Dallas Pushing HUD to Withdraw Letter Accusing City of Misusing Housing Funds

Categories: Schutze

crow_smaller.jpg
Wikipedia
Oh, no! The crow is eating Rudy Bush! I never wanted that!

Yesterday I said I would eat crow if Dallas Morning News editorial writer Rudy Bush turns out to be right and I turn out to be wrong about the outcome of the HUD racial discrimination complaint against the city of Dallas. Today after much more snooping around, I would offer this as my opening position in negotiations with Bush:

I will eat one crow wing, if you, Mr. Bush, will agree to eat a foot. Or it could be me foot, you wing. But I'm not eating crow alone.

See also: When HUD Releases Its Segregation Settlement With Dallas, Someone Is Going to Get Smoked

Here's the real deal. Reliable sources tell me Dallas wants the U.S. Department of Housing and Urban Development to engage in a massive cover-up of its own evidence in order to help Dallas. If and when that happens, I will eat the whole crow, shortly before moving to damn Canada.

One question, the "public interest" question, is whether Dallas will agree to major changes in its housing policies and laws in order to hang on to hundreds of millions of dollars in federal subsidies after HUD concluded Dallas colluded to increase racial segregation in the city between years 2000 and 2010.

The smaller-bore question -- more what Bush and I have been arguing -- is whether HUD will also force Dallas to pay some $40 million to Curtis Lockey, the real estate developer who told HUD what Dallas was doing four years ago and built a lot of their case for them with the evidence he brought forward.

Bush wrote an editorial for the paper last Tuesday in which he said two things: one, generally, that the HUD public interest case against Dallas is turning out to be bogus, and two, specifically, that HUD has already agreed not to press for money for Lockey.

I said in my piece yesterday that I didn't believe any of that and that I would eat crow if it turned out to be true. So why now, barely 24 hours later, and am I willing to negotiate on crow parts?

Yesterday in response to my question, Sam Merten, spokesman for the mayor, told me in writing that the mayor believes HUD gave up on compensation for Lockey a long time ago: "Mayor Rawlings is confident that the financial compensation requested by HUD contained in the original draft will not be included in the final version that is agreed upon because it is his understanding that HUD removed that component early in the negotiations."

I have now heard the same thing from other City Hall sources who would know. I have also satisfied myself that HUD has no legal obligation to get Lockey paid, even though HUD would not have had a case had Lockey not brought it to them. HUD can settle the public interest side of the case -- the things Dallas has to do to make up for years of racial segregation -- and not press the city to pay back Lockey for the tens of millions he claims the city cost him by pulling the rug from under his downtown tower re-do deal in 2009.

Lockey says the city yanked funding that had already been agreed upon for his deal when it found out he intended to develop a racially integrated building. HUD investigated Lockey's claims for four years and came out with a report last year saying he was absolutely right and the city was lying about it. That's where all of this came from.

Wait. Why don't I have to eat the whole crow? Well, merely getting HUD to step away from Lockey, persuading HUD not to use its own muscle to get Lockey paid, is not what the city is seeking. The city knows if that's all they get HUD to do, Lockey may be in for an even bigger payday later.

If HUD tells Lockey to go after his money on his own -- "We got our deal done, now you go get yours" -- Lockey will sue the city directly for compensation, something he hasn't done yet, and he will have all of HUD's evidence from the four-year investigation as ammunition.

In fact Lockey already has a "fair housing" lawsuit loaded up and ready to be filed, in which he will argue that Dallas torpedoed his deal and put it into bankruptcy because he was trying to obey the law on segregation and Dallas wanted him to break it. His lawyers can show the HUD letter of findings to a judge or jury along with reams of supporting evidence and say, "HUD said Lockey was right."

Sources in the Dallas legal community familiar with these negotiations have told me that Dallas wants HUD to do much more than merely step away from Lockey. The city wants HUD to withdraw its letter of findings and take other actions that would suppress evidence and actively cripple Lockey's ability to sue the city.

If HUD entered into some political deal to conceal evidence in order to help out a city it just found guilty of racial segregation, that would make some lost emails over at the IRS look like pretty small potatoes. I have a column in next week's paper detailing what HUD found Dallas had done, and it's very damning, both on the larger segregation issue and specifically what they did to Lockey. To walk on that or try to cover it up would be an enormity.

