH OF 30.
NUMBER TWO, STRATEGIC PRINCIPLE IS FOCUSING ON SIMPLICITY BY EXECUTING IN A VERY PROGRAMMATIC WAY, EFFICIENT DESIGN, EFFICIENT CONSTRUCTION, SMALLER SCALE PROJECTS, INFILL LOCATIONS.
AND LASTLY, STRATEGIC PRINCIPLE NUMBER THREE.
AND PROBABLY MOST IMPORTANTLY, WE BELIEVE IN BEING A STRATEGIC, UM, A STAKEHOLDER COMMITTING TO THE COMMUNITY.
WHEN WE BRING A PROJECT TO MARKET, WE'RE FOCUSED ON A LONG-TERM HOLD, LONG-TERM EXECUTION.
WE'RE NOT MERCHANT BUILDING BY BUILDING STABILIZE AND SELLING.
WE'RE COLLABORATING WITH LOCAL NONPROFITS, AND WE'RE ADVANCING M W B E PARTICIPATION IN OUR PROJECTS.
WE BELIEVE THAT IF WE ARE GOING TO RISE A PROJECT AND BENEFIT FROM IT IN A COMMUNITY THAT THE COMMUNITY AROUND IT NEEDS TO RISE AS WELL.
AND, AND WHEN WE EXECUTE ON THOSE THREE STRATEGIC PRINCIPLES, WE BELIEVE THAT WE WILL BE ABLE TO FULFILL THE FOLLOWING SUSTAINABLE DEVELOPMENT GOALS.
FIRST, REDUCE INEQUALITIES IN THE FORM OF PROVIDING HIGH QUALITY HOUSING AND IN AFFORDABLE PRICE POINTS IN LOCATIONS CLOSE TO THE URBAN CORE JOB CENTERS AND MODES OF TRANSPORTATION.
AND AGAIN, ADVANCING M W B E PARTICIPATION.
NUMBER TWO, RESPONSIBLE CONSUMPTION AND PRODUCTION IN THE FORM OF EFFICIENT DESIGN AND CONSTRUCTION METHODS.
PROJECTS THAT DO NOT LEAD TO GENTRIFICATION IN ACQUISITIONS OF SITES THAT DO NOT LEAD TO DISPLACEMENT.
AND LASTLY, BUILDING SUSTAINABLE CITIES AND COMMUNITIES THROUGH A LONG-TERM HOLD STRATEGY, PARTNERING WITH LOCAL CHURCHES, FAITH-BASED ORGANIZATIONS, AND OTHER NONPROFITS, AND CONDUCTING A COMMUNITY INCLUSIVE
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DEVELOPMENT PROCESS.THE PROJECT THAT WE'RE SPEAKING HERE TODAY IS A 153 UNIT, ROUGHLY A HUNDRED THOUSAND SQUARE FOOT SURFACE PARK, THREE STORY WALKUP LOCATED IN THE CEDAR CCR NEIGHBORHOOD JUST EAST OF THE DALLAS ZOO ACROSS FROM ROOSEVELT HIGH SCHOOL.
THE FIVE ACRE SITE WAS VACANT WHEN IT WAS ACQUIRED ALL CASH IN JULY OF 2021.
THE BASE ZONING OF MF TWO ALLOWS US TO BUILD THE PROJECT.
WE DON'T NEED ANY SORT OF UPZONING OR ADDITIONAL ENTITLEMENTS TO DO WHAT WE'RE PRESENTING TO YOU TODAY.
IT QUALIFIES AS TRANSIT-ORIENTED DUE TO ITS PROXIMITY TO THE MORRELL AVENUE DART RAIL STATION.
AND WE WILL BE PARTICIPATING IN THE SIM IN THE CITY'S M I H D B PROGRAM ACROSS THE STUDIOS, ONE BEDROOM AND TWO BEDROOM UNITS.
WE ARE CURRENTLY UNDERWRITING AN AVERAGE RENT OF $1,500 PER MONTH, WHICH WHEN COMPARED TO THE COMP SET IN THE AREA, EQUATES TO A $387 PER MONTH AFFORDABILITY BENEFIT TO THE TENANT WITHOUT A REDUCTION IN QUALITY OR IN-UNIT OR PROPERTY AMENITIES.
41% OF OUR UNITS WILL BE INDEXED TO MOST 80% OF THE AMI FOR RENTS EQUIVALENT TO ROUGHLY 13 TO $1,700 A MONTH.
11% OF OUR UNITS WILL BE INDEXED TO THE MOST 60% OF THE AMI RENTS, UH, BETWEEN A THOUSAND TO $1,300 A MONTH.
WE HAVE A 16 MONTH PROJECTED CONSTRUCTION TIMELINE, AND WE BELIEVE WITH THE PFCS HELP, WE WILL BE ABLE TO BREAK GROUND IN JUNE OF THIS YEAR.
WE ARE ESSENTIALLY SHOVEL READY FOR ALL I INTENTS AND PURPOSES WITH RESPECT TO AREA AMENITIES.
WE ARE ONE MILE EAST OF THE DALLAS ZOO.
WE ARE A NINE MINUTE WALK TO CEDAR CREST ELEMENTARY.
WE ARE A SEVEN MINUTE WALK TO ROOSEVELT HIGH SCHOOL IN THE MORRELL AVENUE DART RAIL STATION.
WE'RE PRO WE'RE ONE MILE SOUTH OF PROBABLY ONE OF THE BEST KEPT SECRETS IN DALLAS, WHICH IS THE CEDAR CREST GOLF COURSE.
AND WE'RE JUST A SHORT UBER RIDE AWAY FROM THE ENTERTAINMENT THAT THE BISHOP ARTS, UH, DISTRICT PROVIDES WITH RESPECT TO PLACES OF EMPLOYMENTS.
WE'RE NINE MILES SOUTHEAST OF METHODIST HOSPITAL.
WE'RE NOT 12 MINUTES TO DEEP ELEMENT AND 11 MINUTES TO CITY HALL.
THE NEAREST GROCERY STORE IS LOCATED IN WINWOOD VILLAGE, UM, JUST TO THE WEST OF US, APPROXIMATELY TWO TO THREE MILES, WHICH IF YOU REMEMBER BRICKS MOORE JUST ANNOUNCED A 30 MILLION COMPLETE RENOVATION AND THE ADDITION OF A NEW TARGET, UM, TO THAT CENTER, WHICH WE'RE ALL SUPER EXCITED FOR.
AND ON THE NEXT PAGE, YOU'LL SEE THE SITE PLAN.
THE SITE LAYS OUT WITH 153 UNITS DISPERSED EVENLY ACROSS SEVEN BUILDINGS.
THE SITE SLOPES CONSIDERABLY, CONSIDERABLY FROM THE EAST TO THE WEST.
WE HAVE ROUGHLY 40 FEET OF FALL BETWEEN HUTCHINS TO THE EAST AND LITTLE CEDAR CREEK TO THE WEST, WHICH POST A CHALLENGE FOR OUR ENGINEER AND DESIGN TEAMS, BUT CREATED A GREAT OPPORTUNITY FOR COLLABORATION AND PROBLEM SOLVING.
UM, AS A RESULT OF THE FALL, WE'RE GONNA HAVE CONSIDERABLY MORE RETAINING WALLS THAN A TRADITIONAL FLAT SITE, BUT THE LOCATION IN ITSELF IS EXCELLENT.
IT HAS GREAT ACCESS VIA MORRELL IN THE UNION EXIT OFF OF, UH, I 35.
WE'RE JUST NEAR, UH, WE'RE JUST TO THE WEST OF I 45.
CORINTH DEAD ENDS INTO BOTH OF JOHN AND THE CEDARS.
UM, WHICH LONGHORN BALLROOM JUST HAD A NICE, UH, RENOVATION DONE AND OPENED UP IT AS A GREAT ENTERTAINMENT VENUE.
AND OF COURSE, CEDAR CCRS DEAD ENDS RIGHT INTO FAIR PARK SOUTH.
AND WITH THE BOND PACKAGE THAT WAS PASSED LAST YEAR, AND THE, AND THE NEW WORK THAT'S BEING PROPOSED IN FAIR PARK AND ALSO WITH THE CONVENTION CENTER, CEDAR CREST IN THIS PROPERTY IS, IS, IS WELL POSITIONED TO TAKE ADVANTAGE OF THE FURTHER GROWTH.
AND OF COURSE, UM, WITH THE RECENT, UM, WORK THAT'LL BE PROPOSED FOR, UH, CADILLAC HEIGHTS IN THE, IN THE PARK, THEY'LL BE GOING IN OVER THERE.
WITH RESPECT TO DESIGN AND CONSTRUCTION, WE'VE SURROUNDED OURSELVES WITH MISSION ALIGNED 18 TALENT.
WE'VE WORKED VERY HARD ON A DESIGN FOR, TO DESIGN A PROJECT THAT IS HIGH QUALITY AND SOMETHING THAT THE COMMUNITY CAN BE PROUD OF AND WILL LAST FOR A CONSIDERABLY LONGER TIME THAN OUR COMPETITORS, FOR EXAMPLE.
WHEREAS MOST PROJECTS RELY ON THE USE OF THE MORE COST EFFECTIVE FIBER CEMENT BOARD, FIBER CEMENT BOARD ON THE OUTSIDE.
OUR LARGEST AND MOST EXPENSIVE EXTERIOR MATERIAL IS BRICK DUE TO THE DURABILITY, MINIMAL LONG-TERM MAINTENANCE REQUIRED, AND NO NEED TO PAINT PER PERPETUITY.
AND, AND THAT DECISION IS INFORMED BY, AGAIN, ONE OF OUR STRATEGIC PRINCIPLES OF HOLDING THE ASSET LONG TERM.
SO WE HAVE TO LOOK AT MATERIALS, THE LONGEVITY OF LIFE, THE ONGOING MAINTENANCE, NOT ONLY BECAUSE WE WANNA PROVIDE SOMETHING THAT'S HIGH QUALITY, BUT WE ALSO WANNA DO IT OVER, UH, A LONG PERIOD OF TIME.
EACH BUILDING WILL HAVE ITS OWN PORCH AREA AND, AND ACTUALLY I BELIEVE IT KIND OF GIVES IT ITS OWN LITTLE MELROSE PLACE FEEL, UM, AND CREATES A COMMUNITY WITHIN THE LARGER COMMUNITY.
AMENITIES AND FEATURES ARE INFORMED BY EXTENSIVE RESEARCH AND RESEARCH INTO WHAT, UH, TENANTS BOTH WANT AND PREFER.
MOST IMPORTANTLY, THOUGH, OUR AMENITIES AND FEATURES WERE INFORMED BY OUR EXTENSIVE COMMUNITY OUTREACH EFFORTS PERFORMED LEADING UP TO THE COMMENCEMENT OF OUR DESIGN PROCESS THROUGH CONVERSATIONS THAT WE HAD WITH COMMUNITY STAKEHOLDERS AND LEADERS OF SOUTHERN DALLAS, SUCH AS MAYOR PROTE ARNOLD AND COUNCILMAN ATKINS.
WE LEARNED THAT THE SOUTHERN WANTS HIGH QUALITY, BUT EQUITABLE HOUSING.
WHEN THE CONSTITUENTS OF DISTRICT FOUR SEVEN, NATE LOOK NORTH AND SEE A POOL, STAINLESS STEEL
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APPLIANCES AT DOG PARK, VINYL, WOOD PLANK FLOORING, STONE COUNTERTOPS, AND WALK-IN CLOSETS, THEY WANT AND EXPECT AND DESERVE THE SAME THING TOO IN THEIR DISTRICTS.AND TOGETHER, THAT'S WHAT WE'RE BRINGING HERE.
OUR GREATEST AMENITIES ARE WHAT OUR GREATEST AMENITY, THOUGH, UM, IS WHAT OUR COMPETITORS DON'T HAVE.
IN ADDITION TO OLD GROWTH TREES AND CREEKSIDE LIVING, OUR ACCESS TO THE ADJACENT CEDAR CCRS COMMUNITY CENTER AND THE 12 MILLION RENOVATION THAT BEHIND EVERY DOOR IS CURRENTLY UNDERTAKING IS AN AMENITY UNTOUCHED BY OTHERS ONCE COMPLETE.
THE RENOVATION WILL OFFER OUR TENANTS AND MEMBERS OF THE CEDAR CREST COMMUNITY ACCESS TO AFTERSCHOOL PROGRAMS FOR KIDS AND EXERCISE FACILITY ROOMS FOR ART, A FULL SIZE GYM WITH HARDCORE WOOD FLOOR, UH, HARDCORE HARDWOOD FLOOR CORD, EXCUSE ME, IN A BRAND NEW TURF FOOTBALL AND BASEBALL FIELD FOR THE LOCAL POPCORN AND FOOTBALL TEAM, THE CEDAR KEROS TO PLAY ON.
AND THEN THEY'LL BE ABLE TO PROGRAM YOUTH AND SPORTS LEAGUES, WHICH I JUST MENTIONED, ONE OF 'EM, THE COMMENTS, WHICH IS A LONGTIME STAPLE OF THE CEDAR CEST COMMUNITY.
