The Arena Papers
Dallas city councilwoman Donna Blumer could tell that her constituents were not happy.
For one thing, they wouldn't break into small discussion groups, which the city staff was asking them to do. For another, they weren't opening their city-issue manila envelopes, pulling out their city-supplied ballpoint pens and colored 3-by-5 cards--a waste of taxpayer money, people grumbled--and thinking of what they wanted to put on their capital-improvements wish list.
"The format laid out for us tonight includes an exercise," city aviation director Danny Bruce said brightly, sizing up the crowd that had gathered for this public hearing on the city's $150 million May 1995 bond program. "What's really important is to get data from you. The information you give us on your cards tonight will go into a data bank."
Eyes narrowed. These 60 people--all of whom had sacrificed home and hearth on a Tuesday night in November to come to the Walnut Hill Recreation Center in North Dallas--were not interested in playing games with the city staff. They wanted to get to the point--to the source of their enormous irritation.
And so they did.
"Unless we speak up right now, we're going to have to pay for a new sports arena," declared Mike Wilson, a 38-year-old husband, homeowner, and store-fixture distributor who stood up from his folding chair to address the group. "I just don't think it's practical to spend the $200 million they're saying this is going to cost when you have to weigh it against all the improvements we need in this city. I say put the item in the bond election--so we can kill it off."
Dr. Marvin Noble, a North Dallas resident and anesthesiologist at Presbyterian Hospital, was on his feet next. "This arena has me concerned, too," said Noble, looking at Blumer. "I know there is a significant amount of debt still owed on the old arena. Do you know how much?"
Blumer, standing in front of the room, wasn't sure. "We had some difficulty getting that information from staff the last time we had a briefing," she said, a bit embarrassed.
Noble shook his head. "I think the city council needs to insist that a new impartial party look at this and give us a real appraisal," he said. "If they don't, the citizens of this city will insist they all resign. And the council must insist that this arena be a publicly voted item."
Fix the roads, people began saying. Clean up the alleys. Dredge White Rock Lake. Restore Fair Park. Replace the 78-year-old downtown police headquarters.
North Dallas resident Bill Marx, a retired auto executive who lives in the neighborhood, had a more modest plea. "We need a maintenance man in this building," he said, referring to the 27,525-foot recreation center, one of the city's largest. As he spoke, a broken light fixture in the ceiling buzzed. "We haven't had one for three months--the city says we can't afford one."
Ed Oakley, a 42-year-old Oak Cliff resident who had driven north for the meeting, then rose to ask the staff a simple question: "How did we spend the last bonds--the $99 million from the '85 bond program that we issued this past June?"
The staff looked on blankly. Then the assistant director of housing, De McCombs, answered: "We don't have a list here with us."
The audience was not impressed.
"I'm kind of struck by the fact that it seems nobody's in charge," said Dick Hamilton, who works in commercial real estate and has lived for 25 years in the same North Dallas house. "People talk about things, and no one gets any action. The city staff runs amok--off running around, going after grandiose plans like sports arenas when the citizens are concerned about other things like crime and streets. It seems they are out of touch. At least that's the impression I get."
Blumer grimaced, then asked The Question.
"How many people here think we should build a new arena?"
No one raised a hand.
It was extremely quiet in the room as Blumer surveyed the audience, searching for a sign of support.
Finding none, the councilwoman seemed to get the message. "I personally think if we ask you to finance this, it's a big mistake," she said.
The group remained skeptical.
"If everyone's feelings seem to be the same here, why doesn't it ever echo down at city hall?" a bearded man asked from the back of the room. "All the people from the city stand here and shake their heads when people voice their concerns, but I guarantee you when they leave nothing will happen."
Blumer sighed. She had only been on the council a year. She was a former school teacher, not a politician. Quite frankly, she was baffled, too. "I wish I could answer that," she said. "I think your point is well-taken. We have a huge bureaucracy down there and a big turnover on the city council--every two years. And while we're trying to get answers, life goes on."
More than you know, Ms. Blumer.
The sad truth of the matter is that the members of the Dallas City Council are not in charge of the city's business. They are certainly not calling the shots on this crusade for a new arena. To the contrary, they don't even know the shots.
They don't know that while they sit, month after month, watching dog-and-pony shows from the city staff and a host of expensive consultants, they--and the public--are far removed from the major decisions involving this arena.
From the outside looking in, the process looked legitimate enough. The staff went through the motions of objectively studying the critical questions: Could Reunion Arena, just 15 years old, be renovated? Or was it necessary to build a new sports arena? If we needed to build a new arena, where should it go? And how should the city pay for it?
"Objective" outside consultants were hired, at a cost of $471,450, to study these questions--to assess the situation on its merits. And after two months of study, the staff and consultants presented their findings to the council as clear evidence of the proper choices--the decisions that the councilmembers should make, in the best interests of the city of Dallas and its taxpayers.
Virtually all of this public business was conducted under a veil of secrecy. There have been no public hearings on the city's proposed new arena, no offering of taxpayer-financed studies and documents for public scrutiny, and--especially--no suggestion that the city should submit the expenditure of up to $200 million to a public referendum.
The staff presented information only to the council--presumably to allow the officeholders to act in their role as guardians of the public interest, while safeguarding delicate negotiations.
In truth, it helped safeguard a cynical and dishonest process. Because much of what City Manager John Ware and his staff have presented--even to the council, behind closed doors--is a sham.
A two-month Observer review of freshly opened city files--some 15,000 pages of consultants' studies, reports, city hall memos, correspondence, council letters, meeting minutes, handwritten notes, and telephone logs--makes clear that the critical questions about this arena have been answered not by objective consultants' studies, or staff consideration, or (especially) by council action.
In truth, a half-million dollars was spent justifying conclusions that had already been reached--not in Dallas City Hall, but in the boardrooms of businessmen working hard to ensure their private interests.
In truth, billionaire oilman Ray Hunt and Dallas Mavericks owner Donald Carter have been calling the shots. And the machinery of Dallas city government--led by John Ware--has worked to help that happen.
From the beginning, city staffers presented a new arena as a non-negotiable requirement for keeping our professional sports teams, the NBA Mavericks and NHL Stars, from fleeing to the suburbs.
