I-345 Economic Analysis

Development Impact
Dallas, Texas
CSJ 0092-14-094

June 17, 2021

Prepared by HNTB Corporation
CONTENTS
1 Introduction ..................................................................................................................... 2
2 Data Sources................................................................................................................... 2
2.1 TIF District Annual Reports FY 2018-2019 ................................................................... 2
2.2 Dallas County Appraisal District Shapefile .................................................................... 3
2.3 Dallas County Assessor ................................................................................................... 3
3 Methodology.................................................................................................................... 3
3.1 Land Area ......................................................................................................................... 3
3.2 Floor Area Ratio ............................................................................................................... 5
3.3 Use Mix Estimates ........................................................................................................... 6
3.4 Average Building Value Estimate ................................................................................... 6
3.5 Tax Rate ........................................................................................................................... 7
4 Results ............................................................................................................................ 7

Tables
Table 1: Summary of Alternatives ................................................................................................. 2
Table 2: FAR by Land Use Type ..................................................................................................... 6
Table 3: Land Use Mix ................................................................................................................... 6
Table 4: Average Building Value ................................................................................................... 7
Table 5: Economic Impact by Alternative ..................................................................................... 7

Figures
Figure 1: Potential Parcels Under Hybrid Alternative .................................................................. 4
Figure 2: Potential Parcels Under Boulevard Removed Alternative ........................................... 4
Figure 3: Potential Parcels Under Elevated Alternative............................................................... 5
Figure 4: Potential Parcels Under Depressed Alternative ........................................................... 5
1 Introduction
The I-345 Economic Analysis Study compares the economic impacts of four build alternatives
associated with the reconstruction of I-345 in Dallas, Texas, between the Interstate 30/45
interchange and the Woodall Rodgers/Spur 366 interchange. The purpose of this analysis is
to estimate the economic impact in terms of potential property taxes generated by the
conversion of land currently used for transportation to developable parcels for other uses
through each of the four alternatives. The four alternatives are summarized in the table below.

Table 1: Summary of Alternatives

Alternative Description
Depressed Like US 75, mainlanes are low with discontinuous frontage roads
along either side and cross street over the top, includes
pedestrian and bicycle facilities along the frontage roads and
cross streets.
Removal Removal of the existing mainlanes and the City street grid is
reconnected, includes pedestrian and bicycle facilities.
Elevated Like what exists now, a smaller footprint of an elevated highway
with aesthetic improvements, improved access and wayfinding
for drivers, and pedestrian and bicycle facilities under the
highway.
Hybrid Like US 75 and the proposed depressed alternative, mainlanes
are low. There is limited access from the mainlanes to the local
streets that are reconnected over the top. No proposed frontage
roads. Access to the area is from local streets, I-30 or Woodall
Rodgers. Includes pedestrian and bicycle facilities along the local
streets.

2 Data Sources
The following data sources were used to estimate the benefits associated with each
alternative.

2.1 TIF District Annual Reports FY 2018-2019

To estimate the typical land use mix, floor area ratio (FAR), and construction costs of
potential development projects, nearby development in the Dallas urban center was
evaluated. The 2018-2019 annual reports for the City Center TIF District 1, the Downtown

1City Center TIF District FT 2018-2019 Annual Report, 2020, Accessed from:
https://www.dallasecodev.org/DocumentCenter/View/653/City-Center-TIF-District-Annual-Report-FY-2018-
2019-PDF
2
Connection TIF district 2, and the Deep Ellum TIF District 3 were used to identify potential
development projects in these areas between 2015 and 2020. These reports provided the
square footage, land use type(s), and approximate values of existing developments. These
outputs were aggregated across all three TIF districts to estimate typical adjacent
development patterns in the surrounding area.

2.2 Dallas County Appraisal District Shapefile

To determine the land area for each of the existing nearby developments, a property
boundary shapefile from the Dallas County assessor office was used. This shapefile provided
parcel size (measured in square feet) for each development that was identified in the TIF
reports listed above. The parcel size was used to calculate typical FAR by land use.

2.3 Dallas County Assessor

To determine the tax rate that potential developments would pay, the current aggregate
property tax millage in areas adjacent to the I-345 corridor was identified using data from
the Dallas County Tax Assessor website.

3 Methodology
This study estimated the incremental development value and property tax revenue at build
out based on land area, FAR, land use mix, construction costs, and tax rate for each of the
four alternatives. Because all land identified as developable for each alternative was
converted from transportation use, all development value associated with these parcels was
considered incremental over the No-Build condition. This section describes the methodology
used to estimate development value and property tax revenue.

3.1 Land Area

Land area is estimated using a GIS-based calculation of square feet by parcel. The parcels in
each alternative were labeled and the size of each parcel was calculated. This analysis
aggregated the estimated land area for all projects from 2015 to 2020 within the City
Center TIF District, the Downtown Connection TIF District, and the Deep Ellum TIF District.
These land area values were measured in square feet and were used to determine the FAR
of projects by land use type in the surrounding area.