UM, WE'VE ACTUALLY DOCUMENTED OUR COLLABORATIVE RELATIONSHIP WITH BEHIND EVERY DOOR AND WHAT THEY'RE DOING AND HOW WE INTEND NOT TO SERVE ONLY OUR TENANTS, BUT ALSO, UH, THE SURROUNDING COMMUNITY.
THE TEAM PUTTING THIS TOGETHER INCLUDES MYSELF.
UM, THIS CONCEPT OF SMART LENDING RESIDENTIAL WAS REALLY INFORMED BY EXPERIENCES THAT MY DAD HAD RUNNING A NONPROFIT IN WEST DALLAS FOR A LONG TIME.
UM, AND SOME OF THE, AND SOME OF WHAT HE WITNESSED AS WEST DALLAS STARTED TO GROW OVER THE YEARS.
UM, MOST OF MY EXPERIENCES, PRIMARILY CAPITAL MARKETS.
I'VE SPENT MOST OF MY PRO PROFESSIONAL CAREER HERE IN DALLAS.
I'VE WORKED IN SEVERAL OTHER MARKETS, INCLUDING NASHVILLE AND NEW YORK.
BUT MOST RECENTLY, UM, HERE IN DALLAS, MY PARTNER KEVIN PHILLIPS, HE OWNS AND OPERATES NORTH OF 6,000 MULTI-FAMILY UNITS.
UM, MOST OF HIS PROPERTIES HE'S OWNED IN HIS FAMILY FOR 50, 60 YEARS.
SO WHEN WE TALK ABOUT LONG-TERM HOLD OF AN ASSET AND WE TALK ABOUT THE KNOWLEDGE BASE OF WHAT HAPPENS OVER A LONG PERIOD OF TIME TO AN ASSET, WE GO BACK TO HIM AND HIS PORTFOLIO AND WE KNOW BASED ON THE EXPERIENCE OF WHAT IS GOING TO HAPPEN.
THAT'S THEN, THAT'S PART OF WHAT INFORMS OUR DESIRE TO BE LONG-TERM HOLDERS WITH THIS ASSET.
AND LASTLY, DAN HEALY, THE CEO OF CITA CAPITAL, WHICH IS PRIMARILY, UM, KNOWN FOR THEIR WORK IN E B FIVE FINANCING, BUT HE WAS ALSO THE MANAGER OF THE GROSS OUT FUND UNDER MAYOR MIKE RAWLANDS.
LASTLY, LET ME GIVE YOU A STATUS TODAY TO WHERE WE ARE ON THE PROJECT.
I MENTIONED EARLIER THAT WE ACQUIRED THE VACANT PARCEL LAND IN JULY OF 2021.
THE BAY ZONING ALLOWS FOR THE PROJECT TO BE AS OF RIGHT, SO WE CAN BUILD WHAT WE'RE PRESENTING TO YOU TODAY.
UM, UM, AS OF RIGHT, UH, WE'VE IDENTIFIED RPM LIVING, WHICH IS THE SEVENTH LARGEST, UH, LEASING AND MANAGEMENT COMPANY, UH, IN THE COUNTRY TO, TO MANAGE, UH, THIS PROPERTY.
THEY ALSO HAVE EXTENSIVE EXPERIENCE IN PFC PROGRAMS AND ALSO THE REPORTING THAT WOULD BE REQUIRED, UH, AS A MEMBER OF THIS PROGRAM.
WITH RESPECT TO DESIGN AND CONSTRUCTION, OUR DRAWINGS ARE COMPLETE THROUGH AN ISSUE FOR PERMIT SET.
WE'RE NEARING THE COMPLETION OF THE PERMITTING PROCESS RIGHT NOW.
OUR EXPECTATION AND HOPE IS THAT WE'LL HAVE COMPLETE WITHIN THE MONTH, AND WE'VE ALSO EXECUTED A GENERAL CONTRACT, UM, A COUPLE WEEKS AGO.
BUT LET'S TALK ABOUT M WBE E PARTICIPATION CAUSE THAT'S ALSO REALLY IMPORTANT TO WHAT WE DO.
AND ONE OF OUR, UM, GOES BACK TO STRATEGIC PRINCIPLE NUMBER THREE.
WHEN WE STARTED THIS PROCESS, WE ENGAGED, UM, A FIRM TO HELP US J BJ MANAGEMENT, TO HELP US ACHIEVE A GOAL OF OUR 32% M W B E PARTICIPATION, BUT ALSO KEEP US ACCOUNTABLE TO THE COMMUNITY AND IN THE PROCESS.
AND THAT WAS WHAT WAS REALLY IMPORTANT TO US.
IN SEPTEMBER 8TH, 2022, WE HOSTED A MEETING FOR MEMBERS OF THE REGIONAL BLACK CONTRACTORS ASSOCIATION AND THE REGIONAL HISPANIC HISPANIC CONTRACTORS ASSOCIATION TO INTRODUCE THE PROJECT TO, UH, POTENTIAL SUBCONTRACTORS TO BID ON THE PROJECT.
UM, JUST A FEW DAYS AFTER THAT THOUGH, WE FIRED OUR GC DUE TO A LACK OF ALIGNMENT WITH OUR M W B E OBJECTIVES.
THE, THE CONTRACTOR THAT WE HAD IDENTIFIED EARLY IN THE PROCESS, UM, UNFORTUNATELY DID NOT DEMONSTRATE A WILLINGNESS AND A COMMITMENT TO WHAT OUR STRATEGIC INITIATIVE WITH RESPECT TO M W P E.
AND WE MADE THE DECISION TO FIRE THEM SEVERAL DAYS LATER.
WE'LL START THE PROCESS ALL OVER.
THROUGHOUT OUR PROCESS, WE'VE ACTIVELY SOUGHT OUT AND REQUESTED BIDS FROM M W B E CONTRACTORS AND SUBCONTRACTORS EVEN ASKING THOSE WITHOUT MULTI-FAMILY EXPERIENCE TO PARTICIPATE POTENTIALLY IN, IN BIDDING ON OUR CONTRACT.
TO DATE, I'M PROUD TO SAY THAT, UM, WITHIN OUR ARCHITECT IN ENGINEERING AND SUBCONTRACTOR CONTRACTS, WE HAVE THE FOLLOWING M W B E CONTRACTS EXECUTED CIVIL ENGINEERING LANDSCAPE, M E P, STRUCTURAL SPECIFICATIONS, CONCRETE DRYWALL AND TEXTURE PAINTING, HVAC, MASONRY AND PLUMBING.
WE RESPECTFULLY ASK FOR YOUR SUPPORT FOR A FEW REASONS.
ONE, WE RECEIVED BROAD COMMUNITY AND POLITICAL AND CITY STAFF BACKING FOR THE PROJECT.
WE BELIEVE THE PROJECT REPRESENTS THE BEST QUALITIES OF THE PSC PROGRAM BY EMPOWERING THE DEVELOPMENT OF HIGH QUALITY MIXED INCOME HOUSING IN AN AREA OF DALLAS, HISTORICALLY UNDERSERVED BY THE DEVELOPMENT COMMUNITY,
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BY MAINTAINING AFFORDABILITY AND MISSION ALIGNMENT VIA LONG-TERM HOLD AND ADVANCING M W B E PARTICIPATION.WE HAVE A TRACK RECORD OF SPONSORSHIP OWNING AND OPERATING WORKFORCE HOUSING IN A LONG PERIOD OF TIME.
AND LASTLY, WE BELIEVE THAT THIS CATALYST, THIS WILL BE A CATALYST FOR FUTURE GROWTH AND DEVELOPMENT WITHIN SOUTHERN DALLAS.
I REALLY THANK YOU FOR YOUR TIME AND CONSIDERATION AND WOULD BE MAKE MYSELF AVAILABLE SHOULD YOU HAVE ANY QUESTIONS.
THANK YOU VERY MUCH, MR. HENSON.
NOW WE'LL OPEN UP THE, THE FLOOR FOR QUESTIONS.
WE HAVE QUESTIONS FROM THE BOARD.
IF YOU'RE ONLINE, IF YOU COULD, UH, RAISE YOUR HAND OR SOMETHING SO I CAN SEE YOU.
WE HAVE ANY QUESTIONS OR COMMENTS? YES.
UH, MR. STINSON DIRECTORS STINSON, SORRY.
UH, THANK YOU FOR COMING MR. SWED.
THAT, UH, MR. HANSON, THAT'S A VERY GOOD, UH, PRESENTATION, SIR.
AND, UH, YOU DID ANSWER, I TOLD YOU BEFORE WE STARTED THAT I WOULD HAVE A LOT OF QUESTIONS.
AND, UH, WE DID ANSWER, UH, UM, SOME OF THEM MOST SATISFACTORY.
MY FIRST, UH, CONCERN REALLY WITH THIS PROJECT WAS MAKING SURE THAT, UH, HOPEFULLY IT WOULD BE SOME TYPE OF, UH, INCENTIVIZATION FOR THIS PARTICULAR AREA, BECAUSE AS YOU POINTED OUT, UH, UH, SOME OF THE ECONOMICS IN THIS AREA, THEY'RE VERY FRAGILE, REALLY.
UH, BUT YOU HAVE A LOT OF PEOPLE THAT, THAT ARE STABLE THERE.
BUT IT IS A LOW, LOW ECONOMIC, UH, PARTICULAR AREA.
BUT WE HAVE NICE, UH, BRICK AND WOOD FRAME HOMES YES, SIR.
AND IT'S A, UH, IT'S A WELL DIVERSE NEIGHBORHOOD WITH, UH, UH, AFRICAN AMERICANS AND HISPANICS.
AND, UH, THAT, THAT PREDOMINATED THEORY, ROOSEVELT ACTUALLY IS DIRECTLY ACROSS THE STREET.
AND SO RIGHT OFF, UM, THIS IS TRAFFIC MANAGEMENT, WHAT WILL BE THE, UH, INGRESS AND EGRESS, IT LOOKS LIKE YOU'RE GOING TO BUILD A CONSTRUCT, UM, AN ARTERY THAT COMES OFF OF MORRELL INTO THE PROPERTY OR IT, UH, MAIN INGRESS ADDRESS.
AND IF, UM, IF YOU MIGHT BE ABLE TO GO, UH, TO THE PRESENTATION, TO THE SITE PLAN, UM, PAGE, HEY, EIGHT.
SEE IS, WE'RE GONNA HAVE TWO POINTS OF ACCESS IN EGRESS, ONE CLOSER TOWARD THE CORN SIDE OFF OF MORRELL NEAR THE CREEK.
WHEN YOU COME OFF OF MORRELL, YOU'LL BE ABLE TO ENTER AND EXIT FROM THE PROPERTY.
AT THAT POINT, YOU'LL HAVE THE LEASING CENTER AND THE HUMIDITY CENTER RIGHT THERE ON WITH, THAT'S SHADED RED.
WE'LL ALSO HAVE AN A REAR EXIT, UM, TO, TO THE BACK OFF OF HUTCHINS.
AND ONE THING THAT WAS INTERESTING, UH, TO ME, AND THIS IS WHERE OUR COLLABORATION IN THE CITY HAS BEEN REALLY, UM, HELPFUL AND INFORMATIVE, IS THAT WHEN YOU, WHEN YOU GO AND YOU STAND ON HUTCHINS AT EIGHT 30 IN THE MORNING, UM, HUTCHINS IS AN OLD ASPHALT UNAPPROVED ROAD.
AND ONE OF THE THINGS THAT'S DOING IS YOU HAVE THE GOOD HAVEN APARTMENTS JUST TO THE SOUTH OF US, WHICH A LOT OF KIDS LIVE THERE.
YOU'LL NOTICE WHEN YOU STAND THERE, THEY'RE ALL WALKING DOWN THE MIDDLE OF THE ROAD BECAUSE THEY'RE GOING TO SCHOOL.
AND, AND THEN ALSO YOU'VE GOT CARS THAT ARE COMING FAST.
AND SO ONE OF THE THINGS THAT WE DID EARLY ON IN THE PROCESS IS WE IDENTIFIED THAT THERE WAS A POTENTIAL NEED THERE FOR TRAFFIC MANAGEMENT AND ALSO TRAFFIC MANAGEMENT ON MORRELL, BECAUSE PEOPLE LIKE TO COME AT THE INTERSECTION OF BON VIEW AND MORRELL SPEED DOWN THE HILL TOWARD CORON.
WE WORKED WITH THE CITY ABOUT, UM, ADDING SOME, UH, SOME TRAFFIC, MID SPEED MITIGATING LIGHTS, UM, TRAFFIC MITIGATING SIGNS ON THERE TO INFORM PEOPLE HOW FAST THEY'RE GOING.
AND WE'VE ALSO, YOU KNOW, BEEN COLLABORATING WITH THE CITY ON TRYING TO FIND OTHER WAYS TO, TO MAKE THE AREA, UM, SAFER FOR THE KIDS THAT ARE, WOULD BE LIVING AT OUR PROPERTY, BUT ALSO LIVE AT THE GOOD HAVEN.
AND, AND THEY'RE, UM, GOING BACK AND FORTH AT THE ELEMENT SCHOOL AND THE HIGH SCHOOL.