In truth, Mavericks owner Donald Carter, until a year ago, was content with Reunion Arena. In fact, Carter spent much of 1993 exploring ways to update the arena--not leave it. He's now one of the key players in the crusade for a new sports palace--but only because, he says, Stars owner Norm Green and Ray Hunt personally enlisted him in what has now become "a fever." Before the Dallas city council could blink, a new sports arena was at the top of the city's agenda.
To assess the city's ability to finance a new arena--as well as prospective sites--the city then hired a team of "objective" consultants; both had close ties to Hunt and an obvious interest in favoring a $200 million public works project.
Although city staffers claimed to be investigating every possible arena site, they never even solicited information from some landowners until the day before the search was over--and a Hunt-owned site had been recommended. In contrast, the city had formally solicited the "expertise" and input of the Hunt interests four months earlier.
There is, of course, the already publicized example of the secret arena study, where the city manager's office authorized outside consultants last April to study a downtown Hunt-owned site without seeking council approval for the expenditure--or even telling the council about the study's existence. When an Observer public records request turned up the secret study in early November, Ware blamed the "unauthorized" study on long-time public works employee Louise Elam.
But an even more shameless duplicity--one that is not known--was carried out in November. That's when the city staff abruptly changed its month-old arena-site recommendation--the one that had been so painstakingly researched--from one Hunt-owned tract to a second.
Ware publicly credited the sudden change to council concerns about the original site. In truth, the Observer has learned, the move resulted from a private meeting, held just days earlier, between Carter and Hunt. The city manager's office responded to the two millionaires' decision by secretly ordering another round of rushed consultants' work to publicly justify the new location.
The arena papers also reveal that the city staff, desperate to meet a virtually impossible construction timetable, is contemplating a gimmicky "interim" financing scheme to "borrow" up to $15 million from other city programs. The money would allow design work to begin even though the city staff has yet to figure out how to finance construction of the arena. Among the proposed sources for the "borrowed" $15 million: funds allocated for street and drainage repairs, water and sewer-system maintenance, improvements at Love Field and Redbird Airport, and police equipment and training.
City Manager Ware, recovering at home from a month of cancer treatments in Houston, was unavailable for comment on this story.
Ray Hunt declined comment. Speaking for his boss, Hunt Oil vice president Jim Oberwetter acknowledged that his boss had met with Green and Carter, but said he did not know what the three men had discussed.
In the first installment of this series, the Observer reported how Ray Hunt 20 years ago picked the city's pockets in secret negotiations with the city manager. That deal gave Hunt control of much of the Reunion area for 100 years and forced the construction of Reunion Arena next to Hunt's Hyatt hotel.
A second story revealed how private business interests, influenced by Hunt, began the current drive for a new arena, and how they enlisted new city manager John Ware to do their bidding--while cutting the council and public out.
This story makes clear how Dallas is repeating the twisted process that created Reunion Arena. It makes clear why--despite 20 years and a presumed revolution in the process of making important political decisions in this city--reasonable people can conclude that little has truly changed.
And that is why Donna Blumer's constituents--and people like them all around Dallas--are not happy.
The city of Dallas is hurting for money. It doesn't have the dollars to fill potholes, dredge White Rock Lake, or preserve the architectural treasures at Fair Park.
That makes spending up to $200 million to replace a 15-year-old sports arena a pretty unpopular idea.
The city staff knows this. That's why it still hasn't brought a plan to finance the arena to the city council, which has been asking for one for six months.
"There aren't a whole lot of options available to finance this, and that's the problem," says one city official involved in the arena project. "You have voters talking about street improvements and Fair Park and White Rock Lake, and all these things are very, very important projects. We deal with a lot of grassroots-level issues people want to see.
"It can be a fun project--it can be pretty exciting," says the city official about the new arena. "But it's hard to defend. And I think there's a general feeling around here that because the voters are not in favor of it, they have to keep the whole issue in the dark."
What they've been doing in the dark is trying to figure out a way to get the money for a new arena without ever putting the taxpaying public near a ballot, a committee hearing of the Texas Legislature, or a public hearing here in Dallas--and still meet a virtually impossible 1997 deadline for completion of the project imposed by Mavericks owner Donald Carter.
"The Mavericks, in the initial discussions, said '97 was their target," says Ware's hand-picked project director, Mike Marcotte. "I'm not sure there's any absolute magic in '97--except that it conveys we're in a hurry to get this done, not 100 years from now." Magic or not, Ware has been operating as though the 1997 deadline is an absolute imperative.
The manager's own staff has advised him from the start that this frantic schedule is unwise.
"Overall, completion in 1997 appears difficult to achieve," a June 3 public works department memo noted. "There is no allowance for delays in funding, city approvals, design or construction. Also, fast-tracking construction would be required, which is not necessarily desirable, from the city's viewpoint."
"Fast-tracking" involves accelerating the pace of construction by having crews work nights and weekends--a process that is likely to add millions to the arena's price tag and increase the number of construction flaws.
But Ware continues to push for the 1997 completion date nonetheless--creating an assortment of problems.
The immediate problem has been figuring out how to come up with the short-term financing for the next phase of work: designing the arena and calculating precisely what the project would cost. (Although the city manager's office now claims the arena would cost $140 million--down from an estimate of $200 million in June--public works files last summer put the price tag for a first-class new arena at as much as $238 million.)
The city staff began wrestling with the question of interim financing last June--when the council had just given the go-ahead to hire paid consultants to determine whether Dallas could afford a new arena. Within days of that council vote, the public works department, at the request of the city manager's office, began compiling an 11-page list of questions about a new arena--all of which needed quick answers to keep the project on the fast track.
Though the question of whether to recommend proceeding with a new arena was, officially, merely under study, the public works memo, among other documents, makes clear an affirmative answer was always a foregone conclusion.
Four of the 24 questions in the memo, found in the files of arena-project director Marcotte, asked how design, construction, funding, and winning council approval could all be "fast-tracked."
About the time that memo was written, Ware met with staffers to review a "short-term schedule" that set an October 19 date for a council briefing on the consultants' findings. The memo set October 26--just a week later--as the date for the council to approve the consultants' recommendations and to authorize funding for design of the new arena.
The consultants' briefing took place as scheduled. The funding vote has yet to take place.
