Rayzor Ranch

Construction workers work on unfinished portions of Rayzor Ranch Town Center on Friday. The property recently sold again and the new owner is marketing the undeveloped property without the community-focused town center feature.

Longhorns still grazed around the stately, historic home atop Denton’s most scenic hill when the Newton Rayzor ranch sold nearly 15 years ago.

Developers capitalized on that romance when they proposed a grand new vision for the west-side ranch: a friendly, walkable mix of town homes and upscale shops for Denton. They asked the city for $62 million in tax incentives to help pay for “Denton Hillview,” saying most of the project would be finished in three to five years.

The still-unfinished project, now known as Rayzor Ranch Marketplace and Town Center, has changed since then.

A lot.

This past week, city leaders noticed that the project’s defining feature, the town center, disappeared from the plans.

Denton City Council member Gerard Hudspeth called attention to the missing eponymous, elliptical park during a council work session Tuesday, when the newest developer gave an update on the progress.

“Those who have already invested should have a say,” Hudspeth said on Tuesday.

Although he didn’t specifically mention the Embassy Suites by Hilton Denton Convention Center by name during the meeting, he did during a follow-up interview this week.

“I know the hotel has concerns,” Hudspeth said. “They built a structure on what they thought would be a grand avenue with them as a focal point.”

Currently, that grand avenue, Town Center Trail, connects West University Drive to several undeveloped parcels and the parking lot at Alamo Drafthouse Cinema.

Romantic beginnings

The original buyer was a Dallas-based real estate partnership with financing from Austin. The group told city leaders it would invest $850 million to build Denton Hillview, as it was called in 2006. The group would build a 700,000-square-foot shopping center and another 1 million square feet of open-air shopping along with medical offices and hotels.

It said it would be like Firewheel Town Center in Garland, which was new at the time. The community around the shopping center would include houses, town homes, a senior village and a large park with a lake. The group also proposed building a museum and an amphitheater in a nod to Denton’s quality of life.

It asked for $62 million in tax incentives to help pay for major improvements to University Drive and the rest of the 400-acre site, which needed water and sewer lines as well as new roads.

City leaders signed the deal in May 2007, agreeing to reimburse a portion of the sales tax collected at the shopping center over a period of 20 years.

Economic realities

Disagreements among the real estate partners and the Great Recession of 2007-08 exacted a toll on Denton Hillview. Very little happened until another company, RED Development, joined the partnership. It opened Walmart and Sam’s Club in 2010. By 2014, the group was back in front of the city, asking to reset the clock to meet sales tax collection thresholds and for more incentive money.

City leaders remained hopeful for an infusion of news sales tax earnings from the project. They added $6 million to the incentives pot. The new deal put the city on the hook for about $3 million annually for 25 years.

Denton has reimbursed the developers $8 million so far.

A review of total city sales tax receipts from 2014 to 2019 shows an average increase of $2 million each year, or about $10 million in “new” sales tax dollars for the past five years.

Kevin Roden said the incentives deal came together before he was on the City Council and continued long after he termed out. That the development project came in “flashy” and evolved over time was both reasonable and expected, he added.

In late 2014, Roden had publicly criticized the project when it became clear that some of the businesses being lured to Denton weren’t anything the city couldn’t have attracted without incentives.

RED had announced a deal to bring WinCo Foods to the edge of the town center, triggering his criticism. (WinCo later opened a major distribution center in Denton’s industrial park.)

“There’s nothing here that you couldn’t get in Corinth or Lewisville,” Roden said in an interview this week. “You still have to go to Frisco or Dallas, for example, to get a nice suit.”

The extra incentives were supposed to lure retailers that Denton couldn’t land on its own, he added.

“Otherwise it just tends to get people shopping in different parts of town,” Roden said.

The implication behind the deal was that the city couldn’t otherwise pay for its part in a big, master-planned development. But between 2005 and 2012, Denton issued $48 million in general obligation bonds. Then, in 2014, voters authorized nearly $100 million more. In November, they are being asked to authorize another $221.5 million. The electric, water and sewer departments also have their own revenue and borrowing capacity beyond tax-supported bonds.

Denton’s bond indebtedness as of September 2018 totaled $1.4 billion.

Deal or no deal?

Rick Coe, DFW president of Fidelis Realty Partners, said he doesn’t know what the final site plan for the south side will be, but he’s not marketing the town center concept because it doesn’t work well.

RED was unable to get more than two small shops to lease at the town center, Coe said, adding that those deals were also contingent on the center being built.

He is talking to a fitness company instead. Fidelis is finishing the project. The company acquired the property on the north side of West University Drive in 2016 and most of the south side earlier this year.

Coe points to the struggles at Firewheel in Garland, as well as similar concepts in Allen and Fairview, as evidence the town center concept doesn’t work.

“Drive by and you’ll see they are struggling,” Coe said. “All have struggled to keep small shop tenants.”

But he’s confident in Rayzor Ranch otherwise.

“RED has gotten it off to a good start,” Coe said. “We are working with great tenants that would be additive to the area.”

“We’re invested in the community,” he added.

Last Tuesday, Fidelis proposed which expenses it considered reimbursable under yet another tax agreement with the city for the project: a public improvement district.

With the help of the city and the county tax assessor’s office, Fidelis asked to collect about $8 million from property owners in the district through special assessments in the PID.

City Council members have not yet approved the company’s proposal, but the matter is expected to come back before them again in the next few weeks.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.

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