Bayside Plan Update


Bayside rendering with logo


January 4, 2019 Update:

Following months of unsuccessful discussions and negotiations, the City of Rowlett (the “City”) has formally notified Bayside Land Partners LLC and Bayside District Partners LLC (the “Developer”) that they are in default of the Bayside development agreements and the City has filed a lawsuit in State District Court in Dallas County seeking relief as a result of the Developer’s actions. The City and Developer have been working in a public-private undertaking since 2015 to bring Bayside, a $1 billion mixed use development, to Rowlett and the Dallas/Fort Worth metroplex. The City and Developer entered into a series of development agreements to ensure the implementation of the Bayside vision. The 262-acre project envisions numerous features and amenities to make it a world-class destination. This includes an eight-acre Crystal Lagoon, one-acre show fountain, 1.75 million square feet of commercial space that includes mixed use entertainment, restaurants, office and retail, an open-style bench trolley, 45 acres of programmed parks, 4+ miles of hike-and-bike trails, and a 500-room resort and conference center.

In June of 2018, the City issued the Developer a pre-default notice and opportunity to fulfill its obligations to develop the property. Instead, during a special meeting of the Rowlett City Council held in July 2018, the Developer proposed significant changes to the original agreed-upon vision. Among them included eliminating the three most important differentiators and public attractions for Bayside: the eight-acre lagoon, one-acre show fountain, and the trolley. The new proposal also significantly reduced the entertainment, restaurant, and retail opportunities, and increased the amount of land area dedicated to residential uses. As such, the revised plan did not reflect the parameters set forth in the public-private partnership agreements.

On September 18, the Rowlett City Council voted to reject the Developer’s proposed revisions to the original plan. Since that time, the City and Developer have continued discussions about the future of the project; however, those conversations have been unproductive in reaching a solution.

“Bayside is a public-private partnership, and our development partner is obligated to adhere to the vision for Bayside with which both parties are contractually committed; any changes to the vision require City approval,” Mayor Tammy Dana-Bashian said. “We are disappointed that it has reached this point and that we are forced to take this action.”

The City and Developer have specific performance requirements that the parties have agreed to in a series of agreements. The Developer has made agreements and representations upon which the City relied in making strategic land use decisions, agreeing to economic development incentives, and approving requested density and types of structures. Because of this agreed-upon vision, the City has adopted a tax increment reinvestment zone to support the project; created two public improvement districts; and secured state tax support for a convention center.

“This is a textbook bait and switch tactic,” said City Manager Brian Funderburk. “We were promised and sold on a great project and after we fulfilled our obligations, we were shown a completely different one.  The City has performed as required under the development agreements and it is clear that the Developer has not and does not intend to fulfill its obligations. By filing this lawsuit, the City is seeking all available legal remedies.”

The City of Rowlett is resolved that it will not settle for anything less than making Bayside a unique legacy project and world-class destination.


Case No. DC-19-00146 in the 134th District Court, Dallas County.
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Bayside South Plan Differences:

As has been discussed since July 2018 when Bayside proposed changes to the approved vision for Bayside South, the City Council rejected those proposed changes in September 2018 based on Bayside eliminating the three most important differentiators and public attractions:  the eight-acre Crystal Lagoon, one-acre show fountain and the trolley.  In addition, Bayside proposed changes to dramatically reduce by nearly 55 percent the amount of restaurant, retail and entertainment destination use from 510,600 square feet down to 280,500 square feet and dramatically increase the amount of land area in Bayside South dedicated to residential uses from 29 acres to 50 acres.


Bayside Development Status January 2019:

The developments currently under construction on the North side are no longer owned by Bayside as they sold the land to third parties for development. Bayside North consists of approximately 142 acres of which 113 acres are designated for residential uses and 29 acres designated for commercial and open space.  Bayside North approved development plans include 1,067 multifamily units, 217 single family lots, 139 townhomes, 150,000 square feet of retail and 100,000 square feet for a limited service hotel.  Currently constructed or under development is 864 multifamily units and 104 single family lots.  At this time, no commercial development has been permitted for construction; however, the City is currently reviewing plans for the limited service hotel being proposed in Bayside North.