There are three reasons for this. First, the council had questions about some of the consultants' recommendations--including demolishing Reunion Arena. Then the embarrassing revelation about the secret arena study stalled the project. Finally, on the day after Thanksgiving, Ware left town intensive cancer treatments; he is not expected to return to work until mid-January.
These developments have placed the city months behind on its arena timetableand saved the taxpayers $15 million. That's how much the staff planned to ask the council to allocate for the next phase of work, staff memos and worksheets show.
Where would the money come from, in a city with no money for so many things?
Two memos in Marcotte's files--titled "Sources for Interim Financing--New Arena" and "Options for Interim Financing--New Arena"--list the possibilities.
Asked about these documents, Marcotte explains that the tight schedule on the project required design work to begin even before the city had figured out how to pay for the new arena, finalized negotiations with Carter for his private participation in the project--or even obtained the land necessary to build the arena.
"We were thinking we might charge forward with design even while we were negotiating," Marcotte says. "We knew we were months away from selling the bonds on the project, and if we were going to move forward on the design, of course, these people would want to be paid. So we had to figure out how to borrow some money in the short-term."
Apprised of the scheme, two council members marveled at the amount the staff expected them to approve.
"If they had asked us for $15 million, I would have asked them to submit for drug testing," says Paul Fielding. "They are absolutely dreaming. Even if we had the money, it would be crazy. What they ought to do is figure out a way to pay for this thing."
Bob Stimson, a CPA and the council's number-one fiscal watchdog, was shocked to hear that the staff was going to ask for any money at all. "They haven't ever talked to us about interim financing," Stimson says. "They were just talking to us about the big picture--the revenue bonds, the private money. I guess we're naive."
Just how would the city find the $15 million? Once upon a time, Ware wondered that, too. "Where will the money come from?" he scribbled along the bottom of his copy of the project schedule when he received it last June.
To find an answer, Ware turned to Marcotte, recently reassigned to the post of sports arena director from his position as director of the city water department.
When Ware told him to find short-term funding for the arena, Marcotte began rattling a tin cup around city hall, asking various department heads what they might be able to contribute.
One person he contacted was interim public works director Jill Jordan, who turned the request over to Louise Elam, the public works department staffer assigned to manage the arena project.
Elam declined to be interviewed for this story, citing a decree from the city manager's office barring anyone but Marcotte from answering questions about the arena.
But Elam's files show she reported back she could free up bond money set aside for much-needed street and drainage projects.
The city had just issued $70 million in bonds for street and drainage projects--part of a $99 million bond package left over from a 1985 bond election. The 1985 projects had never been launched because the city had been too poor to issue the bonds and service the debt on them.
Now $70 million was sitting in the bank, waiting for construction to begin. Since many of the projects were not slated to start right away, Marcotte figured he could "borrow" some of the money--even perhaps the full $15 million, according to an August 23 worksheet in his files, which posed various funding scenarios.
According to city documents, some of the projects Marcotte could tap under this approach included: new high-occupancy vehicle lanes along North Central Expressway and LBJ Freeway and street and creek drainage work along St. Michaels and Hillcrest roads in North Dallas, flood-prone Five Mile Creek, and Woody Branch in Oak Cliff.
"Public Works and Transportation has $5 million, or more, that can be borrowed until July 1995 available in Street Improvement Fund cash for projects that will not be awarded until after March 1995," Elam wrote in an August 24 memo to Marcotte. "Also, approximately $3 million is available in Drainage funds that can be borrowed until March '95. There should be no impacts to Public Works and Transpor-tation projects as a result of borrowing these funds."
In other words, as long as the city manager's office paid the money back, the street and drainage projects the voters had been waiting on for 10 years could proceed as planned. That, of course, assumed that the money could be paid back at all--that the arena would be formally approved and that permanent financing for it would become available soon enough to avoid holding up the bond projects.
Some in the public works department were clearly concerned about this approach. "The arena will have to pay interest on borrowed monies," interim director Jordan wrote in a handwritten note to Elam on a copy of Marcotte's August 23 funding worksheet.
Officials in the water department--another of Marcotte's targets--also wanted any borrowed funds to be repaid with interest. In a September 1 memo, Terrace Stewart, Marcotte's temporary replacement as water department director, proposed providing $4 million from the fund where the deposit fees of people who open water accounts are kept and another $1 million from the water department's major-maintenance fund. But the money would need to be repaid by July 1995, Stewart explained.
Marcotte kept looking.
He eyed a new $5 million reserve established for improvements at Love Field, Redbird Airport, and the convention center heliport. Although state law bars spending those monies on anything but aviation, the city attorney's office had ruled that it could be borrowed, as long as it was paid back in a timely manner with interest. Marcotte also zeroed in on $2 million in the airport capital reserve fund--set aside for major projects, such as the new $700,000 moving sidewalk the city plans to install at Love Field's main terminal.
Marcotte had other creative ideas for interim funding of the new arena. One was to take $2 million in drug money--funds Dallas police officers had seized in narcotics raids. The police chief uses that money at his discretion for much-needed police equipment and training seminars.
The city manager's office, after conferring with Marcotte, quickly ruled out the idea of using the drug-bust proceeds. The idea was never even presented to Police Chief Ben Click.
Thank goodness, says Glenn White, president of the Dallas Police Association. "What happens if they spend all this money now, but then the arena gets voted down?" White noted. "Then the money's gone. I think it's outrageous."
Dipping into funds set aside for other purposes is not unprecedented in John Ware's administration. It's precisely what happened on the secret arena study. When Ware's first assistant, Cliff Keheley, decided last April to authorize a separate arena study of a Hunt-owned Reunion-area site, the project was secretly funded with money from revenue bonds issued solely for the convention center expansion.
Keheley would join Ware in publicly blaming Louise Elam for authorizing the consulting work. But assistant city manager Ted Benavides confirmed to the Observer that he, Ware, and Keheley all knew about the study and how it was funded. Ware later acknowledged in a memo to the council that Elam was blameless; he also admitted suddenly remembering that he had been told about the consultants' study while it was under way.
The council's reaction was underwhelming.
Paul Fielding is the only councilmember talking about sanctions against Ware. "I don't think any of the council members want to discipline him," Fielding says. "They're like--'So he lied to us? Well, how can we discipline him--he has cancer? [But] how can we discipline anybody else if we don't discipline him?"
