Constructing three buildings, anchored by a cemented, feature-rich outdoor oversized patio of sorts, in the most expensive place to build in Fort Worth city limits required some influx of cash upfront. Luckily for Fort Worth residents, we have the Bass family.
The total costs trump $100 million – for now.
“It’s a design-build strategy, meaning the design of the plaza space is still evolving,” Campbell said. “There’s a little bit of adjustment that could happen with that.”
Campbell said 20 to 30 percent of the funds go toward soft costs, such as the architectural planning and engineering. The remaining 70 to 80 percent pays for the hard construction cost, including materials and labor.
According to the Sundance Square board, the majority of the project funds come from equity and financing. Sundance Square owners, headed by Ed Bass, supplied 45 to 50 percent of the money as cash equity, and the local lenders chipped in the remaining 50 to 55 percent.
In other words, the bulk of the project falls on the shoulders of Sundance developers. Lending office, retail and residential spaces out while praying for sustaining returns personifies Sundance as a CEO and CFO rolled into one.
“Sundance Square is really just a landlord,” Campbell said. “We’re in the business commercially, so we have to get a return on our investments.”
Campbell said the development needs at least a market rate return to secure private financing through the banks.
Though the project had been in the city plans for decades, Campbell’s team still adjusted the project start date with the economy.
“If you’re watching the city budget right now, you know we’re in a difficult situation in terms of deficits,” Campbell said. “We had the ability to step out with very good market timing, when we felt the market had bottomed and was beginning to come back up.”
Public Tax Component
Since the land technically belongs to Sundance Square, a public purpose property, the taxes that help feed the project come from the Downtown Tax Increment Financing District (TIF).
According to the City of Dallas, the point of a TIF district is “to reinvest added tax revenue from new development back into the area where it originated.” The increase in tax revenues goes toward improving public infrastructure.
“When the TIF district is established, the property taxes are valued and frozen at that level,” Campbell said. “Any increases in property taxes that occur during the life of the TIF can be used as incentive to give private developers some help on public systems.”
Public systems, in Sundance Square’s case, involve the street and sidewalks. Since the private development spills out and impact the streetscape in this project, the TIF money will help rehabilitate the torn public portions.
“We end up with lots of street work that is their responsibility, but is in fact public property when it’s completed,” Campbell said.
Sundance Square Director of Marketing Tracey Gilmore said the development team petitioned the TIF to help pay for the project. Gilmore said Sundance Square will pay up front through financing, and then the TIF will reimburse the costs.
The Downtown TIF awarded $11 million toward the $100 million budget. Campbell said this money came from the freeze in the TIF taxes, so the project causes no new taxes.
Sundance Square’s TIF district falls under special guidelines because the area exceeds its income. The cap on the amount of money a TIF district can take in sits at $5 million, which Sundance surpassed.
“Because the TIF district already exceeds its annual capacity, that means the new taxes the Sundance Square project will generate will flow directly back to the taxing entities on day one,” Campbell said.
Campbell said the estimated return in taxes averages $950,000 to $1.1 million, meaning tax entities would make a 10 percent return on the $11 million investment.
In order to keep the project sustainable, Sundance Square plans to secure lenders as soon as possible and fill all the spaces in the three new buildings.