Proposal

Regarding

Former Dalfort/Legend Facilities

December 08, 2014

Table of Contents
SECTION I:

SECTION II:

SECTION III:

PROPOSAL
Team

Key Terms

Exterior

Interior

IMPACTS
Environmental

12

Social

13

Jobs

14

Financial

15

Funding

16

EXECUTION
Budget

17

Timetable

18

Lease

19

Summary

22

Team

Developer
www.flyingcrown.org
Jason Hutton
Stephen Birch

www.gff.com
Architectural
Design

Award-winning 100 person firm in practice for 31

years. Architectural Top 250 Firms nationwide and
Top 100 Green Design firms. Recent projects
include:
City of Dallas: Perot Museum of Nature and Science
Arts District Parking Garage
Fair Park Renovations 1987-2012
Dealey Plaza
Crow Holdings at Old Parkland
Melrose Hotel Renovation and Expansion
Park Lane
Park Seventeen

Old Parkland Renovation (for Crow Holdings)

Interurban Building Lofts Historic Conversion
Adaptive Reuse of Fidelity Union Life Building
Gables Republic Tower lobby
Republic Tower elevation
Cathedral Guadalupe
Santa Fe 4 A Loft Hotel Conversion
Majestic Lofts
Mosaic Loft Historic Conversion
Dallas Power & Light Lofts Historic Conversion

Jeff Good

Construction
www.andresconstruction.com
Wade Andres

Nonprofit organization created to relieve the burdens

of government
500,000 sq. ft. of aviation hangar and office under
management in four states
Completed aviation projects in four states
Renovated facilities at Bridgeport Sikorsky Airport and
Owatonna Municipal Airport
In operation since August 2007

Page 3

Key Terms
Introduction:

Flying Crown Land Group is pleased to present to the Aviation Department this
revised proposal to develop the former Dalfort/Legend facilities

Compromise:

Compromise among aviation, historic preservation and neighborhood groups

Strategy:

Renovate existing aviation facilities and parking garage

Construct new office building and aviation structures
Retail and restaurants along Lemmon Avenue

Development:

Renovation:

Operations and Maintenance Building (OMB)

Annex, North and South
Parking Garage

Construction:

Office Building/Underground Parking Garage

Hangars (2) /Fuel Farm
Retail/Restaurants

Mixed-Use:

Aviation:
Commercial:
Retail:
Civic:
Governmental:
Community:

FBO, aviation offices, new hangars (including 145 facility); fuel farm
Class A office space
High quality owner/chef restaurants and retail spaces
Ballroom and meeting spaces for public and private events
CBP/Secure facility for dignitaries (Secret Service input)
Natural, park-like setting; designated space on Ground Level

Budget:

$92,424,000

Design:

Restore mid-century modern design to OMB and carryover design to other buildings
Retain highest artistic design elements of original architects

Environmental:

Green buildings; LEED certifiable

Proposal

Page 4

Exterior

Page 5

Exterior

Outdoors:

Site Work:

Courtyard (park) feel

Efficient outdoor lighting
Parking lots (natural materials, crushed stone)
Extensive new trees and plantings
Fountain (front entrance)
Benches (exterior seating areas)
Sustainable gardens (on roof tops)
Outdoor restaurant seating areas (covered and
uncovered) on ground and balcony levels
Demolition (Partial South and North Annexes, and
other structures on South perimeter)
Underground parking garage (new office building)
Second entrance to underground parking and FBO
Redesign parallel access road along Lemmon
Design and construct new main entrance
Install new median break at main entrance

Retail Spaces:

Square Footage:

Parking:

Converted ground floor of Parking garage

New construction on South side of Parking garage
Ground floor of office building
Ground floor of OMB
Retail:
38,100
Office:
100,000
Existing Aviation: 440,300
42,000 (18,000 x 2) + (Office: 6,000)
New hangars:
Automotive:
20,000
New underground parking garage - office building (123)
New parking lot - new office building (160)
Reconfigured existing parking garage (745)
New underground parking OMB (110)
Reconfigured front parking lot and new retail parking
(along Lemmon) (274)
Total spaces (1,412)