But it gets worse. The same sources are telling me Dallas City Attorney Warren Ernst has told the City Council that he still wants HUD to fold on most of the public interest side of its complaint by agreeing that Dallas's new "Housing Plus" program is plenty good enough, and Dallas won't have to do anything else that might look like eating crow.

That's much harder for me to believe than the part about ditching Lockey. HUD can walk away from Lockey, and it's cheap for them, not a big story. Lockey is some rich real estate dude. Maybe he did or did not get shafted, in the public mind. He has been pursuing another totally separate lawsuit in the courts, a so-called qui tam whistle-blower suit, and the courts have poured him out twice.

Bush says that means he's not even a real whistle-blower. I say the HUD complaint makes him a whistle-blower because it says he brought all of this to their attention. So two newspaper guys disagree. It's a gray area. Lockey not getting paid right away is not a national story.

But if HUD takes a dive on the public interest side of its complaint -- basically folds its tent and walks away from its own letter of findings -- then that's a major national story about the new HUD Secretary Julian Castro.

If HUD also throws its arm around Dallas' shoulders, agrees to put a knife in Lockey's back and do it by covering up evidence, that's my dream story and everybody else's dream story, too.

Merten told me yesterday that there is no larger deal with HUD yet. He added a curious addendum: "Mayor Rawlings has not shared that information with the council because Mr. Ernst is leading the negotiations and no final agreement has been reached at this point."

Yeah. That's what I thought. If the mayor or Ernst had anything like a deal in hand, they would have been crowing to the high heavens and The Dallas Morning News would have a picture of them on the front page in Roman robes with golden trumpets and little angels fluttering by their heads and multitudes bowing down before.

There is no deal yet. Dallas is still asking for the moon. The deal Dallas wants is crazy.The fact that the whole deal is still so up in the air means that Lockey hasn't been poured of anything yet because there is nothing from which to be poured.

HUD may have agreed early onto consider walking on Lockey if Dallas agreed to a mea culpa on the segregation issues. But if Dallas won't do that and in fact insists on a HUD cover-up, then there is no deal to pour out Lockey or anything else.

If I had to bet? I would bet that HUD will insist on its public interest issues being satisfied, and if the price for getting that done is to walk away from Lockey, they will. But they won't agree to collude with Dallas to bury their own evidence. Lockey will sue. He will be able to use the HUD evidence to get even more money tomorrow than he could get today.

I eat one wing. Bush eats one foot. Fair?



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76 comments
stifki
stifki

http://nlihc.org/article/hud-challenges-dallas-fair-housing-compliance 

"HUD Challenges Dallas’ Fair Housing Compliance

On November 22, HUD sent a 29-page “Letter of Findings” to Dallas, Texas stating that the city is not in compliance with three civil rights statutes: Title VI of the Civil Rights Act of 1964; Title 109 of the Housing and Community Development Act of 1974; and Section 504 of the Rehabilitation Act of 1973. The letter also reminds the city that it certified that it has complied with Title VIII of the Civil Rights Act, which includes the obligation to affirmatively further fair housing choice.

HUD’s Office of Fair Housing and Equal Opportunity conducted an investigation in response to a complaint alleging discrimination filed on February 4, 2010 by a developer, 1600 Pacific L.P. The city did not approve 1600 Pacific’s plan to convert a vacant office building into a mixed-use, 590 housing unit development with 40% of the units targeted to households with incomes at 60% of the area median income (AMI). The structure is in a census tract where African-Americans and Hispanics are significantly under-represented. The developers applied for financing from several sources: city tax increment financing (TIF), federal Low Income Housing Tax Credits (LIHTC), bonds available through the Housing and Economic Recovery Act (HERA) of 2008, and a CDBG Section 108 Loan Guarantee.

HUD’s letter stated, “There is overwhelming evidence reflecting a need for affordable housing for the low-income strata (at or below 50% AMI) in the City of Dallas. As discussed, there is an overrepresentation of minorities and persons with disabilities at this income level. Furthermore, the Central Business District and Downtown Connection TIF District [the site of the project] are overrepresented by white, non-disabled residents. Lastly, the average rents in the Central Business District and Downtown Connection TIF District are not affordable for persons at the 30% or 50% income strata. In addition, the evidence indicates that there was a need for affordable housing to be available in Dallas in an equitable manner and that there was in particular a need for affordable housing in the downtown area for which TIF and Section 108 financing should be resources.”

