Desperate dealing

City scrambles to finance arena privately--and steal racetrack back from Fort Worth

The earth moved at Dallas City Hall last week. But in more ways than you know.
On Monday, Dallas lost the race to build an auto racetrack to Fort Worth. Which was a bad thing.

On Friday, First Assistant City Manager Cliff Keheley--the City Hall veteran who has orchestrated much of the political monkey-business surrounding the racetrack and the sports arena--announced, amid intense criticism, that he was retiring. Which was a good thing.

But there was so much more. Behind closed doors, away from public scrutiny--where all important business is conducted at 1500 Marilla these days--the racetrack and arena negotiations are taking dramatic new turns.

For the better. And it's about time.
It's been a terrible year for Dallas city government. Enormous amounts of public resources--time, energy, and money--have been spent zealously pursuing two relatively unimportant things: sports and billionaire oilman Ray Hunt's real estate agenda.

Since last February, council members and top city staff have fallen all over themselves to figure out a way to build a new sports palace for the Mavericks and Stars on Ray Hunt's land, next to Hunt's Hyatt Reunion hotel. Then, in November, Hunt pushed another of his projects, a car racetrack at Pinnacle Park in North Oak Cliff, to the top of the city agenda. And he got Mayor Steve Bartlett, Councilman Bob Stimson, and Cliff Keheley to start cheerleading madly for it--over a bigger, better racetrack project slated for a better location in South Oak Cliff.

Both have been all-consuming passions--ones that have managed, in fairly short order, to corrupt the city manager's office, expose craven political agendas, end a mostly admirable public-service career, demoralize city staff, and throw away more than a half-million dollars of the taxpayers' money on consultants' studies that had predetermined results.

As the months have passed, media scrutiny and public criticism have mounted. But with a few notable exceptions, no one at City Hall has seemed to listen--much less care.

Last week, it became clear that this is changing. Maybe it's because council elections are only two months away. Maybe it's because the councilmembers, confronted squarely with the lies and misdeeds of their city manager's office, finally felt some embarrassment--at being dupes, at being weak, at being controlled by arrogant bureaucrats.

Then again, maybe it's because the citizens can win--as long as they are given enough information to see the politics and the private agendas behind the public's business.

Whatever the reason, the city council has finally decided that what it's been doing isn't working. And so, behind closed doors, the councilmembers have decided to start fighting.

To get the racetrack back from Fort Worth.
And to get Don Carter to build his own darn sports arena.
The arena deal now on the table comes down to this: Don Carter builds it himself.

The city puts up the land and a certain amount of infrastructure--mainly roads--in an incentive package not to exceed $12.9 million. Carter would probably lease the city's land for $1 a year, thus avoiding property taxes. And Carter agrees to keep his team in downtown Dallas for 30 years.

The city, in its big downside on the deal, has to figure out how to absorb the financial hickey on the old arena--a building destined to hemorrhage money, whether it's demolished or not, when a new arena is built.

This deal has been sitting on the table since February 22, when City Manager John Ware sent a letter by messenger to Don Carter's son Ronald, president of Carter-Crowley Properties, at his office on LBJ Freeway.

"Most of our previous discussions have focused on Option A, which includes equity positions by both the Mavericks and the City of Dallas," Ware wrote in the letter, obtained last week by the Dallas Observer.

"Option A" is well-known: It has been the only game plan since Carter announced last December that he was willing to contribute $65 million toward the construction of a new arena. Under that scenario, the city would augment Carter's contribution--actually a loan, since he wants repayment from the revenues the new arena would generate--with another $65 million. That $130 million would ostensibly be enough to build a first-class, state-of-the-art arena--though the number is a far cry from the $200 million that city staff and a private business group agreed last summer such a topnotch facility would require.

When Carter made his offer, though, he also made it clear that he would want his money out first--essentially taking a first-lien position that would entitle him to first dibs on arena revenues to pay off his $65 million. When his obligations were satisfied, he said, the city then could apply any remaining revenues to its own debt service, created by the revenue bonds it intended to issue to finance its portion of the project's construction.

The city council wanted to do that deal, as long as it appeared that new luxury suites and premium seating would generate enough revenues to satisfy both parties. In fact, councilmembers repeatedly defended the proposal, insisting publicly that this was a wonderful solution because the revenue bonds would be paid off with proceeds from the facility they were financing--not with tax monies. Therefore, they reasoned, the arena was not stealing precious tax dollars away from other city priorities, and there was no need to seek voter approval.

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