Page 6

Exterior

Office
Floors:
Quality:
Size:
Budget:
Design:
Exterior:
Balcony:
Lead Tenant:

Five
Class A
100,000 sq. ft.
$22,584,615 (approx. $200/s.f.)
Inspired by Lever House (in NYC); design tied to OMB
Open foyer space for outside dining and other garden areas
Additional outside seating
FlexJet

Retail
Retail:

Local bank branch and two restaurants; additional

retail along Lemmon

Restaurant:

Two (5,000 sq. ft. each) and One (3,600 sq. ft.)

Parking:

Underground (123 spaces) and new surface lot (160

spaces); street parking off Lemmon

Efficiency:

Central plant and solar powered

Green:

LEED Certifiable

Page 7

Exterior

Parking Garage
Ground Level:
New Retail:
Enclosure:
Design:
Budget:
Ramp:
Sq. Ft.:
Exterior:

Reconfigure 50% of ground level for retail (front

along Lemmon)
New construction (South end) for retail or
restaurant
Redesign entire building with decorative louvers
(increase curb appeal)
Exterior design ties to OMB
$4,821,000
Remove existing ramp; construct new speed
ramp on North side
Retail (converted and new) of 24,500
Outside dining and gardens

Restaurant:

Space for restaurant (South end)

Balcony:

On second level (South end)

Parking:

458 existing spaces (garage)

New Parking:

Additional new street parking off Lemmon (90 spaces)

Tenants:

Sewell Automotive Group

Marketing:

Demand-driven leasing strategy

Demand:

Expectation of close to 100% pre-leased before

construction commenced

Green:

LEED Platinum Certifiable

Page 8

Interior
Lower Level
Theme:

Connection (setting new standards for private FBO

facility experience)

Size:

FBO/Offices:
Parking:
Hangars:

Hangar Capacity:

Accommodate 72 mid-sized private jets

Use:

Operational aviation (FBO, private offices and

hangars)
Exclusive clients, highest public officials and
dignitaries

Public Access:

Restricted area (no public access)

Design:

Luxury FBO (non-public) and private offices

Exclusive, private, high security area
FBO entrance (private/secured)
Hangars (upgraded with unique features)
Convenient, private parking (adjacent to hangars)
Fitness center and locker rooms (private use only)
US Secret Service input (on security matters)

Marketing:
Private FBO
Parking
Hangar
Customs BP
Office

Tenants:

38,000 sq. ft.

26,000 sq. ft.
140,000 sq. ft.

Highest demand (invitation only)

Pre-sold in advance of construction
Undetermined (National FBO Chain)
New corporate clients
Relocated clients (within Love Field)
US Customs and Border Protection

Page 9

Interior
Ground Level

Public Space
Showroom

Theme:

Community (entire level dedicated to aviation and

non-aviation community activities)

Size:

Commercial:
Ballroom:
Atrium:

Use:

Various community activities and events

Ballroom (public and private events); kitchen facilities
Fitness Center
Commercial demonstration kitchen (aviation use)
Conference rooms, aviation library and training center

Public Access:

Full, unrestricted

Design:

Atrium (two-story Atrium through center of building)

Ballroom

Marketing:

Strong demand expected

Pre-leased before construction completed

Tenants:

Undetermined FBO
Cessna Aircraft
Bell Helicopter
Air Culinaire
Augusta Westland
Leading Edge

37,000 sq. ft.

20,000 sq. ft.
13,000 sq. ft.

Page 10

Interior
Upper Level

Public Space
Offices
Walkway
Atrium

Theme:

Collaboration (incubator for community groups and non-profits)

Provide infrastructure, support and office space in central place
Similar to The Meadows Foundation (Wilson Historic District)

Size:

Offices:
Dining Club:
Atrium:
Deck:

Public Access:

Full public access

Use:

Centralized office space designated for non-profit organizations

Private Dining Club

Design:

Two-Story Atrium (sky light)

Restore observation deck

31,000 sq. ft.

