Last week, we told you about the mess happening at 1401 Elm, a landmark $240 million redevelopment deal in downtown Dallas facing forced foreclosure after a developer pulled out.
The city of Dallas had committed $50 million in economic incentives to further progress. But with of the departure of New York-based Olympic Property Partners from the project, early lenders, who shelled out $53.5 million in loans to start redevelopment efforts, are forcing a foreclosure sale Dec. 1.
But city officials say they feel compelled to try and help the skyscraper. The deal is considered to be a major milestone in downtown Dallas’ forward progress, and they reiterated their support for the planned mixed-use redevelopment project, which was supposed to create a combination of commercial space and apartments.
“We are absolutely committed to the redevelopment of the 1401 building, but will need to see how the ownership situation shakes out before making a specific recommendation to the city council,” Karl Zavitkovsky, directory of the Office of Economic Development, told Steve Brown of the Dallas Morning News. “The good news from the city’s perspective is that almost all the environmental mitigation and interior demolition is completed. Redevelopment of 1401 Elm remains a high priority for the city.”
Zavitkovsky told Brown the $50 million earmarked by the city is contingent upon the redevelopment proceeded as planned.
“If the scope of work and/or deal points change, we’ll need to revisit specifics with a new ownership structure and make recommendations to the tax increment finance district board and city council accordingly,” he said.
1401 Elm was once touted as the tallest building west of the Mississippi River, with 52 stories and 1.5 million square feet of office space. Plans were underway to redevelop the Central Business District glass skyscraper, formerly the First National Bank, which has been vacant since 2010. It is the largest vacant building in downtown, occupying a full block between Elm Street and Pacific Avenue.
Olympic Property Partners joined forces with Dallas-based BDRC Partners last year to buy 1401 Elm, which was built in 1965. Together, they began initial work on the structure, like environmental abatement and demolitions.
City leaders and downtown Dallas advocates heralded this $240 million landmark deal, which is considered by some to be critical for the area. The next largest redevelopment project in downtown is the historic Statler Hilton Hotel, ringing in at $175 million.
If the forced foreclosure sale happens next Tuesday, the building owners would likely need to seek bankruptcy protection in order to maintain the reins on the property. And as anyone familiar with bankruptcy proceedings knows, it’s a long, drawn-out process. There’s no way the redevelopment of 1401 Elm could stay on schedule if that happens.
“I’ve called the lender to tell them how important this is to Dallas—I can’t imagine they would go through with this foreclosure,” John Crawford, President and CEO of Downtown Dallas Inc., an advocacy group for Downtown Dallas, told Brown. “We need somebody with the wherewithal to do this project. I’m trying to not let this continue to slip. The longer it slips, the more difficult it will be to do.”
Here’s a depressing bit of information Brown reported: Without a renovation, the landmark Dallas tower will continue as downtown’s largest derelict building or face a demolition that could cost tens of millions of dollars. It would be the largest U.S. skyscraper ever demolished.
We’ll be keeping an eye on this situation and letting you know what happens next Tuesday during the forced foreclosure sale, if it happens.