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City council could cost us $20 million by tanking the Merc deal

Some of the new members of the council have been saying it was all done before they took office, but in fact, the deal itself was struck two weeks after they were elected, and they were all briefed on it in their first month in office last August.

"All of the terms of that agreement were briefed and approved by the council in the August meeting," Zavitkovsky said, "and the briefing in August was consistent with the memorandum of understanding that was negotiated between Forest City and the city."

The city signed a development deal with Forest City, and Forest City went to work. Forest City is already all over the Merc: They've got cranes and crews running in and out of there, walls ripped open, 18-wheeler dump trucks hauling off debris. They had a contract, so they assumed they had a deal.

The city council has been tossing away tax money like confetti for years, giving "incentives" to every developer who asked for one. Now the money's about to run out. So now the council's mad about it.
Mark Andresen
The city council has been tossing away tax money like confetti for years, giving "incentives" to every developer who asked for one. Now the money's about to run out. So now the council's mad about it.

I talked to Forest City Vice President David Levey last week: He said his company had plunged ahead--borrowed money, bought the Merc and surrounding properties, initiated construction--because they had a contract with the city to do so. One of their key assumptions was that the city would pay them what it had promised to pay according to the schedule it had agreed to.

"We needed to be sure from a business point of view that we would do what we said and the funds would be there from the city as we spent them," Levey said.

At the finance committee meeting last week, all the members present except Rasansky, the chair, effectively voted not to pay. By sitting on their hands when Rasansky called for a vote, they voted to walk the deal. The council members who refused to endorse the bond sale were Hill, Blaydes, Oakley, Linda Koop, Ron Natinsky and Steve Salazar (who voted in his usual manner, by ducking out of the room).

It goes to the full council this week. Three sources familiar with the contract told me the cost to the city of backing out on this deal will be in the neighborhood of $20 million. One source said $20 million was way on the low side. Basically, the city will have to pay back Forest City every cent they've spent to buy property, hire lawyers, order in Chinese food, whatever.

Then the city of Dallas will be the owner and proprietor of the unfinished Chateau D'Urine. And that way there will be some tax money left downtown for the city council to give away to people like Ray Hunt of Hunt Oil.

I hate to be boring, but I have to say this again: This is exactly what we get for voting down two strong-mayor ballot proposals.

Utter disaster.

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