Can the City of Rowlett withhold Certificates of Occupancy (CO) for developments on the North side?
The developments currently under construction on the North side are no longer owned by Bayside as they sold the land to third parties for development. Not issuing COs to third parties creates litigation risk to the City.

Bayside South consists of approximately 119 acres of which 29.89 acres are designated for residential uses and 89.17 acres designated for commercial and open space.  Bayside South approved residential development plans include 1,553 urban multifamily units, 300 condominium units and 242 townhomes.  Bayside South approved commercial and open space development plans include 2,030,600 square feet of commercial space consisting of 510,600 square feet of restaurant retail and entertainment destination space; 415,000 square feet of Class A office space;  300,000 square feet of medical office space; 530,000 square feet of Resort/Conference Center (500 rooms); 175,000 square feet for two limited service hotels (250 rooms); 100,000 square feet of marina showroom/service; eight-acre Crystal Lagoon; one-acre show fountain; an open-style bench trolley; 45 acres of programmed parks and 4+ miles of hike-and-bike trails.  At this time, there has been no development plans submitted or permitted for construction in Bayside South except for a grading permit to stockpile dirt on a portion of the site.


September 2018 Update:

What is the status of Bayside?

The City of Rowlett and Bayside Land Partners LLC have been working in partnership over the last several years to bring Bayside, a $1 billion mixed use development to Rowlett and the Dallas/Fort Worth metroplex. This 262-acre project has numerous features and amenities to make it a world-class destination. This includes an eight-acre Crystal Lagoon, one-acre show fountain, mixed use entertainment, restaurants, office and retail, an open-style bench trolley, 45 acres of programmed parks, 4+ miles of hike-and-bike trails, and a 500-room resort and conference center. On July 26, Bayside Land Partners presented a plan that differs significantly from the agreed-upon vision for the Bayside development. The new proposal eliminates the three most important differentiators and public attractions for Bayside:  the eight-acre lagoon, one-acre show fountain, and the trolley. The new proposal also significantly reduces the entertainment, restaurant, and retail opportunities, and increases the amount of land area dedicated to residential uses. As such, the revised plan does not reflect the parameters set forth in the public-private partnership.


After working with Bayside Land Partners LLC and their new development team over the course of the past year, the parties have reached an incurable impasse on the plan to implement the vision for Bayside. As a result, on September 18, the Rowlett City Council voted to reject Bayside Land Partners proposed revisions to the original plan.

“We are disappointed that we have reached this impasse,” says Mayor Tammy Dana-Bashian. “The Rowlett City Council is resolved that it will not settle for anything less than making Bayside a unique legacy project and world-class destination. The success of this project is too important for our community’s future.”


City of Rowlett / Bayside Land Partners Joint Statement

Recognizing the strategic importance of the Bayside project to our community and to the region, the City of Rowlett and Bayside Land Partners are in conversations to determine the right path forward. While both parties want the best long-term investment for the community, we have alternate views on how to achieve that goal. These conversations may lead to a dissolution of our partnership or some other solution. We will continue to keep Rowlett citizens informed of our conversations and decisions as they are made.  Bayside is a $1 billion mixed use development - a legacy project with the potential to attract new visitors, residents and tenants, both regionally and nationally, and we must get it right.


Previous Updates: 

What is Bayside?

In May, 2015, the City of Rowlett and its development partner, Donahue Development (now operating as Bayside Land Partners), closed on the former Elgin B. Robertson Park, acquiring the property from the City of Dallas. Since that time, the City of Rowlett has been working with Bayside Land Partners to realize the vision for Bayside, a unique 262-acre, $1 billion mixed-use waterfront development unlike any other in the DFW area. This vision has the power to turn Rowlett into a resort destination, both for permanent residents as well as day and short-stay visitors.

In particular, the eight-acre Crystal Lagoon and show fountain will differentiate Rowlett from other high-end communities in the area that are primarily anchored by golf courses. The lagoon will feature two beaches and will be the first in the United States with a one-acre show fountain, which will serve as an exclusive landmark for the City of Rowlett, the DFW area and the State of Texas.

An open-style battery-operated bench trolley adds another dimension to the Bayside experience, serving as another key differentiator and incentive for engaging in the City’s attractions.

