Aug 25, 2005 9:00 pm US/Central By Robert Riggs and Todd Bensman, The Investigators
CBS-11 News

   The rule is clear: When Dallas City Council members' business or financial interests conflict with a meeting agenda item, they must abstain from voting and file an official, notarized disclosure report detailing the conflict.
...  Of 280 documented instances during the council's last two-year term where council members recused themselves from a council vote or debate because of a conflict of interest, council members did not complete the mandatory notarized disclosure reports on 142 occasions ? 51 percent of the time.
   The public, therefore, is left without records or reasons why their elected representatives aren't representing them on dozens of votes, including housing deals, zoning cases and transportation decisions.
   City Secretary Shirley Acy, ... "I don't have the staff to police the reports. We don't look back to see if the reports have been filed," Ms. Acy said. "We depend on the council person and his or her assistant to comply. As it is, it's an honor system."
... The council members who most frequently don't submit the required forms offered varying reasons why.
   Council member Bill Blaydes recused himself from 113 council votes during the 2003-05 council session ? the most among his colleagues ? and filed disclosure reports 45 times, according to city records.
... Council member Mitchell Rasansky ...  recused himself from 85 votes or council discussions during the previous council session, usually because he had personal business or real estate interests regarding agenda items.
... Mayor Pro Tem Don Hill did not fill out reports for any of the five times he abstained from voting. Each vote, he said, involved taxi services, in which he has business interests.
... Penalties for violating the Code of Ethics' disclosure provision are vague.
... If political leaders don't believe an ethics law will be enforced, they're less likely to follow it, said Leah Rush, director of state projects for the Center for Public Integrity, an independent organization based in Washington, D.C., that monitors governmental ethics. ...  These ethics laws' effectiveness comes down to how people use them."
   Mayor Laura Miller, who filed proper reports nearly every time she recused herself from a vote last session (14 conflicts, 12 reports), says Ms. Acy must at least send a memorandum to council members reminding them of what the Code of Ethics requires.
... "Citizens want to know: 'Why would that person have a conflict of interest? What financial interest do they have in this?' " the mayor said. ...