15,000 sq. ft.
11,000 sq. ft.
5,000 sq. ft.

Marketing:

Strong Interest
Advance commitments expected

Tenants:

ClubCorp
Community groups and non-profits (aviation and non-aviation)

Page 11

Environmental
Metal Dust
Concern

Cause

Assessment

Action

Takeaways

Soil/Groundwater

Mold/Fungus

Building Materials

Elevated levels of metal dust

Spread through building

Contamination by COCs in
excess of regulatory guidelines

Mold/fungus in Legends
office space

Lead paint
Asbestos
PCB

Plating Room
Paint Booth and
Sand Blasting Rooms

Plating room,
Hazardous materials (storage)
USTs,
Waste water sand traps and
Water separators

Roof leaks
Pipe leaks
Other moisture

Materials used in 1950s

construction

Farmer Interior Sampling

Report (6/10/09)
EFI Global Memo No. 2
(7/16/12)

Limited Phase II ESA/Farmer

Report Re Subgrade Soil &
Water (5/29/09)

Limited Fungal Growth

and Bio aerosol
Assessment (7/3/09)

Phase I ESA (11/17/08)

Asbestos Assessment (not
available)

Clean up: Qualified

abatement contractor

Remove UST
Remove oil water separator
Remove sand traps
Plug/Abandon monitoring wells

Remove contaminated
ceiling tile
Repair sources of
moisture (roof/pipe leaks)

Removal: Qualified
abatement contractor

Environmental issues are typical of aviation facilities

Expected remediation is limited, contained and manageable
Cost of remediation has been properly accounted for
No off-site environmental concerns have been identified
Environmental considerations are not likely to be a significant community concern

Page 12

Social
Focus

To assess impact on the Community

Benefits

Comparison

Employment (Job Creation)

Aviation Development/Growth
Community Development
Removal of eye sore
Historical Preservation
Furtherance of policy (Good Neighbor Plan
Initiative)

Concerns
Residential neighborhood - Impact to adjacent residential
neighborhoods from increased air traffic, noise or congestion
Potential increased traffic on Lemmon (partially caused by loss
of parallel access road)

For
Support

Takeaways

Business neighbors
Residential neighbors
District Council Member
Southwest Airlines
Love Field Pilot/Aviation groups

o
o
o
o

Against
None identified

Proposal benefits different groups within the community

No adverse impact or disproportionate disadvantage to a particular group
No significant negatives identified that cannot be managed or mitigated
Mitigation factors: retail/restaurants improve quality of life for residents and office is good neighbor
(quiet at night)

Page 13

Jobs
Existing
Number of Jobs

OMB

Office
Building

Retail

Construction

Total

Payroll

$5,200,000

Number of Jobs

Total
Payroll

Number of Jobs

Payroll

106

$9,905,000

239

$15,105,000

Building:

327

5,108,105

327

5,108,105

Tenant:

368

31,708,200

368

31,708,200

Building:

10

500,000

10

500,000

Retail:

64

2,698,306

64

2,698,306

150

4,497,750

150

4,497,750

84

4,200,000

84

4,200,000

1,109

$58,617,361

1,242

$63,817,361

Tenant:

133

New

Restaurant:

Labor:

Annually:

133

$6,500,000

Page 14

Financial
Original
Revenues:
Ground Lease (Approx.):
Other:

$1m

Result

$1m
Sales/Property Taxes (Higher)
Sub-Lease Rents (Higher)
$84m

Demolition:
Less: $5m Rent Rebate

$8m

$0
$3m

BETTER ($3m)

Capital Outlay (by City):

$0

$0

SAME

Financial Commitment (by City):

$0

$0

SAME

$[3]m

SAME

$0

BETTER ($1m)

