Good news. You don’t have to go to Idaho to fish in Bogus Creek. Last October, I wrote about how the NHPRAP (Northwest Highway and Preston Road Area Plan), not even a year old, wasn’t designed to be economically viable. Essentially, my scribbles revealed that were its Zone 4 area to follow the recommendations contained in the NHPRAP task force’s final report, their individual condominiums would always be worth more than land value to a developer. Note: Zone 4 contains PD-15 (Planned Development District) within the larger Pink Wall area.
This lack of economic benefit ensures none of the redevelopment and neighborhood renewal touted by the NHPRAP plan will occur, failing to live up to its own goals.
Well, now I’m not alone. A.G. Spanos (who has an option on the Diplomat) released an independent report by architecture firm LRK.
LRK’s report essentially debunks the feasibility of redevelopment within PD-15 when constrained by both the current PD-15 limits and the NHPRAP’s report. Sure, Spanos has a dog in this hunt, but LRK’s report fills a gap in research not provided by the city or the NHPRAP. The report is making the rounds at City Hall just as development opponents are trying to shore up support for the flawed NHPRAP plan.
To recap, the NHPRAP recommends a maximum of four-story construction in the Pink Wall area bounded by Edgemere, Preston, and Bandera Roads and Northwest Highway. It positions the existing 21- and 29-story towers as anomalies, not to be repeated.
“Most of the residents in this multi-family neighborhood and in the adjoining single-family neighborhoods to the north want to limit additional redevelopment projects to a maximum of four stories, with smaller building footprints and more green space.”
“Most” actually refers to those residents who showed up at town hall-like meetings to write their thoughts on flip charts. There was no area-wide polling. Ask yourself: Do the 100-150 area-wide residents who attended the town hall sessions, and the 20-40 attending the average the task force meeting, really represent “most” of the study area’s residents? Remember, 2,250 are residents of Zone 4 alone who had no owner-occupants on the task force.
Ask yourself another question. Would area residents have expressed different thoughts had they been presented with a fuller picture that included the economics?
Even now, anti-development forces, lacking a supporting economic story, are telling city officials and the press that “no one wants development”. Since there has been no official poll, this is hyperbole reflective of their personal desires. In fact, Council member Gates held a meeting last July 12th whereby over 100 attendees raised their hand when asked whether PD-15 should be reevaluated to enable development. It’s what kicked off the PD-15 working group.
“…renewal and replacement of housing stock is visualized to continue, with increased density but with building heights not exceeding four stories.”
The study included no economic analysis demonstrating that the four-story goal is achievable given current home values, coupled with land acquisition and construction costs. My writings, and more importantly, the analysis below, conclude renewal under the plan’s guidelines is extremely unlikely to occur without land devaluation.
“Two high-rise buildings (Preston Tower and the Athena) were constructed in 1966, but current zoning prohibits the development of more high-rise buildings in the Zone.”
Current zoning within PD-15 would allow for another high-rise. Under its existing MF-3 zoning, height is theoretically unlimited. The stopgap is the PD rule limiting the number of units that can be built (which isn’t zoning). At various points in time there was to have been a second Preston Tower, a 40-story Athena and a 125-unit, high-rise Preston Place.
What’s lucky for the neighborhood is contained in the report’s last paragraph,
“Although the Northwest Highway and Preston Road Area Plan does not bind the City of Dallas to implement any of its recommendations…”
Again, I noted in October that my rough calculations showed four-story construction wasn’t financially viable. Individual condo units would always be worth more on the open market than the land would be valued at. This is even truer given the NHPRAP report urges that four stories be coupled with low lot coverage.
The new Spanos report was crafted by the Dallas office of Memphis-based Looney Ricks Kiss (LRK), an architecture firm that specializes in planning, urban design, and guidelines. In Dallas, you may know them most recently as the architects for the McKenzie high-rise being built north of Knox Street.
The LRK report opens by pointing out that both the existing 52.4 dwelling unit limit per buildable acre and the NHPRAP report asking to limit construction to four stories are “significant obstacles to the redevelopment” of the low-rise properties within PD-15 (Diplomat, Royal Orleans, Preston Place, and Diamond Head). Essentially, economic reality is at odds with the NHPRAP plan.
Even though the NHPRAP spent $350,000 on independent consultants, no economic assessment was done to marry their vision with economic reality.