Because 1600 Pacific sought HERA bonds, LIHTC financing was automatically included. The LIHTC statute requires owners to accept vouchers, which the developers’ financing plan relied upon. In an email to the developers, the city’s Director of the Office of Economic Development wrote that he did not see vouchers as an option for the project. HUD found a similar theme in internal emails of the Dallas Housing Finance Corporation board.

Much of HUD’s letter describes how three other projects using Section 108 Loan Guarantees and TIF received terms and conditions different from those that Dallas placed on the failed 1600 Pacific applications. HUD’s investigation led to six “findings,” including:

  • Dallas failed to fund 1600 Pacific because it would serve high percentages of very low and low income residents who were disproportionately minorities and people with disabilities, thus denying those residents of housing opportunities and perpetuating segregation.
  • The manner in which Dallas administered its resources, in particular the Section 108 Loan Guarantee program, had the effect of: defeating or substantially impairing the objectives of the programs; limiting the availability of housing for minorities and people with disabilities; and, perpetuating segregation.

Although loans guaranteed by Section 108 are backed by the full faith and credit of the United States government, the more immediate backing is a jurisdiction’s pledge of collateral amounting to up to five years’ worth of its entire CDBG entitlement. Section 108 loan guarantees are typically used for large commercial projects such as hotels and shopping malls. In most instances, there is no intention to use CDBG funds to repay the loan; instead, revenues generated by the project (such as hotel room charges, retail store sales, parking lot fees, etc.) repay the loan. However, if revenues are not sufficient a jurisdiction’s CDBG money must be used to make up the short fall.

The 2012-2013 Dallas Consolidated Annual Action Plan indicates that after the November 2008 economic downturn, the city turned to the Section 108 program to address its multifamily housing needs. The Action Plan also states that Dallas’ highest need is for one-bedroom units for extremely low income minority households, those with income below 30% AMI.

Section 108 Loan Guarantees must follow all CDBG requirements. For instance, at least 51% of the households occupying a Section 108-assisted housing project must have incomes at or below 80% of AMI, $48,600 for a three-person Dallas household in 2013. HUD’s letter reports that Dallas had a routine practice of seeking waivers [from HUD] to reduce the 51% minimum to 20%.

The Letter of Findings concludes that HUD would like to resolve matters through a Voluntary Compliance Agreement. Nine corrective measures are listed, including:

  • Developing a long-term strategy for siting housing throughout the city that addresses patterns of segregation and that affirmatively furthers fair housing.
  • Adopting an ordinance requiring housing projects funded through public subsidies such as CDBG, LIHTC, and TIF to:
    • Prohibit denial of tenant applications based on their source of their income (such as vouchers);
    • Accept vouchers in at least 25% of their units;
    • Require determination of a tenant’s ability to pay to be based on their portion of the rent.
  • Funding a project within the Central Business District or Downtown Connection TIF District that has at least 51% of the units affordable to households with incomes at or below 80% AMI, with at least half of those for households at 50% AMI.
  • Updating its Section 108 loan guarantee program to comply with the requirement that at least 51% of the units be occupied by households with incomes at or below 80% AMI, to bring existing projects in to compliance with this rule, and to monitor future compliance.
  • Encouraging the development of affordable multifamily housing in areas of non-minority concentration and in areas of greater economic opportunity by providing tax abatement.
  • Encouraging developers to work with organizations that provide housing counseling to low income people.
  • Developing a 10-year plan aimed at providing the infrastructure and service improvements needed in the unincorporated areas of Dallas County to create an environment equal to that of the incorporated areas."

The HUD Letter of Findings is available at: http://bit.ly/19bSfwI

stifki
stifki

As if DMN doesn't know if there are "Fair Housing" issues in Dallas: 


http://www.dallasobserver.com/2014-07-10/news/a-damning-hud-investigation-dallas-city-hall/full/


"Mainly, the city will do as it's told and say thank you. "I think the letter [HUD's findings] and the VCA [when it arrives] have uncovered some underlying weaknesses," she said. "This City Council is clearly headed in a new direction than past administrations."