Other Bayside attractions include:

  • 500 room resort and conference center
  • World class marina
  • Mixed use entertainment/restaurants
  • Mixed use office/retail
  • 8-acre Crystal Lagoon
  • One-acre show fountain
  • Open-style bench trolley
  • 45 acres of programmed parks
  • 4+ miles of hike-and-bike trails

The total build-out is expected to be completed over eight to ten years and will include 1.75 million square feet of commercial space and 3,000 residential units. Bayside is projected to add nearly $1 billion in new taxable value, resulting in nearly $150 million in revenue from property, sales and hotel occupancy taxes over the next twenty years.


Who are the Bayside Land Partners?

Ownership of Bayside Land Partners consists of members of the Kruse family from Grapevine, Texas and the Wilks family from Cisco, Texas. The project manager is Tom D’Alesandro of Blake-Field (Chicago) and Dan Leverett from Place (Houston). Bayside has hired several notable architects including Sasaki (Boston), Lake Flato (San Antonio) and Ten Eyck Landscape Architects (Austin). The team has previously worked on projects such as Reston Town Center in Reston, Virginia and The Woodlands Town Center & Waterway Square in The Woodlands, Texas.


How is the City of Rowlett involved in Bayside?

Bayside is a true public-private partnership. In a traditional development, the City’s involvement is limited to zoning the property, providing utility services, and making inspections. In this project, however, the City of Rowlett and Bayside Land Partners committed to a vision and are obligated to executing that vision and realizing the parameters established in 2015. The City facilitated the purchase of the property from the City of Dallas, annexed the property into the municipal boundary, rezoned the property with Form Based Code, created a Tax Increment Reinvestment Zone (TIRZ), approved a public improvement district, drove a change in state law to qualify Rowlett for a ten-year tax refund from the State of Texas for a new conference center, and championed new development on I30 to support the region’s growth and this project.


How do these proposed changes impact our community? 

Eliminating these attractions from the Bayside experience is certain to impact the tourism and demand for a 500-room resort, as well as current and future local entertainment venues and restaurants. Without major attractions, there will be a considerable reduction in visitors and a loss in tax revenue, particularly sales taxes.


Did the City approved the proposed changes?

No. Although Bayside notified the City of Rowlett of a change in lead developers on October 10, 2017, the City was assured this change was an internal issue for the development firm and would have no relevant impact on the public-private partnership. Any changes to the vision requires City approval.


What are the incentives provided by the City?

Incentives includes the creation of a Tax-increment Reinvestment Zone (TIRZ) to help mitigate extraordinary development challenges and remove barriers to development. These challenges included the costs associated with improvements to Interstate 30 and Dalrock, earthwork and construction of sea walls on the south side, offsite utility improvements, and parks, trails, public art and monuments. In order to accommodate these challenges, the TIRZ provides a contribution rate of 50% of all property taxes collected for a period of twenty years for a total of $75.9 million. During this same twenty-year time period, the City of Rowlett expects to generate $149.5 million in property taxes, sales taxes and hotel occupancy taxes. Upon full build-out (about 10 years), City taxes are expected to be approximately $8.0 million annually, net of the TIRZ contribution, or equivalent to 25 cents on the tax rate.


Why would the City participate in a public-private partnership of this kind?

The City has been interested in this site for many years. It is a “legacy” project that can help ensure Rowlett’s future by providing tax base, jobs and amenities unlikely to occur anywhere else in the city limits. It also meets a number of guidelines in the City’s comprehensive master plan, Realize Rowlett 2020 as follows:

  • Grow the City’s economy through diversification of job and business opportunities
  • Make Rowlett a community that is attractive to people at all stages of their life
  • Invest in places of lasting value and distinctive character
  • Use Lake Ray Hubbard and Rowlett’s natural assets to create a distinctive identify and the quality of life desired by the community
  • Diversify mobility options within the City and connect activity areas
  • Create centers with a mix of activities at key locations in Rowlett
  • Fund public investment that leverages desired private investment

Has the Crystal Lagoon been scrapped?

No. Any changes to the approved vision will require City approval.

 

What are the allowable uses of the Lagoon?

