Project Summary Purse & Co. Lofts Development Agreement

City Center TIF District Developer/Applicant Applicant: Purse Development Company, LLC Todd Smith, Manager Address: 1405 McCoy, Ste. 4, Dallas Texas, 75204 Project Description The building addressed as 601 Elm Street was constructed in 1905 and stands empty at the gateway to the West End Historic District, facing the Dallas County Founders Park and the Kennedy Memorial. The building is located in the West End Historic District and is on the National Register of Historic Places. The building has been vacant since the Dallas County Records staff vacated it in the early 1990’s. Due to this vacancy and lack of maintenance, this historic structure is on the verge of becoming financially irreparable as the structural integrity has been compromised by water damage and neglect. Proposed rehabilitation will be a Certified Rehabilitation allowing the developers to advantage of Historic Investment Tax Credits for the project. The building will be redeveloped to include:

• 14,440 square feet of retail space equipped to accommodate up to five unique concepts.

o A new restaurant on the park for the county employees and tourists.

o A specialty shop serving prepared foods. o A basement speak‐easy reminiscent of the 60’s.A rooftop

restaurant that will have one of a kind views of the downtown skyline.

o A coffee and wine bar opening to the light rail where commuters can comingle with residents of the west end.

• 40 unique loft apartments (including 4 affordable units) with open floor plans, fourteen foot ceilings and contemporary exposed architecture within walking distance of downtown Dallas’ busiest light rail station.

o Larger floor plans for work / live space. o Amenities will include a rooftop deck with fire pit, water feature and

barbeque area, fitness center as well as a bike room and storage.

Project Costs The total project costs for the Purse and Co. Lofts project is $14,867,948. A line Item description of costs associated with the project is attached. Project Sources of Funding and Uses TIF Request Staff recommends TIF funding in an amount not to exceed $2,800,000. The total TIF funding proposed for the project will reimburse environmental remediation/demolition, affordable housing, and public infrastructure costs. Description Amount Public Infrastructure Improvements Streetscape Improvements $42,500 Redevelopment/Development Projects

Environmental Remediation/Abatement $160,000 Demolition $385,500 Utilities $562,000 Historic Façade Restoration (including historic storefront & awning) $1,650,000

Total TIF Funding Recommended $2,800,000 Project Design Review On March 22, 2013, the developer’s design team, and Economic Development staff met with the Urban Design Peer Review Panel to review the project’s design. The CityDesign Studio compiled the panel’s comments and provided them to the developer. Since the meeting the developer has revised the project’s site plan to address the panel’s recommendations. The panel’s comments and revised design plans are attached. When considering TIF funding for the project, the TIF board, at its discretion, can include the panel’s recommendations as conditions of approval of the Project. The Landmark Commission will review the project’s design on April 10, 2013.

Sources Amount % UsesPrivate Equity $2,539,078 17% Acquisition and ConstructionHistoric Tax Credits $2,073,922 20% ConstructionConstruction Loan $10,254,948 69% Construction

$14,867,948

Purse Development Company, LLC Team Members Todd Smith is a managing partner and responsible for implementing a long term strategic vision for the company’s developments. His duties include sourcing equity and debt for all projects, coordinating communication with equity and debt partners as well as overseeing the investment activity. Prior to forming McCoy Development Group he most recently worked for Dallas based Houghton Capital, where he was vice president of business development. His duties included underwriting acquisitions as well as assisting in the development of new properties and managing the efficiencies of the growing portfolio of commercial properties. Prior to Houghton, he formed Southwestern Advisory Services a full service real estate company in 2003, after having worked for Merrill Lynch and Morgan Stanley where he helped facilitate real estate debt and equity transactions. Craig Melde is a managing partner of McCoy Development. Mr. Melde is also an Architect and Senior Principal of ARCHITEXAS which he founded in 1978, an architectural firm which specializes in historic preservation and adaptive use of historic properties. Having redeveloped an existing historic building into a mixed use project himself, Mr. Melde brings a wealth of experience and knowledge in all aspects of commercial real estate development. He oversees and coordinates the architectural department of the company as well as coordinating the communication with the city, state and federal organizations regarding zoning, entitlements, and redevelopment incentives. Ray Sanders is a partner and has been involved in all aspects of commercial real estate for over 40 years. He has founded numerous commercial real estate companies that have developed owned, and managed properties ranging from single tenant build-to-suits, hospitality, retail centers, to industrial properties. Ray has developed over $300,000.00 of constructed developments Ray brings his world class base of knowledge and experience in development and finance to the team to assists in all aspects of McCoy Development Group’s execution of its corporate mission- To deliver exceptional developments into the market. Terrence Wegner is Project manager and front line for McCoy Development Group’s construction management division. He has the distinction of having worked with Trammell Crow, where he eventually trained Crow partner’s to administer and implement their projects, notably building the Dallas World Trade Center as well as Bryan Tower. He consulted on the Peachtree in Atlanta as well as the Embarcadero in San Francisco. He founded DYAD International, Inc. and Construction Related Services, Inc. to partner with Robert Young and Associates to handle construction of projects in Dallas, NYC, Beverly Hills, Paris and London.