Asked by Fielding to investigate the episode, City Auditor Dan Paul, after interviewing 26 city employees about the secret study, decided in early December that, to complete his report, he needed to listen to the tape recordings of a November 17 council executive session where Ware and Keheley blamed it on Louise Elam.
But councilwoman Donna Halstead kept that from happening, by exercising a special council privilege to delay any item on the agenda without discussion. Explains Halstead: "...I wanted to know what the relevance of this was in terms of the audit that Mr. Paul intended to conduct."
City employees want to know the relevance of stopping Paul's investigation at such a critical juncture.
Especially Louise Elam.
"I'm anxious to have closure on this," Elam says. "Although Ware's memo has exonerated me, until Dan Paul's investigation is complete, this still hangs over my head."
On June 17, City Manager John Ware authorized the public-works department to issue a formal request for proposals (RFP) from outside consultants to conduct the feasibility study for the city of Dallas' new sports arena.
The city council had not yet even approved the hiring of consultants; that would happen five days later.
The choice of outside consultants on such a feasibility study is a critical issue. It requires expertise in the field. But equally important, it requires an impartial approach--an ability to honestly assess the critical questions about a project.
In this case, the overarching questions were clear. Could Dallas afford a new arena? If so, what should it look like? What would it cost? How should it be financed? And where should it go? (Unfortunately, no consultants have ever seriously considered renovating Reunion Arena--Donald Carter's original goal.)
To assure that the right decisions would be made for the taxpaying public, it was important that the consultants be as free as humanly possible from political pressures, self-interest, and influencing relationships with the key players in the arena bargaining--such as the Mavericks, the Stars, and Ray Hunt. They needed to study the critical questions on their merits, to have the freedom to tell people what they didn't want to hear. After all, wasn't that the point of hiring outside experts?
More than three hundred architectural and construction firms were formally invited to seek the profitable and prestigious job of conducting Dallas' feasibility study.
Two consultants would be selected: an architectural firm and a construction firm.
One construction firm had an inside track from the start: Austin Commercial Inc., known as ACI, a division of Dallas-based Austin Industries.
ACI didn't have much arena experience. But it had other advantages. For one thing, the Mavericks liked the firm. "Mavericks had good relationship with ACI," noted the minutes of an April 18 arena-planning meeting held by six key employees in city hall.
For another, the city administration was intimately familiar with ACI's work--the firm had just served as construction manager on the convention-center expansion, a $63 million contract granted without competitive bidding. In fact, though the council did not know it in June, city officials had already hired ACI to participate in the "unauthorized" arena study--in part, because its work on the convention center would help justify using convention center expansion monies to pay for the secret arena study.
When the staff, in early August, proposed hiring ACI as part of the paid feasibility-study team, councilman Chris Luna raised a critical question. ACI did extensive construction-management work; if the arena were to be built, it would surely seek that lucrative contract.
How, then, could it objectively assess whether the city could afford a new arena? Was it fair to allow ACI to shape the nature and cost of the project--when it would then likely be gunning for the contract to preside over its construction? Wouldn't ACI's role in the feasibility study give it an unfair advantage in the construction-management competition?
At a closed-door council arena briefing on August 3, notes taken by a city staffer show, Luna proposed barring any firm participating in the feasibility study from seeking contracts during the construction phase.
Two days later, Luna received a memo from Ted Benavides, who had drafted an amendment barring such conflicts, as Luna had requested. But, in the memo, Benavides discouraged the councilman from pursuing the matter. "According to the office of the city attorney there are no legal restrictions on who the city will or will not use for Phase III consultant services," he wrote in closing, referring to the construction phas of the project.
Luna dropped the issue.
There were other clear reasons to question ACI's ability to fairly assess the feasibility and proper location for a new arena.
Most prominent was that the CEO of Austin Industries is Bill Solomon, one of the city's most prominent power brokers and an influential member of both the Chamber of Commerce and the Dallas Citizens Council--groups that have been behind the new arena from the start. Solomon is also a close friend and former college buddy (SMU Class of '65) of Ray Hunt.
In short, ACI was hardly entering the feasibility study free from bias.
But when it formed a joint venture with Turner Construction, a company with extensive arena experience, city officials decided it was just the right firm to fill the role of construction consultant in the feasibility study.
The more significant engineering-architectural slot on the feasibility study team would go to a Kansas City firm called Ellerbe Becket. Its most prominent design work in Dallas: Ray Hunt's Reunion Hyatt Hotel and Reunion Tower.
The selection infuriated a Dallas competitor, HKS Inc., which had done more than $120,000 in pro bono study work for a business-led arena-advocacy group chaired by former Chamber of Commerce chairman John Crawford earlier in the year. HKS, of course, had hoped to get the city's paid work.
The firm, which had designed Reunion Arena but since had a dispute with the Dallas Mavericks, didn't make it past the final five. When Ellerbe Becket got the nod instead, HKS principal Ronald Brame on August 1 wrote an angry letter to John Ware.
"HKS was short-listed by the city, then told that the primary reason we were not selected was because of limited arena experience," Brame wrote. "The city's RFP requested information on large, complex projects completed by the firms to be interviewed; of which, HKS has more than the selected firm..." Arguing that the consulting fees should have gone to a local firm, Brame noted that Ellerbe's out-of-state representatives had gotten lost on the way to the convention center for their final interview. But there was another point that particularly irritated him.
"We gave our time and resources to keep the teams in Dallas because it was in the best interest of Dallas," Brame wrote, referring to his firm's earlier pro bono work. Ellerbe Becket, Brame complained, had done work to help Lewisville's competing quest to build a new arena for the Mavericks.
Brame was correct. When Lewisville had first sought to lure Carter's team, Ellerbe Becket had done some preliminary work on the concept--without pay.
But the pro bono effort developed valuable ties with the team. "Offered advice," states a July 25 memo in Louise Elam's file, referring to Ellerbe Becket's Lewisville work. "Built relationship with the Mavericks."
Nothing illustrates better who is calling the shots on the new arena--the perversion of the public process--than the bizarre machinations surrounding the question of where the city's new sports arena should go.
To date, there have been three studies of potential arena sites.
