Stacked Deck

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

At a community meeting in February, nearly everyone supported Potashnik's Primrose project. When he took his final proposal to the TDHCA board, they awarded him $935,000 in annual tax credits for 10 years. Depending on how he packaged his tax credits, Potashnik could have received nearly $8.5 million to invest in the Primrose property.

A year later, the developer came back to the neighborhood with plans to develop the abandoned Fairway Crossing into a multi-family affordable-housing complex. He told FRI that he would invest up to $30,000 a unit, gutting the apartments, installing new lighting and carpeting, repairing the walls and redoing the bathrooms. He'd also offer a community center, a play area and a computer lab. Now a veritable ghost town, Fairway Crossing was going to come back as affordable apartments everyone could take pride in. This time the FRI steering committee considered Potashnik's proposal and voted in favor of it 49-0 with four abstentions.

The Morning News would later report that Potashnik ensured FRI's support by contributing $10,000 to the organization, but the group says that it used that money to pay two consultants to research Southwest Housing, brief the different neighborhood groups and set up community meetings to discuss the company's proposals. The group itself, they say, never kept a dime and allowed the Dallas Observer to view its financial statements, which corroborate their account.

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.

Vikki Martin, who initially was "freaked out" when she first learned about Potashnik's entry into her neighborhood, has become one of his most ardent admirers.

"All of our relationships with him have been honest and open," she says. "We certainly never had a problem with Southwest Housing."

While Potashnik's dealings with the FRI and its city council representative Leo Chaney have raised a few questions, the developer has pushed for a host of far more controversial projects in the southern sector of Dallas. At neighborhood meetings, at church gatherings and over the dinner table, residents have decried the glut of affordable apartments in their area. As a member of the Housing Finance board and a community leader in Oak Cliff, Ruth Steward talked a lot about how her neighborhood needed single-family homes, movie theaters and parks, not more apartments. But she tried to keep an open mind, even after the young man seemed ready to offer her a bribe on behalf of Southwest.

Steward says the bribe was never formally offered, so she did not go to the FBI. But she never considered taking it. After having launched a campaign against Al Lipscomb predicated on his tenure of corruption, she wasn't going to go down that road. (Steward declined to name the man she says tried to bribe her.) But in December 2002, she voted for the bond package for the project, in part, she says, because Fantroy supported it.

Later, Steward and Fantroy had a falling-out, and in 2003, she began voting against nearly all of the company's projects when they came before the board. In 2004, Fantroy replaced her on the board. A year later, she ran against him and lost.

In July, Steward spoke about her encounter with Southwest to KDFW-Channel 4. The story she told the Observer is virtually identical. In a statement to Channel 4, Southwest denied that the man who met with Steward worked for the company. They also said that they never authorized any such payment. (Southwest officials would not comment on Steward's story to the Observer.)

But Steward is sticking to her story. Asked about Southwest's claim that the man she described never worked for the company, she tells the Observer that, at the time, he visited various churches, including the New Independent Baptist Church, which she attends. According to Steward, he went door-to-door in an East Oak Cliff neighborhood with a petition asking for support for more apartments to be built in the area. He also was with Potashnik at a promotional breakfast Southwest held at Oak Cliff's Cedar Crest Golf Club to boast about the work the company does with minorities.

A former colleague of Steward's, Randall Parker, serves on the Housing Finance board as its chief financial officer. While he did not have any direct knowledge of Southwest's alleged efforts to curry favor with Steward, he did not doubt her credibility.

"To me she was a good board member; she had the community's support at heart," he says. "As far as her story is concerned, with the way things are going, that might have happened."

Like Steward, Parker also was appointed to his post by Fantroy and asked probing questions about Southwest's heavy focus on southern Dallas. Both he and Steward voted against a bond package for Southwest's Rosemont at Laureland in Oak Cliff. The majority of the board approved it, however, and the company was subsequently able to win tax credits from the state.

"He was just coming in with so many developments," Parker recalls. "It got to the point where we were seeing his developments in every corner."

Through his deliberations on the board, Parker got to know Potashnik and his dad, Jack, who worked for his son and often came to the board meetings. He portrays the developer as likable, if occasionally prone to bizarre bouts of self-pity. About two years ago, Parker ran into Potashnik at a housing conference. The developer walked past him and muttered aloud, "I don't know why people don't like me; I do good work."

"I approached him and said 'Brian, what's the problem? You're walking around, talking to yourself,'" Parker recalls. And he said, "I don't know, we do good work." And, Potashnik might have been thinking: Why can't that be enough?

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