Maybe Yigal Lelah Did Spend $4.5 Million of Our Money on Dirt. Feel Better Now?
Patriot's Crossing: it takes a whole lot of subsidy to do affordable housing.
Texas Department of Housing and Community Affairs
I am still trying to reach Yigal Lelah, the developer on Lancaster Road I wrote about yesterday who seems to have spent $13 a square foot in money the city gave him for a bunch of land the tax appraisal district says is worth $1 to $5 a square foot. So far he's being shy and won't call back, but I have been talking to other people who know a few things about his deal.
Some of what they tell me is sort of exculpatory. Possibly. We will know more at the end of the week when city employees meet a deadline set for them by the City Council last week to pony up information about the deal.
This is about a great big pie-in-the-sky development proposal the guy was supposed to do tied to the Veterans Affairs Medical Center on Lancaster Road, kind of like a high-end, multi-use, office, condo and disco park, all with a veterans hospital theme. Yeah. The only thing missing would have been a combination water slide park and military cemetery.
Anyway it didn't happen. For one thing, Veterans Affairs said, "Whaa?" Now Lelah, the developer, wants to do public housing there instead. The City Council wants to know how he could possibly have spent $13 a foot in public money for land in that area.
I was able to speak to a few people familiar with city-sponsored land development in southern Dallas but only on the condition that I not name them, that I never tell anyone I spoke to them, that I never acknowledge them or even wave hello should I accidentally pass in them in traffic and that I agree to kill myself if they tell me to.
Other developers who have worked with the city tell me buying land in a city-sponsored deal is not like buying land in the real world. They say the city doesn't want anybody to feel they got screwed for a city deal, so the city requires them to use an appraiser from a city-approved list and then pay at least the price set by that appraiser.
The developers tell me that if they are buying land themselves with their own money in a private deal they use somebody like their brother-in-law to do the appraisal, somebody who can be trusted to come back with an extreme low-ball figure so the developers can try to get the land dirt cheap. In other words, the American way.
In addition, when a developer buys property in a city deal, he has to pay relocation costs. I mean, wouldn't that be great? OK, you just bought my house. Now pay to move me to my new house. But that's how it is, the developers tell me, with city deals.
I ran these matters by Dallas Interim Assistant City Manager Theresa O'Donnell late yesterday and got a mixed response this morning. She said the story about developers having to use a city-approved appraiser is not true. The story about having to pay relocation costs is true. But she also said some of this may change on a case-by-case basis. Some of the people I talked to are potential competitors with Lelah, so I'm not sure why they would invent excuses for him. I assume most of this will come out in the wash Friday when City Hall staff is expected to pony up full details on Lelah's deal.
Bottom line, the developers I talked to suggested, is that the price Lelah paid for the land across Lancaster Road seemed kind of high but not outrageously or impossibly high. Giving people a fair shake on purchase prices for their houses and then helping them move all runs up the project cost. Lelah could well have the entire $4.5 million in the land, they said.
The $4.5 million, by the way was in the form of another wonderful city-sponsored convention -- the "forgivable" loan. Based on my memories of my own early days in newsrooms, I would say a forgivable loan is like a loan to a reporter. You might as well forgive it. You're not getting it back anyway. Otherwise known as a gift.
It was suggested to me that sharp-eyed council persons looking at the information to be provided them by staff Friday should direct their attention especially to consultants. Could be some interest there.
By the way, in addition to the $4.5 million already forgiveably loaned him for the land, Lelah has been gifted with an additional loan of $1.35 million to help him qualify for an additional tax credit subsidy from the state for his proposed subsidized housing project. I think the answer here is just to stick around City Hall a lot with your hands cupped.
At any rate, here is some language I have lifted directly from his application to the state for the tax credit subsidy. In the application he says: "Veteran's Place, at the request of the City of Dallas, will in the future be known as Patriot's Crossing. It is a 150 unit new construction development for families loacted [sic] in the southern sector of Dallas, Dallas County, Texas.
"The development will be 'green' construction. The development is located across the street from the the [sic] Dallas Veteran's Hospital, the leragest [sic] emplyer [sic] in South Dallas. It is also within walking distance of the DART rail line and transit stop. It is being dveloped [sic] as aa [sic] Tranist [sic?] Oriented Development. The project will be set on approximately 3.7 acres and will be one four story building with intereior [sic] corridors and elevator access. This development will serve familes [sic] with income between 30% and 60% of area median income and is owned by a qualified non-profit."
Below is his bio.
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