DIRECTLY, UH, NEXT DOOR, AS YOU POINTED OUT, UH, THEY ARE CONSTRUCTING ON THAT, THAT WAS AN OLD SALVATION ARMY.
AND SO NOW THAT IS THE BEHIND EVERY DOOR ORGANIZATION? THAT'S CORRECT.
THEY ACQUIRED THAT PROPERTY, UM, OH, ABOUT TWO YEARS AGO.
NOW, UH, A LOT NEXT TO THAT, MAYBE TWO LOTS DOWN THERE IS ANOTHER SOMETHING BEING CONSTRUCTED.
DO YOU KNOW WHAT THAT IS? UM, ON ON BURRELL?
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NO, ON HUTCHINS.ON HUTCHINS, UM, SEEMS TO BE A HUGE, UH, STRUCTURE THAT THEY'RE GOING TO BUILD.
THE STRUCTURE IS NOT THERE YET, BUT THEY HAVE HOLES THAT ARE IN PLACE FOR COLUMNS ALSO.
UM, SO THE, THE COMMUNITY CENTER ALSO OWNS THE, THE FOOTBALL FIELD NEXT DOOR.
AND SO MAYBE THAT'S WHAT IT IS.
THEY'RE DOING A FULL RENOVATION OF THE FOOTBALL FIELD STORE.
THEY, THEY TOOK THE GRASS FIELD OUT AND THEY'RE PUTTING IN, UH, A TURF FOOTBALL FIELD AND BASEBALL FIELD IN IT.
AND SO I BELIEVE MAYBE THAT'S WHAT YOU WERE BASICALLY SAW IN, THERE'S, THAT'S A LOT OF THE RETAINING WALL STRUCTURE IN ORDER TO, YOU KNOW, MAINTAIN THE LAND AND THE, THE PERIMETER BETWEEN THEM AND THE GOOD HAVEN APARTMENTS NEXT DOOR.
NOW, DIRECTLY ACROSS THE STREET, UH, RIGHT BEFORE YOU GET TO ROOSEVELT COMING, UH, EAST, UH, IS VACANT, UH, PROPERTY SIMILAR TO WHAT YOU GUYS HAVE THERE? YES, SIR.
UH, DO YOU KNOW WHAT THAT WILL BE? SO SAW SOME GUYS, UH, WALKING IN PERHAPS PREPARING THAT FOR SURVEYING.
SO THE NORTHEAST CORNER OF MORRELL AND CORINTH? NO, DIRECTLY ACROSS THE STREET, DIRECTLY ACROSS THE STREET FROM US ON MORRELL.
SO THAT'S STILL AN MF TWO LAND.
I'M NOT AWARE OF ANYTHING GOING IN OVER THERE.
BUT YOU GUYS DON'T HAVE IT THOUGH? NO, SIR, WE DON'T.
I, I BELIEVE A GROUP OUT OF HOUSTON OWNS IT.
AND, AND MY FEELING IS THAT THE CREEK RUNS RIGHT THROUGH IT, AND THE TOPOGRAPHY CHALLENGES THERE PROBABLY MAKE THAT SITE ACROSS, DIRECTLY ACROSS THE STREET FROM US, PRETTY DIFFICULT, UH, TO DO ANYTHING ON.
AND ONE OF THE BIGGEST CONCERNS, OF COURSE, THAT WE HAVE, UH, ALONG THIS CORRIDOR IS, IS, IS MAKING SURE THAT ONCE AGAIN, SINCE THE STABILITY IS FRAGILE, THAT HOPEFULLY WHATEVER IS PUT THERE WILL STRENGTHEN THE STABILITY OF THE GOOD FAMILIES THAT ARE THERE AND BE AN ASSET BECAUSE, UH, MY CONCERN IS ALWAYS PUTTING MORE, UH, CONCENTRATING ANY MORE POVERTY, IF YOU WILL.
AND THAT'S PROBABLY A BAD, UH, WORD, POVERTY, BUT, UH, CONCENTRATING, UH, ANY MORE LOWER ECONOMICS IN THE AREA THAT UPSET, THAT GRADUAL STABILITY THAT WE HAVE NOW.
SO I VISITED, UH, THE SITE, WELL, FAMILIAR WITH THE AREA OF COURSE, BUT VISITED THE SITE AT LEAST FIVE TIMES AS OF THIS MORNING.
THEY DO WALK DOWN, UH, UH, THE STUDENTS DOWN HUTCHINS, CAUSE THERE ARE NO SIDEWALKS.
WOULD YOU ALL BE CONTRIBUTING, UH, ANY SIDEWALKS ON YOUR PERIMETER? W WE ARE REQUIRED W WE, WE WILL, I BELIEVE WE ARE REQUIRED, WE ARE REQUIRED TO PUT SIDEWALKS ALONG OUR FRONTAGE ON HUTCHINS.
UM, DIRECTOR STINSON, THAT'S HIS DIRECTLY IN FRONT OF, UH, YES, SIR.
SO THAT'LL BE ON THE PARTICULAR STREET THAT YOU'LL BE COMING IN? YES, SIR.
AND I KNOW BEHIND EVERY DOOR THEY'RE REQUIRED TO PUT IN SIDEWALKS ALONG THEIR FRONTAGE AS WELL, ON HUTCHINS ALL THE WAY DOWN, I BELIEVE THROUGH THE, THE FOOTBALL FIELD.
AND HERE ON YOUR CONCEPTUAL, UM, AM I LOOKING AT PARKING, ARE THESE PARKING SPACES IN BETWEEN THE BUSHES OR THE TREES THAT YOU HAVE NOTED IN FRONT OF THE BUILDINGS? AND, AND I'M SORRY, WHAT, WHAT AM I LOOKING AT? PARKING AND WHAT PAGE IS THAT? I'M SORRY.
THE, THE LAND IN LITTLE BLOCKS, THOSE ARE PARKING.
HOW DID YOU GUYS COME TO, UH, TO CHOOSE THIS PARTICULAR SITE FOR THIS? I SPENT PROBABLY TWO YEARS.
UM, IT'S A, IT IS A LONG-WINDED ANSWER, AND I'LL TRY TO, I'LL TRY TO KEEP IT SHORT FOR YOU DIRECTOR SINCE YEAH.
WE GOT A SHORT, SHORT MEETING TODAY.
UM, I SPENT, I SPENT A LOT OF TIME, UM, INVESTING MY PERSONAL TIME JUST BEING PRESENT IN THE SOUTHERN DALLAS SECTOR AND IN FAIR PARK SOUTH, AND JUST TRYING TO UNDERSTAND WHAT THE NEEDS WERE OF THE COMMUNITIES DOWN THERE, AND UNDERSTAND WHAT THE HISTORY IS OF THAT COMMUNITY.
AND AT THE SAME TIME, TRYING TO UNDERSTAND, UM, KNOWING THAT I WANTED TO BE INVOLVED IN PROVIDING A HOUSING SOLUTION TOWARD THE CURRENT PROBLEM THAT WE'RE DISCUSSING HERE TODAY.
UM, ONE OF THE THINGS THAT I FOUND, THE MORE THAT I LOOKED, UM, INTO THE AREA OF SOUTH OF TRINITY AND THE CEDAR CREST, UM, I FOUND JUST WHAT YOU DESCRIBED, YOU HAVE A HISTORICALLY, UM, AFRICAN AMERICAN AND HISPANIC COMMUNITY
[00:30:01]
IN CEDAR CREST THAT IS VERY ACTIVE, THAT LOVES THEIR NEIGHBORHOOD, THAT TAKES CARE OF THEIR NEIGHBORHOOD, AND IT'S REPRESENTED BY WHAT YOU SEE IN THE HOUSES IN THE NEIGHBORHOOD.AND, AND SO ONE OF THE THINGS THAT ORIGINALLY ATTRACTED TO ME WAS, NUMBER ONE, HOW WELL KEPT THE INDIVIDUAL SINGLE FAMILY HOMES WERE IN THE NEIGHBORHOOD.
AND THAT SHOWED THAT THERE WAS SOMEONE THAT REALLY CARED ABOUT THEIR COMMUNITY.
AND NUMBER TWO, I SAW A LOT OF, UM, ENTREPRENEURIAL HOME BUILDERS THAT WERE MOVING INTO THE COMMUNITY, BUYING UP RESIDENTIAL LOTS AND BUILDING NEW HOMES, AND THOSE HOMES WERE SELLING.
SO THAT DEMONSTRATED TO ME THAT PEOPLE WANTED TO BE IN THAT COMMUNITY AND THEY WERE WILLING TO PUT THEIR PERSONAL FORTUNES AT RISK TO BUY NEW HOMES.
AND IT WAS, AND THE PEOPLE THAT WERE MOVING INTO THE COMMUNITY WERE PEOPLE THAT GREW UP IN THE COMMUNITY THAT THEY PROBABLY DIDN'T HAVE OTHER OPTIONS TO BUY IN THE COMMUNITY UNTIL RESEARCH.
AND SO THAT WAS ONE OF THE THINGS THAT ATTRACTED TO ME.
AND THEN KNOWING THAT BEHIND EVERY DOOR WAS GONNA MAKE A 12 MILLION INVESTMENT IN RENOVATING THE, THE, THE COMMUNITY CENTER, UM, WAS REALLY INSTRUMENTAL IN, IN, IN ME DECIDING TO, UM, ACQUIRE THE PROPERTY ON TOP OF IT BEING VACANT AND, AND ZING MF TWO.
AND, UH, ONE OF THE, UH, ONE, ONE OTHER MAJOR QUESTION I HAD, WHICH YOU, UH, JUMPED OFF INTO AND PRETTY MUCH ANSWERED, I GUESS IS ABOUT THE, UH, CONSTRUCTION MATERIALS.
AARON, DO YOU HAVE THAT OTHER P PDF, IF YOU DON'T MIND, THAT WE COULD PULL UP AND SHOW THE DIRECTOR AND EVERYONE ELSE? SO WHILE THEY'RE PULLING THAT UP, I'LL JUST TELL YOU THAT'S CORRECT.
SO WE TOOK A LOT OF CARE EARLY ON IN TRYING TO IDENTIFY PROPER MATERIALS THAT BALANCED NOT ONLY COST EFFECTIVENESS, BUT LONG TERM VIABILITY, KNOWING THAT WE WERE GONNA HOLD THE PROPERTY LONG TERM, WE WANTED TO MAKE SURE THAT WE WEREN'T PUTTING OURSELVES IN A SITUATION, UM, IN THE FUTURE WHERE NUMBER ONE, OUR COMMUNITY WOULD DAP, UM, WOULD DETERIORATE OVER TIME AND, AND BECOME AN EYESORE OF THE COMMUNITY, BUT ALSO BECOME, UM, CAPITAL EXPENDITURE NIGHTMARE INTO THE FUTURE.
AND SO, AND, AND, AND A LOT OF THAT'S INFORMED BY THE EXPERIENCE THAT I HAVE IN, IN REAL ESTATE, IN THAT THE MERCHANTVILLE MULTI-FAMILY MODEL IS REALLY DRIVEN BY HOW CAN, HOW CHEAPLY CAN I BUILD SOMETHING SO THAT I CAN SELL IT AND IT BECOMES THE NEXT PERSON'S PROBLEM.
AND SO THAT'S WHY YOU SEE A LOT OF MULTI-FAMILY WITHIN, IN THE COMMU IN WITHIN DALLAS BEING BUILT WITH JUST MATERIALS EXTER, EXTERNALLY, LIKE FIBER CEMENT BOARD, UM, LANDSCAPE THAT DOESN'T, THAT WASHES AWAY, ET CETERA, THINGS LIKE THAT.
AND SO IF YOU SEE, IF YOU'LL KEEP GOING, UM, SCROLL TO, I BELIEVE IT'S PAGE EIGHT.
THAT'S A PERSPECTIVE OF YOU, BUT IF YOU'LL KEEP MOVING ON, KEEP GOING.
SO THERE'S AN INTERIOR, YOU MIGHT NOT BE ABLE TO SEE IT RIGHT NOW, BUT THAT'S AN INTERIOR VIEW WHERE WE'RE USING HIGH QUALITY MATERIALS, NOT ONLY EXTERNALLY, BUT ALSO INTERNAL, INTERNALLY.
EVERYTHING THAT YOU'LL SEE IN LUXURY PRODUCT, UH, AROUND THE CITY OF DALLAS ATTENDED IN OUR PROPERTY WILL GET FROM VINYL, WOOD, PLAIN FLOORING, UM, STONE COUNTERTOP MATERIALS, UM, HIGH QUALITY CABINETRY, YOU KNOW, WELL LIT INTERIORS.
IF YOU'LL KEEP GOING, KEEP GOING.
YOU'LL SEE THE STUDY THAT WE DID WITH RESPECT TO THE MATERIALS.
SO MATERIAL THAT LOOKS LIKE, YOU KNOW, MARBLE WOOD PLANK FLOORS THAT ARE LIGHTER IN COLOR SO THEY, THEY DON'T SHOW DUST.
