By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Michael Sorrell, who was on the city's charter review commission, wrote an op-ed piece for The Dallas Morning News last week praising the people of southern Dallas for going to the polls this year to help shoot down two "strong mayor" ballot initiatives.
I do believe voting is always better than not voting, even if you vote the wrong way. But that leaves us with a problem. The current set-up at City Hall, left in place by these two failed efforts at reform, does not work.
The buck still stops nowhere. City Hall is still utterly without discipline or direction, and the city council is still giving away the company store. It's Christmas every day down there.
Is that a legacy in which anybody can take pride?
Take this one issue alone: tax cuts for developers. In fact, narrow it down even more, because there are all kinds of tax cuts that go to developers. Just to keep things simple, let's talk only about Tax Increment Finance Districts.
No, no, wait. It's not complicated. Not really. Think of it this way. You own a rent house. It's empty. You should be able to get about $1,000 a month for it. You have a mortgage to pay, plus insurance and taxes, plus maintenance. You need to gross at least 12 grand a year just to be whole.
A guy shows up: great credit, good references, no visible indications of crack addiction. Says, "Sure, I'll take it. If you will do a few things for me first."
Hmmm, OK. But while he talks, you're doing the math.
"Would you have the carpets cleaned?"
"And for me to talk my wife into it, it would need to be totally repainted inside."
Another $2,500; $3,000 total.
$3,000; $6,000 total.
"And I have to tell you, she's just not going to go for that funky 1970s bathroom in the front. That's got to be updated."
$7,000. $13,000 total.
"The only other thing I know for sure: The green counters and that rusty sink will not fly. She'd love a stone farm sink in there with granite countertops."
$13,000. $26,000 total. More than two years' gross income. You send this mutt packing, right?
But wait! He has such a deal for you. He says he will pay for all this stuff himself. Out of the rent. He'll just keep the rent and use it to improve your house. When it's all paid for, then he'll start sending the rent checks to you instead. So you get to keep the improvements, and when he's done fixing up your house two years from now, it will be worth more. What's wrong with that?
Here's what's wrong: Long before he finishes with the stone farm sink, your house will have been repo'd by the mortgage company! You need to get cash money from him right now so you can pay the note. Today money. Not tomorrow money. Send the mutt packing.
So here's the deal with City Hall TIF giveaways. They're supposed to work just like my rent example: The city lets the developer keep all his tax money and spend it on streets and gutters and things for X number of years.
In 10 years from 1989 to 1999, the city council gave developers a total of $178.5 million in tax breaks designed to encourage investment in blighted areas that otherwise would have seen no redevelopment.
Makes sense, right? You take a tough area: Nobody's going to spend a dime. You tell developers they can keep all their property tax money and spend it on improvements instead of paying it in to the city, because you're trying to get them to invest in a bad area.
Flash forward to this year. This is where things get scary. This year alone, the Dallas City Council has created new TIFs delivering tax breaks amounting to three times the total for all TIF districts in the city before 2005. In this budget year the council has given away $341.5 million in future revenues, according to numbers provided me by the city's Department of Development Services.
Hey, what if it's all being done to encourage development in areas that otherwise would have seen no development at all?
They're giving these things to developers who are coming into prime real estate that would be developed anyway in any kind of up cycle in the market. The city council is shoveling this money out the door as fast as it comes in. Why?
From the debates, I would say sometimes they're doing it because they want to be liked. And then of course there is that all-important principle you always have to take into account when trying to understand city council high finance:
It ain't their money.
One of the best examples is the so-called Vickery Meadow TIF--a $33.5 million tax cut for developers--passed by the council last spring. From its name, you might assume the purpose of the Vickery Meadow TIF is to improve the area of low-rent apartments around the intersection of Vickery and Meadow streets. I think you'd be wrong.
When Harvest Partners originally presented this puppy to the city, it was being billed as "West Village on Steroids," a fancy-schmancy mixed-use development on Park Lane right across Central Expressway from NorthPark shopping center. More to the point, Harvest Partners told council members they could be Mr. Nice Guy and do the fancy development, but they wanted $20 million from the city. If they didn't get their $20 million tax cut, they said they might have to do a Wal-Mart.