O'Donnell pointed specifically to the city's longstanding practice of crowding affordable housing into already heavily segregated areas where poverty and crime are problems. "We can't put people in an island of poverty," she said.

O'Donnell acknowledged that past practices to some degree have grown out of the extreme bunker mentality of the single-member district council system, in which each member wants his or her share of federal bounty but no member wants any other member meddling in what's to be done with it. The federal requirement that local governments "affirmatively further fair housing," O'Donnell agreed, requires a new way of doing business." 

stifki
stifki

Below is the link to watch the recording of Castro's HUD Confirmation Hearing. Its very interesting to watch in its entirety, but if you move the timer to 15 minutes you will hear Castro mention some very important goals of his , including "enforcement of Fair Housing Laws." He also mentions his mother worked for the San Antonio Housing Authority...............and that he lived in public housing with his single mother and brother.......question asked by Senator about his position on Affirmatively Furthering Fair Housing @ 55 minutes.........another remark by Castro to provide more opportunity by the creation of desperately needed affordable housing @ 34 minutes....



http://www.c-span.org/video/?319983-1/hud-secretary-confirmation-hearing

bennyt8
bennyt8

Having worked for years with HUD, there is a reason its called "Housing and Urban Development" they know development and housing related issues, its all they do. Anyone that dismisses that fact, will at their own peril. 

RTGolden1
RTGolden1 topcommenter

For someone who will never being able to justify paying to get a copy of your book, your columns on Dallas politics are the closest I can get.

Add in the comment thread and it's like getting portions of your book in 'made for TV' telenovela format!  and if I want the dime-store pulp fiction version, I can always go to the DMN website.

beancount
beancount

"NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE

CITY OF DALLAS HOUSING FINANCE CORPORATION THAT:


EXHIBIT A


DESCRIPTION OF PROJECT


Section 11. The Board of Directors of the Corporation hereby finds, determines and

declares that written notice of the date, hour, place and subject of the meeting at which this

Resolution was adopted was posted and that such meeting was open to the public as required by

law at all times during which this Resolution and the subject matter hereof were discussed,

considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551,

Texas Government Code.

PASSED AND APPROVED this 11th day of December, 2008.


Costs of the Project to be financed by tax-exempt bonds in an amount not to exceed $102,000,000 include the acquisition, construction, reconstruction or rehabilitation of a multifamily residential housing project and related facilities proposed to be located at 1600 Pacific and 1511 Elm Street in the City of Dallas, Dallas County, Texas 75201."


Yup, must have been a really bad deal!! 

JimSX
JimSX topcommenter

There's a lot of loyalty going on here -- OMG we've even got Wylie H defending the city -- but at some point the people being loyal to each other need to look around and see who've they've gotten onto the elevator with. Notice the dude way in the back in the white pointy costume.

beancount
beancount

From: Zavitkovsky, Karl

To: Bowers, Chris

Cc: Cook, David; Haywood, Bryan

Sent: Wed May 27 20:13:18 2009

Subject: FW: RESPONSE REQUIRED re: Economic Development

Claim likely to be asserted: 1600 Pacific Building LP (Curtis Lockey)

-Have spoken with CAO/litigation: do not expect an unfavorable outcome

-The claimant will likely seek $30 M+ in damages

-Claimant has requested TIF assistance totaling $78M+. We are recommending $49M. They claim that we have not treated them equitably versus other projects in the Downtown Connection TIF. More specifically, they assert that Jerry Killingsworth (Housing) and myself have conspired to thwart their ability to obtain City sponsored financing via TIF reimbursements, the HUD Section 108 program and the Housing and Economic Recovery Act (HERA) private activity bond program. Project has $11.5M of first mortgage bank debt which is maturing and $9M of investor equity which is unhappy.

City contact: Brian Haywood @ 214-670-1691."


Hmmm. Does this say what I think it says???

"We are recommending $49M" Karl Zavitkovsky

rbush3
rbush3

Another reason I'll pass on the crow: your whole premise was wrong. 


You wrote: Later in the day yesterday I learned from very good sources close to City Hall that Rudy's piece may have been complete bullshit. It's possible the mayor and the city attorney don't have squat for a deal yet and that Bush got played.


