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At City Hall Federal Corruption Trial, Former DHA CEO Says Hill Wanted a Lott of Love

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This morning at the Dallas City Hall federal corruption trial at the Earle Cabell, we are getting insight into the involvement of Ann Lott, former CEO of the Dallas Housing Authority, in this whole sorry mess. I'm not sure where we're headed. But so far, an hour into it, let me share what I think I'm hearing.

Sounds to me like Lott, who was forced out of her job, blew the whistle on a bunch of this stuff. You know, she was accused of some obscure bookkeeping errors -- the kind of crap you can get on anybody if you want to. Was she punished for being honest? I haven't heard it all. It ain't half over. But see what you think.

Lott tells the court that she knew Don Hill first as Deacon Hill, "the person I saw sitting on the front row every Sunday." In 2001, when Lott was interim CEO of the DHA, she met him again as Dallas City Council Member Hill. They had lunch. Lott tells the court she was lobbying council members to get the job of permanent DHA director.

They talked about Beverly Brooks, a member of the DHA board. They misunderstood each other. Hill thought they were talking about Beverly Mitchell Brooks, head of the Dallas Urban League. She was talking about a white lady who was in the insurance business. Sarah Saldana, the assistant U.S. Attorney, asks if Hill said anything that worried her.

"He said in the past he had some issues with integrity. He said sometimes the lines were blurred, but he's working on it. I walked away from the meeting a little bit anxious about the comment, not really clear what he meant and wondering what I had to do to get his support, what it would cost me." That was 2001.

In 2004, Hill called Lott about two affordable housing developments being built by Southwest Housing's honcho Brian Potashnik -- a defendant who pleaded guilty to bribery and extortion charges in this case -- that were coming up for city council and City Plan Commission approvals. Developers of these projects get tax breaks worth millions of dollars that require approvals by the city council and also may require zoning changes approved by the city. Hill called Lott at her office.

"It was a good conversation," she said in court. :He indicated Southwest Housing wanted to build housing in his district. He wanted them to build good quality housing. He asked me if I knew them. I said of course I did, they had a reputation for building good housing. He asked me if I has any issues with working with Southwest Housing."

She told him the DHA had tried on different occasions to partner with housing developers, but it never went anywhere.

Lott says that Hill told her, "I really need you, Ann, if we're going to get this project done." She says, "I questioned him on that. I said, 'Well, they don't really need the Dallas Housing Authority.' He indicated that he didn't really care for what they were bringing before him. He wanted something as nice as what they build in North Dallas. He said, 'I understand that that's going to cost more to do. We're going to need you to partner with them to get this done. I really want to see this in my district.'"

Hill wanted Lott to partner with Beverly Mitchell Brooks of the Dallas Urban League. Hill told Lott that Southwest Housing had made a lot of money in the community and that iIt's time for them to start giving back."

Hill wanted the Housing Authority to partner with Southwest Housing and to bring together other partners from the non-profit community. He told her to work directly with D'Angelo Lee, another defendant in the case and Hill's appointment to the City Plan Commission. Hill told her, "He's my man."

Says Lott, "My impressions were mixed. I hung up thinking, 'Wow, that's different. I've got a city council member who actually wants affordable housing in his district.' But I also was left thinking I had to figure out a way to get this done, because it's important to Mr. Hill to get it done,' and that's what I communicated to my staff."

Lott tells the court that Potashnik's Southwest Housing was actually more experienced in the tax credit affordable housing biz than DHA and that Southwest Housing did not need DHA's help. She says Hill wanted Southwest Housing to build fancier housing than they had proposed. He wanted DHA to be a partner in order to take the project off the tax rolls. The tax savings, Hill told her, would allow Southwest Housing to build the more expensive units he wanted to see and still make a profit.

On Oct. 21, 2004, Ann Lott and Tim Lott, who was head of development for DHA, met with D'Angelo Lee, Potashnik and others. Potashnik said he really wanted to partner with DHA. Lott tells the court she left the meeting with reservations.

"At that point I believed they needed us to bring the tax breaks. I had no reason to question their motivation. I was a little bit anxious about what I didn't know."

Lott was nervous because the two deals Potashnik were proposing were already far along, almost ready for council approval. She said that normally DHA would talk to developers before a project was ever commenced: "This transaction appeared to have already happened, and we were coming in pretty late in the game."

She says she found out at the October 2004 meeting that the Urban League was already a partner. Lott tells the court that normally this process takes a long time because "to develop low-income hosing was impossible."

She says everyone in Dallas at that time wanted home-ownership developments, not subsidized low-income apartments. Lott says Hill disinvited her from appearing before the city council on October 27, 2004, when the project was presented for a vote. She says normally she wouldattend such a meeting in case council embers had questions. Lott was alarmed later when she heard that the city council was not informed of DHA's involvement in the project.

Saldana asks Lott if Hill ever discussed with her the subject of whether the city was expecting the properties to produce taxes. The defense raises many objections to this question as leading. Finally Saldana asks it in a way the judge will allow.

Lott says it was discussed only in that Hill wanted to make sure there would be a total exemption from city of Dallas ad valorem property taxes. Lott says she called Jerry Killingsworth, director of housing for the city, to ask if he knew DHA would be involved and the project would therefore be taken off the tax rolls. She says the city is always concerned about property taken off the rolls and that normally a lot of discussion takes place before it can happen.

After talking to Killingsworth, she was worried that the council had not been informed of the tax exemption and would have voted differently had it known. Lott says she and Tim Lott were doing due diligence.

"Tim was nervous, to use his words, about whether all the money was on the table. We still weren't comfortable that we had seen all the information."

Tim Lott began funneling information to a DHA board member who had real estate experience. She says he "backed away" from the projects a couple of times, advising her he wasn't sure DHA should be in on this. She says she did not back away herself, "because it was important to the councilman."

She said Hill and Lee would call her.

"Mr. Hill would talk about how important it was to him to get the deals done, and Mr. Lee would ask what did I need to get the deals done." Lott says the deal stalled and DHA considered not moving forward.

The name Myron Mims is brought up. Apparently they have an e-mail that Hill sent to Myron Mims, who was supposed to be a lawyer for a community housing development organization (CHDO) called "Bright Three."

Hmmm. First time in a couple weeks that more press is filing into the little upstairs media room for the trial. I believe this is getting interesting.

Lott says she talked to Potashnik's wife, Cheryl, a defendant in the case who has pleaded guilty. Before she can say what was discussed, the defense objects, and the judge calls them all up to the bench for a sidebar.

When I started in this business, a press room like this would have had a wet bar. But that was not a good thing. We are all much better off in the era of good health. We were terrible in those days. We are happy that we are virtuous now. Yes. Now people think we are liberal. They used to think we were drunk. Which do they prefer?

Judge sends the jury out to take this up out of their presence. She's got a conference call coming at 10:15, so the jury is gone until 10:30.

Out of the jury's presence, Lott says, "I actually had a feeling that something was not right about this." She asked Potashnik, "Are they making you do this? Her response was really political."

Cheryl Potashnik told her it was all wonderful, and "'we want to work with you.'"

So, I'm lost. Will she say this again to the jury?

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