Maybe Yigal Lelah Did Spend $4.5 Million of Our Money on Dirt. Feel Better Now?

Categories: Schutze

Patriots_Crossing.jpg
Texas Department of Housing and Community Affairs
Patriot's Crossing: it takes a whole lot of subsidy to do affordable housing.
I am still trying to reach Yigal Lelah, the developer on Lancaster Road I wrote about yesterday who seems to have spent $13 a square foot in money the city gave him for a bunch of land the tax appraisal district says is worth $1 to $5 a square foot. So far he's being shy and won't call back, but I have been talking to other people who know a few things about his deal.

Some of what they tell me is sort of exculpatory. Possibly. We will know more at the end of the week when city employees meet a deadline set for them by the City Council last week to pony up information about the deal.

This is about a great big pie-in-the-sky development proposal the guy was supposed to do tied to the Veterans Affairs Medical Center on Lancaster Road, kind of like a high-end, multi-use, office, condo and disco park, all with a veterans hospital theme. Yeah. The only thing missing would have been a combination water slide park and military cemetery.

See also: Dallas City Council Wants to Know What It Did With 4.5 Million of Your Dollars

Anyway it didn't happen. For one thing, Veterans Affairs said, "Whaa?" Now Lelah, the developer, wants to do public housing there instead. The City Council wants to know how he could possibly have spent $13 a foot in public money for land in that area.

I was able to speak to a few people familiar with city-sponsored land development in southern Dallas but only on the condition that I not name them, that I never tell anyone I spoke to them, that I never acknowledge them or even wave hello should I accidentally pass in them in traffic and that I agree to kill myself if they tell me to.

Other developers who have worked with the city tell me buying land in a city-sponsored deal is not like buying land in the real world. They say the city doesn't want anybody to feel they got screwed for a city deal, so the city requires them to use an appraiser from a city-approved list and then pay at least the price set by that appraiser.

The developers tell me that if they are buying land themselves with their own money in a private deal they use somebody like their brother-in-law to do the appraisal, somebody who can be trusted to come back with an extreme low-ball figure so the developers can try to get the land dirt cheap. In other words, the American way.

In addition, when a developer buys property in a city deal, he has to pay relocation costs. I mean, wouldn't that be great? OK, you just bought my house. Now pay to move me to my new house. But that's how it is, the developers tell me, with city deals.

I ran these matters by Dallas Interim Assistant City Manager Theresa O'Donnell late yesterday and got a mixed response this morning. She said the story about developers having to use a city-approved appraiser is not true. The story about having to pay relocation costs is true. But she also said some of this may change on a case-by-case basis. Some of the people I talked to are potential competitors with Lelah, so I'm not sure why they would invent excuses for him. I assume most of this will come out in the wash Friday when City Hall staff is expected to pony up full details on Lelah's deal.

Bottom line, the developers I talked to suggested, is that the price Lelah paid for the land across Lancaster Road seemed kind of high but not outrageously or impossibly high. Giving people a fair shake on purchase prices for their houses and then helping them move all runs up the project cost. Lelah could well have the entire $4.5 million in the land, they said.

The $4.5 million, by the way was in the form of another wonderful city-sponsored convention -- the "forgivable" loan. Based on my memories of my own early days in newsrooms, I would say a forgivable loan is like a loan to a reporter. You might as well forgive it. You're not getting it back anyway. Otherwise known as a gift.

It was suggested to me that sharp-eyed council persons looking at the information to be provided them by staff Friday should direct their attention especially to consultants. Could be some interest there.

By the way, in addition to the $4.5 million already forgiveably loaned him for the land, Lelah has been gifted with an additional loan of $1.35 million to help him qualify for an additional tax credit subsidy from the state for his proposed subsidized housing project. I think the answer here is just to stick around City Hall a lot with your hands cupped.