SO THAT'S SOMETHING THAT WE REALLY STUDIED AND DID AN EXTENSIVE AMOUNT OF RESEARCH ON, NOT ONLY CUZ WE WOULDN'T BE HIGH QUALITY, BUT WE WANTED IT TO FIT WITHIN THE CHARACTER OF THE EXISTING NEIGHBORHOOD.
QUICK QUESTIONS FOR STAFF THEN.
MR. HINES, YOU SENT US, UH, ON ONE OF YOUR EMAILS ON APRIL 18TH, AND I GUESS THIS IS JUST FOR MY, UH, COMPLETE UNDERSTANDING UNDER ESTIMATED GP REVENUES.
THIS IS ON PAGE THREE OF NINE.
ON SOME, UH, OTHER PAGES ALSO THAT YOU SAY THE REVENUES GENERATED ARE HEALTHY, BUT THERE IS A DISCREPANCY BETWEEN THE RENTS STATED, UH, BETWEEN THE PERFORMER AND THE TURN SHEET.
CAN YOU EXPLAIN THAT? YEAH, I THINK THAT WAS ACTUALLY FROM ONE OF THE, UH, FILES CREATED BY OUR PART, OUR FINANCIAL ADVISOR, HILLTOP SECURITIES.
UM, IF THEY, IF BRAXTON, CAN YOU SPEAK TO THAT? ARE YOU ONLINE? IS THERE HE IS, IS THERE? SORRY.
I WAS TRYING TO GET UNMUTED THERE FOR A SECOND.
UH, BUT YES, SO, UM, KIND OF LOOKING THROUGH THE, THE TERM SHEET THAT WAS PROVIDED AND JUST THE, UM,
[00:35:01]
THE PERFORMER, IT SEEMED LIKE JUST HOW THE, THE RENT BEGINS IN THE, THE PERFORMER FROM THE DEVELOPER WAS, DIDN'T REALLY FOLLOW THE, THE TERM SHEET, UM, UH, RENTS THAT, THAT WERE GIVEN.UM, SO I, I I JUST KIND OF SHOWED THE DIFFERENCE BETWEEN THE TWO.
UH, SO I'M NOT SURE IF THERE NEEDS BE, UH, AN ADDITIONAL CONVERSATION JUST WITH, UH, THE DEVELOPER JUST TO GET A, A CLEAR UNDERSTANDING OF HOW THEY, THEY SEE THE TERM SHEET KIND OF WORKING OUT.
YOU FAMILIAR WITH, UH, THAT PARTICULAR INFORMATION? NO, SIR.
SINCE THE FIRST I'M HEARING THE PERFORMANCE SHOWS A PARTIAL PAYMENT OF 1 36 82 IN YEAR TWO, THEN A PAYMENT OF 2 49.
I THINK IT'S JUST, IT'S A, OH, IT'S A FUNCTION OF WHEN WE START, WHEN WE START OUR ANALYSIS, WE START UPON STABILIZATION.
BUT I THINK THE PROFORMA STARTS IN YEAR ONE, SO THERE'S NO REVENUE AND IT DOESN'T STABILIZE.
SO THE LEAST PAYMENT'S GONNA BE LOWER IN THE FIRST YEAR, THEN IT WOULD BE WHEN WE CONDUCT JUST OUR, OUR STRAIGHT ANALYSIS OF WHAT WE'RE EXPECTING TO RECEIVE FOR THOSE, THE PROPERTY.
SO IN, IN EFFECT, WE'RE, IF YOU LOOK AT THAT PARTIAL PAYMENT OF 1 30, 130, THAT'S, THAT'S BASED UPON STARTING TO RECEIVE REVENUES FOR THIS, THIS PROJECT, WHICH WE WOULD BE PART OF.
BUT, UH, WE DON'T ACTUALLY TAKE THAT INTO CONSIDERATION WHEN WE DO OUR, YOU KNOW, ANALYSIS OF, OF WHAT WE'RE RECEIVING AS FAR AS THE CORPORATION IS CONCERNED.
I I CAN SPEAK TO THAT NOW THAT I KNOW WHAT YOU'RE TALKING TO, IF YOU'D LIKE.
SO YOU'RE, YOU'RE SPEAKING SPECIFICALLY ABOUT THE ANNUAL RENT PAYMENT OF $250,000.
AND SO IN, IN THE FINANCIAL MODEL THAT WAS SUBMITTED TO, FOR, TO YOU FOR CONSIDERATION, ACCORDING TO THE M MOU STRUCTURE, THE $250,000 PAYMENT STARTS SIX MONTHS AFTER YOU ACHIEVE WITH 90% OCCUPANCY, WHICH IS CONSIDERED STABILIZATION IN MY FINANCIAL MODEL, THE EXPENSES, THE OPERATING EXPENSES OF THE PROPERTY RAMP UP DURING THE INITIAL LEASE UP PERIOD.
SO EVEN THOUGH YOU'RE NOT 90% OCCUPIED, THERE'S GONNA BE A PARTIAL AMOUNT OF EX OF EACH OF THE EXPENSES THAT YOU'RE UNDERWRITING DURING THOSE INITIAL, UH, 12, 10 TO 12 MONTHS OF LEASE UP.
SO IF YOU'RE 5% OCCUPIED, YOU'RE GONNA HAVE 5% OF THE $250,000 AS AN EXPENSE.
BUT ONCE YOU GET, AND YOU WILL SEE WHEN YOU REVIEW THAT MODEL, ONCE THE PROPERTY HITS A HUNDRED PERCENT OCCUPANCY OR 90% OCCUPANCY, YOU'LL HAVE THE FULL $250,000 PAYMENT GOING FORWARD.
IS THERE SOME MODEL THAT YOU, THAT YOU EXPECT, UH, HITTING THAT 90% IN A CERTAIN PERIOD OF TIME? MY EXPECTATION IS THAT THE PROPERTY WILL BE FULLY LEASED AND STABILIZED IN 10 MONTHS, RIGHT? YES, SIR.
UM, I HAVE NO FURTHER QUESTIONS AT THIS TIME.
YOU'VE, UH, BEEN VERY INFORMATIVE, TOOK CARE OF, UH, LISA HAD MY PAGE.
THANK YOU, DEREK, JUST A QUESTION.
DIRECTOR STENSON, UH, DIRECTOR PAUL, SEE YOUR HAND UP.
IT WAS, UH, WELL, UM, WELL WRITTEN AND EXPLAINED.
DO HAVE SOME QUESTIONS THOUGH, UH, OF THE APPLICANT FIRST, AND THEN I HAVE A QUESTION OF OUR ATTORNEY, MR. PLUMER.
UM, DOES, UH, THIS IS A 75 YEAR, UH, TAX CREDIT SITUATION ALSO.
IT IS, IT'S NOT A TAX CREDIT, IT'S A TAX EXEMPTION, RIGHT? 75 YEARS, YES, AS, AS WE'VE STATED PREVIOUSLY, UH, THESE DEALS DON'T HAPPEN FOR, UH, LESS THAN A 75 YEAR LEASE TERM.
UH, WE HAVE TO BE ABLE TO TRANSFER EFFECTIVE TITLE TO THE, TO THE LAND, TO THE DEVELOPER WHO IS MAKING THE INVESTMENT IN THE PROPERTY.
AND WE, JIM PLUMBER AND I AND OTHER STAFF AND OTHER POCS HAVE TRIED TO HAVE SHORTER TERMS THAN 75 YEARS.
HOWEVER, IT'S NOT, IT'S, IT'S JUST NOT SOMETHING THAT IS FEASIBLE IN THE MARKET.
JOSH, I THOUGHT WE HAD A CONVERSATION AT THE FINANCE COMMITTEE THE OTHER DAY ABOUT CHANGING THAT TO 40 YEARS.
WHAT, WHAT WAS THE CUE? THE EARLY TERMINATION? UM, YOU SAID EARLY IT'S, THAT'S THAT THE EARLY TERMINATION OPTION IS, IS NOT PART OF THE LEASE.
THE LEASE AND THE DEVELOPER WILL STILL HAVE ACCESS AND CAN DEVELOP THE LAND AND HOLD THE TITLE TO THE PROPERTY FOR 75 YEARS.
HOWEVER, AT YEAR 40, BASED ON THE EARLY TERMINATION OPTION, THAT WAS ONE PREVIOUSLY DISCUSSED AT OUR LAST BOARD MEETING.
AND AT OUR FINANCE COMMITTEE MEETING, UH, THE DEVELOPER DOES HAVE THE PROP OPTION TO, UH, FROM YEAR 40 TO YEAR 60 TO, UH, EFFECTIVELY BUY OUT OF THE, THE LEASE TERM, RETURN THE PROPERTY TO THE PROPERTY TAX ROLL AND, UH, EXIT THE TRANSACTION AND MAKE IT A FULLY MARKET RATE PROPERTY AND START PAYING TAXES AGAIN.
HOWEVER, THE LEASE ITSELF STILL REMAINS 75 YEARS.
[00:40:02]
WHAT KIND OF, BUT FOUR ANALYSIS DID WE HAVE? UM, FOR THIS PROJECT WE DID OUR STANDARD, BUT FOUR ANALYSIS THAT THE RETURNS ON THE PROPERTY AND THE REVENUES WOULD NOT BE, UH, SUFFICIENT ENOUGH TO BE ABLE TO PAY FOR, UH, THE AFFORDABLE UNITS AND ALSO PAY THE, THE PROPERTY TAXES AND OR THE, MAKE A SUFFICIENT RETURN TO HAVE A RESPONSIBLE DEVELOPER OR EQUITY OWNER, UH, INVEST IN THIS PROPERTY.AND DOES THE APPLICANT HAVE HIS FINANCING READY TO GO? MR. HS, YOUR CAMERA'S NOT ON, I'M, I'M ON CAMERA VIA THE, THE, THE ONE IN THE, IN THE ROOM.
PULL THAT EVERYBODY ELSE'S, RIGHT? I, YEAH, I CAN SEE MYSELF ON THERE.
AND MR. HANSEN, IF YOU'D LIKE TO RESPOND TO YOUR FINANCING? UM, YES.
DIRECTOR POS, WE DO, WE HAVE SEVERAL BANKS THAT ARE LINED UP AND READY TO GO.
UM, VERY INTERESTED IN DOING THIS PROJECT, UM, JUST, YOU KNOW, PENDING SIGNING THE TERM SHEET.
UM, A QUESTION FOR, UH, MR. PLUMER, UH, MR. PLUMER, THE, BUT FOR ANALYSIS, DOES THAT MEAN THAT, BUT FOR THE TAX ABATEMENT, THIS PARTICULAR DEVELOPER COULD NOT DO THE PROJECT? OR DOES IT MEAN THAT ANY PARTICULAR, ANY DEVELOPER PR LIKELY COULD NOT DO THE PROJECT WITHOUT THE TAX ABATEMENT? IT, IT IS BASED UPON A FINANCIAL ANALYSIS THAT IS INDEPENDENT OF THIS DEVELOPER.
AND IT MEANS THAT IT IS NOT LIKELY THAT ANY DEVELOPER COULD DO THIS PROJECT WITHOUT THE TAX ABATEMENT.
SO WHEN WE, WHEN WE LOOK AT THESE, IT'S NOT JUST A CONSIDERATION OF THE FINANCIALS OF THIS PARTICULAR DEVELOPER, WE'RE CONSIDERING ALL ASPECTS OF A LIKELY PROJECT AND WHETHER OR NOT ANY DEVELOPER COULD COME ALONG AND DO THE PROJECT.
THIS, THE FINANCIALS FOR THIS PARTICULAR PROJECT ARE BASED UPON THE COST INFORMATION AND THE POTENTIAL RENTS FOR THE PROJECT.
UM, SO IT IS SPECIFIC TO THIS PROJECT.
WE'RE NOT SAYING THAT SOMEBODY COULDN'T COME ALONG AND BUILD A TOTALLY DIFFERENT PROJECT.
FOR EXAMPLE, THIS PROJECT COST ABOUT $160, I BELIEVE, PER UNIT.
IF YOU WERE TO BE ABLE TO BUILD A PROJECT AT A HUNDRED DOLLARS PER UNIT, MAYBE YOU COULD, BUT THAT WOULDN'T DELIVER THE SAME PROJECT AND IT CERTAINLY WOULDN'T DELIVER THE QUALITY THAT YOU'RE LOOKING AT HERE.
DIRECTOR PAUSE, DIRECTOR MONTGOMERY.
UM, OKAY, SO BEFORE WE GO ANY FURTHER, LET'S, UM, JUST A QUICK FACT CHECK ON, UM, THE TAX SITUATION.
SO RIGHT NOW, 1710 MORELL PRODUCES $1,121 IN TAXES.
1802 IS $553 AND 8 33 HUTCHINS IS $685.
I COME TO A GRAND TOTAL ANNUALLY OF TAX REVENUE TO THE CITY OF DALLAS OF $3,795.
SO, UM, THE PROPOSAL, THE TERM SHEET AS WRITTEN WOULD, UH, ON ORIGINATION FEE OF $250,000, THAT WOULD PAY ALMOST 66 YEARS WORTH OF TAXES.
