News Article | 2/23/2005

City has considerable leverage over competing Alliance retail projects

How hot is the Alliance area in north Fort Worth?

Hot enough to attract three competing retail projects aiming for the same tenants and same consumers. And hot enough to drive down some incentive numbers to zero, as in zero tax abatements and zero tax rebates.

But is Alliance so hot that Fort Worth can tell the nation’s biggest shopping-center developer to cool its jets?

That’s what the city has to do now. If not, it runs the risk of backing the wrong horse on a project that could become the retail centerpiece of the Alliance area.

It’s tricky, but it’s a sweet spot for Fort Worth to be in. After priming the pump at Alliance for two decades, the area has heavyweights fighting to bring in retail in a big way.

That tells us that Alliance, a dynamo in job creation and housing, is about to arrive as a retail force.

It also means that Fort Worth has unusual leverage and influence. In getting to designate the chosen one, the city can place aesthetics over costs or product over performance or the long run over the short.

Fort Worth seems to sweat every detail on its big downtown projects, and the one in Alliance deserves the same treatment. It could set the tone for development for years to come in the area’s top growth corridor.

Three proposals

Simon Property Group, which operates 78 regional malls, including North East Mall in Hurst, put a major retail proposal on the table this month. It attached urgency to its request for help on new roads, saying it has a March 1 deadline on its land option.

Hillwood, Ross Perot Jr.’s company, which created Alliance, sent its site plan to elected officials last week. Its ambitious vision includes a medical campus, a blend of residential and commercial properties, a grocery store and a hotel, all in addition to the usual anchor retailers and cinemas.

A third player, Ellesmere Corp. of Vancouver, British Columbia, is talking about something even larger. It’s supposed to submit plans to the city next week, and like Simon, it may want to be reimbursed for road improvements. A development partner says Ellesmere’s retail complex would include lifestyle and entertainment components and would be larger than Hulen Mall.

The focus of all this attention is an area along Interstate 35W just north of U.S. 287. Two of the tracts abut the western edge of I-35W, and their potential to capture the growing population along 287 is being played up.

Hillwood’s tract is east of I-35W. With plans for bike trails and walking paths, it’s designed to appeal to the neighboring Heritage residential development. It also offers a denser-living counterweight to suburban sprawl.

It’s not unusual for retailers to go head-to-head for the same market, fighting to be the first to lock up tenants and break ground. Cities are often involved in the battle, as Grapevine and Irving, which squared off for the discount mall that became Grapevine Mills in the 1990s.

Usually, the marketplace sorts things out: Retailers pick the development and price they prefer, and that becomes the primary center. A few years later, the other location becomes something different.

Ultimately, all three sites along I-35W may end up with retail development because the area is growing rapidly and it’s underserved. But only one project can emerge as the first to market, which means it will have the most-coveted tenants and the best chance to become the signature designation.

In this case, Fort Worth leaders may have to play Solomon. Simon and Ellesmere want public help to make their projects fly. They’re willing to pay for new roads to U.S. 287 as long as they’re reimbursed by a special taxing district that includes their project and, paradoxically, Hillwood’s.

Hillwood, in contrast, has paid for its access roads. President Mike Berry says it’s unfair to force Hillwood to compete with a developer that didn’t have to sink those costs.

“The city doesn’t have to get involved in this,” Berry says. “At least not at this stage of the game. The city ought to sit back and let us guys battle it out.”

That would be a death knell for Simon. Without a publicly funded road, it won’t do the project, says Bill Hammer, Simon’s vice president of development.

“Simon is a large company with a lot of development opportunities,” Hammer says. “We really like this project, but if it’s not going to happen here, we’ll go on to others.”

Don Silverman, the Dallas development partner for Ellesmere, says Simon is pushing too hard. Ellesmere has held the land for 30 years, but now “we’re running as fast as we can to submit a plan,” Silverman says.

“It’s a disservice to the community to rush into anything,” he says.

Another opinion

Fort Worth has asked a financial firm to review the three plans. Analysts will make sure that the developers can repay the road costs if that’s included in their request. They’ll also assess the amount of sales tax that each project would generate.

That measurement could favor sites west of I-35W if they call for more retail space. But the Hillwood proposal, designed with Trademark Property Co. of Fort Worth, might win points for aesthetics.

Hillwood also deserves kudos for delivering at Alliance. It received about $200 million in public money and has generated more than 20,000 jobs and hundreds of millions in new tax revenue.

But Hillwood has critics, especially leaders still angry that Hillwood plans to build an upscale mall on the Circle T Ranch in Westlake, across the city line.

Simon is trying to capitalize on that sentiment. Hammer says Simon’s project would let Fort Worth capture taxes that would otherwise go to Westlake.

I’m skeptical.

The retail spending that’s up for grabs has nothing to do with Westlake. It’s going to be spent around I-35W and 287 — at Hillwood’s Alliance Town Center, Simon’s Presidio Vista or Ellesmere’s new project.

Which one will Fort Worth bless? With so much riding on it, this requires serious study.

But Simon may not be patient, because its option costs climb every month.

“For us, time is money,” Hammer says.

Maybe he should be prepared to part with more of it.