The program, approved unanimously by City Council, will reimburse the developer of Regent Square — a 4-million-square-foot community that will abut Allen Parkway near Dunlavy and Dallas — for public improvements the developer has agreed to make to public roadways, sidewalks and streetscapes. The money will come from tax revenue generated by the development and will be paid through the Memorial Heights Tax Increment Reinvestment Zone, or TIRZ.
In exchange, Boston-based GID Urban Development Group, which had been on the brink of putting the project on hold indefinitely, has agreed to begin work on the public improvements by Oct. 1, and initiate the private aspects of the property by Oct. 1, 2010. It also will provide 150 free parking spaces and rehabilitate a nearby historically black cemetery.
White said he generally has shied away from such public-private development efforts, but would continue to review opportunities on a case-by-case basis for distressed properties, such as Sharpstown Mall and for other major projects already in the works that have been delayed or canceled amid the national economic crisis.
In this case, the overriding question was whether the city would get the same benefits without the reimbursement, White said, adding that he did not believe it would.
“I would say that this is an unusual project in its scale and scope to be started in a big urban city today when real estate markets are seizing up,” he said.
Critics contend that the economic development effort is an artificial benefit to the economy, one that creates winners and losers in the marketplace.
“If these projects are stalling and developers are saying they’re not going to execute them, well, that’s the market and the market has slowed down,” said Greg LeRoy, executive director of GoodJobsFirst, a national watchdog of public economic subsidies. LeRoy said the city could do further harm to the local real estate market by helping add capacity when there is less demand, or creating more commercial space when rents already are growing soft.
The more I think about this, the more I think that the objections raised here and in the earlier story don’t add up to much. By the time the developer gets started on the project, the economy may be in far better shape and the real estate market may be back to normal. It’s not like this is a speculative area, either – there’s some high-end stuff immediately around it, and the location and view can’t be beat. And the city will get some infrastructure improvements out of it as well – just working on the sidewalks puts this in the W column as far as I’m concerned. So while this sort of thing definitely needs to be evaluated on a case by case basis, this particular case made a lot of sense to do.
Further, as Council Member Brown says in this KHOU story from Tuesday night, it’s not like the city has never done this sort of thing before. The fact that it didn’t even draw a token No vote from the likes of CMs Holm or Sullivan, and the fact that none of the people who could be Mayor by the time this project gets underway have raised any objections says to me this is no big deal.