Representative Development Projects Completed by Team Members: Historic Harlan Building Mixed Use - 22,000 square feet Dallas 2005 Clearpoint Crossing Apartments Multifamily - 252 Units Houston 2009 Sheraton Hotel 382 Rooms Houston 2004 2004 Main Street Office 30,000 square feet Dallas 1999 Recommended Contents of the Development Agreement

1. Minimum private investment of $12,000,000 for the Project (acquisition, construction and construction related soft costs).

The term “Invest” or “Investment” means the sum of all acquisition costs, construction costs (hard and soft) paid, payable or actually incurred by or on behalf of the Owner, with respect to the Property and the improvements thereon. Construction related soft costs include the following items: architecture and engineering, interior design, remediation and demolition. Carrying or other similar costs shall not be considered toward this definition of project investment. The owner must provide verification of all expenditures.

2. Redevelopment of the Project shall include:

a. Minimum 30,000 square feet of residential space (approximately 32

residential units); and b. Minimum 11,800 square feet of retail/restaurant/commercial space.

3. Obtain a building permit and start construction for the Project by December

31, 2013; 4. Obtain a Certificate of Occupancy (CO) for the Project by December 31,

2014; 5. Obtain final acceptance of public infrastructure improvements associated with

the Project, as evidenced by the issuance of a Green Tag from the Public Works and Transportation Department by December 31, 2014 and submit documentation to the Office of Economic Development (the “OED”);

6. Execute an Operating and Maintenance agreement for public infrastructure improvements associated with the Project by December 31, 2014, for a period of 20 years;

7. Mixed Income Housing: A minimum of 10% of the Project’s total residential units must meet affordable housing standards in accordance with the District’s Mixed Income Housing Guidelines, attached as Exhibit A. These guidelines require, but are not limited to, the following:

a. Affordable units must be available for a 15 year period (from the date

of CO); b. If the total number of affordable units drops below 10%, a 90-day

compliance period will be granted, after which the contract may be terminated at any time before compliance is achieved; and

c. Submit semi-annual reports to the OED Staff (from the date of CO).

8. Prior to City Council consideration Design Review by an independent group of design, engineering, and/or planning professionals selected by the Dallas City Manager is required for all City Center TIF District projects. If a peer review group has not been established prior to TIF Board consideration, the CityDesign Studio shall review and provide recommendations on the Project’s design to be considered by the City Center TIF District Board of Directors. The Project’s design plans shall include: a. A site plan showing the location of parcel boundaries clearly differentiating

publically accessible space form private space; b. A pedestrian lighting plan for the site using lighting acceptable to the City

and spaced at approximately 75 feet unless otherwise required by the City’s Public Works and Transportation Department. This lighting plan is required for all public and private streets included in the project;

c. A sidewalk plan for the project. Sidewalks with high anticipated levels of pedestrian traffic shall be designed to accommodate the traffic. The sidewalks shall have a minimum 7 foot walking zone and a minimum 3 foot landscaping and lighting zone, where possible. Landscaping and pedestrian lights shall be placed in the area closest to the back of curb for the length of the sidewalk. The plan shall show the location and type of all landscaping materials;

d. Elevations for all sides of the building visible from the public right of way, focusing on the ground floor;

e. Valet plan indicating where the vehicular drop off will be located; and f. Signage plan for the building.

9. Construction of Project improvements and building renovations shall be in

general conformance with design plans approved by the City Center TIF Board of Directors and Dallas City Council;

10. A minimum of 25% of the total net leasable square footage of non-residential space, with a minimum of at least 50% of ground floor space must be occupied prior to TIF Reimbursement;

11. This project/property is not eligible for City of Dallas County Historic Tax Abatements if approved for TIF funding.

12. The Project shall be managed by a management company acceptable to the Director of the OED, such approval not being unreasonably withheld;

13. Owner shall submit to the Director of the OED a quarterly status report for ongoing work on the project, as well as public improvements. Status reports will be due once every three months after the Council approval date;

14. Owner shall make a good faith effort to (i) comply with the Business Inclusion and Development (“BID”) goal of twenty-five percent (25%) Minority/Women-owned Business Enterprise (M/WBE) participation for TIF reimbursable improvements, and (ii) achieve a goal of 25% certified M/WBE participation for total private improvement construction expenditures for the Project, and meet all reporting requirements for each;

15. Market the apartments pursuant to an affirmative fair housing marketing

plan approved by the City; 16. If necessary, the project deadline can be extended up to 6 months, subject

to the Office of Economic Development Director’s and City Center TIF District Board of Director’s approval;

Purse Building Redevelopment Project

Minimum Residential Space (required) 30,000 s.f.