Where did I write they had a deal? 


From the editorial:  Negotiations are occurring even now with HUD, and the agency seems to be softening what had been a ridiculous offer to the city. We still don’t know, however, what final agreement the city and HUD might strike.


So that was right too. And I'll stand by the opinion part also, that it was ridiculous to try to force taxpayers to pay a nickel to Lockey. 

rbush3
rbush3

No, I don't think I will. But if it matters, I don't want you to have to eat crow either. I just want to get what's true on this thing out there.


Here's what the editorial said.


Meanwhile, city attorneys have been frantically working with HUD to get a better deal. The feds have agreed to scuttle any payments to Lockey and MacKenzie. That’s a good start. If there are legitimate issues with the city’s housing policies, those should be addressed. But forcing Dallas taxpayers to pay off two guys with a bad deal was ludicrous. It calls into question HUD’s credibility on the entire matter.


So that was accurate. Now, if HUD shows wrongdoing by the city then that needs to be addressed. That's what I said all along. But don't just call it a cover-up. Cover-ups are crimes. If you're claiming a cover-up, bring the evidence. And don't call it a strong-arming. HUD just made Bank of America payout $17 billion for wrongdoing. BofA! You think Mike Rawlings and Warren Ernst have bigger lobbying muscle than BofA? 


Two courts now, including the 5th Circuit, have said that Lockey brought no info to light that would make him a whistleblower. And, Jim, no one but you defends the 1600 Pacific deal he was offering. Angela Hunt and her successor Philip Kingston saw it as a bad deal. So did the Downtown Connection TIF board (volunteers) and the pros on the city Eco Deve. staff. So why would he get paid? Let him take it to court and prove it up on the merits. I can promise you the city is chomping at the bit for that case.


Yes, if there are fair housing problems, let's get those addressed. But you're just guessing Lockey will win on the merits on a deal that just about everyone thinks was monumentally bad for downtown. 


stifki
stifki

@bennyt8 


Point well taken: 


All commenters here should read the HUD Finding's attached hereto by Schutze before speaking in an uninformed fashion. 


It is a treasure trove of arguments asked and answered below. 

rbush3
rbush3

@beancount The deal changed radically after the passage of that resolution. 

rbush3
rbush3

@JimSX Unreal. Citywalk at Akard, John Greenan. Atmos Lofts, Greenan and the Hamiltons. Belleview, Jack Matthews. Really Jim? Is that the Klan? 

JimSX
JimSX topcommenter

@beancount

Here is the line that really makes my blood boil: "$9M of investor equity which is unhappy." These bastards know Lockey has $9 million from  investors who are getting antsy.They like that. They see it as a way to get rid of him. At this point in the deal (see below) they are bum-rushing him around, yanking back funding, playing him, and they are chortling over how bad he must look to his investors. Like doing business with the Mafia. Then later they say (and Rudy joins the chorus): oh look, his deal went belly up. Well, yeah! 

maxim2
maxim2

Must have been a really bad deal for the director of ED to "recommend 49M" of taxpayers monies. Much more than this itsy bitsy bit of stuff.

RTGolden1
RTGolden1 topcommenter

@rbush3 "Where did I write they had a deal? "

How about right here:  "Meanwhile, city attorneys have been frantically working with HUD to get a better deal. The feds have agreed to scuttle any payments to Lockey and MacKenzie."

I didn't even have to read the editorial, you posted it right below.  If the city attorneys are working frantically to get a better deal, that implies there is a deal on the table already.

WylieH
WylieH

@rbush3 I agree that it was ridiculous to try to force taxpayers to pay Lockey... his deal didn't stack up on the merits.

WylieH
WylieH

@rbush3 Wylie H. saw 1600 Pacific as a bad deal, as well.  That is probably the real reason the City passed.

Chattering_Monkey
Chattering_Monkey

@rbush3 Of course they all said it was a bad deal, because none of them wanted him to do what he said he was going to do.  SO just because everyone said it was a bad doesn't mean it was a bad deal.  They want their rules followed.  Dallas didn't, they found out because of Lockey, how is that not whistleblowing, Unless you are saying HUD knew and wasnt going to do anything about it until Lockey went to the courts.  