The first was conducted by the Crawford group. Ware, who had served on the committee, presented its conclusions to the council on June 15.
The Crawford panel's proceedings had taken place in secret, prompting some councilmembers to complain that they were being cut out of the process. They had reason to gripe. While the council didn't get a briefing until June, Crawford's committee, city documents show, had detailed its work to select members of the Dallas Citizens Council at a 7:30 a.m. breakfast on May 2. There, Crawford's committee presented a "Confidential" briefing packet to the business leaders entitled "Economic Work Plan Review" and containing some sensitive revenue figures on Reunion Arena and its tenants, including the Mavs and the Stars.
On June 15, Ware reported that the Crawford group had rejected any site outside downtown--including Fair Park and Pinnacle Park. According to documents the panel submitted to the council, it found the entire area around Reunion arena "attractive."
Councilmembers Stimson and Domingo Garcia objected to the exclusion of Fair Park and Pinnacle Park--without effect. The next round of study was to focus exclusively on downtown.
So on June 22, the council formally voted to spend up to $550,000 to hire outside consultants.
That very afternoon, the city manager's office dispatched letters to three powerful men. The first two went from Ware to team owners Donald Carter and Norm Green. "Our schedule for the next few months is extremely tight," Ware advised Carter. "My staff has received instructions to move quickly and decisively on this project. Our plan is to involve the Dallas Mavericks in all aspects of this critical analysis...our success will, in part, be dependent on the participation of the Dallas Mavericks."
The letter to Green solicited the Stars' involvement, but noted that the team had yet to sign a formal lease with the city. That problem, Ware wrote, left "the extent and seriousness" of the team's participation in the design and site selection of a new arena "subject to question." (This problem--and Green's reported fiscal woes in the wake of the NHL lockout--have sharply limited Green's role in the arena maneuvering in recent months.)
The third letter went to the offices of a single powerful landowner: Ray Hunt. Written by assistant city manager Ted Benavides to John Scovell, chairman of Hunt's Woodbine Development Corp., it warmly invited the company's participation. "Woodbine Development has been, and will continue to be, a significant partner with the city," Benavides wrote. "The Reunion development is an excellent example of the true meaning of public/private partnerships. It is our desire to call upon your expertise on this project. We realize Woodbine Development has a number of ongoing activities, however, your experience and civic support can be valuable to our team as we move forward on this project." Benavides signed off by saying: "I look forward to hearing from you soon."
No other landowner received such a letter.
Other correspondence in the city files would further suggest the deference with which the city bureaucracy treated the Hunt organization--as well as the hubris the Hunt organization displayed.
"John Scovell is a contact for Woodbine/Hunts," property management supervisor Ruby Anthony advised a subordinate. "They usually only talk to the mayor or manager, but Mike [Marcotte] said OK to contact them."
As the consultants began their work, the council had no idea that ACI had already participated in the "unauthorized" study of downtown arena sites.
That report, conducted by JPJ Architects and ACI but halted while still in draft form, offered its highest praise for a tract owned by Chavez Properties of Cincinnati and located on Young Street between the convention center and the Dallas Morning News building.
"The centrality of this location with respect to the green mall, nearby parking resources and future public transportation maximizes phasing flexibility," JPJ wrote. "As illustrated, the scheme includes opportunity for a privately developed hotel in configuration which is ordered around a triangular urban space implying an interest in enhancing the public realm of this district."
The Chavez site was also the only one that gave a new arena the opportunity to connect to the only viable nightlife in downtown Dallas--the West End. "The Market Street connection to the West End is an opportunity to establish meaningful connection to other zones within the district."
But it was apparently not to receive the consultants' recommendation. City documents show that the Mavericks favored a different tract: "Lot B," a skinny piece of property owned by Ray Hunt, located between Reunion Arena and the Hyatt Hotel. Known as "the banana tract" for its distinctive shape, the property is now a parking lot.
In the final pages of its draft report, left blank, someone at JPJ had written, underneath the words "Preferred Option": "(LOT B SCHEME) TO BE CONFIRMED."
It would cost taxpayers almost $500,000 for ACI and Ellerbe Becket to come up with the same conclusions.
After two months, the consultants delivered their "official" study: 400 pages in four volumes. At first, even the councilmembers weren't permitted to have copies--they were required to sign them out, like kids at the school library. The public and press were denied access altogether, until the city staff released the studies--along with the rest of the arena papers--in response to Observer open records requests.
Location and financing were, of course, the two big questions about the new arena.
The consultants all but ignored the thorny question of financing, simply summarizing eight different types of funding that have been used, in various combinations, to fund arenas elsewhere. The 34 pages offered no specific recommendation for Dallas.
At the outset of the consultants' work, city staffers had informed the council that the firms would consider a wide array of sites downtown. On August 12--two days after the council approved the funding for the consultants--Ted Benavides sent a memo to council members, listing the 13 sites that the consultants planned to "study." Two of those were Hunt properties near Reunion Arena--"Lot E" and "Lot B."
But four days later, out of earshot of the council--at the second meeting between the consultants and city staff--Dallas-based Corgan Associates Architects, a subcontractor on the project for Ellerbe Becket, informed the group that the number of potential sites needed to be sharply curtailed. "Due to the short time frame, CAA is proposing 'short listing' sites in order to focus evaluating in detail the identified sites," CAA wrote in its meeting minutes.
By August 31, the list of sites was down to just two. In a memo, interim public works director Jill Jordan ordered up private property appraisals on the two tracts--Site No. 2, which was Hunt's "Lot B" site, and Site No. 3, the Chavez site on Young Street, next to the convention center.
For the next six weeks--more than half the entire study period--the consultants focused on those two sites, records show.
The owners of the other 11 sites were not advised that they were, for all intents and purposes, out of the running.
In truth, everyone but Hunt was out of the running.
Michael Anderson, the Dallas representative for Chavez Properties, was having trouble getting anyone from city hall to return his calls. No one from city hall or any of the consultants ever called Anderson to get information about his property: to discuss what development plans Chavez might have; its willingness to sell; or to review the stacks of environmental studies Anderson had on the land in his office. Anderson finally received one phone call from an employee in property management who wanted to know what price he placed on the land.
