By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
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.
Mayor Laura Miller and Councilman Mitchell Rasansky, whose district this thing is in, both told Harvest Partners they were not going to get a $20 million TIF to come into prime real estate that would be developed anyway without them. It's not what TIFs are for, and it's stupid for the city to kiss off that much tax revenue when somebody else would come in right behind Harvest Partners, should they drop out, and pay full freight.
To make a long, ugly story short, Harvest Partners, working with council members Bill Blaydes and Ed Oakley, redid their politics: They added another mil for themselves but also added $12 million for the poor people a few blocks away in Vickery Meadow.
The council ate it. They signed off on a $33 million tax rebate, $12 million for the poor folks' area but $21 million to the high-end development on prime real estate, exactly where the city needs to collect money, not give it away.
During the council debate on the Harvest Partners TIF, Rasansky complained bitterly that the rest of the council, with the exception of the mayor, was being suckered. Not only was the announced purpose of the TIF a transparent deception, but there was never any need to give Harvest Partners a tax break in the first place to get them to build their $400 million development.
"You're going to build it anyhow," Rasansky told Tod Ruble of Harvest Partners.
He said he had spoken with two other developers who intended to do $350 million in development--theirs in the Vickery Meadow area, not over on prime land next to the expressway--and those developers had never even thought to ask for a TIF. He pointed out that Ray Nasher just doubled the size of NorthPark right across the expressway without a TIF. He pointed out that Mockingbird Station just south of there didn't get a TIF.
"You said if you didn't get the $21 million," Rasansky told Ruble, "you're going to put a Wal-Mart there. You told several people that. Well, I don't care. Put your Wal-Mart there. I do not want the citizens of Dallas to give up $21 million in future taxes. I commend you, and I thank you as a developer for stepping forward and building there. But not at the expense of everyone in the city who needs the money."
After the council voted 13-2 in favor of the $21 million tax cut for Harvest Partners, Rasansky ruefully summed up: "All I can say is they out-pokered us. They played a great game of poker with us, and they won, and their PR firm won. The losers are the citizens of Dallas and the people who pay taxes in this city. Those are the people who lost."
I had a long conversation recently with Mayor Miller about TIFs and other giveaway programs at City Hall. Her take was somber and troubled. She said unless it's Rasansky, who just happens to have strong principles in this area, it's almost never in the interest of any other council member to say no to anyone.
If they say no, they earn an enemy. If they say yes, they have a friend and supporter. "And if at the end of the year we need 600 more cops and we don't have the money," she said, "they don't see the connection."
At the end of the debate on the Harvest Partners TIF, Miller said to the rest of the council: "I just want to remind everybody that when we do a budget this fall and our revenues do not match our expenditures, that we are looking at yet another property tax [hike], our third in four years.
"I feel like we ought to be a lot more careful with how and when we give away our money, and I do not feel that we are being prudent today."
You know what the response was? Silence. No response. Because they all figure, "Not my job. I just give the money away. I'm not in charge of counting it."
So I don't know. How much pride can voters take in shooting down the strong mayor initiatives when this is what we're left with? I don't even know what we passengers can do on a ship of state like this. Keep bailing, I guess.