JimSX
JimSX topcommenter

@rbush3

One correction. The HUD letter of findings cites deals in which Dallas continued to do business with Forest City, the Hamiltons and Prescott Realty after they had bankruptcy problems, in violation  of HUD rules for how soon after a bankruptcy the city can do a deal with somebody using HUD money. HUD measured the solvency of the Lockey deal against all those other developers. It was worse on some counts, better on others  but way inside the ballpark. 


The difference was that the others not only agreed to the city's stipulation of a very small share going to poor black and brown people, some of them even ginned jup their own illegal deed restrictions barring some demographics. 


The city knew exactly how the demographics worked. HUD used the city's own studies to show that the city knew full well that barring low income people in Dallas would throw a big slant into the racial mix. "Low income" was code for "black, Latino and disabled."


Much as it pains me to say, Angela is mentioned high in the HUD letter because long before she had any financial qualms, she told a TV station she didn't like the amount of low income Lockey was putting into his deal. 


What HUD found was that everybody at City all beat up on Lockey for having too many black and brown people in his mix, then only later when he bit back at them through HUD did they come up with the story about his finances. 


Compared to everybody else doing these deals downtown, the financial story just does not hold water. Read the letter.


I am a huge admirer of Hunt and of Kingston, too. But they're over 21, been to a hog auction before, and they need to look very closely before they enlist. 

rbush3
rbush3

@beancount And the resolution wasn't to approve the deal. It was to approve 1600 Pacific to submit an application to the Texas Board of Bond Review by Dec. 31, 2008. That never happened.

JimSX
JimSX topcommenter

@rbush3 @JimSX Oh, no, sorry, good point. Too broad a brush for sure. No, I only mean the individuals named in the HUD letter,

JimSX
JimSX topcommenter

@WylieH @rbush3

OK,  but you need to look at the HUD letter of non-compliance.

http://www.scribd.com/doc/188549166/HUD-Letter-of-Findings-of-Non-Compliance

They did this analysis, comparing Lockey to the Hamiltons, Prescott realty and Forest City, and they found that Lockey's deal was right inside the ballpark.

There is an email trail and statements on TV and other stuff where for a long time the only objection to Lockey's deal was the amount of low income. The financial argument is post facto, and HUD decided it sounded too much like, "We're not prejudiced, we're just worried about our property values." 

beancount
beancount

@WylieH @rbush3


Wait, WylieH, on the editorial you defended Angel Hunt by saying: "She was getting bad and incomplete info from City staff... THAT'S where she was." 


Who told you to change your mind? I thought you used your own brain? 

JimSX
JimSX topcommenter

@rbush3

Rudy, the Dallas Housing Finance Corporation approved $102 million in HERA bonds for the Lockey deal. Karl Zavitkovsky and Economic Development approved another $48 million in TIF money. If your story were true, that everybody who even looked at Lockey knew his deal was bullshit, how on earth do you explain $150 million in financing they wanted to give him? 


After they got a look at Lockey's low income mix, the DHFC withdrew the HERA bonds, which carried a stiff requirement for low income mix. Then the city sent back, forfeited, didn't use $150 million worth of HERA bonds it could have used to build housing. Rather than create housing opportunities for low income (black, brown and disabled) people downtown, the city gave back $150 million to the federal government.


HUD looked at this and other evidence and decided that the city was lying about what it did to Lockey and why. 

maxim2
maxim2

Never known a developer in my life that neglected to fill out an application to secure their financing. Obviously more to this story because your argument in nonsensical.

JimSX
JimSX topcommenter

@rbush3 @beancount

This is a technical argument advanced by the city early in dealings with HUD. HUD pretty much drop-kicked it.  

rbush3
rbush3

@JimSX They kept coming back for more and more and still couldn't get it to work. They ultimately sought $70m in TIF funds, or 85% of the downtown connection TIF. That would have exhausted the ability to redevelop other properties. The public expenditure added up to $112m. The final value of the building? At most $48 million. That's if it included units as small as 375 square feet. 

Lockey and MacKenzie had never completed a major project like this. They were in arrears on their taxes, couldn't pay the note on the building and were in a dispute with the landlord of the attached parking garage. 

86753099
86753099

I literally fell out of my chair laughing at this one, Rudy.