City hall documents also show that the property owners of the other 11 sites, some of which had multiple owners, were sent letters asking for that same information. But some of the letters were sent the day before the consultants and city staff made their final recommendation of a site to the council. Another letter was sent the day after the recommendation was made.
The September 26 note from property management's Ruby Anthony sheds some light on why work was being done on sites that were no longer in the running: "[Property management department director] Gay [Dehoff] contacted Mike Marcotte and tried to explain to him that contacting the owner and asking their asking price of property was a little unusual, but he wanted us to proceed that way to satisfy council. Mike M. doesn't want any other appraisals done."
In fact, Ellerbe Becket and ACI had written separate letters to Louise Elam on September 20 revealing that they were recommending Site No. 2 (Hunt's "Lot B") for the new arena.
Amonth later, the consultants presented their final report and recommendations to the council. Meeting behind closed doors, the experts advised the council that they favored sites 2 and 3--the Hunt and Chavez tracts--in that order.
In a move that mirrored the secret JPJ study, Ellerbe Becket and ACI, using a complex rating system, gave the best overall score to the Chavez site--but gave Ray Hunt's tract the nod. "...Site No. 2, next [to] Reunion Arena, is the best and most appropriate location for the new arena," a briefing handout prepared that day for council stated, "and Site No. 3, north of the most recent Convention Center Expansion, is the next most appropriate location."
The full report offered seven reasons for favoring "Site 2." One focused on how the choice would benefit Hunt's private Hyatt Hotel and Reunion Tower: "A new arena located on site 2 would be within the most widely recognized view of downtown Dallas offering a prime opportunity to update and build upon the city image created by the Hyatt Regency Hotel and Reunion Tower."
The Hunt tract would also maximize use of the existing infrastructure built for Reunion Arena--both roads and parking, the study noted.
In sum, the consultants concluded: "The total project development cost on site 2 is the least of the 13 sites evaluated."
At last the city had a decision.
Months of objective study and hundreds of thousands of dollars, the council and public were told, had found the best possible site for the new arena.
In truth, it had been a done deal from the start.
Until Ray Hunt decided to change the deal.
During the week of November 14, there were two shocking developments in the city's quest for a new arena.
On that Monday, the council was told about the secret arena study.
Two days later, on November 16, the city staff abruptly informed the council that it had changed its mind about where to build the new arena.
"Lot B"--the clear choice of the staff and the expensive consultants--was no longer the best site.
The new best site was "Lot E"--also owned by Ray Hunt. Known as Site No. 1 to the city staff, the tract, located between the Jefferson Boulevard viaduct and the convention center, was not even among the consultants' top choices.
Assistant city manager Benavides broke the news.
"At our last briefing on October 19, several council members asked us to go back and look at other sites, like Site No. 1, Lot E, which we felt conflicted with the Dallas Convention Center master plan," Benavides said, standing before the council, armed with new flip charts and drawings that made the case for Site No. 1.
Benavides then went on to discuss, in detail, the incredible virtues of "Site No. 1"--previously dismissed in part because it would obstruct future expansion of the convention center.
One virtue of Site No. 1, Benavides said, was that it would be $8 million cheaper to put the arena there because the city's existing parking garage could be used instead of having to build a new one.
Never mind that the consultants had previously told the council Site 2 would be the least expensive.
When Benavides was finished, the council members were so surprised that no one spoke for a moment. Then Fielding asked Benavides: "Are you here to recommend Site 1 or Site 2?"
"We're recommending Site 1," Benavides responded.
Fielding smiled--clearly, this was ludicrous. "Have we changed now the site recommendation? Now we've decided we want to put it in the path of the convention center expansion?"
Benavides shook his head yes.
Councilman Bob Stimson was all ears. The freshman councilman couldn't help but think that he had gotten the site changed.
"Just 10 days ago I spoke to John Ware about my concern on the original site--thinking this site would be better," Stimson said, grinning ear to ear as he spoke. "I'm somewhat happy that we have a system that appears to be working. It's going to take a while to digest this one."
In fact, Stimson had gone to Ware and voiced his concern about "Lot B"--site No. 2. Ware had listened to Stimson's reservations--and diplomatically promised to look again at the possibility of expanding the convention center and building the new arena in that space.
Stimson went off and did his own review of "Site 1." And next thing anyone knew, the city staff had recommended the site.
He had done it, Stimson figured. "I even got [councilman] Max [Wells] to go to John and say, 'Stimson makes a good argument,'" Stimson told me several days after the site change. "John can see the writing on the wall."
Perhaps so. But only when Ray Hunt is doing the writing.
In truth, Stimson had absolutely nothing to do with anything. Even the merits of the sites had nothing to do with anything.
In truth, Ware and the city staff had dismissed Stimson's appeal for Site 1 out of hand.
On November 11, in fact, Louise Elam--at the request of assistant city manager Benavides--had drafted a memo to Stimson explaining why it was impossible to move the new arena to site No. 1. Copies of the memo were found in the files of Elam, Marcotte, and convention center boss Frank Poe.
"You have requested additional information concerning the evaluation of Site No.1 (Lot "E", West of the 1994 Convention Center Expansion)...The following information is provided."
The memo spent five paragraphs explaining why Stimson's idea was a bad one. There were only two ways to do the arena on that land, the memo explained: Build it in place of the convention center expansion plans, or build it on top of, or below, a future convention center expansion.
None of which was a good idea, the staff concluded; the convention center needed more room to expand. "Future marketability of the Convention Center for large events will be compromised if the 1 million square feet of exhibit hall space cannot be accommodated," Elam's memo states. And putting the arena above or below the convention center expansion would be equally "problematic," according to the memo, because of elevation and structural problems.
There were other considerations too. "Lot 'E' contains 1,579 parking spaces and depending on the arena design, the majority of these would be displaced," Elam's memo states. "It is anticipated that if the new arena were constructed at this location that it would be necessary to add at least one level of parking to the Reunion Parking Center. Also, the traffic accessibility and visibility from the freeways are not as favorable as Site No. 2."
Stimson's idea was simply a bad one. "Since there did not seem to be any distinct advantage to Site No. 1 over Site No. 2, and there were several distinct disadvantages," Elam explained, "Site No.1 was not recommended for the new arena."
Councilman Stimson never got his memo.