Environmental/Clean-Up:
Mitigated Costs:
(Maintenance/Preservation)

$[3]m
$1m

BETTER ($63m)

BETTER ($67m or more)

TOTAL

Takeaways

BETTER

$21m

Capital Commitment/Residual Value:

Factors

Proposal

Budget:

Stable and constant rent revenues

No capital outlays (initially or in the future) by the City
No financial guarantee or credit support
Benefits aviation and general funds

Economic:

Greater residual value

Greater upside potential (sales/property taxes and sub-leasing revenue)
Greater multiplier effect

Risk:

Execution:
Financial:
Stability:

Greater expertise (GFF, DEVCO and Andres)

Additional financial specialists (Raymond James/Amegy)
Strategic business plan diversifies and decreases risk

Page 15

Funding
BRANIFF OMB SOURCES OF CAPITAL

30.0%

Sources
of
Capital

Equity
Charitable Donations
Owner Cash Contribution
Foundation Support
Land Lease Equity
Debt
Section 380 Guarantees
Bank Debt Financing
Section 108 Guarantees
Government Incentives
Brownfield Development
CDBG
State Tax Credits
Historic Tax Credits
New Market Tax Credit

29.0%

170.1%

27.1%

84.1%

Equity

Detail

Debt

Government Incentives

FUNDING BREAKDOWN

EB-5

$
$
$
$

500,000
2,000,000
4,619,863
6,287,243

1.1%
4.3%
10.0%
13.6%

$
$
$

2,500,000
5,000,000
5,000,000

5.4%
10.8%
10.8%

$
$
$
$
$

2,500,000
4,000,000
4,619,863
9,239,727
18,479,454

5.4%
8.66%
10.0%
20.0%
40.0%

EB-5 Funding

$
$

13,859,590
78,605,741

30.0%
170.1%

Project Cost

46,198,635

Federal Historic Tax Credit available due to National Park Service eligible status of 20%

Newly enacted State Historic Tax Credits of 10% by legislation implemented this year

Love Field Area is in Highly Distressed economic identification zone as per the 2010 US
Census making it eligible for New Market Tax Credits (NMTC)

Eligible for Brownfield Development Improvement Funds due to EPA registered cleanup site

Chapter 380 Guaranty from the City of Dallas

Property remains FAA grantee site and eligible for HUD Section 108 loan guarantees

Job creation meets both EB-5 and NMTC requirements

FCLG Confidential and Proprietary

Page 16

Budget
OMB Renovations
SQUARE FOOTAGE (SF)
Office
Special Events
Hangar & Showrooms
Civic
Support
Atrium
Restrooms
Parking
Total

RENOVATIONS
Office
Special Events
Hangar & Showrooms
Civic
Support
Atrium
Restrooms
Parking

DEMOLITION
Interior - Mezzanine levels
Hangars (Level 1)
Atrium
Parking
Existing Building

TOTAL
33,847
64,510
191,213
2,902
1,927
62,326
5,213
25,540
387,478

FIRST
0
20,040
162,104
0
0
18,163
1,250
25,540
225,847

LEVELS
SECOND
12,510
29,699
29,109
0
0
31,256
2,904
0
105,478

SF
33,847
64,510
191,213
2,902
1,927
62,326
5,213
25,540
387,478

PRICE/SF
80
60
50
120
120
120
80
40

COST
2,707,760
3,870,600
9,560,650
348,240
231,240
7,479,120
417,040
1,021,600

137,508
162,104
62,326
25,540
16,168

2
3
10
4
20

New Construction
THIRD
21,337
14,771
0
2,902
1,927
12,907
2,309
0
56,153

TOTAL

PRICE/SF

COST

EXISTING AVIATION
BLDGS
North Annex
South Annex

74,000
21,000

30
30

2,220,000
630,000

NEW HANGARS (2)

