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Think City Hall Should Get A Tax Hike? You Might Think Again After Seeing How Crappy It Treats Its Taxpayers.

Jenn and Josh Terry asked the city if they could invest $100,000 in an apartment building in Oak Cliff. The city said yes. They spent the money. Then the city council got involved. Now the city says their building is illegal.
Danny Fulgencio

In the last few weeks everyone has been talking about taking on a tax increase so we can give City Hall more money. I promise you this much: This story will make you wonder why on earth we would even consider giving the people at City Hall more money.

Josh Terry, a young guy who works for a major financial institution, decided last year that rehabbing a property in an old neighborhood might make an interesting personal project and hopefully a decent investment.

Terry did everything right in terms of checking with the city. He asked the city if the city zoning requirements on his property would allow him to do the project he had in mind—remodeling an 87-year-old five-unit apartment building in the King's Highway Conservation District in North Oak Cliff.

The city didn't just say yes. They provided him with the specific ordinance for that district with a map showing his specific property with the specific kind of zoning he needed. Then a city official told him, yes, your property is "grandfathered" under the law as multifamily (apartment) property. Then the city granted him building permits for his work.

Tons of work got done quickly after that. He showed me his books. In his spreadsheet you can see the money flooding into the place—$12,495 for heating and cooling units, $14,285 for new wiring, $2,350 for plumbing, $550 to scrape and paint ceilings, $1,540 for new windows—on and on until he's got $100,000 in it.

Then the staff gets a call from somebody in the city council office (ominous drum roll here).

The property happens to be in Council District 3, the realm of one David Neumann. Councilman Neumann wouldn't respond to my calls or e-mails about this, as he never does, so I can't say with certainty he's the one who called. I do know he is following this case closely.

But it almost doesn't make any difference who called. Somebody associated with the city council calls city staff—someone with a problem or objection to the project. The city staff immediately and completely reverses field and tells Terry he can't do the project. Stop now. It's all illegal.

What? They can't do that, right? They already said it was legal. They're the ones who said it was legal. They gave him the go-ahead. He spent the money. They can't decide later to pull the rug out from under him.

Flat out impossible, right? Schutze just makes this crap up. It comes to him in dreams. Somebody grab a net. Nobody would do that, especially City Hall.

Sorry, kemosabe. It's exactly what they did. I called Betty Antebi-Taylor, the city's Building Official, as she is called, the top staff person on these issues. She e-mailed me back, conceding that City Hall had given Terry building permits and other permissions. But, sadly, she said, they shouldn't have.

"Mr. Terry's CO (certificate of occupancy) request was processed in error," she said in her e-mail, "as a multifamily use is not permitted in that zoning district."

I also heard from David Cossum, who is assistant director of the planning department. Cossum told me in an e-mail: "It does appear that certain assumptions were made by all involved as to the presumed zoning status of the property based on the applications submitted."

Well, I don't know if that really captures it, Mr. Cossum. It's not really a matter of "certain assumptions," is it? Your people gave the guy active permission.

Over a course of months, Terry through his own research, attempted to resolve city staff's issues, and thought he had done so, until the staff changed its arguments against him. First they told him his property had lost its multifamily zoning because, while vacant, it had lost its "intended use," triggering an obscure provision of the zoning law. In order to prove them wrong, Terry would have to produce affidavits from neighbors and former owners.

He did so. He brought them all the necessary affidavits. The staff immediately changed its mind. They said the affidavits were no longer good enough.

Terry filed an appeal to the Board of Adjustment. He learned that the board, made up of citizens and people with real estate experience, usually grants a restoration of the multifamily zoning in a case like this, especially where the investor has spent money based on permission from the city.

But staff—and whoever is churning this from the council office—saw that one coming. Last week the staff e-mailed him and said they had changed their minds again. Now they said his multifamily zoning had not lapsed. They said the property had never been zoned multifamily. Ever.

They told him he could no longer appeal the lapsed zoning designation because he had never had the designation in the first place. The only way he could prove them wrong would be to bring them documentation showing them that the city had recognized the property as multifamily in the past.

 

Terry did more research. Somehow he found building permits for the property from 1978 showing that the city considered the property to be zoned multifamily. He took the old permits to the staff.

They told Terry they had changed their minds again. They could no longer recognize their own building permits as proof of anything.

You...OK, stop, you reader...I know what you're thinking. You're thinking, "Schutze, sober up. Turn yourself in to rehab, man. This is so sad for your family. None of this can remotely be true."

I asked Antebi-Taylor, the Building Official, if it was true Terry had brought her city of Dallas building permits from 1978 showing the property designated by the city as multifamily and if it was true she told him she would not "recognize" those documents as valid.

She said yes.

When Terry scheduled his Board of Adjustment hearing, he was required to post a city of Dallas sign in front of his rental property with a phone number that people could call in order to find out what the hearing was about. Terry then started calling Steve Long, the Board of Adjustment administrator, to ask him how the calls from the neighborhood were going.

"I call him and ask him if there has been any opposition," Terry told me. "He says, 'No, there's just been inquisitive calls,' because the neighbors see the sign and they want to call and see what's going on, like I would. But he does say things like, 'Well, yeah, city council's calling on this.'"

City council. There you have it. One call from city council, and the City Hall staffers race for their rat holes.

I called Long to confirm all this. He said, "I think you ought to get the best information from my supervisor, because I think he is privy to things about this site that I am not fully aware of."

I called his boss, Donnie Moore. He never called back.

I toured the rental property in Oak Cliff one hot Sunday afternoon with Terry and his wife, Jenn. They're both 29 years old.

Sitting on the stoop, Terry shook his head and gazed off into the middle distance for a moment. He said he had doubled the value of the property. But the city's actions had clouded the zoning enough to render the property virtually worthless.

The experience with City Hall has changed his feelings about the world. "It goes to lack of faith in government," he said. "You can't trust the government to do the right thing."

He's summa cum laude from Baylor. He didn't want me to include that fact, but it's significant here.

"If I can make this mistake," he said, "I would assume a lot of people do."

In the week after I talked to Terry and his wife, I called a trusted legal source who works with these issues all the time for big developers. He or she speaks to me on the condition that I not name him or her.

The source said Terry is right about one thing. The city treats people this way all the time. But most of the people in the development business are afraid to complain, because then they'll really get screwed by City Hall.

This person told me that the staff can always take five days and plunge into the jumbled junk-pile of past and current regulations and ordinances in Dallas to find a way to stop a deal. If they want to.

Or they can decide to be reasonable and helpful, not to mention honorable. In this case, when the city council person called and said he or she wanted staff to put the kibosh to this project, they could have said: "Oh, too late. We already gave this young man the green light to go ahead. He has committed a great deal of money. It would ruin him to stop it now. We'll just have to make the best of it, won't we?"

But my source told me that isn't how it works at City Hall. All it takes is one phone call from some douche on the city council, and the staff will go out there like the mafia and slam whoever it is into the trunk of a car.

Don't tell me Terry can sue. He cannot sue. The city claims sovereign immunity on all this stuff. And even if you can get around that issue, they've got a floor full of lawyers and bottomless pockets.

And here is where I started. Guess whose pockets they've got to screw us with. Our pockets. Josh Terry is a taxpayer and a decent guy, willing to risk his own money on an old neighborhood in the city. And they're going to use his pockets—our pockets—to ruin him.

 

Now tell me one more time: Why are we going to give these people a tax hike?


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