Stacked Deck

Giving penny-ante politicians a say over lucrative affordable-housing developments seemed like a good idea--until the FBI came calling

And let's be clear here: The stakes can be very high. Affordable-housing advocate Henneberger says that developers used to call their tax-credit applications a "Two-Lexus Deal," because if they won, they could buy two Lexuses. Now, though, he says the rewards for tax-credit deals are even greater. With the developer fees in the millions, "you can buy a whole bunch of Rolls-Royces," he says.

Even after the endless series of stories on Potashnik and his connection to the FBI investigation, the developer remains something of a hero among a cluster of neighborhoods in far East Dallas along Ferguson Road and Buckner Boulevard. Against a backdrop of urban blight, you'll find thriving streets of old, regal homes, middle-class subdivisions and tiny, well-kept ranches. But a series of bleak, crime-ridden apartments seems determined to plague their own tenants and the surrounding neighborhoods. These are not tax-credit properties, so landlords don't have to worry about state regulations governing the appearance and operation of their apartments.

At the beginning of Ferguson Road, off Interstate 30, sits the Fairway Crossing, an abandoned apartment complex of dirt-brown two-story town homes. Some of the windows are boarded up; others are shattered. A broken spotlight dangles from an electrical wire on one of the front buildings. Behind several rows of empty apartments, in an alley out of sight of the main thoroughfare, thieves ditch the cars they've gutted.

Burning down the house: Brian Potashnik is a hero in one East Dallas neighborhood for pledging to spend millions renovating seedy apartment complexes such as this one.
Burning down the house: Brian Potashnik is a hero in one East Dallas neighborhood for pledging to spend millions renovating seedy apartment complexes such as this one.

In 1998, a neighborhood activist named Vikki Martin helped found the Ferguson Road Initiative (FRI), a nonprofit umbrella group that would grow to cover nearly 20 neighborhoods in and around Buckner Boulevard and Ferguson Road. The group received a federal grant through the U.S. Department of Justice and used part of the money to help pay for more bike patrol officers to watch over the crime-ridden apartments. The officers would later tell the group how easy it was for them to ride right up to a drug deal in progress. FRI also helped lobby for $3.7 million in a city bond package that included paving sidewalks for neighborhood children to walk to school. In turn, developers came in and built single-family homes worth up to $300,000.

There are still some dangerous stretches on and around Ferguson Road and Buckner Boulevard, but since 2000 violent crime is down dramatically. Buoyed by their community's fledgling resurgence, the Ferguson Road Initiative has also created a master plan for the area that aims for walkable communities, upscale retail and up to $50 million in new investments.

So in late 2003, when Martin and the other FRI board members learned that Potashnik wanted to build 400 apartments for low-income tenants on a vacant lot on Highland Road, just a short walk north from Ferguson Road, they told him to take a hike. If there ever was a neighborhood that really did have an abundance of cheap apartments, it was theirs.

"We freaked out," Martin says. "We made it very clear that all 20 communities would come out against this project."

If Potashnik were just a developer of seedy apartment complexes, he could have told Martin and her meddling neighbors exactly what they could do with their opposition. He already had the zoning he needed to construct hundreds of apartments, and if he wanted to build another Fairway Crossing, no one could stop him. But because Potashnik was applying for federal tax credits from the state, he'd have to enlist the neighborhood support, or he wouldn't have a chance of submitting a competitive bid.

When Potashnik learned that the Ferguson Road Initiative and its assorted neighborhood groups were set to oppose his proposal, he was obviously frustrated. The FRI board soon employed a pair of planning consultants, Bobbi Bilnoski and Bob Moss, to meet with Potashnik. On February 11, 2004, Bilnoski met with Potashnik at Southwest Housing headquarters on Central Expressway, where she found him to be adamant in sticking to his original plan of developing up to 400 affordable apartments.

But when the two got to talking, Potashnik broached the possibility of developing a much smaller complex for seniors. Many neighborhoods that oppose multi-family housing, fearing crime and school overcrowding, are more amenable to senior citizen homes. Ferguson Road's board and its consultants felt the same way.

First, though, Bilnoski began to research Southwest Housing. She called the Dallas Housing Department, which gave the company sterling reviews. Then she called TDHCA Executive Director Edwina Carrington.

"She called back and said that they are the best model in the whole state for tax-credit and affordable housing," Bilnoski recalls. "She told us how fortunate we were to be working with them."

After individual meetings with neighborhood associations, the two consultants continued to meet with Potashnik to see if he'd fine-tune his proposal. Neighborhood leaders toured some of his other properties as well. Potashnik also showed FRI board members a promotional video featuring Mayor Laura Miller lauding the company's work.

"He was tough. He knew he had to deal with us and didn't like it," Moss says. "But he was very sophisticated. He understands this tax-credit process very well. He's a New York-style negotiator where you ask for more than you want, and you don't show your hand."

Ultimately, Potashnik agreed to build the Primrose at Highland with 168 apartments for tenants 55 and older at an investment of $16 million. It would be restricted as a senior-only facility for 40 years. The Primrose wouldn't be like other low-income apartments in the area, as it would feature a pool, a clubhouse, picnic areas and carports for every unit. This would not be the Fairway Crossing II. Considering that the vacant lot Potashnik wanted to develop had turned into an illegal dump over the years, few could muster any objection.

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