UM, SO I, I JUST WANT TO, I WANT TO MAKE SURE THAT WE'RE CLEAR ON THE, THE, THE TAXES THAT THE RECEIVING NOW VERSUS WHAT WILL BE RECEIVED GOING FORWARD, UM, WHICH IS SUBSTANTIALLY MORE.
SO THAT BEING SAID, LET'S TALK ABOUT THIS CALL OPTION.
UM, SO IT'S A 40 YEAR AT, UM, WELL IT'S REALLY PROBABLY ABOUT YEAR 43, GIVE OR TAKE CUZ IT'S 40 YEARS AFTER TABLE MAKING.
UM, SO THERE'S A, A CALL OPTION FOR YOU TO BUY THE PROPERTY FOR 70% OF THE FAIR MARKET VALUE, UM, FOR A 20 YEAR PERIOD.
SO, UM, AND, AND I, I THINK THERE'S A, A TYPO, UM, IN THIS, IT SAYS, AS DISCUSSED,
[00:45:01]
MULTI-FAMILY DEBT AND EQUITY PROVIDERS ARE NOW REQUIRING AN EARLY TERM TERMINATION OPTION.I THINK THAT'S REQUESTING, SO MAYBE THAT WAS JUST A, A TYPO THERE.
UM, SO TELL ME A LITTLE BIT ABOUT, UH, WELL TELL ME ABOUT THAT CALL OPTION.
SO LET ME FRAME IT FROM THE PERSPECTIVE OF US BEING A LONG TERM HOLDER OF ASSETS.
AND THAT'S WHY I, I TRY TO REITERATE THAT CONSIDERABLY IN MY EXISTING PRESENTATION POINT TO YOU.
ONE OF MY PARTNERS WHO'S OWNED ASSETS OVER 50 TO 60 YEARS, HE OWNS 24 TO 25 APARTMENT
WHEN YOU OWN AN ASSET LONG TERM, YOU HAVE TO CONTINUALLY FINANCE IT OVER A LONG PERIOD OF TIME, STEPPING BACK, AND NOT TO GET TOO WONKY, BUT IN A, IN A TYPICAL MARKET GROUND LEASE TRANSACTION, THE TERM OF THE LEASE IS 99 YEARS.
AND THE REASON BEING, YOU KNOW, PLUS SOME EXTENSION OPTIONS.
AND THE REASON BEING IS TO TRY TO CREATE AS CLOSE TO A FEE SIMPLE OPPORTUNITY FOR A LENDER TO HAVE A A A A LEAN ON SO THAT THEY CAN GET COMFORTABLE FINANCING.
AND KNOWING THAT THERE'S GOING TO BE RESIDUAL VALUE FOR ME IF I HAD TO FORECLOSE ON THE PROPERTY AND TAKE TITLE TO IT.
SO, SO AS WE, AS A LONG-TERM HOLDER OF THE ASSET, WE'RE LOOKING AT THE EXISTING STRUCTURE AND SAYING THAT IT'S 75 YEARS, SO THE EXISTING TERM OF 75 YEARS IS DIFFERENT THAN WHAT'S TYPICALLY MARKET ACCEPTED FOR A GROUND LEASE.
SO HOW DO YOU GET COMFORTABLE WITH THAT, KNOWING THAT WE AS A LONG-TERM HOLDER ARE GOING TO CONTINUALLY INVEST IN THE PROJECT? WE'RE CONTINUALLY REQUIRED TO INVEST IN THE PROJECT PER THE TERMS OF THE PFC.
WE FELT LIKE THAT CREATED AN UNDUE BURDEN ON, UM, A POTENTIAL RISK FOR US IN THE FUTURE AS OWNERS OF THE PROPERTY TO FINANCE OUR FUTURE CAPEX PROGRAMS. BECAUSE AT SOME POINT IN THE FUTURE, WHETHER YOU BELIEVE IT'S IN YEAR 15 OR YOU BELIEVE IT'S IN YEAR 20 OR YEAR 25, WE'RE GONNA GO OUT TO MARKET AND GET A LENDER TO TRY TO FINANCE, HELP US FINANCE OUR CAPEX PROGRAMS. AND THAT LENDER'S GONNA SAY, MY COLLATERAL RUNS OUT IN 20 YEARS AND RUNS OUT IN 30 YEARS.
AND, AND HAVING COME FROM THE FINANCE SIDE, BOTH WORK FOR A CONSTRUCTION LENDER AND A PERMANENT CMVS LENDER, THAT LENGTH OF TERM RE THAT REMAINS ON THE LEASE.
YOU'RE NOT ONLY LOOKING AT FROM YOUR PERSPECTIVE, BUT YOU'RE LOOKING AT IT FROM THE NEXT LENDER'S PERSPECTIVE.
SO IF THERE'S ANY POTENTIAL RISK THAT THAT NEXT LENDER MIGHT NOT HAVE CONSIDER OR TERM LEFT TO PERFECT THEIR COLLATERAL, THAT'S A RISK THAT YOU MIGHT NOT WANT TO TAKE AND THEREFORE MIGHT NOT WANT TO FINANCE.
AND SO THE, THE SOLUTION, UM, IS THERE'S, THERE'S MULTIPLE WAYS TO DO IT, BUT THAT'S, THAT WAS OUR GENERAL FEEDBACK TO THE CITY AND TO, UM, MR. PLUMER ABOUT OUR CONCERN WITH THE EXISTING FIXED TERM OF 75 YEARS, THAT WE NEEDED TO FIND SOMETHING THAT WOULD ENABLE US IN THE FUTURE TO FINANCE THIS PROPERTY EASILY, UM, AND NOT CREATE ANY RISK THERE.
THE PROPOSAL THAT CAME BACK TO US, BECAUSE I BELIEVE THAT THERE'S SEVERAL OTHER INDIVIDUALS OR OTHER GROUPS OUT THERE, UM, THAT, UM, RAISED A SIMILAR CONCERN ABOUT THE FINITE, UH, NATURE OF THE 75 YEAR TERM WAS THE, THE EARLY TERMINATION OPTION.
UM, WE BELIEVE THAT THAT CREATED SUITABLE RESIDUAL VALUE FOR US.
FOR US IT COULD BE, UM, YOU KNOW, THERE'S A COUPLE OTHER OPTIONS, BUT THE PROPOSAL BACK TO US WAS THE EARLY TERMINATION OPTION.
WE FELT LIKE THAT US BEING ABLE IN THE FUTURE, WHETHER IT'S YEAR 10, WHETHER IT'S YEAR 15 OR YEAR 20, TO GO TO THE, TO THE POTENTIAL LENDER AND SAY, HEY, GIVE US THE MONEY TO DO OUR CAPEX PROGRAM.
WE STILL HAVE THE ABILITY TO CONTROL OUR FUTURE AND MAINTAIN RESIDUAL VALUE FOR YOUR COLLATERAL POSITION, UM, THROUGH THAT EARLY TERMINATION OPTION, MITIGATED THAT POTENTIAL RISK, UM, OF FINANCING IN THE FUTURE.
SO ARE YOU SAYING EFFECTIVELY THEN THAT AFTER YEAR 60 YOU WOULD NOT ANTICIPATE FURTHER FINANCING? UM, I MEAN AFTER YEAR 60, THE, THE RE SO THE, THE YEAR SIX, WE WOULD ANTICIPATE THAT, UH, SR.
AND ANY OF THE OTHER DEVELOPERS THAT ARE NOW REQUESTING THIS, UH, EARLY TERMINATION OPTION, THE REASON WE WOULD ANTICIPATE THEM EXERCISING THE TERMINATION OPTION BETWEEN YEAR 40 OR 60.
THE REASON WE PUT THE CAP ON THE YEAR 60 AND JIM PLUMBER CAN, UH, CORRECT ME IF I'M WRONG, BUT WE DON'T WANT PEOPLE COMING TO US AND BUYING OUT OF THIS LEASE TRANSACTION IN YEAR 73 BECAUSE THAT WOULD BE ONLY TWO YEARS BEFORE WE GET THE ENTIRE PROPERTY FREE AND CLEAR.
SO IT'S TO TRY TO FORCE THE ISSUE THERE OR WE'RE IN THIS LONG TERM TOGETHER.
SO THAT WAS THE REASON THAT THIS 60 YEARS IS IN THERE.
AND, AND DIRECTOR, TO ANSWER YOUR QUESTION, I THINK IT KIND OF GOES HAND IN HAND WITH WHAT KYLE JUST SAID.
YES, THERE WOULD BE A NEED TO FINANCE IN THE FUTURE, BUT THERE IS A, A GIVE AND TAKE IN ANY SORT OF DISCUSSION COMING TO TERMS AND THAT THE P FFC HAS A NEED THEMSELVES AND JUST LIKE YOU SAID, THE NEED TO ACTUALLY, UM, MAINTAIN THAT VALUE PAST
[00:50:01]
YOUR 60.SO, SO THERE ARE THREE VARIABLES IN THIS CALCULATION THAT, UM, THAT I, I THINK WARRANT CERTAINLY BOARD DIRECTION AND, UM, AND SIGNIFICANT, UM, STUDY FOR LACK OF BETTER TERM.
SO NUMBER ONE IS THE FAIR MARKET VALUE.
SO IN THE, THE THIS, UH, IN THIS, UH, SUMMARY, IT SAYS THAT, OR IN THE TERM SHEET I SHOULD SAY, UM, IT SAYS THAT THE, UH, FAIR MARKET VALUE WILL BE, UM, DEFINED IN THE, THE TERM OR IN THE LEASE ULTIMATELY.
SO, UM, YOU'RE WELCOME TO SPEAK TO IT.
UM, KYLE, IF, UH, YOU OR, OR JIM WANNA SPEAK TO IT.
UM, BUT LET, LET'S TALK ABOUT, CAUSE WE'RE GONNA BASE THIS DECISION BASED ON FAIR MARKET VALUE AND WITHOUT UNDERSTANDING WHERE WE'RE DETERMINING FAIR MARKET VALUE, IT SEEMS LIKE A, UM, A FOOLISH ENDEAVOR TO, TO PASS ANY KIND OF DECISION ON.
I I, WELL, CAN, CAN I JUMP IN ON, UH, OUR, OUR NORMAL REQUIREMENTS? THERE ARE COUPLE PAGES LONG, SO THEY'RE NOT REALLY APPROPRIATE FOR A TERM SHEET.
THE, THE PARTY WHO WILL DETERMINE THE VALUE OF THE PROJECT HAS TO BE AN M A I APPRAISER FIVE YEARS OF EXPERIENCE IN THE APARTMENT PROJECT SUBMARKET.
UM, THE WAY THAT WE NORMALLY WORK THAT IS THE DEVELOPER WILL NAME AN APPRAISER, WE WILL GET TO DECIDE IF WE THINK THEY ARE QUALIFIED AND ACCEPTABLE.
IF THEY ARE NOT, IF WE DO NOT LIKE THEM, THEN WE WILL NAME OUR OWN APPRAISER.
UM, AND IF THAT PARTY'S ACCEPTABLE, UM, TO THE DEVELOPER, THEN THAT PARTY WILL DO THE APPRAISAL.
IF WE CANNOT AGREE, THEN THOSE TWO APPRAISERS, USUALLY WE HAVE THEM SELECT A THIRD APPRAISER AND THAT APPRAISER WILL DO THE APPRAISAL.
ALL OF THESE APPRAISERS HAVE TO BE M A I, THEY HAVE TO BE EXPERIENCED, UM, IN, IN APARTMENTS, UM, AND THEY HAVE TO BE INDEPENDENT.
UM, SO WE WILL SPELL ALL OF THOSE TERMS OUT IN THE LEASE IN A LOT MORE DETAIL.
IS IS THE FINANCE COMMITTEE UP TO SPEED ON, ON THIS PIECE OF IT? YEAH, ON THE FINANCE.
UM, SO THEN THE, UH, THE OTHER COMPONENT IS THE STRIKE PRICE.
SO WHERE, WHERE DO WE GET THAT STRIKE PRICE? I'LL LET MR. PLUMER DESCRIBE THAT AND THAT THAT WAS HIS LANGUAGE THAT HE PROPOSED
IT, IT SEEMS LOW 7% OF FAIR MARKET VALUE.
SO WHAT I DID WAS I TOOK, UM, THE REMAINING TERM OF THE LEASE ON A 40 YEAR BASIS, THAT'D BE 35 YEARS.
I TOOK $1 AND DISCOUNTED AT 8%, WHICH IS THE PREFERRED RETURN THAT IS IN OUR TERM SHEET.
SO IT IS ON A, ON A DISCOUNTED BASIS, THEORETICALLY THE SAME AS YOU GETTING THE PROJECT BACK AT THE END OF THE TERM? AS CLOSE AS WE CAN GET WITH A PERCENTAGE.
AND THEN MY, MY FINAL QUESTION IS THERE DOESN'T SEEM TO BE A PREMIUM FOR THE CALL OPTION, UM, PRICED INTO THIS AND, UM, TO PROVIDE A, AN OPTION FOR, UM, A DEVELOPER TO GET OUT AT LEAST 35 YEARS EARLY.
UM, IT, IT WOULD SEEM LIKE WE WOULD BE THE PFC, UM, WOULD BE DUALLY COMPENSATED, UM, FOR THAT, UH, THAT PRIVILEGE THERE.