The land area for the potential parcels created by the Hybrid, Boulevard-Removed, Elevated,
and Depressed alternatives were based on a GIS calculation and are shown in Figures 1 to
4. Parcels that were considered too small or irregularly shaped to be developable or that

2 Downtown Connection TIF District FY 2018-2019 Annual Report, 2020, Accessed from:
https://www.dallasecodev.org/DocumentCenter/View/2462/Downtown-Connection-TIF-District-Annual-Report-
FY-2018-2019-PDF
3 Deep Ellum TIF District FY 2018-2019 Annual Report, 2020,

https://www.dallasecodev.org/DocumentCenter/View/2848/Deep-Ellum-TIF-District-Annual-Report-FY-2018-
2019
3
were associated above a depressed roadway as freeway parks were not considered in the
analysis. These parcels are indicated by red text in the figures.

Figure 1: Potential Parcels Above Hybrid Alternative

Figure 2: Potential Parcels Adjacent to Removal Alternative

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 Figure 3: Potential Parcels Under Elevated Alternative

Figure 4: Potential Parcels Over Depressed Alternative

3.2 Floor Area Ratio

TIF reports from FY 2018-2019 for the City Center TIF District, the Downtown Connection TIF
District, and the Deep Ellum TIF District were examined to determine a baseline FAR for the
following land uses: Residential, Retail, Hotel, and Office. Projects that were completed
5
between 2015 and 2020 were examined to determine the FAR assumptions used in this
analysis. Aggregate FAR contributions by each use type are shown in Table 2.

Based on feedback provided by City of Dallas staff, alternatives that include elevated
segments (Elevated Alternative) had a portion of Retail space converted to Office space
based on recent development trends. Likewise, alternatives that offered amenity parks over
the freeway (Hybrid and Depressed Alternatives) or removal of the freeway (Blvd-Remove
Alternative) were assumed to experience greater Residential and Retail development
density.

Table 2: FAR by Land Use Type

Current Blvd-
Land Use Hybrid Elevated Depressed
FAR Remove
Residential 1.99 2.49 2.49 1.99 2.49
Retail 0.35 0.44 0.44 0.35 0.44
Hotel 0.59 0.59 0.59 0.59 0.59
Office 2.25 2.25 2.25 2.25 2.25
Total 5.19 5.78 5.78 5.19 5.78

3.3 Use Mix Estimates

The FAR assumptions were also used to describe the land use mix of the potential parcels
created by the I-345 development, shown in Table 3, based on the existing development
trends. This mix was then applied to all the developable parcels in each alternative.

Table 3: Land Use Mix

Blvd-
Land Use Current MIX Hybrid Elevated Depressed
Remove
Residential 38% 43% 43% 38% 43%
Retail 7% 8% 8% 7% 8%
Hotel 11% 10% 10% 11% 10%
Office 43% 39% 39% 43% 39%
Total 100% 100% 100% 100% 100%

3.4 Average Building Value Estimate

Construction costs were calculated using the reported costs from the TIF reports from the
City Center TIF District, the Downtown Connection TIF District, and the Deep Ellum TIF
District. A sample that includes properties that contained at least 85% of a single use by
building size was used to estimate existing building value by use. Potential developments
between 2015 to 2020 were reviewed and sorted by land use type (residential, retail, office,
and hotel). The building size (in square feet) and the approximate values for each of these
land use types were used to derive an average building value per square foot for each use
type, shown in Table 4.
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 Table 4: Average Building Value
Construction
Residential Retail Hotel Office Total
Costs
Building Size
620,000 109,463 280,500 916,677 1,926,640
(sq ft)
Approximate
$149M $41M $73M $256M $519M
Value
Average
building value $241 $376 $260 $279 $269
(per sq ft)

3.5 Tax Rate

Tax rates were calculated using the 2020 Dallas County Property Tax Rates report from the
Dallas County Assessor. The tax rates for Dallas County, Parkland Hospital, DC College
District, and Dallas County Schools were combined to create an aggregate property tax
millage adjacent to the potential development area. This created a total property tax rate of
$2.712875 per $1,000 assessed value for each of the potential development parcels within
the various I-345 alternatives. Tax rates were multiplied by the estimated property values to
determine an estimated annual property tax revenue increment at the time of buildout for
each parcel.

4 Results
The I-345 Economic Analysis compares the economic impact of four different alternatives that
include the redevelopment of a segment of I-345 in Dallas, Texas. This analysis accounted for
the potential parcels of land that would be developable because of each of the four
alternatives. The property value and incremental annual property tax revenue at buildout (in
2020 dollars) was calculated and is shown in Table 5 for each of the I-345 alternatives.

Table 5: Economic Impact by Alternative

2020 $, Millions Hybrid Removal Elevated Depressed

Property Value at
$1,247 $1,702 $915 $960
Buildout
Annual Incremental
Property Tax Revenue $3.4 $4.6 $2.5 $2.6
at Buildout