Hang on. We're just getting rolling here.
A year after we agreed to the deal, Perot and Hicks sold naming rights to the arena for $150 million, payable 100 percent to them, zero percent to us, according to the contract negotiated by our City Council. A year after that, Perot sold the basketball team for $155 million more than he had paid for it.
An important footnote here is this: Of the $125 million you and I put into the arena, $10 million went to Perot and Hicks right off the top. Perot drew $8.4 million as the fee he charged us for being the developer of his own project. Another $1.58 million went to Hicks as his fee for arranging financing of his own project, which amounted mainly to getting us to pay for most of it.
We're not done here.
Mayor Kirk's next great memorable line on all this was that we had Perot and Hicks by the short ones. By agreeing to pay them big amounts for the development of the area around the arena, we had put them in a position where they had no choice but to live up to their promises.
"If they don't go and develop the property, they don't get squat," then Mayor Kirk vowed. "That's a great incentive for them to develop."
In 2002, Perot and Hicks told the city they wanted to bring in somebody else, a company called Palladium, to do the developing for them, and as part of that deal they wanted the city to basically cash them out early. Even though the agreements and ordinances setting up a special taxing district for Victory expressly forbade the district from selling bonds, they wanted the city to find some way to sell $83 million more in some kind of bonds.
Of that new money, $43 million was to go directly to Palladium; $25 million was to go to Hicks, Perot and Mark Cuban, the new owner of the basketball team; and then you and I would have been paying an additional $15 million as interest and for "other costs."
Had this deal gone through, Perot would have profited about $30 million by selling 20 acres of his project to Palladium.
The City Council voted for this thing, over Miller's strong objections and against angry opposition from most of the long-term owners of downtown Dallas property. The southern Dallas contingent on the council gave strong support to the Palladium deal after Palladium and Perot proposed that they take millions of dollars mandated for affordable housing in the deal and give it to southern Dallas council members to divvy up in their own districts.
So it's not only a shaft. It's the down-and-dirty shaft.
Even though the City Council approved it, the Palladium deal died in the marketplace (no tenants), which the developers blamed on September 11 and the economy and the weather and so on. But the point is that the City Council will and did agree to anything. There is no limit.
Assistant City Manager Ryan Evans makes a strong case that tax increment finance districts (TIFs) and tax incentives generally are good for the city. He gave me the counter-example of vast sums the city is spending to build new roads in southern Dallas, where there is no current need for the roads based on existing traffic levels, in order to woo businesses into locating along those roads.
"In that particular case," Evans said, "the entire city of Dallas is paying to build that new street. Now, is that a subsidy? Well, maybe.
"In the case of a TIF, at least the only guy who has to pay for that road is the guy that's right next to that road. So, in some sense, it may be more fair to the citizens of Dallas to have the developer that's benefiting from it have to pay for it from his own taxes, rather than charging everyone."
Sure. But let's remember: You want a new alley? They pave your alley. Then they assess you for it. They don't pay you back later "out of your taxes" or out of anything else.
Getting paid back $25 million is a $25 million subsidy. Getting a free gift of $125 million in bond money is a $125 million subsidy. If they get it and you don't, it's a subsidy.
I never heard Miller say don't build a basketball arena. I heard her say don't be an idiot. The fact that she wanted to bargain it out, drive a hard deal and protect the taxpayers' interests doesn't mean she was against doing it.
So now we have this beautiful Lexus in the driveway. It still matters what we paid for it. And in the real world, you can get that Lexus for a good price just like you can get it for a bad price. You just have to care what you pay. Most of them down there do not care because it is not their money.