Because on the very day it was going to be sent--Friday, November 11--Elam and her boss, Jay Macaulay, got new instructions, documents in their files show.
"Jay said Mike Marcotte called, and CVK asked him to get E.B. to do study on moving arena to Site No. 1 (Lot "E")," according to notes Elam took after a conversation with Macaulay. The initials she used refer to Cliff Keheley and consultant Ellerbe Becket. "Apparently," the notes continue, "Carter came to city and said, Hunt would fight city 'tooth and nail' if arena on Site No. 2, because it's in the way of their future development.
"Hunt wants arena on Site No. 1. Told Jay E.B. would need supplemental agreement to do additional work. Jay said CVK wants study done by Tuesday. Jay said he would be meeting with Mike and CVK at noon, and he would call Brent to be there." (Brent Byers is vice-president of Corgan Associates Architects.)
According to an earlier fax, dated November 1, in Elam's files, Brent Byers had--just days earlier--provided information panning the Lot "E" site for purposes of the Stimson memo.
Later that day, on November 11, Elam faxed Marcotte the completed Stimson memo. "Did you want to send this?" she wrote on the fax. The answer, of course, was no.
Corgan Associates then proceeded--out of thin air--to come up with a glowing recommendation for Lot "E," just as Keheley had requested. The firm did it by drawing on members of the entire consulting team that had produced the four-volume study. Staffers at Ellerbe Becket participated by phone and fax from Kansas City.
And they did it all in record time--in time for Ted Benavides to use their material to try to justify the remarkable about-face at the November 16 council briefing.
How did Benavides and the consultants explain embracing a site they had previously dismissed out of hand?
The location in the path of the convention center's future expansion was actually an asset, Benavides told the council; the city could simply incorporate the new arena into any future convention center expansion plans.
No one on the council had a clue about this cynical--and utterly dishonest--manipulation. There was no mention of the involvement of Carter and Hunt in the change. To the contrary, documents presented to the council at the briefing inaccurately stated that the Hunt-owned site belonged to the Communities Foundation of Texas.
But there was a problem: the consultants, of course, wanted to be paid.
Ellerbe Becket vice-president Thomas Beckenbaugh advised public works' Jay Macaulay on November 29 that, for this little bit of sleight of hand, the consultants were due an additional $9,859--plus expenses of less than $100.
That, of course, would keep the figure below the magic total of $10,000 requiring council approval--and avoid any nosy questions about the consultants' fire drill.
Nonetheless, as in the case of the "unauthorized" $49,750 arena study last spring, no one wanted to officially approve spending the money.
Louise Elam--who was scapegoated the last time this had happened--dutifully prepared the required administrative action form for formal approval by the city manager's office. Elam gave it to her boss, Macaulay, who sent it on to arena director Mike Marcotte.
But documents show it was never signed and processed for payment--avoiding creation of any record showing that the consultants, after months of study, had been paid to come up with a rushed justification for a site they had previously rejected.
In fact, public works department supervisor Macaulay, in a November 28 memo, advised Marcotte that he had warned the consultants they might never get paid. Macaulay notes that he told them "they would be working, at risk, on this new option and that an Administrative Action was not guaranteed to be approved."
The consultants still have not been paid.
First assistant city manager Keheley insisted in an interview Tuesday morning that the arena-site change was made solely because "the council had requested it."
Asked what influence Hunt and Carter had exerted, Keheley said:"I know nothing about that." The new, rushed consulting study on "Lot E" had been done solely in response to the council's concerns, Keheley explained. Asked why Louise Elam was finalizing a memo to Stimson dismissing the site on the same day the new consulting study was ordered, Keheley said, "I don't recall it. I may have been aware, but I can't pull all these little details up in my head at one time."
The number-two man in city government then summarized his account of events, concluding with the comment:"Beyond that, I don't care what's in whose files."
So the city manager's office has done what it did with the secret arena study--ordered consulting work to be done but avoided signing anything that would trace it to their level.
And that--they could only hope--might help cover up the real story of why the city changed the site for the new arena.
Mavericks owner Don Carter is sitting in a room in the basement of Reunion Arena sipping coffee out of a paper cup and talking about how he got swept up in the crusade for a new arena.
He is refreshingly open about the subject, smiling and agreeable. As the basketball game between the Mavs and the Boston Celtics booms in the background, Carter leans forward in his chair and lays his white cowboy hat--and his cards--on a nearby table.
"I was down here in Reunion--was the major tenant, pretty much had the building to myself--and didn't have what other clubs might have in an arena and all," Carter said affably. "But hey, we made ends meet.
"And then Norm came along."
As in Green. As in the owner of the Dallas Stars hockey team, which carpetbagged here from Minneapolis two years ago, in search of a better financial deal.
Green could not be reached for comment. But Carter explains what happened.
"Before he even moved here, he laid out an arena plan in front of us," Carter says. "I can't say the city fathers promised anything, but I do know that he came with pictures in hand. And when he got here, there are some people that at least led him to believe that he'd be able to get that arena."
Like Mayor Steve Bartlett. Norm Green has always claimed that Bartlett promised him an arena.
Carter smiles at the mention of Bartlett's name and continues his story. "He quickly put two and two together," Carter says of Green, "and he said to me, 'if you and I could be partners--if you would join me on this--we can make the city do this. Together, we've got a big club."
Carter says he told Green no thanks. "I don't have too many partners," Carter says. "I don't do partners."
But Green wasn't about to take no for an answer, which infuriated city staffers who had negotiated the deal that brought the Stars to town.
"When Green first came to town last year he had a list of conditions he wanted met," says one city official. "One of those conditions was a new arena. Within two weeks of that meeting, the city responded that the city wouldn't do that. We said, 'No, you just have to come.' And we thought the issue was settled. We then signed a letter of agreement with him, and within 60 days of that letter being signed, he went around the city to the business community and started talking about building a new arena."
And who did Green meet with?
"He met with Ray Hunt," the official says.
If anybody in town could get a new sports arena built, Ray Hunt could. After all, he'd already done it once. Bartlett was also indebted to Hunt for helping elect him in 1991 (council members call Bartlett "Ray's Boy").
If Norm Green was determined to get a new arena, Ray Hunt was equally determined to keep it inside the 50-acre Reunion development he had controlled for 20 years--and where he owned most of the undeveloped land.