THERE IS NOT A SPECIFIC CALL PREMIUM, IT WAS JUST AN ATTEMPT TO, TO EQUATE THINGS TO GETTING THE PROPERTY BACK IN 75 YEARS.
UM, WE, WE WILL OF COURSE GET, NOT YOU, THE PFC WILL NOT GET TAXES, BUT THE CITY OF DALLAS WOULD AND SO WOULD ALL THE OTHER TAXING ENTITIES.
UM, SO THAT IN MY MIND REPLACED THE LOST RENT.
UM, AND THEN WE JUST TRIED TO EQUATE IT TO WHAT WE WOULD GET BACK AT THE END OF 75
[00:55:01]
YEARS.AND SO, YOU KNOW, IF WHO KNOWS WHAT, UH, THE VALUE OF THESE PROJECTS WILL BE IN 40 YEARS, UM, WE HAVE A PRETTY GOOD IDEA, UM, THAT, THAT THEY'RE GONNA GO UP 20 OR 30% IN VALUE AND, YOU KNOW, IF THIS WAS A HUNDRED MILLION DOLLAR VALUE AT THAT TIME, THEN YOU WOULD GET A $7 MILLION PAYMENT AND IT WOULD GO BACK ONWARDS.
PERSONALLY, I, AND I DON'T KNOW HOW TO, UM, I DON'T KNOW WHERE WE LAND ON THIS, UM, BUT IT, IT CERTAINLY NEEDS TO BE A, A PREMIUM FOR THE, THE CALL OPTION.
UM, THE, THE PFC, UM, JUST FINANCIALLY SHOULD GET COMPENSATED FOR, UM, PROVIDING THAT CALL OPTION.
SO THAT, THAT I'LL, I'LL MOVE ON FROM THE, FROM THAT PIECE.
UM, THE NEXT THING I I WANT TO ASK YOU ABOUT IS UNIT MIX.
SO, UM, BASED ON THE UNIT MIX, I ACTUALLY HAD TO CHECK AND MAKE SURE THAT THIS WAS COMPLIANT WITH, UH, THE STATUTE, WHICH IT, IT WOULD APPEAR TO BE, UH, BASED ON THE, THE LANGUAGE, THE LETTER OF THE LAW, UM, NOT NECESSARILY THE SPIRIT.
SO, UM, 153 TOTAL UNITS, UM, 75, 76 OF THOSE ARE MARKET.
UM, AND I NOTICED THAT IN THE MARKET RATE YOU HAVE NO STUDIOS, BUT AT 80% A M I 18 OF YOUR 80% A M I ALLOCATION IS TO STUDIOS.
AND ONE OF YOUR 60% A M I ALLOCATION IS TO STUDIOS.
AND YOU, YOU TALKED ABOUT, UM, EQUITY AND PROVIDING AN EQUITABLE, UM, PRODUCT, AND THAT DOESN'T SEEM VERY EQUITABLE.
WE WILL FOLLOW THE LETTER OF THE AGREEMENT TO THE T AND, AND WHAT WE DID WAS WE TOOK OUR BEST EFFORT IN DISTRIBUTING ALL THE UNITS PROPORTIONALLY THE REASON WHY WE DIDN'T HAVE ANY STUDIOS AT MARKET RATE IS BECAUSE MARKET RATE IN THAT SUBMARKET FOR STUDIOS IS $1,300 A MONTH IS A THOUSAND DOLLARS A MONTH.
AND, AND SO, UM, THAT'S, THAT'S WHY WE HAVE, YOU KNOW, MORE OF OUR STUDIOS IN THAT 80 TO 60%.
BUT, UM, SO WHAT YOU'RE SAYING IS THE MARKET RATE IS, IS SIMILAR IN A STUDIO TO WHAT A 60 TO 80% AMI WOULD, UH, WOULD LEASE FOR? YEAH.
WHAT WE'RE, WHICH WOULD BEG THE QUESTION AS TO WHY A TAX EXEMPTION WOULD BE NECESSARY? I'M SORRY, I I DON'T UNDERSTAND WHAT YOUR QUESTION IS THERE.
WELL, SO YOU ARE ALMOST HALF, WELL, A THIRD, UH, THE 80% AMI UNITS ARE STUDIOS AND NONE OF THE MARKET RATE UNITS ARE STUDIOS.
SO I, I THINK WHAT WHAT I, WHAT I, I I UNDERSTAND YOUR QUESTION.
WHAT, WHAT, WHAT, WHEN WE TALK ABOUT HOUSING EQUITY, UM, AGAIN, I I DON'T, I DON'T WANNA GO OFF ON THE TANGENT, I, I APOLOGIZE HERE, BUT, UM, IF I AM, SO PLEASE STOP ME.
BUT FOR, FOR US, WHAT I LOOK AT, AT THE BIG PICTURE WITH RESPECT TO HOUSING EQUITY IN THAT I'M LOOKING AT A SUBMARKET WHERE THERE HAS NOT BEEN ANY NEW DEVELOPMENT IN THIS AREA FOR OVER 10 YEARS.
ALL OF THE DEVELOPMENT, THERE'S A RECENT DOWNS NEWS ARTICLE THAT CAME OUT TWO WEEKS AGO, 75,000 UNITS IN THE CITY OF DALLAS.
65% OF THOSE WERE ADDED NORTH OF 30.
AND SO WHEN I LOOK AT EQUITABLE HOUSING, I LOOK AT IT FROM A WHOLE PERSPECTIVE IN THAT WE ARE BRINGING SOMETHING TO A TYPICALLY UNDERSERVED MARKET THAT HAS HAD NO NEW DEVELOPMENT, NO NEW HOUSING, AND WE'RE DOING IT IN A WAY THAT'S HIGH QUALITY.
IT'S WELL DESIGNED AND WE'RE NOT SKIRTING ON AMENITIES JUST TO TRY TO MAKE THE NUMBERS WORK HERE.
AND, AND SO THAT'S WHEN WE TALK ABOUT EQUITY, UM, IF, IF, IF THE BOARD CHOOSES AGAIN, WE WILL FOLLOW THE LETTER AND WE WILL GET APPROVAL FOR OUR RENT ROLE AS REQUIRED, PER THE PROGRAM IF, IF, IF NOT HAVING ANY STUDIOS IN THE QUOTE UNQUOTE MARKET.
AND AGAIN, WHAT I WOULD LIKE TO SEE IS THAT OUR MAXIMUM, 97% OF OUR UNITS ARE LESS THAN A HUNDRED PERCENT OF THE AM I 50% OF THOSE ARE LESS THAN 80% OF THE AMI.
WE EVEN HAVE UNITS THAT ARE LESS THAN 60% OF THE AMI.
AND, AND SO WHAT I BELIEVE IS THAT WE ARE FULFILLING THE SPIRIT OF THE POC PROGRAM AND THAT THIS PROGRAM IS ENABLING
[01:00:01]
US TO BRING SOMETHING THAT HAS NEEDED, IT IS DESIRED AND HAS NOT BEEN BROUGHT IN YEARS IN RESPONSE TO THE TAX EXEMPTION.IF THE, IF THIS HAPPENS ALL THE TIME WITH A TAX CREDIT DEVELOPMENT WHERE YOU'RE DEVELOPING IN AN AREA WHERE THE MARKET RENTS ARE BA BASICALLY 60%, UH, AMI RENTS THAT, YOU KNOW, EVEN IF YOU COULD BE ALL AT MARKET, BUT IF YOU DON'T HAVE THE, THE RENT REVENUES COMING IN HERE, BECAUSE I THINK THE, THE, FROM WHAT I HEARD IS THAT THE, THE, THE AFFORDABLE RENTS FOR A STUDIO UNIT ARE THE SAME AS WHAT IT WOULD BE FOR A 60 TO 80% UNIT.
AND THAT RE LIKE, IT DOESN'T MATTER IF IT'S RESTRICTED OR NOT, THAT REVENUE'S NOT THERE IF YOU DON'T HAVE THE REVENUE TO PAY FOR A PROJECT OR PAY THE, THE, THE PROPERTY TAXES, ANKLE RESTRICTED OR NOT.
THAT'S KIND OF WHERE THE, THE SPIRIT OF THE, THE TAX EXEMPTION IS COMING FROM IS THAT THIS TAX EXEMPTION IS PROVIDING A SUB TO PROVIDE, UH, MIXED INCOME WORKFORCE UNITS.
AND SO IF THE, IF THE RENT'S THE SAME, STILL A QUESTION OF REVENUE TO THE PROPERTY TO PAY IT BACK, TO GET THE, TO, TO MAKE THE DEAL PENCIL.
AND WE'RE TALKING ABOUT A CLASS A PROPERTY.
MAY I GET, I WOULD, I WOULD ADD TOO, HE'S ACTUALLY TAKING LESS MONEY IN REVENUE BECAUSE SINCE THE STUDIO UNITS ARE AT KIND OF MARKET IN ANYWAYS, JUST BASED ON THAT, THAT UNIT TYPE, WHEN YOU MOVE THOSE 60 AND 80% UNITS UP INTO THOSE HIGHER, UH, REVENUE UNITS, THE DEVELOPER ACTUALLY GET LESS MONEY.
SO HE'S, HE'S TAKEN A BIGGER HAIRCUT JUST TO BENEFIT THE COMMUNITY, UH, IN THAT REGARD, WHICH I THINK IS THE INTENT.
YEAH, YOU EXPLAINED IT A LITTLE BIT BETTER FOR ME.
I APOLOGIZE TO HAVE THAT HERE IN HEADLIGHTS THERE, DIRECTOR.
BUT, UM, SO TELL ME ABOUT THIS, UH, THIS HOUSE THAT'S SANAL BY ITSELF, THAT, UH, I THINK THAT'S 1802, CORRECT.
UM, WHEN WE ACQUIRED THE PROPERTY, IT INCLUDE INCLUDED 1802 MORELL, WHICH WAS AN OLD SINGLE FAMILY RESIDENTIAL LOT.
WHAT YOU SEE ON THE SITE PLAN THERE IS OUR POTENTIAL IDEA ABOUT BUILDING A SINGLE FAMILY FOR SALE PRODUCT ON THEM IN THE FUTURE.
IT'S NOT A, THE, THE LAND IMPORTANT.
SO IS 1802 INCLUDED IN THE STEEL? IT IS PART OF THE COLLATERAL, YES.
BUT NOT PROVIDING A TAX EXEMPTION ON, NOT, NOT ON THAT PROPERTY.
AND THEN, UM, TELL ME ABOUT THIS, UH, TELL ME ABOUT APARTMENT LIFE.
UM, THERE'S ONE 60% UNIT THAT'S CALLED OUT CORRECT.
AND, UM, SO I'M, I'M FAMILIAR WITH WHAT THEY DO, BUT TELL ME ABOUT THAT.
SO, UM, GOING WITH OUR WHOLE, AGAIN, GOING BACK TO STRATEGIC PRINCIP, STRATEGIC PRINCIPLE NUMBER THREE, BEING A STAKEHOLDER, COLLABORATING WITH LOCAL NONPROFITS, COMMUNITY GROUPS LIKE IRA AT THE SEACREST GOLF COURSE BEHIND EVERY DOOR WITH WHAT THEY'RE DOING.
ONE OF THE NONPROFITS THAT, UM, I'M FAMILIAR WITH AND ONE OF MY PARTNERS HAS EXPERIENCE WITH IS A NATIONAL NONPROFIT CLUB, UM, APARTMENT LIFE.
IT'S A, IT'S A FAITH-BASED NONPROFIT THAT EMBEDS PEOPLE WITHIN YOUR PROPERTY.
AND WHAT THEY'RE RESPONSIBLE FOR DOING IS COORDINATING, UH, TENANT OUTREACH ACTIVITIES, UM, THINGS THAT YOUR LOCAL PROPERTY MANAGER CAN'T DO.
UM, I'LL GIVE YOU A TERRIBLE EXAMPLE, BUT A REAL ONE IF THERE IS, FOR EXAMPLE, AND THERE WAS RECENTLY LAST YEAR, UM, A DEATH OF ONE OF THE TENANTS AT THE PROPERTIES.
AS A PROPERTY MANAGER, YOU CANNOT SPECIFICALLY MENTOR AND INVEST AND DIVE AND, AND, UM, INVEST IN THE TENANTS DUE TO THAT DEATH OF A POTENTIAL FRIEND.
BUT THAT'S WHERE APARTMENT LIFE CAN STEP IN AND FILL THAT VOID THAT YOUR PROPERTY MANAGER OR LEASING AGENT CAN'T.
AND YOU KNOW, IT'S EVEN DOWN TO, UM, COORDINATING, UM, ENTERTAINMENT ACTIVITIES ON SITE.
BUT ONE OF THE THINGS THAT WE WANT TO EMPOWER THEM TO DO IS NOT ONLY TO INVEST IN OUR, UH, IN THE LIVES OF OUR TENANTS AT OUR PROPERTY, BUT ALSO BE OUR EYES AND EARS AND LIAISON TO THE COMMUNITY.
