Don Bouvier, president of UCR Development in Dallas, signs an agreement with the Tulsa Public Facilities Authority on Aug. 11, 2015, to purchase 8.8 acres of Helmerich Park at 71st Street and Riverside Drive.
KEVIN CANFIELD/The Frontier
The City Council will hold a public meeting at 5 p.m. Wednesday to continue its discussion of a proposed commercial development at 71st Street and Riverside Drive. The meeting will be at City Council chambers of City Hall, Second Street and Cincinnati Avenue.
The Tulsa Public Facilities Authority signed an agreement Aug. 11, 2015, to sell 8.8 acres of Helmerich Park to Dallas developer Don Bouvier for $1.465 million. A lawsuit filed by five Tulsans, including former Tulsa Mayor Terry Young, has put the project on hold ever since.
The plaintiffs, as well as other Tulsans, have argued that the authority had not right to sell the property and that it did not follow the property procedures. Opponents have also said they object to the sale of park land for commercial uses.
Mayor G.T. Bynum last week presented a plan he believes would ensure that the city lives up to its signed agreement with the developer while using proceeds from the sale to enhance the remaining 60 acres of the park that would remain untouched by the proposed development.
After listening to more than two hours of public comments on the proposal last week, councilors voted to continue the meeting until Wednesday, in part to give the public another opportunity to express their views. Individuals who spoke at last week’s meeting will not be allowed to speak Wednesday night.
Bynum has requested that councilors declare the 8.8-acre tract no longer needed for park purposes, a step he believes would put the city in a better position to prevail in the lawsuit and help move the project forward.
That vote is expected to take place Wednesday night. In anticipation of the meeting, The Frontier asked Bouvier, president of UCR Development, and the Mayor’s Office to respond to questions that councilors and citizens raised last week.
Here are their responses, beginning with questions posed to Bouvier:
1. Why is the park property being sold as opposed to leasing the land to the developer?
While many believe a leasehold interest conveys absolute landowner control (in this case the TPFA) over the property, that is actually not case. Land owner control is derived from deed restrictions put in place at the time of sale. There is not a difference in control mechanisms between a lease and a sale.
Knowing that, it was important to the city to have immediate funds available to put back into the adjoining park for new volleyball courts.
A sale is the perfect solution. With the added deed restrictions, the seller (TPFA) still retains control over the pieces most important to them.
2. At what point would you be willing to go forward with the project? Once the City Council vacates the property? Once a new agreement is signed with the Tulsa Public Facilities Authority? Or once the legal proceeding surrounding the case have been settled?
Put another way, would you be willing to proceed with the project if the plaintiffs’ lawsuit is still active?
There are many steps involved in the development process. Removing the lawsuit is a step required of the seller in order to deliver title to the buyer of the property.
3. Critics of the proposed development argue that the sales price is too low, and that the city could get much more for the property? Do you agree? Why
Land price is a function of, among other things, building density and existing encumbrances. What many people don’t realize is that this property is heavily encumbered by a statutory right-of-way that limits the placement of buildings in this part of the 60-acre parcel.
Furthermore, the proximity to the airport further limits the density one can place on the northern part of the property. As you move southward, both these encumbrances go away leaving the remainder of the property available for more density and a much larger project. Furthermore, the city has mandated that this parcel be developed to a quality level that far exceeds the requirement of other privately-owned, similar-type properties.
All these requirements, such as increased parking, four-sided architecture, and the addition of all the landscaping also have a significant cost to fulfill them.
When you compare apples to apples we are paying market value. We feel like we havve the perfect ingredients of potential tenants for the property given the restrictive nature of this part of the land.
4. Is REI still a viable candidate to be the anchor tenant of the development?
Yes.
5. One speaker at last week’s City Council meeting said the proposed agreement “screams of impropriety?” What is your response to that statement?
I can tell you we develop all over the United States and this is one of the most heavily negotiated plans we’ve encountered. The River Design Overlay standards are aggressive and required many revisions, but to the credit of Mayor Bynum and his staff, they have worked diligently to identify compromises for consideration to meet the standards adopted by the City Council.
6. What assurances does the proposed amended agreement with the developer provide that the anchor tenant (REI) will remain part of the development for the 15-year life of the agreement?
The anchor tenant will have a 20-year lease term that includes two five year options. The company we are targeting will be making a significant investment of their own in order to locate there. If the property is as good as everyone says, then market forces will dictate.
7. If a business in the development goes out of business or chooses to leave the 8.8-acre site, who — and what regulations — determine what types of businesses can be brought in in its place?
