April 9, 2009 - Regent Square project - GID Urban Development Group, Houston TX

Houston City Council OKs deal to boost $850 million development

Regent Square Regent Square is designed to create an intimate, urban environment that will be a focal point for living, shopping and entertainment in the evolving, mixed-use district south of Allen Parkway. Shops and restaurants with residences above will front shaded sidewalks, creating a walkable neighborhood that will be home to over seventeen-hundred residents. In addition to creating a place that will be highly integrated with the surrounding community, the master plan establishes a network of streets and squares that promote pedestrian activity. The plan establishes two interior streets that both subdivide and knit together the development’s 24-acre, four-block site. A public square fronting onto West Dallas Avenue is located at the intersection of these two interior streets. Buildings facing the square increase in height from four stories, to eight stories, reinforcing the importance of this place as the project’s primary public gathering space. The project’s first phase will accommodate 230,000 SF of retail and restaurant uses, 740 residential units and 60,000 SF of office space. Later phases will add another 100,000 SF of commercial uses, an additional 1,000 residential units and a hotel. Construction of the first phase of Regent Square is schedule to commence during the fourth quarter of 2007 with a 2010 planned opening. Visit the Regent Square Website

The city moved forward Wednesday with a plan to boost an $850 million mixed-use development with about $10 million in incentives, the first in a line of possible deals with major projects in which Mayor Bill White’s administration believes investment will be needed.

The program, approved unanimously by the City Council, will reimburse the developer of Regent Square — a 4-million-square-foot community that will abut Allen Parkway near Dunlavy and Dallas — for public improvements the developer has agreed to make to public roadways, sidewalks and streetscapes. The money will come from tax revenue generated by the development and be paid through the Memorial Heights Tax Increment Re­investment Zone, or TIRZ.

In exchange, Boston-based GID Urban Development Group, which had been on the brink of putting the project on hold indefinitely, has agreed to begin work on the public improvements by Oct. 1, and initiate the private aspects of the property by Oct. 1, 2010. It also will provide 150 free parking spaces and rehabilitate a nearby historically black cemetery.

White said he generally has shied away from such public-private development efforts, but would continue to review opportunities on a case-by-case basis for distressed properties, such as Sharpstown Mall, and for other major projects already in the works that have been delayed or canceled amid the national economic crisis.

In this case, the overriding question was whether the city would get the same benefits without the reimbursement, White said, adding that he did not believe it would.

“I would say that this is an unusual project in its scale and scope to be started in a big urban city today when real estate markets are seizing up,” the mayor said.

Critics contend that the economic development effort is an artificial benefit to the economy, one that creates winners and losers in the marketplace.

“If these projects are stalling and developers are saying they’re not going to execute them, well, that’s the market and the market has slowed down,” said Greg LeRoy, executive director of GoodJobs First, a national watchdog of public economic subsidies. LeRoy said the city could do further harm to the local real estate market by helping add capacity when there is less demand, or creating more commercial space when rents already are growing soft.

White defended the need for investment in certain communities, but said he was sensitive to the market critique and had made an effort during his tenure as mayor to make sure development incentives were rare in Houston. He said his administration has gained a reputation for stinginess in this regard, a claim several developers confirmed.

The mayor made note of a number of properties to which he hopes to attract developers, including in the Leland Woods TIRZ near Homestead Road and East Little York, the Near Northside TIRZ immediately north of downtown Houston, and in the Fifth Ward TIRZ. Other potential incentive packages may not be administered through a TIRZ, he added.

Under a TIRZ, property tax revenues generated within the boundaries are frozen at a specified level. As development occurs and property values rise, tax revenue above that level, known as the increment, is funneled back into the zone to pay for infrastructure and capital improvements to help attract further development.