City of Dallas Buys Part of Old DMN HQ, Will Auction Lemon on Stemmons
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Despite a city-imposed suspension of new real estate transactions, the Dallas City Council made two big deals on Wednesday — voting to sell a troubled office building on Stemmons Freeway and buy part of the old Dallas Morning News downtown campus for its convention center expansion.
Council members voted 13-2 to authorize spending $51 million and change to purchase a portion of the property at 508 Young St. that backs up to the Kay Bailey Hutchison Convention Center for its renovation and expansion.
Developer Ray Washburne, who purchased the building in 2019 for $28 million, made headlines earlier this year for claiming he would sell the 8-acre property to a data center company after growing frustrated by communication with city officials. Since then, council members have been meeting regularly in closed session with city staff to discuss purchasing part of the property from Washburne, listed in city documents as Charter DMN Holdings LP.
“We’re ready to move forward and let them get moving on taking the back part of that property and getting it ready for the convention center expansion,” Washburne told CandysDirt.com.
City-Imposed Real Estate Freeze for New Projects
Council members took the vote without any public discussion, however, Council Member Cara Mendelsohn (District 12) requested a roll-call vote. Mendelsohn and Mayor Eric Johnson were the only two dissenting votes.
“While I fully support the redevelopment of the Kay Bailey Hutchison Convention Center and believe it is essential to the revitalization of our downtown, I am not comfortable with the city making any major real estate purchases before we have conducted a wholesale review of our city’s processes and procedures for evaluating these opportunities,” Mayor Johnson said in a statement to CandysDirt.com.
Last week, City Manager Kimberly Bizor Tolbert said she was suspending all property acquisitions that weren’t previously approved by voters or the city council until new procedures could be put into place to improve staff’s handling of real estate deals.
Tolbert announced her decision in an after-action report on the infamous “Lemon on Stemmons” debacle, saying the City failed to do their due diligence before purchasing the 11-story office tower at 7800 N. Stemmons Freeway to house a one-stop shop for municipal services, permits, and code compliance. The problematic purchase has cost city taxpayers $29 million and counting.
Speaking on background, a city official told CandysDirt.com that the suspension doesn’t apply to 508 Young St.
“The Kay Bailey Hutchison Convention Center (KBHCC) master plan received prior City Council approval, and Dallas voters approved a proposition to expand the KBHCC. Wednesday’s Council consideration to acquire the Young Street property is a step toward implementation of those existing authorizations,” the official said.
Council members also signed off on some lower-stakes land deals on Wednesday, which will be paid for with bond funds.
Downtown Dallas Dodges Data Center Bullet
One of the current convention center plans, presented to the public recently, shows a southern portion of the DMN property’s parking garage included in the convention center renovation’s expanded footprint. It was slightly amended after the Texas Department of Transportation revealed the convention
center expansion, west of Lamar Street, abuts the forthcoming Interstate 30 project. “Providing the easement for the TxDOT request necessitated moving the convention center back several thousand feet onto the abutting property,” city documents explain.
Washburne bought the 8-acre property in 2019 to develop an entertainment district and boutique hotel to complement the convention center expansion. Now, it appears those plans can move forward.
“I think the city manager and her staff did an excellent job,” Washburne told CandysDirt.com. “I’m very satisfied with the way we were able to get a resolution on this and just get on down the road.”
Lemon on Stemmons Hits the Auction Block
The city’s handling of its extensive real estate portfolio has come under scrutiny in recent years — not only for questionable deals but also for high-profile examples of mismanagement and neglect, like the former Family Gateway building downtown, which the city acquired and then allowed to fall into disrepair.
Council members ultimately decided to auction off the derelict property last year, a move they are also pursuing with the Stemmons property. On Wednesday, council members voted to authorize putting 7800 N Stemmons Fwy on the auction block, hoping to recoup some of the taxpayer money they spent on the endeavor.