Three legal documents control the types of tenants that can go in the building – the RDO, the underlying zoning and the restrictive covenants filed of record at closing.
8. One speaker mentioned that the developer had created a “shell company” (North Point Development Co.) that could be sold by the developer at any time. Are there any provisions in the proposed agreement that would prohibit the developer, UCR Development, from selling the property/project before the 15-year life of the agreement?
Although it’s not our immediate intent to sell the property, you always want to build something that has marketability. Otherwise, it’s probably not going to be a very desirable project regardless of whether you want to hold it or sell it. The speaker’s reference is to what is called a single asset entity and is the most common form of legal organization used in real estate investment and ownership. Mostly all projects across the country use this type of legal formation. We don’t have experience doing it any other way.
Mayor’s Office questions:
1. Why is the park property being sold as opposed to leasing the land to the developer?
TPFA issued an RFP more than a year before North Point Development submitted an offer to develop the property. TPFA specifically required that it be developed under a lease agreement. They received no responses. Conversations with North Point Development began as a lease agreement, but the developer was unable to secure financing for the project without purchasing the property outright.
Selling the property has a series of benefits not possible in a lease: it generates proceeds that can be dedicated to improving Helmerich Park, as we’ve proposed; and the improvements generate property tax revenue for our schools and infrastructure improvements. From the feedback we’ve received, the greatest goal in leasing the property seems to be ensuring that a high standard is maintained long-term for property. We believe we can ensure that high standard, regardless of owner, through a series of protections we have worked into the contract.
2. What happens if the developer defaults on the contract? (i.e., fails to live up to the terms of his contract with the City). Does the city assume ownership of the property? And if so, would the city then become the landlord for the businesses on the property?
To be clear, the contract is between the developer, North Point Development, and the Tulsa Public Facilities Authority (TPFA) — not the city of Tulsa. Many of the terms of the contract TPFA would consider are required to be completed as a condition precedent to closing on the property. In other words, if they are not fulfilled, North Point Development is unable to close and finalize the sale.
3. What assurances does the proposed amended agreement with the developer provide that the anchor tenant (REI) will remain part of the development for the 15-year life of the agreement?
The proposed amended contract requires that a lease be signed with the anchor tenant for at least 20 years that includes two five-year extension options, prior to North Point Development’s closing of the property. While that lease remains in draft form, the proposed contract requires final approval from TPFA — and if they are not satisfied with the terms of the lease, TPFA may terminate the lease without liability.
4. Under the proposed agreement, could the developer change the anchor tenant? If so, under what circumstances?
It cannot, and the proposed contract requires TPFA approval prior to any lease being signed.
5. If a business in the development goes out of business or chooses to leave the 8.8-acre site, who — and what regulations — determine what types of businesses can be brought into that place?
We have developed a multi-layered system of controls to ensure that both initial businesses – and all businesses going forward — are worthy of this property. First, the underlying zoning and existing PUD restrict both the building square footage and the potential uses for the property. Second, the River Design Overlay further restricts allowed uses on the property, and requires an additional level of design, landscaping, and walkability be added. The proposed contract requires that any future changes in use or improvements be fully compliant with the River Design Overlay. And third, the proposed contract provides an additional layer of protection through a Restriction Agreement, further detailing what business uses are acceptable and design standards that must be met.
6. One speaker mentioned that the developer had created a “shell company” (North Point Development Co.) that could be sold by the developer at any time. Are there any provision(s) in the proposed agreement that would prohibit the developer, UCR Development, from selling the property/project before the 15-year life of the agreement?
Our goal throughout this process has been to put an agreement in place that protects the property, its development, and its use — regardless of owner. If the property is sold two minutes or 20 years after North Point Development develops the property, those protections and the lease with the anchor tenant would continue.
7. Did we understand correctly that the mayor would be willing to have a traffic study done to ensure that the proposed exit/entrance is in the best place? If so, please explain who would do the traffic study, and why?
That’s correct. The proposed contract would require the developer to conduct the traffic study, and be flexible on their southern-most entry if that needs to adjust somewhat to accommodate improvements. While initial reviews by city staff indicated that improvements would not be needed, both the City and the developer wanted to be absolutely sure.
8. The mayor mentioned trying to raise private dollars to match the $1.465 million the sale of the land would generate. Is the mayor looking to raise only $1.465 in matching funds, or would he accept more in private donations should they be offered?
If additional private dollars are offered, we would be more than happy to accept them and put them directly toward improving the park.
