On Wednesday, the City Council Will Finally Vote on Eliminating a TIF Conflict of Interest

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On Wednesday, the Dallas City Council will finally address what many have considered one of the larger loopholes in the city's Code of Ethics. For the last nine years, folks who serve on Tax Increment Finance District boards have been allowed to not only own and acquire property within the TIFs, but they've also been able to "participate in discussions and voting on matters before the board of directors that may directly or indirectly affect the member's property within the reinvestment zone." Which city officials have long acknowledged doesn't look too good.

This morning, Karl Zavitkovsky, director of the city's Office of Economic Development, tells Unfair Park that it was Mayor Tom Leppert's idea to rewrite the code, a process that has taken nearly a year. (Here's an Economic Development Committee briefing from last May.)

Should council OK the amendment Wednesday, the Code of Ethics will prohibit TIF board members -- such as Dan Blizzard, who's on the Downtown Connection TIF District Board and is also Senior Vice President for A. H. Belo Corporation -- from voting on or discussing properties that "directly affect" their property. Under the new amendment, they must recuse themselves from all discussions if they already receive TIF funds or are located within 200 feet of the property in question. Which city officials acknowledge isn't perfect, but it's better than nothing.

"TIFs are eclectic things, and it isn't so easy to find people to serve on them," Zavitkovsky says. "It's a voluntary thing. We haven't had blatant conflicts, but folks are sensitive to it and started to look through there and see where the inconsistencies might be."
Changing the Code of Ethics has been no easy thing. Zavitkovsky says the problem first came up during a council meeting last year, and that the mayor told City Attorney Tom Perkins, the Ethics Advisory Commission and several council members to figure out a way to get rid of a clause that could allow blatant conflicts of interest. The discussions began in earnest in May, and last June the council considered a revision before kicking it back to committee. It bounced between the council committee and commission during the fall, and it was determined board members could acquire property within their TIF -- they just couldn't vote on property that "directly" affects theirs.

"It was difficult to say, 'Well, how close can you be and be impacted directly or indirectly?'" Zavitkovsky says. "You could be a mile or half a mile away and be impacted or 100 meters away and have no impact. Two hundred feet seemed like it was a reasonable distance away."

The city currently has 17 TIF districts and almost two decades' worth of experience with them. But in the early 1990s, it was a brand-new thing for Dallas -- and, Zavitkovsky says, the only folks the city could find to sit on their boards were property owners and stakeholders and developers who likely wind up voting on projects within their own districts. Which nobody seemed to mind at first -- to the point where it clearly wasn't an issue when the Code of Ethics was being written.

"What happened was, some questions came up -- and I don't recall the specifics -- but as you form new TIFs and get new council members who haven't hard much familiarity with the TIF structure, they will ask what occurs to them," Zavitkovsky says. "And you start looking at it and say, 'Gee, this doesn't make sense, and maybe we ought to take a deeper look at this.'"
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