At any rate, here is some language I have lifted directly from his application to the state for the tax credit subsidy. In the application he says: "Veteran's Place, at the request of the City of Dallas, will in the future be known as Patriot's Crossing. It is a 150 unit new construction development for families loacted [sic] in the southern sector of Dallas, Dallas County, Texas.

"The development will be 'green' construction. The development is located across the street from the the [sic] Dallas Veteran's Hospital, the leragest [sic] emplyer [sic] in South Dallas. It is also within walking distance of the DART rail line and transit stop. It is being dveloped [sic] as aa [sic] Tranist [sic?] Oriented Development. The project will be set on approximately 3.7 acres and will be one four story building with intereior [sic] corridors and elevator access. This development will serve familes [sic] with income between 30% and 60% of area median income and is owned by a qualified non-profit."

Below is his bio.

Yigal Lelah bio, developer, Patriot's Place, application for 2013 4% tax credit project by Schutze

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26 comments
Ianwhiterock09
Ianwhiterock09

Jim Schutze seems to have too much time on his hands. This story is much about nothing. Seems like he's trying to create a "scandal" so people can read his boring articles. Yawn.

mcdallas
mcdallas

This is making me sic (sic).


wcvemail
wcvemail

Following up on an analogue link in yesterday's story, this development seems to be in competition with the OTHER across-from-VA, mixed-use development, Lancaster Urban Village. That status is both "preleasing" and "open in November 2013", according to their website. That one used federal funds. Consider this question a return on your link, and now I'm as curious as if I had contributed money to both developments. Well, I guess I did, indirectly.

Cliffhanger
Cliffhanger

Can we turn the land into a horse park?

WylieH
WylieH

So... Mary Suhm gave this semi-literate guy millions of dollars to build a whacky mixed use development in South Dallas that required VA participation, but she failed to get a commitment from the VA to participate prior to funding the deal?

mavdog
mavdog topcommenter

-The City owns land in the middle Lelah's assemblage. A development likely needs this tract, although not impossible to develop around it. just very inefficient.

Most of the purchases were done with groups who did not live on the purchased properties. the Lancaster frontage was owned by investors, about half of the tracts on Denley were people who lived there.

The area doesn't need a high density project called "Patriots Crossing" Lelah is proposing. I laugh when the phrase "Transit Oriented Development" is placed on the project, just beacuse it abutts the DART line does not make it a TOD.

The address on Lelah's work resume, on Lennox Lane in north Dallas, is a 12K sq ft residence built in 2005, on the tax rolls for $4.3M. Not too shabby, eh? btw Lelah is not currently shown to be the owner, the deed was transferred in 2012.

The phrase you may mean is a "non-recourse loan" rather than "forgiveable loan". The loan is likely not truly "forgiveable", the property is the collateral that would be surrended should the borrower default on the loan, but the borrower is not personally liable for the outstanding debt should the foreclosure occur.

dallasdrilling.wordpress.com
dallasdrilling.wordpress.com

Thanks for staying on this.This line caught my eye: But she also said some of this may change on a case-by-case basis.

I see a tip of the iceberg here and if it were me, I would file an open records request regarding communication/meetings between Hill, Suhm with Lelah. I smell a side deal much like the gas drilling ordeal where Suhm got busted and Hill defended her. It also takes me back to when Hill told us in a public meeting that making deals without pesky strings/paper trails/etc attached was how good government worked.

James080
James080

Hmmmm. Packing more low-income rent subsidized apartments into South Dallas. Mindless. Insane. The Dallas way.

Dallas has now committed $5,800,000 in this deal and it's still a weedy vacant lot. They now propose to build 150 low income "green" units in a four story building. Dallas could have merely granted $38,666.66 to 150 families and let them each buy a single family house in the area, and forgiven the loan after 5-10 years of ownership. Or given the money to Habitat for Humanity and they could have built 150 new 2/2 homes on vacant city owned lots in South Dallas.