JimSX
JimSX topcommenter

@rbush3 @JimSX Simply not true. First of all, true low income housing requires huge subsidy because the rents are too low to finance the project, way too low.

Lockey was funded with the $102 HERA bonds, which the city rescinded. He came back to the TIF, still trying to do the deal. He brought them a spreadsheet saying, "Here is exactly what you are giving the Hamiltons for low-income units from the TIF on a per unit basis. Just give us the same." The math came out to $78 million. Yes, they were coming back, trying to keep their boat afloat, while City Hall was drilling holes in the hull.   

rbush3
rbush3

@JimSX @rbush3 Without the capital to keep their building or the cash to pay their taxes. They assumed they would get the money with a building that would have exhausted the TIF. Plus, at some point, they wanted to add in LIHTC funds. The formula for that is beyond complicated and there is no one who can guarantee they will get them. 

Jim, it wasn't a viable project. 

JimSX
JimSX topcommenter

@rbush3 @JimSX @WylieH

No, not that I know of. HUD said the city funded deals that had the same fundamentals as Lockey's deal but a much lower component of low income, however they got that worked out. (There's the later Atmos deal where all the low income was crammed into a separate ghetto building, but that's another issue. HUD didn't like that, either.) 


I don't think HUD ever questioned the legality of the waivers. They just said Dallas City Hall likes developers who get high waivers and then tries to destroy a project because it doesn't have any waivers.


The argument that HUD waivers show HUD's bad, too, and that gets us out of something was at the heart of the Warren Ernst letter to HUD, and it was really weak, sort of like telling a cop, "Your taillight's out, so you can't ticket me for no headlights. " Guess again.

stifki
stifki

@rbush3 @JimSX


The 102 million HERA Bond allocation automatically qualified the project for the 4% non-competitive tax credits, doofus. Tell City Hall to give you some more ammo, Rudy! Your shooting blanks!

RTGolden1
RTGolden1 topcommenter

@rbush3 @JimSX If the deal was financed originally under the premise of the $102m HERA funding, which was then rescinded, that might explain why they didn't have the capital to float the boat.  As Jim claims, the city was drilling the hull.

I'm not a big fan of public/private funding for private profit projects, I don't see an upside to them.  However, your argument and the city's position seems like a lot of tap dancing.  If the project was initially approved for $150m in public funding, based on the financing and investment he had, then had it rescinded and subsequent, lower, requests for public funds denied, it would seem to any reasonably intelligent observer that the denial of funding stemmed from something other than private side financing shortfalls.

JimSX
JimSX topcommenter

@rbush3 @JimSX

Nice try, Rudy, but these are all after-the-fact arguments made by the city, argued by lawyers back and forth, ultimately rejected by HUD. But if you believe HUD is just wrong in all of its conclusions about Lockey and City Hall is right, then I guess we are at an impasse. I do need to observe that there is nothing obvious or self-evident about these assertions you keep making so adamantly. In fact anyone looking at this from a distance would say the preponderance of the evidence is solid against you. The problem with having to defend City Hall is that you have a fool for a client. 

stifki
stifki

@JimSX @rbush3 @WylieH


I'm sure there is language in the waivers whereby HUD is granting the waiver based on promises and representations by the City. 

rbush3
rbush3

@JimSX @rbush3 Tell you what. Let's do business. You put up all the money and when we're done, I get the profits. 

JimSX
JimSX topcommenter

@rbush3 @JimSX

Rudy, again, HUD examined the Lockey deal, examined the Hamiltons, Forest City, Prescott Realty, and found that on some metrics Lockey was worse, on some better, in general he was in the same ballpark. HUD looked at the email trail and public pronouncements of people saying Lockey had too much low income and decided the financial argument was phony, like "I'm not prejudiced, I'm just worried about my property values." Get on that elevator, that's who you're riding with, and I really don't think you want to go to their floor. 

PlanoDave
PlanoDave

@JimSX @rbush3 

Jim, I hate to over-simplify, but sometimes I have to in order to put things right in my mind.

In this case it seems that you are saying that you are partially right because HUD is a bunch of idiots.

But, when Rudy says that he isn't partially wrong, you say he is because of HUD's brilliance.

Which is is, man?

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