City initiates LH Town Center design changes; grocer appears larger

Late last week we received an email from JAH Realty informing us of two upcoming public meetings regarding the development at Lake Highlands Town Center at Walnut Hill-Skillman — one for Tuesday, May 24, and another Wednesday, June 1.

Tuesday’s meeting of the Skillman Corridor TIF design review committee is at 10 a.m. at City Hall, LI Auditorium. This meeting, according to the initial agenda we received, will include a “review of revised concept plans, phase 1 design and potential design modifications for future phases of Lake Highlands Town Center.”

Based on previous experience, we know that periodic revisions to the plan are to be expected. Revisions have happened before and turned out to be no big deal. It wasn’t until receiving further emails from JAH Realty in response to our requests for an interview that the nature of this meeting began to take shape, including: 1) design changes proposed for the Town Center by City of Dallas-hired consultants; 2) updates on Town Center developer Prescott Realty Group‘s progress and recommendations to the Skillman Corridor TIF Board, and 3) a group calling itself Concerned Lake Highlands Citizens with a presentation opposing potential changes.

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The documents include extensive and interesting information, and we encourage neighbors to peruse them. We have made all of these documents visible and easy-to-access, plus examined some of the main questions, after the jump:

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Street Works design review of Lake Highlands Town Center

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Skillman Corridor TIF Design Review Committee, May 24 meeting summary, updated Lake Highlands Town Center s…Concerned Lake Highlands Citizens

What design changes are being proposed?

It appears that the Town Center design changes are being initiated by the City of Dallas, not by Prescott Realty. An email from Sue Hounsel of the city’s office of economic development explains that the city has been “negotiating with Prescott for some time now” on potential amendments to the Tax Increment Funding (TIF) agreement “due to delays in vertical development.” (Here’s a quick refresher on TIF funds and the Town Center.) As part of those negotiations, the city “hired Street-Works, a development consulting firm, to do an independent analysis of the Lake Highlands Town Center development plans, market strategy, etc.”

“The meeting is really going to be more of an information exchange where Prescott will update the TIF group on where their current plans are, but then will also talk about some of the observations of the consultant and talk about how there may be an ongoing process to look at retooling some of the future phases, depending on some of the consultant’s recommendations,” Hounsel said via voicemail. “It’s something we’ve asked Prescott to do as part of our review process for the TIF.”

The reason the city is interested enough in the Town Center’s viability to hire a consultant is because of “the complexity of the project and wanting to ensure the best chance of success given the public commitments already funded or pledged,” as the meeting summary states. Those public commitments and funds, detailed in the summary, include: $23 million in TIF incentives, $4.7 in the 2006 City bond program, $3.4 million invested by Dallas County, $5.15 committed by The North Central Texas Council of Governments (NCTCOG) and DART for transit connections and other improvements, plus another $10 million invested by DART to build the Lake Highlands DART Station.

Street-Works’ initial observations and comments on the Town Center have to do mostly with the overall urban design, such as its assertion that “the overall master plan should really be organized as two separate neighborhoods with different anchors, one that is more dense and vertical anchored around the DART Station, while the second anchored by the ‘water feature & trails’ [should be] less dense and not quite as vertical.” Street-Works also wants to ensure that “Phase I deals for a supermarket and rental housing [be] allowed to close and commence construction in an expedited time frame. These two deals will give the market a sense that LHTC is real and viable.”

What does this mean for the Town Center grocery store anchor?

We’ve been reporting on possibilities for the grocery store that will anchor the Town Center, including Sprouts, which Prescott initially identified as an all-but-signed tenant, and Tom Thumb, which sources began to tell us about a few months ago. Tuesday’s meeting summary states that Prescott “has been working diligently to obtain financing and begin construction on a Phase I project currently planned for approximately 85,000 square feet of grocery anchored retail,” and the document also shows an updated Town Center rendering with a 58,000-square foot grocery store, rather than the original rendering with 25,000 square feet.

“It appears to be exactly what we expected, approximately 50,000-60,000 square feet, and most likely a Tom Thumb standard store,” says Graham Irvine, JAH Realty acquisitions director, via email. He goes on to reference that “CVS is approximately 15,000 square feet, Sprouts 30,000 square feet, Sunflower Market 30,000 square feet, Wild Oats 20,000 square feet, Trader Joes 15,000 square feet, Michaels 30,000 square feet, Petsmart 30,000 square feet, Office Max 25,000-30,000 square feet, Hobby Lobby 80,000 square feet, Academy 100,000 square feet, Kroger 80,000-100,000 square feet.”

Street-Works’ design review doesn’t give any recommendations specific to the size or style of the Town Center grocery store, which it calls the “market”, other than it is “the key retail component of a merchandising program” and “should be located as close as possible” to both sides of the project, on either side of Walnut Hill. Street-Works also states that “Program Components (uses) in the Lake Highlands Town Center neighborhood must reflect market driven demand of the future, not the past,” but this, again, doesn’t appear to be aimed at the size and style of the grocery store.

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What is JAH Realty’s interest in the design changes?

We haven’t yet had the chance to speak directly with Irvine because of scheduling conflicts, but this is a question we’d like to ask him. Our interaction with JAH Realty in Lake Highlands has had to do with the shopping centers they own or broker, including Royal Highlands Plaza at Royal and Skillman, where one of our neighborhood’s Tom Thumbs is currently located. When we spoke with JAH Realty leasing director Ethan Slavin a few months ago, he told us that he had been “hearing the same rumors” our real estate sources had told us about Tom Thumb closing its stores and consolidating at the Town Center.

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One of JAH Realty’s interests in Town Center design changes likely has to do with the possibility of losing its anchor at Royal Highlands Plaza to the Town Center, and understandably so. Even though Prescott originally had plans for a smaller grocery tenant, changing to a larger grocer such as Tom Thumb wouldn’t necessarily require a zoning change at the site, as city officials told us. And if Tom Thumb closed at Royal Highlands, an empty 52,000-square-foot big-box would be difficult to fill quickly.

Who are the Concerned Lake Highlands Citizens, and what are they concerned about?

Neither the presentation sent to us from JAH Realty nor the new website promoted in the presentation identifies who the “citizens” are. The “contact us” page simply states: “email contact information coming soon.”

The organization’s main concerns are stated as “the potential development of large grocery to directly compete with other existing properties” that will give the project “less of a town center look and feel” and will mean the “potential relocation of Tom Thumb or an additional large format grocery store.” This could lead to “vacancies at other properties, property blight and an erosion of the City of Dallas tax base … negatively impacting the neighborhood and school district that the Tax Increment Financing ‘TIF’ was designed to assist.”

The presentation argues that a big-box or standard grocery anchored center “will not attract co-tenancy with quality multi-family or office users,” and that “Lake Highlands citizens deserve a complementary project along the lines of what they were promised” — a word used six times in the presentation.

We emailed Prescott executives late in the day Friday asking about the Concerned Lake Highlands Citizens, but haven’t heard anything over the weekend.

We will attend Tuesday’s meeting and report back. The June 1 meeting of the TIF Board also is open to the public, and we will fill you in on those details as we learn them.

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