Units Per Acre
The report’s author goes into detail saying that existing zoned FAR (floor area ratio) of 4:1 isn’t remotely achievable. Under MF-3 zoning and its 4:1 FAR, a one acre-site could build 174,240 square feet of any height (4×1 acre in square feet). However, even assuming 52.4 units on all acres, the resulting 52 units would be 2,848 square feet each. Even the much-touted Laurel’s larger units are, on average, half that size at approximately 1,400 square feet.
For reference, the Athena’s average unit size is 1,721 square feet while Preston Tower’s average is much smaller still. Both Athena and Preston Tower, at 64 and 85 units per acre respectively, well exceed 52.4 units per acre.
From a “number of units per acre” coupled with currently-zoned FAR, it’s easy to see the problem. No one is going to build 2,800 square foot apartments.
Four-Story Height Limitation
PD-15 is zoned MF-3 making height legally irrelevant. But the NHPRAP sets a recommended limit of four stories. Remember FAR? An acre site could build 174,240 square feet. However a property isn’t allowed to build lot line-to-lot line. MF-3 allows only for 60 percent lot coverage. Taking one-acre x FAR x 0.60 and you get a building containing 104,544 square feet or 2.4 FAR or 40 percent less.
Taken together, if a parcel within PD-15 were even allowed 52.4 units per acre (they’re not today) but was then also limited to four stories, those units would be 1,708 square feet — similar to Athena but 300 square feet larger than The Laurel and who knows how much larger than Preston Tower.
This might not seem bad, but who’s going to build a 52-unit apartment building without land costs being significantly cheaper (than the existing condos would be worth)? And who’s going to sell their land with that math?
Parking Cost Considerations
The NHPRAP report recommends most or all parking underground. According to LRK’s estimates, underground parking is $22,000 per parking space for one level underground. For each additional level underground the price jumps to $32,000 per space. Above-ground parking was estimated at $15,000 per space.
Even at 52 units per acre and two spaces per unit, that’s $2.8 million in parking costs for a two-story underground garage (roughly double above-ground costs).
Again, this is money that has to come from somewhere. Either the land gets cheaper or the developer gets to build more to offset the costs. The only other alternative is for construction to get cheaper. If the goal is to make the Pink Wall better, then forcing cheaper construction achieves the opposite.
The Math Is In
Swirl units-per-acre together with four stories and required parking and you get land that is worth less than the existing condos to a developer. In fact, using these assumptions, LRK’s report states that a four-story project would diminish land prices by 36 percent compared to a seven-story project.
Sure, A.G. Spanos has a Jones-on for a seven-story project (so insert grain of salt). But it just so happens that a seven-story building is the largest hybrid structure you can build. Hybrid structures have a multi-story concrete base (for parking usually) topped by up to five stories of wood construction. Moving above 85 feet in height kicks into concrete and steel which adds substantially to construction costs (which then requires a taller and denser building to be profitable).
The report also shows that there is a “no man’s land” in construction. Due to the increased costs of concrete and steel construction, structures in the 8-to-16 story range don’t make economic sense. Essentially, the additional 30-plus percent in construction costs can’t be effectively absorbed by buildings in this range given the sales/rental prices supported by Dallas.
P.S.: I’m not necessarily pushing for a seven-story building. I’m pushing for plans backed up by math versus hallucinations. Because while this report is centered on the PD-15 area with its MF-3 building rights, the remainder of the Pink Wall is even worse off with deed restrictions and three-story height restrictions. For those areas, the NHPRAP plan’s allowance for one additional floor above zoning demonstrates that there is little hope for renewal.
Regardless of A.G. Spanos’ desires, the double amazement here is how quickly I was able to figure this out on a napkin and how seemingly inexpensively A.G. Spanos was able to commission a more sturdy analysis. Why couldn’t the Lollipop Guild NHPRAP, complete with a $350,000 budget, figure it out in the two years they were supposed to be working on their vision? And why would the Plan Commission and City Council vote to adopt a plan so woefully lacking in the easily obtained proof required for validity?
Remember: High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. If you’re interested in hosting a Candysdirt.com Staff Meeting event, I’m your guy. In 2016 and 2017, the National Association of Real Estate Editors has recognized my writing with two Bronze (2016, 2017) and two Silver (2016, 2017) awards. Have a story to tell or a marriage proposal to make? Shoot me an email email@example.com.