SO WHEN THEY'RE GOING OUT AND MEETING THE PRINCIPAL AT CEDAR CREST ELEMENTARY AND SHE TELLS THEM THAT THERE'S A COUPLE KIDS THAT COME TO SCHOOL, UM, THAT THEIR UNIFORMS ARE OLD AND TATTER, WE WILL FIND THAT OUT AND WE CAN FIND WAYS TO SOLVE THAT.
OR THEY'RE WORKING WITH ANOTHER, UM, NONPROFIT AND THEY FIND OUT THAT THE COMMENTS NEED NEW FOOTBALL EQUIPMENT.
WE CAN RALLY AND LEVERAGE OUR RELATIONSHIPS IN NORTH DALLAS AND OUR KNOWLEDGE OF THE CRA ACT TO GO SOLICIT DONATIONS FROM BANKS TO GIVE TO THE CEDAR CCRS COMMENTS, UM, TO HELP THEM GET NEW FOOTBALL EQUIPMENT.
AND THAT'S A, THAT'S A REAL LIFE EXAMPLE.
BUT AS PART OF THE PROGRAM WITH APARTMENT LIFE IN EXCHANGE FOR WHAT THEY DO AND PAYING THEM A FEE FOR THEIR INTER, YOU KNOW, THEIR SERVICES OF COORDINATING, UH, TENANT OUTREACH ACTIVITIES, UM, YOU TAKE A UNIT OFFLINE, A TWO BEDROOM UNIT OFFLINE, UM, TO WHICH THEY LIVE THERE FOR FREE.
SO DO YOU HAVE TO BE AT 60% AMI OR BELOW TO BE THE PERSON THAT, UM, EXECUTES THAT PROGRAM? NO, WE, WE EXCLUDE THAT FROM OUR, OUR CALCULATION.
WE CONSIDER THAT A MARKET RATE UNIT.
CUZ IT'S, UM, ON HERE IT SHOWS IT, IT'S 60% AMI
[01:05:01]
AND, AND THAT WAS MAINLY, AND APOLOGIZE, THAT'S PROBABLY, UM, UM, JUST A, A THROW A FLOW THROUGH ON OUR EXCEL BEING IT THAT AT ZERO END IT WOULD QUALIFY AS A 60% AMI.BUT IF YOU REMEMBER BACK TO THE PRESENTATION, WE HAVE 41%, UH, UNITS AT, UM, 80% AMI AND 11% OF UNITS.
SO WE'RE ABOVE THE REQUIRED THRESHOLD, WHICH MEANS WE EXCLUDE THAT UNIT FROM IT.
DO WE HAVE ANY OTHER QUESTIONS? TTO? THANK YOU PRESIDENT.
I'VE GOT SOME OF THE SAME QUESTIONS ABOUT THE EARLY TERMINATION.
AND I, AND THIS IS REALLY QUESTION FOR THE BOARD AND, AND MAYBE JIM, WHAT'S PREVENT THE OTHER 10 DEALS THAT WE'VE APPROVED FROM COMING BACK TO US TO SAY LIKE, WE WANT THAT, AND I'M JUST CONCERNED WE'RE OPENING, UH, PANDORA'S BOX.
AND, AND TO KEN'S POINT, THERE'S NO ADDITIONAL REAL, REAL CONSIDERATION.
UM, YOU KNOW, OUT OF FAIRNESS TO, YOU KNOW, OTHER PARTICIPANTS, THE, YOU KNOW, THAT WE'RE ADDING, YOU KNOW, WHAT I CONSIDER A VERY SIGNIFICANT CHANGE, YOU KNOW, TO OUR, TO OUR BASIC DEAL STRUCTURE.
UM, AND IN THE FINANCE COMMITTEE CALL, WE HAD A LOT OF CONVERSATION ABOUT, YOU KNOW, WHAT IS THE, THE APPRAISAL PROCESS THAT JOE WENT THROUGH, JUST, YOU KNOW, WHAT IS FAIR MARKET, ET CETERA.
AND I WOULD, I WOULD TAKE A POSITION, WHY DON'T WE, WOULD IT BE FAIR FOR US TO REQUEST WRITE A FIRST REVIEW? SO IF, IF THEY KNOCK ON OUR DOOR IN YOUR 40 AND THEY SAY, WE'VE GOT AN OFFER FOR 34 MILLION, YOU CAN EITHER GET YOUR 7% THROUGH THE APPRAISAL PROCESS OR YOU CAN BUY THE PROPERTY 32 MILLION, YOU KNOW, WHATEVER THE NUMBER IS.
AND THEN NOT THAT WE'RE, NOT THAT WE WANNA GET THAT BUSINESS, BUT IT'S, IT'S A WAY OF KEEPING PEOPLE HONEST IS IF YOU, IF YOU HAVE A RIGHT OF FIRST REFUSAL TO A SUPERIOR, UH, YOU KNOW, TO THE LANDOWNER, THEN YOU KNOW, IF IT JUST, UH, LET JUST THROW THAT OUT.
I MEAN, I THINK, UH, IN THAT SCENARIO, AND JUST TO KIND OF SPEAK ABOUT HOW THE EARLY TERMINATION OPTION BELIEVE, I DON'T, I DON'T THINK THAT THE, THE OPTION IS NECESSARILY GONNA BE USED FOR THEM TO BE ABLE TO SELL IT.
I THINK IT'S FOR THEM TO BE ABLE TO EXIT THE LEASE, TO BE ABLE TO REFINANCE AND RESTRUCTURE THE, THE PROJECT.
I THINK GENERALLY SPEAKING, THAT'S WHAT I THINK IS GONNA HAPPEN.
SO I DON'T EVEN KNOW THAT THE FIRST REGIMEN FUTURE REFUTE.
I DON'T, I WOULDN'T, I WOULD HAVE TO DEFER TO WHAT DEVELOPERS ARE ALSO LOOKING FOR.
AND UH, YOU KNOW, AS FAR AS OTHER, OTHER DEVELOPERS COMING BACK AND REQUESTING THIS, I DON'T KNOW, IT MIGHT HAPPEN ANYWAYS BECAUSE WHEN IT WASN'T TECHNICALLY A, A TYPO, THERE'S JUST CERTAIN PRO THERE'S CERTAIN DEVELOPERS OUT THERE THAT ARE SAYING, WE NEED TO HAVE THIS 40 YEAR OPTION.
AND WE'LL, WE'LL, WELL, DO I NEED TAX REVENUE THERE? WHAT'S THAT? THAT I NEED TAX REVENUE THERE? THAT'S WHAT HAPPENS AT THE 40 YEAR OPTION.
THEN IT GOES BACK ON THE PROPERTY TAX RULES.
SO I DON'T, I DON'T NECESSARILY SEE THIS, THIS OPTION AS, YOU KNOW, SOMETHING THAT'S DETRIMENTAL TO THE PROGRAM.
CAUSE I FEEL LIKE DEVELOPERS WILL BE COMING BACK TO US NO MATTER WHAT, TO TRY TO RESTRUCTURE THIS.
CUZ IF YOU'RE GONNA REFINANCE THIS, YOU'RE GONNA NEED A LONGER LEASE TERM OR YOU'RE GONNA NEED TO EXIT THE TRANSACTION.
THIS IS, THIS IS THE WAY THAT IT'S BEEN, BEEN HOW IT'S BEEN DONE ELSEWHERE THROUGHOUT THE STATE.
BUT I, I SEE US HAVING A, AN EXTREMELY DIFFICULT TIME MOVING FORWARD WITH OTHER DEVELOP DEVELOPMENTS NOW THAT THIS HAS BEEN, YOU KNOW, REQUESTED ELSEWHERE AND BEEN APPROVED ELSEWHERE.
UM, I THINK WE'RE GONNA HAVE A DIFFICULT TIME.
IT MATCHES THE AFFORDABILITY REQUIREMENTS OF PUBLIC HOUSING AND TAX CREDIT DEALS.
I KNOW THAT WE'RE A DIFFERENT TYPE OF, OF ENTITY, BUT AT THE, AT THE END OF THE DAY, IF IT, IF, IF IT MEANS THAT, YOU KNOW, WE CAN DO A TRANSACTION OR A DEAL OR NOT, UH, I WOULD, I WOULD RECOMMEND THAT WE ALLOW THE EARLY TERMINATION OPTION BECAUSE IT'S, IT'S 40 YEARS, SOMETHING'S GONNA HAVE TO HAPPEN WITH THAT PROPERTY ANYWAYS.
AND YOU KNOW, FOR THE LONGEST TIME, ALL I'VE EVER HEARD WAS THAT 75 YEARS WAS TOO LONG.
AND NOW IF THERE'S A NEED FOR THE THE PROPERTY TO, TO EXIT AND KIND OF RECAPITALIZE, REEVALUATE IT, THEN, YOU KNOW, WE HAVE LIKE, LET, LET'S TAKE THAT, THAT OPPORTUNITY.
BUT I DON'T KNOW IF I ANSWERED YOUR, YOUR QUESTION OR NOT, BUT, UH, I MEAN YOU DID, IT'S JUST, IT, IT, IT JUST SEEMS, IT JUST SEEMS PATENTLY UNFAIR TO EVERYBODY ELSE THAT'S BEEN HERE.
YOU, YOU CAN MAKE THE EXACT SAME ARGUMENT TO L D C, THE DEAL ON ENFORCE THE DEAL.
I MEAN, EVERY ONE OF THEM WOULD LOVE, I'M SURE WOULD LOVE TO HAVE THIS OPTION, RIGHT? WHY IF IT DIDN'T COST THEM ANYTHING, RIGHT? NO, I JUST, I JUST, IT IS UNFAIR IN THE SENSE THAT THEY DON'T HAVE IT.
UM, BUT THE HONEST TO GOD TRUTH IS ALL REAL ESTATE IS UNFAIR.
[01:10:01]
THE GUY BEFORE YOU A YEAR AGO PAID 80,000 AND NOW YOU'RE PAYING A HUNDRED.I MEAN, THAT'S JUST THE WAY IT IS.
UM, I AM SURE SOME OF THEM WILL COME BACK AND ASK, BUT MY INCLINATION IS TO SAY, NO, YOU, YOU CUT A DEAL AND WE'RE NOT CHANGING IT.
SO WOULD, UH, I WOULD ALSO, OH, I'M SORRY.
I WOULD ALSO INTERJECT THAT, UH, FROM WHAT JIM TOLD US AT THE FINANCE COMMITTEE MEETING A COUPLE OF WEEKS THAT I WAS AT, UH, IT'S THE WAY OF THE MARKET AND THE MARKET'S MOVING THIS DIRECTION.
I MEAN, IT ALSO COULD BE SAID THAT, UH, THIS TYPE OF PROGRAM WASN'T BROUGHT TO US, YOU KNOW, BY THE OTHER, UH, DEVELOP DEVELOPMENTS WE WENT TO AND THEY PROBABLY KNEW ABOUT IT, BUT THEY DIDN'T BRING IT TO US.
BUT NOW THAT WE ALL ARE AWARE OF IT AND HAVE BEEN DISCUSSING IT AS A BOARD, IF THIS IS THE WAY THE MARKET'S GOING, THEN IT'S SOMETHING THAT, UH, WE SHOULD CONSIDER TO MAKE SURE FUTURE DEALS ARE ARE COMPETITIVE.
ALSO, UM, JAN YOU CAN CORRECT ME, BUT, UH, IF SOMEONE DID COME BACK, IF A PRIOR DEVELOPER DID COME BACK AND SAY, WE WOULD LIKE TO ADD THIS OPTION, UH, SINCE THEY DID SIGN UNDER THE PREVIOUS CONTRACT AS THEY DID, IF THEY WANT TO ADD THIS THERE, THERE'S NOTHING TO SAY THAT WE CAN'T ASK THEM FOR A PREMIUM BECAUSE IT'S BASICALLY A NEW NEGOTIATION.
WE DON'T JUST BECAU IF WE DO OR DO NOT GIVE THIS ONE DEVELOPER, UH, THIS OPTION, IT DOESN'T MEAN THAT, UH, ONE FROM THE PAST COULDN'T COME BACK AND WE HAVE A CHARGE FOR IT.
IT ONE OF THE, ONE OF THE REASONS WE'RE TAKING THIS UP NOW, THE, THERE'S TWO BLUFF VIEW DEALS THAT WE TALKED ABOUT.
THERE'S TWO MORE DEALS COMING UP AND, AND PART OF THE REASON WE'RE SEEING ALL OF THIS IS BECAUSE HOUSTON AND AUSTIN HAVE AGREED TO THESE TYPE OF REVISIONS.
SO THEY'RE OUT IN THE MARKETPLACE.
THE CURRENT LEGISLATIVE PROPOSAL THAT'S HOPEFULLY GONNA BE PASS PASSED AT THE HOUSE TODAY, UM, ONLY HAS A 10 YEAR REQUIREMENT FOR AFFORDABILITY.
UM, AND SO ONE OF THE REASONS THAT I LIKE MOVING THIS FORWARD IS IT SETS OUR REQUIREMENT AT 40 INSTEAD OF THE 10 YEARS.