But Hunt knew that he and Green couldn't do the arena alone. He moved to provide the missing link. "When I told Norm that I didn't want to be his partner," Carter says, "Ray got involved then."
Carter says Hunt invited him to dinner one night almost two years ago. It was a catered affair in a conference room at the executive offices of Hunt Oil Co., in downtown Dallas. Supper for three: Ray Hunt, Norm Green, and Donald Carter.
"He had brought himself in to where, maybe, we could work something out," Carter says of Hunt. "He was interested. Both of them were interested before I was. And I'm still not--I'm not hurting for an arena. But, you know, now it's a fever."
But for this arena to work, Carter says emphatically, Ray Hunt has to be out of the picture--because Carter won't be his partner. And under the 1974 contracts, Hunt controls virtually the entire area, making him an automatic factor in any Reunion-area project. Hunt has the development on such a tight leash, in fact, that, on just 90 days' notice, he can pull much of the parking around Reunion Arena that the city is required to provide the Mavs.
"See, the problem here at Reunion is that we've got a real good ol' boy situation here," notes Carter, "in that all this property around here that the city gets to use for parking is on a 90-day string."
"I won't put five dollars in a project that's not fee simple," says Carter, who has said he would put up $65 million for a new arena--under the right terms. "No string. They'll have to sell this property of theirs," he said, speaking of Hunt.
Carter says he has told Ware that if the city wants his money for the arena, it has to extricate Hunt from the picture--either by buying some of the oil billionaire's land and air rights or by swapping it for other city properties elsewhere. "If this was going to work out--if anything here was going to work--then there's going to need to be some property purchases or some trades," Carter told me.
(In fact, a city official involved in the arena negotiations says that Ware is trying to do just that. Hunt and Ware are talking about swapping Hunt-owned Reunion parcels for, among other things, the old city library building on Commerce Street and the old U.S. Naval Air Station near Mountain Creek Lake, which the city is now seeking to buy from the federal government.)
Recognizing Hunt's critical role, Carter decided in early November to visit the oilman in his office.
The city's consultants had just picked "Lot B"--which Carter liked. But he wasn't sure how Hunt felt about the choice. "You want to see if they like an idea," the Mavericks owner explained.
And Hunt--who has always wanted to build office towers on "Lot B"--didn't like the idea.
"We were looking at this," Carter says, "and Hunt would say this would really be bad for him. It knocks out his high-rises that he wants to build. And I said, 'well, there is another thing.'"
Carter told Hunt about a vision he had. To build an arena that was as majestic as the new Ballpark in Arlington--with an enormous circular entryway off Reunion Boulevard, across from the Hyatt, filled with fountains and lush landscaping and Texas flags. The arena would rise on the other side of the Jefferson Boulevard viaduct, but it would attach onto the Houston Street viaduct, which would be transformed into a magnificent, grand entryway to the new arena--with stunning porticos that shimmer in the sun, and "humongous" towers that reach high into the sky, and restaurants and shops on the first level of the parking garage.
"This goddamn Ballpark in Arlington causes me pain," Carter told me, after drawing his vision out on paper for me--just as he had for Hunt. "I'm a fan, but I'm not an authority on ballparks. But the people who are authorities say this one fits in with the legendary ones. And I want one for myself."
Carter told Hunt he would throw his considerable weight behind the "Lot E" site--a tract the billionaire presumably had thought the city, because of the convention center conflict, would never consider.
When Carter left his meeting with Hunt that day, he called John Ware.
The owner of the Dallas Mavericks told the city manager that he and Ray Hunt wanted the city to switch the site it had selected, after months of study, for the new arena.
Which didn't faze Ware a bit.
"John Ware," says Donald Carter, "has been open 100 percent."
After arriving at work on November 11, Louise Elam began putting the finishing touches on her letter to councilman Stimson, explaining all the reasons why the new arena could not be built on Ray Hunt's "Lot E," adjacent to the convention center.
Hours later, she and her boss were told instead to ask the city's consultants to quickly begin providing justification for switching the arena to that site. And to tell the consultants that they might not get paid.
Elam--already burned once in a strikingly similar situation--had apparently had enough. That day, records show, she wrote a letter to her boss, interim public works director Jill Jordan, asking to have nothing further to do with the new arena. Elam cited her other work obligations in her request.
Jordan backed her request in a letter to the city manager's office. On December 6, the word came back: she would not be reassigned.
Donald Carter continues to negotiate with the city for the construction of a new arena. Though he has offered to contribute $65 million, he insists on the demolition of 15-year-old Reunion Arena (an unpopular idea with councilmembers and citizens) and the construction of a new multimillion-dollar city parking garage (also unpopular, because the city's existing arena garage loses millions).
Carter continues to publicly flaunt the option of moving his team to a new arena in Lewisville, though he insists he would like to reach a deal with John Ware when the city manager returns to work in mid-January.
Carter says he prefers to build a new arena in Dallas, and that the project needs the Dallas Stars as a second tenant. He also says he doesn't want a partner in the new arena and expects "someone with money" to buy the hockey team from troubled owner Norm Green--the man who started the new-arena drive in the first place. It is a combination of observations sure to fuel speculation that Carter will buy the team himself.
Hunt spokesman Jim Oberwetter says his boss believes any new arena should be downtown, but that "the city should be the one who decides where it should go."
City councilwoman Donna Blumer, meanwhile, says she has gotten the message about the arena from her angry constituents.
But as she explained her feelings to them in November at the Walnut Hill Recreation Center, she confessed that many councilmembers lack the courage to buck the city bureaucracy, and to stand up to business leaders like Ray Hunt.
"I can tell you letters and faxes make a big difference," Blumer advised the group. "Fax. Write. And don't stop. We really need it. We need the backbone...So give us backbone."
Later, when the meeting was over, Blumer walked toward the front doors of the recreation center, shaking her head. "You know what really surprised me?" she said. "When they said that they felt like no one was in charge. That really hit me."
Blumer knew why they felt like that--because all too often, she felt like that, too. What was unnerving about it was that she was supposed to be able to change that. She had run for office to change that.
"But if we do make enough noise--and enough stink--about this, something can happen," Blumer said, standing outside the center, watching the last of her frustrated constituents drive away. "I really believe that.
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