City Hall

Thursday, Dallas City Hall: Chickens Come Home To Roost on Federal Housing Fraud

At Patriots Crossing, city officials paid $4.5 million for a luxury development. Here's what they got.
At Patriots Crossing, city officials paid $4.5 million for a luxury development. Here's what they got. Jim Schutze
City Council member Tennell Atkins has called a special meeting of the council’s economic development and housing committee at 9 a.m. Thursday in the first-floor auditorium at Dallas City Hall to listen to the chickens. Why? Because 9 a.m. Thursday is when the chickens come home to roost.

Last week, word flew through City Hall like a bullet that a report is soon to come out on the federal government’s yearlong investigation of missing millions in the city’s housing and economic development activities. Almost as fast, Atkins scheduled this special meeting for the people known to be in the crosshairs of that investigation, especially the operators of federally funded nonprofits engaged in developing affordable housing.

Those are not the chickens I’m talking about. The chickens I’m talking about are way bigger than those chickens. My chickens live farther uphill. And I can’t believe they’ve been sleeping well lately.

City Manager T.C. Broadnax and his staff have already signaled pretty clearly that a long, deep investigation by the U.S. Department of Housing and Urban Development Office of Inspector General has turned up significant “record-keeping” problems among the entities called community housing development organizations, or CHDOs.

A city auditor’s report found last year that at least $30 million is missing, maybe much more, maybe hundreds of millions, from the city’s federal grant funds, and that’s way more money than even the hungriest CHDO could ever have consumed. So where did the rest of it go?

“The taxpayers got screwed out of $4.5 million that has not been repaid. This stuff involves a whole other level of people of a whole other ethnicity.” — Dwaine Caraway

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At Thursday’s meeting, we will surely hear a reprise of the song sung all last week in the back corridors of City Hall. CHDO operators like former City Council member Diane Ragsdale, according to this refrain, have done great good for the community. Pulling them through the mud now over bookkeeping errors is unfair and racist. This line of reasoning will undoubtedly be raised, probably with passion.

But there is a corollary that may or may not be brought to bear. Whatever problems may bedevil the city’s federally and locally funded housing and economic development activities at the retail end, that much money could not have gone missing without the wholesale participation of people at City Hall in the era before the arrival of the current city manager.

That’s not rumor. It’s not paranoia. It’s known fact, scattered all over the map. And there, by the way, is where the racial paradigm gets complicated.

One of the more flamboyantly almost incomprehensibly sleazy City Hall real estate involvements in recent years was so-called Patriots Crossing, a fanciful luxury residential development to be built next to the Veterans Administration Hospital on Lancaster Road in central southern Dallas because, you know, rich people always want to live near veterans' hospitals.

In that deal, the city gave $4.5 million to a developer who developed absolutely nothing. The great champion of Patriots Crossing on the City Council was former member Vonciel Hill, who is African-American. But the person who pulled the documents, went over them with a fine-toothed comb and then called the project a scam was council member Dwaine Caraway, who is also African-American.

Caraway is angry now, not so much because the feds are going after the CHDOs as because nobody ever seems to go after the people uphill at City Hall who sign off on these deals in the first place.

“The taxpayers got screwed out of $4.5 million that has not been repaid," he said. "This stuff involves a whole other level of people of a whole other ethnicity.”

Some at Thursday’s meeting may be less interested in catching anybody uphill than simply in saving their own bacon. The most passionate people in the room may be the ones looking at the possible cutoff of their federal life support and possibly even at criminal charges. They’re going to push for any kind of accommodation that will bail them out.

But Caraway says he’s looking less for an accommodation than for justice. He says he respects the work some of the community-based nonprofits have done and regrets seeing them put out of business or worse. But that’s not his lookout. After his long years on the council, he says he just knows too much about how all of this works — who, what, when and where — and he’s sick of federal crackdowns that only crack downward.

“It’s very difficult for water to run uphill," Caraway said Friday. “It’s very simple for people that are uphill to empty their bucket of water on the people that are downhill.”

I asked Caraway a couple of times to tell me how important the uphill thing really is. After all, what the HUD OIG investigation appears to be unearthing is really just some bones everybody has known were buried there forever.