AND AS IF THE LEGISLATION COMES OUT REQUIRING ONLY 10 YEARS, EVERY DEVELOPER'S GONNA ASK US FOR 10.
AND I LIKE THE CONCEPT OF BEING ABLE TO SAY, NO, WE, WE ALREADY CONSIDERED THIS.
AND WHAT WOULD YOU, WHAT WOULD YOU SUGGEST AS A PREMIUM? WHAT IF THEY DO, WHAT IF THEY DO COME BACK TO US? DO YOU HAVE ANY, HAVE YOU SEEN ANYTHING IN OTHER MARKETS? NO, I HAVE NOT SEEN THE, THE, THE, THE 7% HAS BECOME THE STANDARD IN THE OTHER MARKETS BECAUSE OF THE CALCULATION I TOLD YOU ABOUT.
UM, I, MY TAKE ON A PREMIUM WOULD BE THAT MAYBE YOU ADD 2% TO THE BUYOUT OPTION, UM, IF THEY'RE COMING BACK TO US, UH, MY OTHER TAKE WOULD BE THAT WE GET UP FRONT MONEY.
SO, OKAY, IF YOU WANNA MAKE MAKE THIS CHANGE, WE'LL DO IT, BUT YOU OUGHT TO PAY US ANOTHER A HUNDRED THOUSAND DOLLARS AT CLOSING.
SO IF YOU WANT, I ALSO KIND OF CONSIDER THE FACT THAT WE'RE GETTING THAT CHUNK OF FUNDS IN YEAR 40TH.
THEY EXERCISE THE OPTION AS THE PREMIUM.
IT'S, WE'RE NOT JUST, WE'RE NOT JUST LETTING THEM EXIT THE TRANSACTION.
WE'RE GETTING THE PRESENT VALUE OF THE, OF THE, THAT'S NOT HOW A CALL OPTION WORKS THOUGH.
THE CALL OPTION ISN'T JUST THE, THE TANGIBLE VALUE YOU HAVE TO PAY FOR THE RIGHT TO, IT'S, IT'S LIKE INTEREST ON MONEY.
WELL, THEY COULD SAY, WELL, THE PRESENT COULD BE MONEY.
WELL, THEY COULD JUST SAY, WELL, THEY COULD SAY, WELL, THE ACTUAL PRESENT VALUE WE WOULD LIKE TO USE IS FIVE OR 9%.
LIKE IT'S, IT, IT, IT IS KIND OF WHAT IT IS.
LIKE WE ARE SETTING THIS AT 7% AND WHO, WHO SAYS THAT IT COULD BE EIGHT OR SHOULD BE SIX.
I JUST, I DON'T, I DON'T KNOW.
I I VIEW THIS, THIS BUYOUT OPTION, THIS AS A BUYOUT OPTION.
YOU CAN CALL IT EARLY TERMINATION, WHATEVER YOU WANT TO CALL IT.
UH, WE'RE GETTING PAID MONEY EARLIER THAN WHAT WE WOULD HAVE IF WE JUST INHERITED AT THE PROPERTY, YOU KNOW, AT YEAR 75 AND SOMETHING WILL BE DONE WITH THE PROPERTY.
I ALSO ENVISION EVERYBODY, EVEN
[01:15:01]
IF THIS WASN'T THERE, PEOPLE COMING BACK TO US AND TRYING TO NEGOTIATE HOW TO EXIT THE TRANSACTION AT THAT TIME TO RECAPITALIZE, REFINANCE THE PROPERTY OR DO WHATEVER.SO, UM, I I, I DON'T KNOW WHAT THE, WHAT THE, IF THERE IS A PREMIUM ON TOP OF THIS, I DON'T KNOW WHAT THE MARKET CAN WITHSTAND SINCE, YOU KNOW, THAT'S, YOU KNOW, THEY'RE DOING A LOT MORE PFCS AROUND, AROUND THE STATE THAN WHAT WE ACTUALLY CONSIDER HERE.
SO WE'RE, YOU KNOW, WE CAN, WE HAVE THE ABILITY TO DICTATE WE ARE DALLAS, WE HAVE PROB ONE OF THE STRONGEST REAL ESTATE MARKETS IN THE STATE.
BUT, UM, I WOULD, I WOULD SAY THAT, YOU KNOW, IF IF YOU, IF YOU WANT TO LOOK AT A MARKET AS A WHOLE, THIS IS, THIS IS WHAT WE HAVE SEEN.
DO YOU HAVE ANY OTHER QUESTIONS? UH, NOTHING I COVERED, I I DIDN'T NEED TO TAKE THE CONVERSATION AWAY FROM YOUR PROJECT.
I'D LOVE THE PROJECT, YOU KNOW, OVERALL, I MEAN, AND YOUR PRESENTATION IS FANTASTIC.
THE, THE, I'M GONNA, I'M GONNA STEAL SOME OF YOUR SLIDES INTRODUCTORY.
LOCATION, YOU KNOW, WHAT YOU'RE DOING, ET CETERA, ET CETERA.
THIS, THIS, THIS IS THE NEW CONCEPT FOR THE BOARD.
AND SO WE'RE OBVIOUSLY FLUSHING IT OUT IN REAL TIME.
AND, AND, AND I UNDERSTAND, AND I, UM, KNEW COMING IN HERE AS THE FIRST PERSON WITH THIS N R M R U, THERE WAS DEFINITELY RISK IN TERMS OF, UM, HOW YOU GUYS INTERPRETED THIS.
UM, BUT JUST KNOW WE, WE'VE BEEN COMMUNICATING WITH, WITH KYLE AND, AND JIM FOR, FOR MONTHS AND, UM, I, I DON'T WANT TO SAY TOO MUCH, BUT, BUT, UM, WE, WE'VE DONE MYSELF AND MY PARTNERS, DAN HEALY, UM, IS CONSIDERABLY WELL VERSED IN THE PFC AT THE STATEMENT LEVEL.
AND WE KNOW AND SEE THE VALUE OF THIS PROGRAM.
WE'RE WELL VERSED IN WHAT'S GOING ON WITH THE REST OF THE STATE AND KNOW THAT THE CITY OF DALLAS HAS DONE A TREMENDOUS JOB OF ALIGNING THE INTEREST OF THE CITIZENS TO, TO THIS PROGRAM.
UM, IN, IN THEIR, THEREFORE, WE WANTED TO BE A PARTNER AND HELP UNDERSTAND FROM OUR PERSPECTIVE AS A LONG-TERM HOLDER OF AN ASSET, WHY SOMETHING LIKE THAT IS IMPORTANT.
MOST PEOPLE THAT DO MULTIFAMILY, THEY'RE JUST MERCHANT BUILDERS.
THEY'RE GONNA GET STABILIZATION AND THEY'RE GONNA SELL IT, HAVE A LIQUIDITY EVENT, IT'S GONNA BE SOMEONE ELSE'S PROBLEM.
THAT'S WHY THE PEOPLE THAT HAVE SIGNED UP HAVEN'T EVER BROUGHT IT UP BECAUSE THEY HAVEN'T EVER HAD TO THINK ABOUT IT.
THEY MIGHT TAKE A DISCOUNT TO THE CAP RATE AT, AT EXIT, BUT OUR INTENT IS TO HOLD LONG TERM AND THEREFORE THE REALITY OF WHAT HAPPENS IN YOUR 40 AND 50 AND 60.
AND THAT'S WHY MY PARTNER AND HOW LONG THEY'VE OWN ASSETS IS SOMETHING THAT WE HAVE TO THINK ABOUT.
AND THAT'S WHY WE'VE BEEN VERY DILIGENT AND PATIENT IN TERMS OF TRYING TO HELP EDUCATE WHAT IS IT, YOU KNOW, WHAT ARE THE THINGS THAT WE'RE CONCERNED ABOUT FROM OUR POSITION.
WE THANK YOU FOR YOUR CONSIDERATION.
ANY OTHER QUESTIONS OR COMMENTS FROM HERE ON ZOOM FROM THE BOARD? IF SO, PLEASE RAISE YOUR HAND SAYING NONE.
DO WE HAVE A MOTION FROM THE FLOOR DIRECTOR TELLIS A MOTION FOUR.
IF YOU CAN, WE'LL MOVE ON TO A VOTE.
CAN WE HAVE COMMENTS? OH, YES, I GO AHEAD.
ARE YOU MAKING A MOTION? NO COMMENTS.
SO WE GOT A MOTION FROM NOW COMING? YEAH, I HAVE AARON.
UM, LISA, ARE YOU ON? SHE IS ON.
I WAS TRYING TO HIT MY BUTTON.
WE HAVE A MOTION ON THE FLOOR TO, UH, APPROVE, RIGHT? YES.
UH, DIRECTOR STINSON WANTS TO MAKE MORE COMMENTS.
IS THAT CORRECT? AND WE'RE ALREADY IN A MOTION, WE MOVE ON TO THE MOTION.
UM, SO ARE YOU WITHDRAWING THE QUESTION? I'M WITHDRAWING THE QUESTION.
SO LET'S TAKE A VOTE IF YOU WILL INDICATE WHETHER YOU ARE IN FAVOR OR NOT WHEN I CALL YOUR NAME DIRECTOR STINSON.
YOU REPEAT THAT? DIRECTOR REYES.
[01:20:04]
VICE PRESIDENT MONTGOMERY MAY.DIRECTOR HALFMAN FOUR PRESIDENT.
SIX APPROVING AND FOUR AGAINST MOTION BALLOT.
WE HAVE ANY NEW BUSINESS ONE ON OUR, REMIND EVERYBODY ABOUT OUR RETREAT ON JUNE 3RD.
WE HAVE THE SUITE CENTER LINED UP.
THEY HIGHLY DISCOUNTED GRANT HAS, HAS THAT CHANGED? I THOUGHT IT WAS MARIETTA.
I THOUGHT YOU SAID A MARRI SUITES MARRIOTT.
I AND LUNCH GO HAVE BEVERAGES AND LUNCH WILL BE SERVED.
WELL WE HAVE A, UH, PRESENTATION FROM, UH, MR. PLUM DURING OUR RETREAT.
UH, THAT'S UP TO THE PRESIDENT.
MAINLY ON, UH, STATE LEGISLATURE ISSUES.
AND IF WE HAVE ANY, UH, IDEAS FOR ITEMS THAT YOU WOULD LIKE TO MAKE SURE WE COVER, UH, PLEASE SEND THEM TO MYSELF AND AARON AND WE WILL, UH, CIRCULATE A FULL AGENDA WELL BEFORE THE EVENT TO MAKE SURE THAT EVERYONE'S CONCERNS ARE COVERED.
AND BEFORE I ASK FOR MOTION ADJOURN, I'D LIKE TO SAY THANK YOU TO KYLE FOR HIS SERVANT HERE.
I KNOW EVERYONE, LIKE IF THEY'RE LIKE ME, THEY REALLY HAVE RELIED ON YOUR EXPERTISE, UM, FROM YOUR, FROM OUR TIME THAT WE, WE HAVE SERVED HERE ON THE BOARD, SO I REALLY APPRECIATE IT.
I KNOW WE'RE LEFT IN GOOD HANDS WITH AARON AND DAVID AND THE REST OF THE STAFF, SO, UH, UM, WE APPRECIATE THEM AS WELL AND LOOK FORWARD TO MOVING FORWARD.
I WANT TO THANK EVERYBODY FOR SERVING ON THIS BOARD, THIS, UH, CORPORATION, NOT BECAUSE OF ANY ACTION THAT I FEEL THAT THIS PUBLIC FACILITY CORPORATION BOARD HAS TAKEN, BUT THE ACTIONS ELSEWHERE THROUGHOUT THE STATE AND THE VARIOUS WAYS IT'S BEEN VIEWS HAVE MADE IT WILDLY POLITICAL AND UNNECESSARILY POLITICAL IN MY OPINION.
UH, HOWEVER, UH, I WANT TO THANK YOU ALL FOR YOUR THOUGHTFUL COMMENTS ON EVERYTHING THAT, UH, WE'VE EVER DISCUSSED, UH, AROUND THE VARIOUS, UH, MEETING SPACES WE'VE, WE'VE HAD TO OCCUPY.
BUT I REALLY APPRECIATE, I WILL MISS EVERYBODY, UH, MISS THE CITY, UH, GOING FORWARD.
UH, I'LL MAKE SURE Y'ALL HAVE MY, UH, PERSONAL EMAIL AND PERSONAL CELL PHONE.
CALL ME WITH ANY QUESTIONS AND THANK YOU AGAIN AND, AND, UH, LOOK FORWARD IN THE ENDEAVORS OF THIS, UH, THIS CORPORATION.
THE CAROLINE CHAIN, A MOTION TO ADJOURN.
HAVE A QUESTION, COMMENT, COMMENT.
I, I JUST WANTED TO, UM, INTRODUCE DARWIN WADE.
UM, DAR DARWIN WILL BE SERVING AS OUR, OUR INTERIM ASSISTANT DIRECTOR WITH, UM, KYLE'S DEPARTURE THIS WEEK.
YOU'LL GET A CHANCE TO MEET HIM.
DARWIN BEFORE WORKING NUMBER ONE 14.
NO, WE HAVE A MOTION TO ADJOURN.