By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
I realize the stories about this stuff in The Dallas Morning News are inscrutable and read like a badly translated Japanese tractor repair manual. And short of somebody on the council snatching off somebody else's toupee, you're never going to see it on TV.
But just keep your horse sense tuned up: 1) City needs money. 2) City gets money by collecting taxes. 3) City lets big boyfriends skate on taxes. 4) Trouble.
The trouble with the Dallas City Council? Half of them are running for mayor. And they assume the only way they can raise campaign money in this town is by making bedroom eyes at a sugar daddy.
Trouble with Dallas sugar daddies? They don't care about the bedroom; only place they want to go is the vault. "Button up your negligee, sweetheart, and show me where they keep the cash."
North Dallas council member Mitchell Rasansky told me an amazing story recently:
"There is a wonderful real estate developer in Dallas named David Gleeson," he said, "a marvelous person, started with Henry S. Miller, then went in for himself. I've known him for 25 years. He came to me and said, 'I want to show you what we're doing.'"
Gleeson shows Rasansky a plan to redevelop an area on the east side of Central Expressway, about seven-tenths of a mile northeast of NorthPark Center. "He said, 'We're going to build $250 million, $350 million. We're buying all these apartments. We're going to close on them.'"
Then Gleeson sets the hook. He tells Rasansky that he and his partners need a tax abatement from the city--money they can take off their taxes and use instead to build the project or put in their pockets. "I said, 'David, I don't know.' I talked to our assistant city manager, Ryan Evans. He said, 'Well, I don't know where we're going to get it from.'"
Gleeson is no longer involved in the project, and he told me a confidentiality agreement prevents him from discussing most details. But he did acknowledge meeting with Rasansky and getting shot down on the tax abatement. "I had a meeting with Mitchell, saying that we would like to entertain the possibility of a tax increment financing district or TIF," Gleeson said. "Frankly, the feedback that we got, from him and from talking to others who are familiar with what's going on at City Hall, was that it probably wasn't real likely.
"We could always pursue one, but it wasn't so sure that there was money available or the enthusiasm for another TIF, since there had just previously been granted a TIF for the Park Place project."
Yeah. I wrote about that heist a while back ("Drunk Tellers," December 15). You'd think after that one, in which the council gave some guys $20 million in tax money to build a Whole Foods on prime ground across from NorthPark Center, there might have been a bit of morning-after shame.
Instead, Gleeson sells the project to an outfit called Valencia Capital Management, which is basically, as far as I can tell, four guys in an office on Turtle Creek. And now Valencia Capital Management comes back to Rasansky with the same deal again but with one important change:
"These other people approach me," Rasansky said, "and they want $37 million."
You heard right. He said the new guys want a $37 million "incentive" in city tax money.
Rasansky got curious. He wanted to know some things, such as who their money was.
You know: It's four people in an office. Somebody has to be behind them with a bankroll. So Rasansky asked where their financing was coming from. They told him. And everything became clear.
Originally it was a project that deserved, according to its promoters, a $4 million to $6 million tax cut. Now it's a project that deserves a $37 million tax cut. And what has changed?
This is Ray Hunt of Hunt Oil and Hunt Realty who was recently gifted with a $6.3 million tax cut on a corporate headquarters building that was already in pre-construction on prime downtown real estate when Hunt's people thought to ask the council for some free dough. Mayorally hopeful council members Bill Blaydes and Ed Oakley couldn't wait to give him a big wet wad of city moolah, and they excoriated Mayor Laura Miller for daring to raise questions.
This is Ray Hunt, who wants the city to spend $15 million extending the proposed Woodall Rodgers deck park a full city block to bring it to his new corporate doorstep; Ray Hunt, who wants to swap the city a parking lot for Reunion Arena, on which the city still owes $19 million, so he can tear it down; Ray Hunt, who talked the city into building Reunion in the first place in a one-sided back-room deal a quarter-century ago.
In a gushy-mushy story about the Valencia deal ("Big Plans in Northeast Dallas," The Dallas Morning News, February 3, 2006), the News quoted Blaydes as already cheerleading for Valencia: "'Valencia is going into areas where there has been very poor management for years and trying to get started with their program,' Mr. Blaydes said."
Steve Brown, who wrote the story, also very generously allowed the spokesman for Valencia not to be identified by name in the story, calling him "a spokesman for the investment firm who asked not to be identified."
Asked not to be identified? Somebody who's going to ask for rezoning and a $37 million tax cut doesn't want to be identified? And the News agrees to that? Ah, let me tell you: Ray Hunt is one of those very special princes of the city who receive very special treatment.
Jeanne Phillips, spokeswoman for Hunt Realty, confirmed to me the Hunt connection with the Valencia project. She described Hunt Realty's role as that of a "limited partner."
"We provide them growth capital," she said. "We have no rights as a limited partner, meaning that they aren't a subsidiary of ours, so they run the show. We just have money in their project. We don't make decisions related to the project."
But Phillips said another thing she wanted to make clear: "We have not applied for any tax incentives. We have applied for a zoning change only."
Michael J. Romo, president of Valencia, confirmed to me that his firm had spoken with Rasansky. He said the talks were very preliminary, and he denied that anybody had demanded a $37 million tax cut.
"The $37 million number that is being bandied about is not a request for tax incentives," he said. "It is a base budget of various things that are required to position the area for change. That is a preliminary budget that is subject to change, and we had 'draft' stamped all over it. So there is no number out there."
Well, maybe not. But Mayor Miller told me she had seen a piece of paper with Valencia's logo on top floating around City Hall with the number $37 million on it, characterized in a way she remembered as a tax cut.
I told Romo some people had speculated to me that the demand went up from $6 million max to $37 million on this deal because somebody figures Ray Hunt's name is big enough to take that kind of bite out of the city's hide.
"I can't comment on who might have made that sort of statement," he said, "and I don't know why someone would make that statement, so I cannot address it."
Fair enough. But look. This comes down to a pretty simple set of principles. Remember your horse sense. The city depends on tax money. Some of it is tax money from established taxpayers. Some of it from new.
When we're talking about prime real estate, the city must assume someone will build on it, no matter what, because it's prime real estate. There is no need to give people an inducement: The market value of the real estate is the real inducement. And the city needs to be able to collect taxes on that property--especially on good property--if the city is to survive and have enough money for cops, streets, sewers and so on. If City Hall keeps shredding all the big tax bills, sooner or later it's going to be behind the eight ball.
Tax incentives are a legitimate way to lure a developer into a high-risk area where he wouldn't otherwise venture, but this whole thing has turned into something else--a kind of orgy of greed that abandons all sense of civic responsibility.
I recently told a former mayoral candidate that I didn't understand why Hunt needed a tax break on his new corporate headquarters. He said (I'm paraphrasing a little, because I wasn't taking notes): "If the city's going to hand out all kinds of money to people from Cleveland and New York to come down here and do deals, don't you think they could do the same for somebody who's been here all along and a loyal citizen?"
Wow. My answer would be no. These are not supposed to be door prizes.
Mayor Miller said to me last week: "I go to these town hall meetings, and people get up and want to know why we don't have enough police. Well, this is why. They're giving away all the money down there."
To me, that's horse sense.
The sad ending here? I guarantee you Valencia will get all or most of that $37 million out of the city. Guys like Blaydes and Oakley will make sure of that. That's the other end of the horse.