This is how it works in Dallas. The people who run City Hall always have their grocery list — the Trinity toll road, massive rezonings for their development projects, keeping the school tax down. They buy the votes they need on the City Council by handing out federal grant money, which they regard with contempt anyway.

And not to let the minority side of the equation off the hook entirely, black council members and community leaders often have their own hands out for that money. They do not merely regard the money as theirs by right, but, as we will surely hear Thursday, some will even cry racism against anyone who dares be stingy with it.

So I wondered. How important is it, really, for this ongoing spasm of self-examination to go uphill? Maybe uphill and downhill are the wrong metaphor. What if we thought of it as two hands washing?

And let’s not assume too quickly it’s absurd for the parties in the CHDO mess to expect powerful white people in Dallas to clap their hands and make the OIG investigation go away. They’ve done it before when their own bacon was in the fire.

click to enlarge Dallas City Councilman Dwaine Caraway exposed Patriot's Crossing for a scam. Now he wonders why no one was taken to task. - STEPHEN YOUNG
Dallas City Councilman Dwaine Caraway exposed Patriot's Crossing for a scam. Now he wonders why no one was taken to task.
Stephen Young
Assuming the OIG probe does find serious wrongdoing at City Hall involving HUD housing money, we need to reflect on the fact that HUD already found all of the same things going on five years ago in the Lockey and MacKenzie matter.

Curtis Lockey and Craig MacKenzie were two downtown apartment developers in 2009 who forced HUD to carry out a four-year probe of Dallas housing activities. HUD’s final report found Dallas guilty of violating all the same laws under which the current OIG investigation is being carried out. In particular, Dallas had been using money devoted by law to achieving racial desegregation in ways that deliberately increased racial segregation downtown.

Dallas was seriously under the gun at that point. All of the city’s federal funding, not just HUD money, was at risk. More to the point, perhaps, those accusations did not involve small chickens. Those charges went straight to the top — the mayor, the council and top city officials, including the city manager.

Lockey and MacKenzie also had brought suit against the city under the federal false claims act, a Civil War-era law that could have put the pair in position for an immense, even crippling financial recovery from city coffers. Had all of that gone forward, as seemed likely, the political outfall might have put the city’s old power elite out of business for good.

“It is extremely important for the community for [accountability] to go uphill because until it goes uphill, the community will never prosper, will always drown." — Dwaine Caraway

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So they made it go away. Dallas Mayor Mike Rawlings traveled to Washington to chat with President Barack Obama’s newly appointed HUD secretary, former San Antonio Mayor Julian Castro. And blink! It was gone.

Castro tossed the whole four-year investigation, the findings and the proposed penalties for Dallas right out the window. Rawlings even publicly thanked Castro later for his help.

People in leadership watch this stuff. They remember it. Leaders in the black community know that when the HUD guns were pointed uphill at City Hall, the mayor was able to make those guns simply disappear. Now the guns appear to be pointed downhill.

So why shouldn’t the people downhill demand that the mayor do his magic again? The mayor, the Dallas Citizens Council, the old guard, wherever they may be: They brag about their juice in Washington. Why don’t they go have another picnic with the secretary of HUD? After all, now that Donald Trump is president, the Dallas old guard should have 10 times the juice it had under Obama. Juice up!

Here we come to a question buried deep in the soul of the city. When Caraway says accountability must include those who are uphill as well as down, is he demanding simple fairness? Or is he making a threat?

“It is extremely important for the community for it to go uphill,” he says, “because until it goes uphill, the community will never prosper, will always drown.

“It’s just like the drugs. You can arrest the little guy standing on the corner selling the crack cocaine, but it’s uphill where you find the airplane where the drugs came from. We have to go up the hill to get the person that’s supplying it and bringing it in.”

These questions are much bigger and deeper than housing, even bigger than all of the city’s federal grant money. These are questions about the soul of the city.

And you know what? It doesn’t matter if it’s a call for justice or a threat. Let’s just say it’s both things. Caraway is still right: The city only prospers in a climate of moral legitimacy. Legitimacy can only happen on a two-way street.
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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