The Crystal Lagoon was always envisioned to be one of the key attractions and differentiators to establish Bayside as a world class destination. The design of the Crystal Lagoon accommodates multiple uses including public water sports and recreational activities and amenities; private beach areas for the resort and conference center and condominium owners and guests; and the one-acre show fountain. It is important to the City that the general public have access to the lagoon.


What is a Public Improvement District?

A Public Improvement District (PID) is a special assessment area created at the request of the developer in the district to fund higher quality or special improvements and services within a designated area. Property owners pay a supplemental assessment in addition to their taxes, which is used to pay off the public funds provided to the developer for project costs associated with the property development, such as water, sewer, drainage, roads, parks, police, fire, libraries and other development enhancements.

The Rowlett PID for Bayside South totals $36.5 million and includes funding for roadway improvements, utilities, and public open space and amenities. Public open space and amenities include trails, parks, distinctive lighting, signs, pedestrian malls, public art, and a multi-acre lagoon. A separate agreement between the City and Bayside requires the lagoon to be eight-acres.


Who pays the assessments for a Public Improvement District?

The assessments of a public improvement district are paid by the owners of the property or the developers until the property is sold. Rowlett taxpayers are not responsible for the payment of those assessments. Rowlett’s responsibility is limited to establishing the assessments each year and billing the property owners.

 

When did the developer submit their change to the approved vision?

Since 2013, the City has been actively involved in the Bayside project. The City spent two years negotiating with the City of Dallas and Donahue Development to acquire the 262-acre property.

In May, 2015, the City and its development partner, Donahue Development (now operating as Bayside Land Partners), closed on the former Elgin B. Robertson Park, acquiring the property from the City of Dallas. Funding for the property totaling $31.8 million was paid by the developer. No City taxes were used.


In April 2015, the City and Bayside Land Partners entered into a development agreement establishing the vision. From May 2015 until September 2017, City staff and Bayside worked on formalizing plans, including creating important amenities believed to make the project successful and provide a regional, multi-state draw. The most significant amenities of that vision were the crystal lagoon, show fountain and trolley. These were amenities originally identified by the developer as part of their research and design. Bayside hired a series of highly qualified consultants to do the financial analysis to confirm the feasibility of these amenities. The City relied upon this information, this analysis laid the foundation to support the $36.5 public improvement district on Bayside South. 


Also, during this period, the City of Rowlett and Bayside Land Partners entered into a series of contractual agreements regarding the public improvement district and the construction of a conference center. Each of these agreements commit both Rowlett and Bayside to the approved vision including the amenities outlined previously in this document.


On September 28, 2017, Bayside notified the City of Rowlett that they were evaluating their management team structure. On October 10, 2017, Bayside notified the City of Rowlett that they had hired Tom D’Alesandro of Blakefield Development as the new Development Manager of Bayside. Since that time, City staff have met on a number of occasions with Bayside ownership, Tom D’Alesandro and a new slate of consultants hired by Bayside. While Bayside’s new consulting team raised concerns regarding the sizing of the condo towers, the operating cost of the lagoon and the viability of the show fountain, Bayside continued to assure the City that they were committed to the approved vision. Over the course of the last ten months, the City continuously requested supporting details, information and phasing schedules related to the completion of the approved vision for Bayside South.


The City of Rowlett did not see a comprehensive proposal of the changes to the approved vision until July 10, 2018. City staff, at the Mayor’s direction, immediately called an Executive Session to brief the City Council at the first available opportunity on July 17th. The City Council was told at that time that Bayside had requested to share their proposed vision with the entire City Council. The Council agreed and called a special work session that was held on July 26th.


It is important to note that the City wasn’t “stunned” as subsequent news articles indicated, but more disappointed and upset that important amenities included to make the project successful were removed. These were amenities that previous consultants hired by Bayside analyzed and concluded would work and were necessary to make Bayside successful and sustainable.


What is the original estimate for the completion of Bayside?

In 2015, when the original vision was established, the developer believed that Bayside would have an 8-10 year build-out.

 

Watch the July 27 Special City Council Meeting

July 27, 2018 News Release - City Council Receives Bayside Land Partners Presentation
January 4, 2019 News Release – City of Rowlett Files Lawsuit

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