City Hall's Desire For A Fancy Downtown (Without Too Many Poor People) Costs Developers $30 Million

Don Hill, the Dallas City Council member recently sent to federal prison for 18 years for bribery and corruption, didn't use a baseball bat on people.

He was a lawyer. He used parliamentary procedure.

The table, I call it. Hill knew developers always have a clock ticking—money sifting away like sand in an hourglass—so he tabled their issues at council, and re-tabled, and re-tabled until he got his way.

Hill got sent away. The table is still with us.

Take the curious case of Curtis Lockey, Craig MacKenzie and the LTV Tower 1600 Pacific Avenue building. Lockey and MacKenzie, who have long, serious résumés as commercial developers, tried to do a redevelopment deal that would conform to federal law.

But the people running downtown Dallas don't want developers to comply with federal law. Federal law requires a lot of low-income housing. Dallas wants fancier things downtown.

So Lockey and Mackenzie got tabled. They tell me the table cost them $30 million. Cash. Dead presidents.

Look. This is about a square deal versus the table. You invite people to sit down and play poker with you. No fair slipping them a roofie and pocketing the chips.

LTV Tower is a typical downtown Dallas albatross—a 1960s 33-story office building that Lockey and MacKenzie wanted to convert to apartments. At first the city was gung-ho. In 2007 it gave them the go-ahead.

Ah, but here is where the affordable housing issue rears its troublesome head. The total project cost was going to be about $112 million, with varying amounts, depending on the version of the deal, coming from the U.S. Department of Housing and Urban Development (HUD).

HUD has a very clear guideline. It's based on the law authorizing the loan program that Lockey and MacKenzie intended to use. If you take HUD's money for a multifamily housing project, HUD says your project must include at least 51 percent "affordable" and "low income" units.

We're not talking about public housing here. Minimum "affordable" rents would have been about $500 a month. To get one of those deals, you would have been required to have a job and good credit. We're really talking about making it possible for working people and young people to live downtown.

It's rent control. It lasts for 15 years. Take the money, you have to control the rents for 51 percent of the building for 15 years. Don't take the money, you are free to charge what you want.

City Hall wants people to take the HUD money, because City Hall believes federal subsidy is the only way we can convert our beleaguered downtown into apartments. But City Hall, according to its own repeated statements of policy, doesn't want converted buildings downtown to include 51 percent housing for non-affluent persons.

As Lockey and MacKenzie demonstrate in their official complaint to HUD, Dallas city policy states overtly that no project should exceed 40 percent affordable housing and in fact a much better number would be 20 percent, possibly 10 percent.

I have read the city's response to Lockey and MacKenzie's complaint, and, I have to tell you, it is not persuasive. The city basically tells HUD that it doesn't really mind if projects are 51 percent affordable, but, unfortunately, the downtown "tax increment finance" district or "TIF" doesn't like it.

The city says repeatedly in its responses to HUD that the TIF has goals other than affordable housing, such as "upgrading the image of the area." The city tells HUD that the downtown TIF has a "desire not to concentrate a high density of affordable housing in any one area or any one building." what is a TIF? Well, that's an entity set up by the city. But it's not the city. The city loves affordable housing. Oh, but that naughty TIF. It's against it. Yeah, sure. This is clever. Right?

Here's the problem. If you take the HUD money, you're supposed to obey the HUD law. You can't take the money and then not obey the HUD law because the TIF told you not to. Give the damn money back.

Let me explain how this actually went down for Lockey and MacKenzie. The TIF provides big grants of money for all of these expensive downtown re-dos. Lockey and MacKenzie went to the TIF, because that's where you go for the first sock of money.

But the downtown TIF told them they had to go to the city's housing department to see what help they could get there before the TIF could offer them anything. So they went to housing.

The housing department said it would help them get a major amount of their funding in loans under the federal Housing and Economic Reform Act (HERA). So they went back to the TIF.

Ah, but now there begins to be a lot of serious concern about all this affordable housing in the LTV proposal. At one point, Lockey and Mackenzie agree to drop their affordable housing from 51 percent to 40 percent, but they're still in the doghouse. The TIF tables their application for a grant.

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Jim Schutze has been the city columnist for the Dallas Observer since 1998. He has been a recipient of the Association of Alternative Newsweeklies’ national award for best commentary and Lincoln University’s national Unity Award for writing on civil rights and racial issues. In 2011 he was admitted to the Texas Institute of Letters.
Contact: Jim Schutze