Shallow news media coverage is driving me crazy. And I’m also not very impressed with information one can find on the City of McKinney Web site. The real story. The Gateway Project has had a ton of public money poured into it. It is 90 acres that hugs the northeast quadrant of Hwy 75 and Sam Rayburn Tollway, the site you can’t see until you are almost past it due to the highway flyover. Let’s see what we can learn from the City under their Transparency link.
Lincoln Property Company, Inc. has notified the City of McKinney that it cannot proceed under the terms and conditions set forth in the Master Development Agreement entered into with the city. It has withdrawn from the agreement to serve as the master developer for the approximately 57 acres at the Gateway site surrounding the current anchor owners, such as Emerson Process Management.
Located at what many refer to as the “gateway” to McKinney, the Gateway site is one of the most visible development sites in McKinney located at the heavily-traveled interchange of the Sam Rayburn Tollway and U.S. 75. Collin College was the first occupant at Gateway, opening the Higher Education Center in January 2010. Emerson Process Management followed by moving the world headquarters of its Regulator Technologies business to the Gateway site in 2013. The Sheraton Hotel and Conference Center opened at Gateway in February 2015. These anchor properties occupy approximately 33 acres of the 90-acre site. The approximately 57 acres surrounding these anchor owner sites is intended to be a mixed-use development including restaurants and office space.
In concert with the McKinney Economic Development Corporation, which owns the land, the city determined the primary developer. Following an RFP and selection process, a master development agreement was signed with Lincoln Property Company, Inc. on May 14, 2015. According to the terms of the agreement, Lincoln had to acquire the first parcel by executing a purchase agreement by February 16, 2016 in order to continue as the master developer.
“We are disappointed that Lincoln has withdrawn from this important economic development project,” said Mayor Brian Loughmiller. “This is a development site that has been years in the making and we remain committed to bringing a robust master development for this highly visible and important Gateway site to our community. The city, MEDC and the MCDC will be exploring next steps for Gateway very soon.”
So Joe Sixpack, the citizen, relies on the newspaper to answer the most basic of journalistic questions: Why did Lincoln Properties pull out so quickly after they made a proposal to the City and entered into an agreement?
So far the Dallas Morning News has not reported on this story that I can find. The McKinney Courier Gazette ran a story yesterday. The story is 563 words long and is a blend of the mostly lifted City’s release of 314 words plus some filler from the same reporter’s story in 2014. It appears the reporter did ask the WHY question and settled for a quote from the Interim City Manager: any real details as to why Lincoln dropped the project “would be more speculation than anything” at this point.
So, Let’s Speculate.
I have complained to the City on more than one occasion that it bothers that I have to be the one asking questions and not their own staff or the Council itself. I extend my complaint to the news media. You have to be fairly bright to understand intricate issues. But more than that, you have to spend time to learn the players and relationships, understand important history and dig, dig, dig into documents and numbers.
I don’t think most reporters are lazy as much as it is they are stretched too thin. If you are covering multiple cities and ISDs, plus Collin County as a reporter, I can pretty much guess how superficial the reporting is going to be. And then with the average tenure of a reporter on assignment being just a few short years or less, you might as well forget it. Don’t they pass on their research files to the next reporter?
Here are a few questions I suggest somebody ask and answer:
Is there anything wrong with this Gateway location? I would think not except for the visual obstruction I mentioned. As you approach Gateway from any direction, I don’t recall a sign announcing it is ahead and how best to approach it.
Is there a demand for anything that would fit on the property? The 2014 news story mentions the competing developers making a claim that they had several letters of intent from potential users of the site. Of course, a big story missed yesterday when they mentioned the competitor is that Wallace Bajjalli Development Partners failed in Amarillo and other places and was linked to Ponzi schemes. Why would a reporter mentioned WB yesterday and miss the chance to tell local McKinney folks something new – and perhaps pat the city officials on the back for not going down that path?
But Lincoln Properties is a big firm with good credentials. Where was the market demand study they or the City provided to indicate there was a convincing attraction to this Gateway site? Collin College being there itself probably wouldn’t be singularly a draw, and Emerson Electric was already in another location of the City. “Build it and they will come” is a movie script, not harsh reality in most cases where something is going to be writing checks.
What are the rent rates necessary to make the numbers work? I am skeptical of the first thing out of a developer’s mouth being that they need this or that to make the numbers work, but I do understand arithmetic. You aren’t going to buy a piece of land and build something on it without knowing both the numerator and denominator. The numerator is going to be the full cost plus profit and the denominator is going to be square feet or some kind of unitized value. The result is a cost and rent rate per square foot. Is that why Lincoln backed out? Are construction costs rising that much or the demand for the products diminishing?
Speaking of the denominator, this is where all cities have gotten themselves in a trap offering incentives. What was being asked of the City regarding taking on some of the infrastructure costs (roadways, drainage, water, sewer)? And this is where you have to look beyond the site in question. What kinds of incentives are being offered in Frisco, Fairview, Allen and Plano? McKinney would do well just to get the crumbs from some of the robust adjacent cities.
What kinds of incentives were offered (or demanded) and paid to the huge commercial developer just down the tollway at Craig Ranch? In fact, I have a huge related question. If Lincoln is out and Craig Ranch or another developer, local or not, comes in to bid on the completion of the Gateway project, will the City offer them incentives that were not offered to Lincoln Properties?
Whoa, baby! If you think the McKinney Two-Step hasn’t been danced around here before, then you don’t understand the McKinney Underground. Do you think this is the first out of town developer who might have backed out or was otherwise urged out by the local movers and shakers?
Or is this just a quirk? I had heard a few weeks back that a Lincoln executive highly involved in the project had passed away suddenly. In that case, it may just be a situational deal where the project champion can’t be replaced with a person with a similar passion or availability. Or it may be a combination of all these things. Do we even know that McKinney is viewed as a 10-foot pole city, as in don’t touch them with one?
However, what are the lessons learned by the City up to this point?
And just exactly what has the City gotten in return for their investment in both Gateway and Craig Ranch?
Why is Plano and Allen so willing to sit on valuable frontage property until the demand gets right and McKinney is so unwilling to do the same? Why has McKinney had so much pressure to give back commercially zoned property to residential purposes? Why has the current council so loudly proclaimed “property rights” so that it makes it easy for a landowner do whatever they want? What’s next? An alligator farm or a petting zoo for Gateway? How about giant warehouse storage complex? Move over Crepe Myrtle Capital of Texas.
Or do we just wait patiently? McKinney’s time will come. McKinney is only half built-out. But then if we could somehow build out completely in the next 10 years, the question I would have is this: Why in the world would be want to do that? LFM