42,000

125

5,250,000

TOTAL

2,850,000
5,250,000
FUEL FARM
Building
Equipment

5,272

80

421,760
500,884
922,644

OFFICE BUILDING
Standard Class A
Parking

100,000

200

20,000,000
2,584,615
22,584,615

25,636,250

275,016
486,312
623,260
102,160
323,360

PARKING GARAGE
Exterior Features
Ramp
Retail

55,720
190,000
38,100

25
2
80

1,393,000
380,000
3,048,000
4,821,000

1,810,108

HISTORIC RESTORATION
Hangar Door
Precast Skin
Storefront Glass
Clearstory Glass
Roof
Tarmac

SF

SITE WORK
Surface Parking
Landscaping
Curb Cut
Sidewalks

130,150

12

66,263

1,561,800
400,000
50,000
530,104
2,541,904

832
543,060
19,200
7,152
225,847
395,266

500
10
65
45
12
4

416,000
5,430,600
1,248,000
321,840
2,710,164
1,581,064

CENTRAL PLANT
6,300,000

11,707,668
TOTAL OMB

39,154,026

PROJECT TOTAL

84,424,189

Page 17

Timetable
Construction Schedule
Pre-Construction Period:

Finalize ground lease terms

Finalize architectural drawings
Complete environmental clean up

Construction Period:

Begin renovations on OMB, Annex and site work (Day 1)

Construction of new hangars projected to commence 9 months after Day 1
Renovations on Parking Garage, Automotive and Retail projected to commence 15 months after Day 1
Construction of new office building projected to commence 18 months after Day 1

Projected Capital Expenditures

First Year
Start Date

Q1

Q2

Second Year
Q3

OMB

Q1

1,603,938

4,558,560

6,880,050

OMB Annex

Q1

1,097,250

1,601,700

151,050

Sitework

Q1

1,664,947

876,957

New Hangars

Q4

Parking Garage

Q6

Office Building

Q7

Quarterly Totals
Annual Totals

Q4

8,061,898

Q5

8,061,898

Q6

6,880,050

Q9

Q10

Q11

Total
Q12

1,603,939

42,208,893

2,541,904
3,364,091

901,206
1,685,904

7,037,217

4,558,560

Third Year
Q8

2,850,000

1,907,347

4,366,135

Q7

7,031,100

9,969,245
28,403,697

11,425,989

9,467,160

6,172,644
2,973,520

796,576

2,716,056

6,977,026

8,198,005

5,805,882

1,220,979

10,248,136

9,377,541

8,198,005

5,805,882

1,220,979

40,518,826

5,456,000
24,917,948
15,224,866

84,147,389

Page 18

Lease
Original

Proposal

City of Dallas (Lessor)

Reed Enterprises Investment Holdings, L.P. (Lessee)
Reed Enterprises Management, LLC (General Partner)
Randall L. Reed (Manager)
Forty (40) years (to commence fourteen (14)
months from Effective Date)

Parties: Braniff International Property

Company (Lessee)

Effective Date:

Date upon which lease is executed

Effective Date: No Change

Property:

635,538 sq. ft. (Total)

600,858 sq. ft. (Improved Land)
34,680 sq. ft. (Unimproved Land)

Revised property line:

788,855 sq. ft. (Improved Land)
No Change (Unimproved Land)

Rate:

$0.65 per sq. ft. (Improved Land)

$0.40 per sq. ft. (Unimproved Land)

Rate: No Change

Rent:

Amount: $404,429 (Annually)

Computation: (600,858 * 0.65) + (34,680 * 0.40)
Payable: Begins fourteen (14) months from the Effective Date
Period: First three years

Amount: $526,627
Computation: (788,855* 0.65) + (34,680* 0.40)
Payable: [24] months

Rent
Increase:

Timing: Every three years

Computation: Greater of (1) percentage increase in CPI over previous 3-yr
period, (2) Prevailing rate for similar properties at Love Field or (3) 6 %
Cap: 12% (of previous 3-year period)
Period: Years 4 through 30

Rent Increase: No Change

Parties:

In General

Aviation

Term:

