SOUTHLAKE TOWN SQUARE

THE RESIDENCES

(BLOCK 4R1)

Specific Use Permit

(Case ZA13-054)

City Council Submission September 3, 2013

Southlake Town Square 1997 DEVELOPMENT PLAN

Southlake Town Square Downtown Master Plan

C&S is in its 19th year of investing, planning and developing in Town Square. Southlake Town Square’s 125-acre mixed use development plan is based on a

blueprint in the spirit of the world’s best historic small town downtowns. Buildings are organized around a street grid. The street and block pattern is

designed to promote walkability. Buildings are arranged around the perimeter of the blocks along the sidewalks, with parking designed “inside” the blocks and behind the buildings.

The Phase 1 Development Plan approved in 1997 reflected this approach. However as Block 4 was only partially included at the time, only a small future building was shown on Central Avenue in this 1997 Plan.

When the Grand Avenue District Site Plan was approved, the lot for Block 4 was expanded to include the area on which C&S has now proposed The Residences.

“DT” Downtown District

Town Square was originally approved as a Planned Unit Development, with uses as allowed under C-3 zoning. C&S has always maintained that the best downtowns in the world have people living in them. By 2003, Town Square had evolved into a place in which many of Southlake’s own residents wanted to live. But zoning at the time prohibited this.

In order to allow “downtown” residential uses in Town Square while also limiting such uses to the downtown core, the Town Square PUD was codified as Section 37 – the “DT” Downtown District - of Southlake’s Zoning Ordinance. Section 37.1 summarized the intent of the approach: “The purpose of the Downtown district is to encourage the creation of a pedestrian oriented, mixed-use urban environment, providing shopping, employment, housing, and business and personal services. Downtown is intended to be the focal point of the community. This is achieved by promoting an efficient, compact land use pattern; encouraging pedestrian activity; reducing the reliance on private automobiles within the district; promoting a functional and attractive community through the use of urban design principles; and allowing developers flexibility in land use and site design.”

THE GARDEN DISTRICT New Concept Plan – May 2013

• 33 Brownstones in 4 Configurations • 60 Garden District Residences in 3 Buildings

The Residences – Fit Within the Town Square Master Plan

The Residences fit the Residential Loft classification contemplated in the “DT Downtown District,” are consistent with the use envisioned for this site, and fit the goals of the Town Square Master Plan: - Ground Floor commercial use is not supported in this location - Residential is “highest and best use” here, and complements the

Brownstones and Garden District, with lower impact on traffic and parking - High end residential and historic architecture will add vibrancy and enhance

the Central Avenue corridor and surrounding property values The Residences are an important element of the Central Avenue corridor, which

is a current area focus: - A Site Plan application has been filed for Trader Joe’s at the southern end of

the corridor (NW corner of Central and FM 1709) - Garden District and proposed new park enhance mid-corridor development - High Street development is expected to anchor northern end of corridor - Block 4 is unaffected by the potential future realignment of Central Avenue

(as may be required in support of High Street development plan)

THE RESIDENCES - Concept

The Residences - Overview

Up to 40 total residences available for sale or lease with purchase option

With Garden District, 2013 plan reduces condominium count from 130 to 100, on overall larger land area

5-story building fits within 52’ Garden District height limit

Improves Central Avenue streetscape and walkability; frames Garden District and end of proposed new Meeting Street

Class “A” construction quality and level of finish Minimum size, level of finish and other design guidelines consistent with

Garden District Residences Project start following sales of 55% or more of new Brownstones (minimum 18)

THE RESIDENCES

Entry Court

Concept

Building Description

Incorporates Federal and Neo-classical architectural influences

High quality steel and concrete construction

Masonry (brick and accent stone) on front three sides and corner wraps

EIFS or similar material on back of building facing East Garage

Front courtyard includes iron gates, wall fountain, benches, landscaping and authentic gas lanterns

Secured Central Elevator lobby with 2 elevators to common corridors

Gated indoor garage on first level with options for direct access garages – two spaces per Residence

Visitor parking provided on street at front and back of building – in excess of 0.5 spaces per resident

THE RESIDENCES Roof Top Terrace - Concept

THE RESIDENCES Fitness Room - Concept

Residential Features and Amenities

Variety of 1 Bedroom + Den to 3 Bedroom homes; majority 2 Bedroom

Size range: 1,500 SF to 2,600 SF, average 1,850 SF

All Residences are single-level except for 2 two-level Residences

Each Residence has an outside terrace

Luxury interior finishes, including granite/quartz countertops; custom cabinetry; crown molding; and top-of-the-line appliances

Yoga/Pilates and Meeting Space/Function Rooms on top floor

Rooftop Terrace

Indoor climate-controlled storage units

Investment and Development Approach

Condominium legal structure will be put in place up front, to enable sales of individual units following completion.

Buyer is expected to be similar to those who purchase in condominium buildings such as The Residences at the Ritz Carlton in Dallas and The Omni Residences in Fort Worth: - Pricing in this high-end condo market ranges from $400/sf to over $800/sf - The Residences will be of a quality that is expected to compete favorably in

this market, with forecasted pricing from $500,000 to over $1.0 million.

A pre-sale approach is problematic as there are no comps in the local market. While individual sales will be sought and can close as early as building completion, investment considerations support underwriting based on operating cash flow from leasing (with options to purchase) at the outset. Investment assumptions include: - Initial rents expected to range from $3,000 to $6,000 per month - Purchase options available from the beginning - First sales likely to be all cash, to establish comp values for future appraisals

Financing Considerations

Condominium legal structure is expected to limit construction lender(s) to those experienced in and with a desire to finance “for sale” condominiums.

Experience at Town Square has shown that it takes lenders and appraisers time to fully value these higher end buildings for which comparable sales data is not available in the local market.

Because there are no local high-end condominium sales comparables, even if 100% of The Residences are pre-sold, risk remains that Buyers’ lenders (and their appraisers) might not appraise the end purchase at the full sale price, putting contracts at risk. - Lease/purchase option mitigates this risk by ensuring that cash flow will be

in place until sales of individual residences are ready to close.

Other Considerations

Condominium legal structure will disqualify contractors and design professionals who are not experienced in “for sale” condominiums. - Only “best in class” condominium contractors and design professionals to

be considered

Independent sales and marketing team with high-end condominium sales and marketing experience will be brought in.

Although lease options available initially, condominium insurance program will be placed from the outset, providing coverage as individual Residences are sold.

Property Owners Association (separate from Brownstones HOA) will be established up front.

Summary

The Residences are for sale condominiums that will be available for sale upon completion of the building. - Lease/purchase options will be available initially, until individual residences

are ready to close - Approach allows for patient conversion of sales consistent with the market,

buyer financing, and quality of the offering

Condominium ownership structure will be put in place upfront.

Marketing will be designed around sales program: - Targeted to affluent professionals looking for single-level living - “Best-In-Class” condominium construction, design and marketing

professionals - Condominium insurance/warranty program will be in place from the outset - High-end condominium quality and residence sizes

Project commencement would be subject to sales of no fewer than 18 (55%) new Garden District Brownstones.