Approx. 32 Units

Minimum Affordable Housing Units 3 Units or

10% of Total Residential Units

Minimum Retail Space 11,800Required Private Investment – (site acquisition, construction hard and soft costs)

Min. $12,000,000

Expected Total Project Cost $14,867,948 TIF Funding $2,800,000 % TIF funds to total project cost 18.83%Return on Cost without TIF 6.00%Return on Cost with TIF 4.90%Deadline to Obtain Building Permit December 31, 2013Deadline to Obtain Final CO July 31, 2015

Attachments Location Map Project Costs Pro Forma CityDesign Studio Comments Project Design Plans

Location Map

Project Site

Purse Building Redevelopment ProjectPrivate CostsLand/Building: Amount Land Cost (Acquisition) $1,750,000Other Costs (Carry) $98,581Total Land Acquisition $1,848,581

Hard Costs:Site Work $82,500Building Construction $6,505,877Hard Cost Contingency $1,155,800Total Hard (Total Construction) $7,744,177

Soft Costs:Marketing Expense, Advertising, etc. $277,000Architects/Engineers/Consultants Total $650,000Appraisal, Market Study & Feasibility $25,000Legal and Accounting $120,000Loan Expenses $350,000Title and Closing Costs $30,000Consulting/Developer Fee & Reimbursable Expenses $330,000Environmental/Soils $11,000Property Taxes $39,000Security $15,000Surveys $10,000Other Soft Costs (Parking) $75,000Soft Costs Contingency $250,190Total Soft Costs $2,182,190Total Private Costs (Land/Building, Hard and Soft Costs) $11,774,948

Public CostsEnvironmental/DemoEnvironmental Site Assessment $160,000Environmental Remediation/Demolition $385,500Total Environmental/Demo $545,500

Streetscape/Utilities:Streetscape $42,500LandscapingUtilities $570,000LightingArchitectural/EngineeringSelective Retail Construction $210,000Total Streetscape $822,500

Other:Façade Restoration $1,650,000Other (Roof, Sign and Exterior Lighting) $75,000Total Other $1,725,000Total Public Costs $3,093,000

Total Project Costs (private plus public) $14,867,948

City of Dallas

UDPRP Review Summary DRAFT 03.26.13 Urban Design Peer Review Panel

dallas citydesign studio Page 1 of 1

DATE: 03.22.13 TIME: 8:30am PROJECT: Purse Building Redevelopment LOCATION: Dallas City Hall Room 5ES Overview Below is a summary of Urban Design Peer Review Panel advice for the Purse Building Redevelopment as derived from the March 22 Peer Review session. Advice Summary [1] Consider the treatment of the proposed residential entrance as an enhanced urban design

element.

Purse Building Project Pro Forma

City Center TIF District PROJECT DESCRIPTION: 601 Elm Street PROJECT TYPE: Mixed Use (Residential/Commercial) CONSTRUCTION START DATE: December 31, 2013 PROJECT SCHEDULE: December 31, 2015 Residential Units SF # of Units Total/Avg 36,780 40

Use Breakdown SF Rents per

SF Total Leasable SF Residential 36,780 $2.45* 51,222 Commercial 14,442 $52.59 Other 23,202 $18.21 Total Bldg SF (Gross) 74,424 Project Costs Income Hard Cost $10,837,177 Residential Revenue $695,142Soft Cost (less Developer Fee) $2,182,190 Commercial Revenue $361,050Acquisition $1,848,581 Total Revenue $1,056,192Total Project Cost (without City $) $14,867,948 Expenses Total Project Cost $14,867,948 Operating Expense (Residential) ($278,057)

TIF Assistance $2,800,000Operating Expense (Commercial) ($54,158)

Net Cost to Developer (after TIF reimbursement) $12,067,948 Total Expenses ($332,214)

Return on Cost Analysis NOI $723,978NOI/Total Project Costs

Return on Cost (without City $) 4.9%

Return on Cost (with City $) 6.0% Notes: Stabilized rates in 2017; Revenue reflects a residential and commercial vacancy rate of 10% and 25% respectively