Tablet Local

Arlington council gives developer more time on $200 million apartment project

A developer has been given more time to complete a proposed $200 million apartment complex in north Arlington while remaining eligible for millions of dollars in economic development incentives.

On Tuesday, the Arlington City Council amended its deal with Arlington Commons Lands Llc., which is demolishing three aging apartment complexes on Lamar Boulevard to clear the 24-acre site for a mixed-use development and linear park.

The upscale urban-style apartment project, known as Arlington Commons, is expected to be completed in phases over the next 15 years and will eventually include about 1,700 apartment units.

“It has the potential of transforming [Lamar] in several ways, from the linear park aspect of it to more of a community of upwardly mobile young individuals,” said Councilman Charlie Parker, who represents north Arlington.

“Anytime you infuse $200 million in a community, that tax base is going to rise significantly.”

First, the council granted the developer, formerly operating as JCKPL AC, six more months to complete demolition of the Huntington Chase, Pointe of North Arlington and Countrywood apartment complexes between Rolling Hills Country Club and Lincoln Drive. The complexes were originally expected to be torn down by year’s end, but developer Robert Kembel needed more time to help some of the lower-income tenants find new housing.

“We’ve gotten over three really significant hurdles,” Kembel said, referring to the land acquisition and getting the demolition and abatement work under contract.

The council’s action Tuesday also extended Kembel’s original deadlines, which were set last year before he acquired the properties, to get the project built. The first phase of the complex, three buildings with at least 800 apartment units, was originally set to be complete by January 2019 but now has five more years. The second phase’s deadline for completion, originally in 2021, has been pushed to 2027 and the final phase is now expected to be built by 2029 instead of 2024, according to a city staff report.

“We have confidence in Mr. Kembel’s model to complete this project in less time than that,” Parker said. “I feel as though it will allow him just a little wiggle room and ensure the success of the project.”

Kembel, who is also developing the Viridian master-planned community in far north Arlington, said he expects construction of the first complex, which will include a parking garage, to begin as early as March and to take 18 to 24 months to complete.

To help make the project more economically feasible, the City Council previously approved nearly $10.5 million in possible economic development incentives. On Tuesday the council made adjustments to how that money will be spent.

For example, more money was dedicated to reimbursing demolition and abatement expenses, which have risen from original estimates, and less was earmarked for infrastructure improvements. The developer, in partnership with the city, plans to transform the median on Lamar Boulevard into a landscaped linear park and add amenities at nearby Parkway Central Park.

“Whether the project was going to happen depended on assemblage,” Kembel said. “It would have never happened without the help the city is providing. We continue to be grateful.”

Because of the substantial investment and risk of building a level of apartments not currently found in the city, Arlington has also guaranteed up to $5 million to cover investors’ losses if the project fails within a certain period. Economic Development Manager Bruce Payne said the reserve fund helped Kembel’s investors feel more comfortable with the project, which required significant capital to assemble the land, demolish the existing complexes and prepare the site before the new apartments can even go up and start generating revenue.

“It’s a temporary insurance policy,” Payne said.

If the project is still financially successful by the time the third apartment building is under construction, the city will put the $5 million toward infrastructure improvements, Payne said. That money would come from the city’s general fund reserves.

“The city was willing to spend as much as $10 million to redevelop those apartments,” Payne said. “We are operating within that number.”

Kembel is reportedly estimating rents around $1.45 per square foot, higher than is typically found for Arlington apartments.

For years, city officials have sought to revitalize the Lamar Boulevard area near Collins Street by attracting mixed-use development with upscale apartments to replace aging complexes that are declining in value.

“Once he proves that market up here, we are going to get a lot of interest because people will realize it’s not just Uptown Dallas or Fort Worth that can do it,” Payne said.

As part of the deal, Kembel was also granted a 10-year, 90 percent tax abatement. After that ends, Kembel will pay property taxes on the full assessed value, but the city will then reimburse him for 90 percent of the taxes he pays on the increased value each year for 20 years.

Even with the economic development deal, Payne said, the city will still be bringing in more taxes than the current properties generate. The Huntington Chase Apartments, for example, bring the city $20,939 annually, a staff report says. The city anticipates receiving $22,842 in revenue if it collects just 10 percent of the increased value from the first completed $47 million apartment building.

This report includes material from the Star-Telegram archives.