[Urbannizer]

Some great news!

City OKs deal to boost $850 million development

The city moved forward on Wednesday with a plan to boost an $850 million mixed-use development with about $10 million ($17 million) in incentives, the first in a line of possible deals with major projects in which Mayor Bill White’s administration says investment will be needed.

The program, approved unanimously by 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 will 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,” he 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 GoodJobsFirst, 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.

http://www.chron.com/disp/story.mpl/front/6365125.html