   The FBI's increasingly complex probe of Dallas City Hall seems to have had a simple start: two bitter apartment developers battling over millions of dollars in controversial tax subsidies.
   Some of the politicians named in recent subpoenas and search warrants blame the investigation on racism because many of the apparent targets are black.
   But federal agents swept into City Hall after two white developers, Brian Potashnik and James R. "Bill" Fisher, became locked in a winner-take-all battle for City Council approval of their rival apartment projects in southern Dallas.
   Their struggle links several spectacles that have become headline news or hot gossip among the city's political class, including: ...
? A council member successfully pushing approval for an apartment complex that city housing planners opposed ? after the developer hired the council member's security company.
? Two city leaders enjoying the use of luxury autos they never paid for.
? Public officials steering a developer toward hiring their political associates as consultants and contractors on housing projects.
? A retired DISD principal getting named to the city's Plan Commission, then getting hired by one of the developers and then occasionally voting on matters affecting his employer.
? Several other apartment projects winning council approval, often over planners' objections, while developers collectively donated tens of thousands of dollars to political campaigns of black and white council members.
... "It got to the point that you had Fisher on one side of the road and Potashnik on the other side of the road fighting about which one would get his deal done," Mayor Laura Miller recalled. "This is when everything went a little crazy."
   Public records and interviews show that Mr. Potashnik and Mr. Fisher were pushing dueling projects in three different neighborhoods last year ? six apartment complexes in all.
... And there were other complications. The city's own housing department experts declined to endorse any of the six projects
... Despite the obstacles, the council approved two of Mr. Potashnik's projects and one of Mr. Fisher's.
... Matt Yarbrough, ...  said the City Council approved company apartment projects on their own merit.
   And he insisted that Southwest Housing had hired Melvin Traylor, a city plan commissioner, because he is an experienced educator who could help the company run tutoring programs for its tenants, not because he could do things for Southwest Housing at City Hall.
... A growing number of people have criticized affordable housing programs for creating future slums instead of bringing in single-family homes, shops and restaurants.
... Mr. Potashnik has become a prosperous Highland Park family man who likes to play high-stakes poker in Las Vegas.
... Mr. Fisher knew the Southwest Housing system for developing properties. But he didn't have Mr. Potashnik's City Hall connections and track record.
... Competing developers began investigating each other's community support to see whether it was real or bogus.
   In Dallas, the new rules also required developers to get City Council endorsement as a prerequisite for getting state tax credits or low-interest bonds.
... The city's housing staff didn't help them any. After conducting market studies, the staff decided not to endorse any of the six projects, citing an abundance of low-income apartments and flat occupancy levels.
... Mr. Fisher's Pecan Grove project faced an uphill battle because the property needed to be rezoned from single-family housing to the less desirable multifamily apartments.
   He looked for allies and turned to a relationship he had established with Mr. Fantroy in 2003. Mr. Fisher already had used J.L. Security and Investigations, a Fantroy-owned firm, to guard construction sites as the new apartment complexes got built.
   When the Pecan Grove zoning item came before the council on Sept. 22, 2004, he and Mr. Fantroy walked into the mayor's line of fire.
   Mr. Fantroy, citing the financial connection between his security company and Mr. Fisher's company, announced that he wouldn't vote on the zoning change even though it pertained to property in his council district. He left the council table and asked his colleague, Ms. Thornton-Reese, to carry the zoning change to approval.
   "He said he wanted me to pass it," Ms. Thornton-Reese said at the time. "And he asked me to carry it and I'm doing as he asked."
... The city's code of ethics says the official who develops a conflict of interest must "immediately refrain from further participation in the matter, including discussions with any persons likely to consider the matter."
... Darren Reagan, who heads a nonprofit community development group called Black State Employees Association of Texas, applauded Mr. Fisher for including some retail space in his development. Just two months earlier, Mr. Reagan had written City Hall to protest more apartment construction. In the letter, he had called for a six-month moratorium on such projects, including Mr. Fisher's Pecan Grove.
... "We don't want it, and we seemingly have no way of really combating what's going on," said Lionel Churchill, an officer with the Southeast Dallas Civic Association. He lives about a mile from the Pecan Grove project.
... Mr. Yarbrough, the Potashnik lawyer, said Mr. Hill recommended Ms. Farrington to Southwest Housing executives as a consultant before the council discussed whether to endorse the Rosemont deals last fall. He said Southwest Housing hired her about five days after the approval vote, and her duties included lining up and negotiating with minority contractors and meeting with neighborhood groups.
... In June, Mr. Lee told The News that he helped get Dallas' public housing authority involved in Southwest Housing's two Rosemont projects. That public-private partnership meant Southwest Housing didn't have to pay property taxes, which could save the company hundreds of thousands of dollars over the life of the project.
   As a city plan commissioner, Mr. Lee voted on zoning matters important to Southwest Housing and many other developers.
... Mr. Yarbrough said the Urban League was among the community organizations that Mr. Hill recommended as subcontractors at Southwest Housing apartment complexes. That came after the mayor pro tem had pressed the developer to hire a higher number of minority contractors than the state requires for its tax-credit projects, the lawyer said.
... "We were told that, as a North Dallas developer who has been successful, that if we were going to continue doing business in South Dallas, we had to hire more people from the community," Mr. Yarbrough said.
... Southwest Housing's lawyer said Mr. Hill and Mr. Lee also urged the company to hire Andrea Spencer, a businesswoman who had won construction contracts to pour concrete. She once shared a Dallas office with Mr. Lee and Ms. Farrington.
... Mr. Fisher refused to confirm or deny that he is working with the FBI. And agents are not talking about their strategy. ...

... James R. "Bill" Fisher was trying to establish himself as a viable low-income housing developer at City Hall. After six years as an executive at Southwest Housing Development, he was striking out on his own.
... Mr. Fisher, flanked by his consultants, stood before 15 City Council members perched around their horseshoe-shaped meeting table. Item 70 on the Sept. 10, 2003, agenda called for approval of city financing for Mr. Fisher's 289-unit Rose Court at Thorntree Apartments at Old Hickory Trail and Beckleymeade Avenue in southern Dallas.
... When time for council discussion arrived, council member James Fantroy pushed away from the council table, announced that he would abstain from voting and left the room.
... "I asked him why Mr. Fantroy was abstaining, and he told me it was because he [Mr. Fantroy] would get a security contract" with Mr. Fisher, Ms. Miller said.
   Ms. Miller said she left the council table and went to the podium where Mr. Fisher and his colleagues were making their presentation to the council. She introduced herself and asked Mr. Fisher if it was true that Mr. Fantroy's family-owned J.L. Security and Investigations Co. would get a contract to protect the apartment complex site if the council approved the funding.
   "And he said, 'Yes.' And so I said, 'This is a problem,' " she recalled. "He was so blatant and open about it. It was like it was the most natural thing in the world."
   Ms. Miller then took council members into a closed session to tell them what she had learned. She persuaded them to postpone the vote on Mr. