An effort to build about 100 new affordable apartments near northern Dallas’ Lake Highlands neighborhood has cleared a legal hurdle.
A Dallas County judge removed all but one of the defendants who are seeking to build the Cypress Creek at Forest Lane apartments from a lawsuit aimed at blocking their construction.
The lawsuit was the latest in a series of impediments to the $60 million project, which would provide a mix of subsidized and market-rate apartments near the intersection of North Central Expressway and Forest Lane.
The suit was filed by the owners of an office complex adjacent to the site of the proposed apartment project, FC Investment, Ltd. A lawyer representing the company sent a statement saying they plan to keep fighting the development.
“The sole basis of the ruling is that the dispute is not yet ripe. No decision has been made on the merits. FC Investment, Ltd. will pursue an appeal and will continue to litigate in order to defend its property rights,” the statement said.
A lawyer for Sycamore Strategies, the lead developer on the apartment project, said the lawsuit clears the way for the project to move forward.
“It's my opinion that even if they try to go back to court again, they will be similarly unsuccessful on the merits of what they're alleging,” Kingston said.
Not yet ripe
FC Investment filed the lawsuit in December 2023 against six companies that either own the land where the apartments would be built or are part of a deal to develop the apartment project. The City of Dallas, which partnered with Sycamore Strategies to move the project forward, was also named.
The office owners argued that building apartments would diminish their property’s value, and that a 1976 deed restriction blocking apartments on the land precludes Sycamore Strategies from building.
The owners of the property— Parula Partners, LP and its affiliate EY Ventures, LLC — asked Judge Eric Moyé to dismiss the case. Their motion asserted that the land is vacant after a tornado in 2019 destroyed an office building on the property. They said they don’t have a contract to sell the land or a plan in place to build apartments, and that made the case premature.
“Because Plaintiffs claims against Parula and EY (the general partner of Parula) are based on contingent and hypothetical facts and events that have not yet come to pass, Plaintiffs claims against Parula and EY are not ripe and the Court has no subject matter jurisdiction over such claims, and such claims should be dismissed,” the company argued in its court filing.
Moyé issued an order removing them from the case. A lawyer for the companies did not respond to KERA’s request for comment.
Sycamore Strategies and its affiliated companies joined the motion and were also removed from the suit. So was the City of Dallas, which agreed to partner on the deal to bring affordable housing to an area with ample jobs and low crime rates.
The city declined a request for comment. Lawyers for Anthem Interests, LLC, the remaining defendant, have not responded to KERA’s request for comment.
Moving forward
Kingston said Sycamore Strategies is working to hammer out financing and a deal to acquire the land for the apartment complex, which would be turned over to the City of Dallas and would receive a 100% tax exemption. He said the city is not required to follow deed restrictions on the land and this arrangement would allow the project to move forward, because the city has an interest in bringing more affordable housing units to high-opportunity areas.
The office owners disagree and call the arrangement an illegal conspiracy to violate their property rights.
The court didn’t rule on these arguments.
Nonetheless, Kingston said that Sycamore Strategies has offered to pay FC Investment to remove the restrictions. That would require the owners of 60% of the land still covered by that 1976 restriction to agree. FC Investment has not agreed to do that, Kingston said.
“We’ve offered them $300,000 to release their deed restrictions, and they've paid tens of thousands of dollars in legal fees in this improper, premature lawsuit. What's very clear from that is that this isn't about money for these supposed businesspeople. It's about preventing affordable housing next to their property,” Kingston said.
Kingston said he thinks the luxury apartments Sycamore Strategies plans to build – with a price tag around $60 million – would likely increase the value of adjacent properties.
Cypress Creek at Forest Lane won competitive federal tax credits designed to finance high-quality affordable housing in 2021. The project has been championed by fair housing advocates who point out that it would offer opportunities for lower- and middle-income renters a rare opportunity to move into neighborhoods where they’re currently priced out. But it’s faced vigorous opposition from homeowners in neighborhoods nearby, as well as the area’s former city council member.
Got a tip? Christopher Connelly is KERA's One Crisis Away Reporter, exploring life on the financial edge. Email Christopher at cconnelly@kera.org.You can follow Christopher on Twitter @hithisischris.
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