Term: [40] years (or longer to

accommodate financing) and [24] months
(longer construction period)

Subsequent Rent: Amount: Collection of rent at then prevailing market rate at Love Field
Period: Years 31 through 40

Subsequent Rent: No change

Permanent
Improvements:

$9 million (within 24 months of Effective Date)

$4 million (within 10 years of Effective Date)

$[35] million within [36] months

$[15] million within [5] years

Title:

Title to Improvements vests to Lessor upon completion of construction

Title: No Change

Page 19

Lease
Original

Proposal

Property:

414,600 sq.ft. (Unimproved and Improved Land)

261,283 sq.ft.

Rate:

$0.75 per sq. ft.

$240,000 annually (parking garage)

Rate: No Change

Rent:

Amount: $521,809 (Annually)

Computation: ((414,600 less 38,865 for parking garage)
multiplied by $0.75 rate) plus $240,000
Payable: Begins fourteen months from the Effective Date
Period: First three years

Amount: $406,814
Computation: ((261,283 less 38,865 for
parking garage) multiplied by $0.75 rate)
plus $240,000
Payable: Begins [24] months

Rent
Increase:

Timing: Every three years

Computation: Lessor of (1) percentage increase in CPI over
previous 3-year period or (2) Maximum of 2 percent per year
Excess CPI Amount: Any CPI increase over 2 percent shall be
payable on a pro rata basis over 5 years
Period: Years 4 through 40

Rent Increase: No Change

Percentage Rent:

Lessor shall receive percentage rental equal to excess of (1)

10% of gross retail rentals collected by Lessee under subleases
of the property over (2) amount of base rent otherwise payable
by Lessee for same period
Period: Years 20 through 40

Percentage Rent: No change

Permanent
Improvements:

$8 million (within 24 months of Effective Date)

$[20] million within [60] months

Title:

Upon completion of construction, Lessee retains ownership

of permanent improvements through remainder of Term
(which will be subject to ad valorem property taxes)

Title: No Change

Commercial

Page 20

Lease
Original

Other

Proposal

At Maturity:

At expiration of the Term, Lessor retains right

to require Lessee (at Lessees expense) to
demolish the improvements or leave them in place

[NA, no demo of historical property]

Right of
First Refusal:

Lessor remains responsible for environmental clean-up and

remediation of environmental contaminates, not caused by
Lessee, after Lessors initial demolition of the structural
improvements. If, during Lessees construction of new
improvements on the leased premises, environmental
contaminates requiring remediation are found on the site for
which Lessor is responsible, Lessee may remediate the site
to acceptable levels and Lessor shall reimburse Lessee for
the cost of such remediation through rent abatements in an
amount not to exceed one years rent under both leases

No Change

Environmental:

Lessor remains responsible for environmental clean-up and

remediation of environmental contaminates, not caused by
Lessee, after Lessors initial demolition of the structural
improvements. If, during Lessees construction of new
improvements on the leased premises, environmental
contaminates requiring remediation are found on the site for
which Lessor is responsible, Lessee may remediate the site to
acceptable levels and Lessor shall reimburse Lessee for the
cost of such remediation through rent abatements in an amount
not to exceed one years rent under both leases

No Change

Renewal:

The Parties agree to enter into negotiations in the thirty sixth

(36th) year regarding possible ten (10) year extension of the
Term. If no agreement is reached (by the beginning of the 37th
year), Lessee has right to terminate the lease upon written
notice. Lessee has limited right of first refusal for third party
offers

No Change

Page 21

Summary
Thank you for the opportunity to present our proposal
Win-win solution that is superior to the original plan

Conclusion

Compelling financial deal for the City

More positive impacts to the community (e.g., creates more jobs, preserve
historical building, and furthers Good Neighborhood Initiative)
Less risk (execution, funding and ongoing risk)

Endorsement to proceed
Finalize lease terms

Next Steps

Finalize architectural designs

Schedule environmental clean-up
Identify any other concerns

Page 22