Every day, this city seems more and more inept, clueless, corrupt and hopeless.

btzp
btzp

"This is about a great big pie-in-the-sky development proposal the guy was supposed to do tied to the Veterans Affairs"


problem here? 

JimSX
JimSX topcommenter

Both projects are competing for state-awarded tax credit subsidies. State rules are supposed to provide a minimum distance between such projects, but apparently the city can waive those rules or thinks it can. The city council agreed to a deal whereby the two projects were put into separate calendar categories, one for 2013, the other for 2014' as candidates for the tax credits, I guess to reduce the direct competititon between the two. What they actually accomplished was a clear demonstration for anybody at HUD who might be watching: even when Dallas is accused of illegally cramming subsidized housing into the Southern sector, at the very same time when the city is firing off a fuck-you letter to HUD ("How dare you accuse of cramming housing into segregated neighborhoods, you bunch of Yankee loons!"), in fact the city is bending over backward and bending all the rules to do exactly that! This will not end well.

Montemalone
Montemalone topcommenter

@WylieHMaybe we can salvage this deal. Those frackin' people still looking for a place to stick their drill bits?

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@WylieH 

Why are you complaining?  She got us a deck park, an arts center and string thingy bridge.

What do you expect, basic services to be provided?

mavdog
mavdog topcommenter

@WylieH

to be accurate, the project doesn't require VA participation. The current plan includes a skybridge going over Lancaster and to incorporate the skybridge an easement would need to be granted by the VA. No skybridge, no need for VA cooperation.

which brings me to complain on the design of the DART tracks which run down the middle of Lancaster. The need for the skybridge is for people to be able to easily cross Lancaster, which wouldn't be an issue if not for those DART rails. Just sheer stupidity to put those rails down the midddle of the street.

JimSX
JimSX topcommenter

@mavdog 

You are right about the loan, I believe. A commenter here said he/she had found a city lien.

City property was, I believe, a fire station.

TheCredibleHulk
TheCredibleHulk topcommenter

@dallasdrilling.wordpress.com 

It's enough to make yuo [sic].

WylieH
WylieH

@James080 Habitat for Humanity... pfff.... ain't nobody got time for that; no opportunity for that good ole' fashioned Dallas City Hall graft!

Montemalone
Montemalone topcommenter

@James080 

Now they can go:

Hey HUD, see? We blew $millions of your money in south Dallas! No rich white people in sight.

btzp
btzp

@James080 


I have a feeling "subsidies" for this project, to perpetuate more segregation is DOA!!! 

holmantx
holmantx topcommenter

@JimSX 

Could be a "soft second" loan - Don't have to pay it back unless he tries to take it out of the LIHTC program within a proscribed number of years.  

And I bet there is a fuse on the City monies.  He has to get a project on the ground in a certain amount of time or give some part of the money back.

WylieH
WylieH

@Montemalone @James080 Except for Yigal Lelah, living in a multi-million dollar spread in North Dallas, evidently.... lol...

holmantx
holmantx topcommenter

@JimSX @holmantx 

Dumbass deals are not exclusive to the Public Sector.

Instead of just loaning the money to build the Museum Tower (requiring 50% pre-sells before the funds are released) . . . 

Dallas Police and Fire BOUGHT the tower on paper.

That shocked the commercial real estate community.  It was unheard of.

Then the reflective glass became an issue, and DPF came up snake-eyes.  They own it instead of being the lender.  The pre-sells dropped out and the solds wanted their money back.  They were promised it would work and the value of their million dollar units are worth zilch until it is resolved.  The owner is completely on the hook.

And you can't foreclose on a deep pockets pension fund who paid cash.

JimSX
JimSX topcommenter

@holmantx @JimSX 

Yes, there was a fuse, but, apparently every time you propose a new use, you get $1.35M and a new fuse. 

holmantx
holmantx topcommenter

@JimSX  


Ran a civil check on Yigal Lelah; seems he got crosswise with the same guy Snuffer's went sideways on.  Don't know what that means.


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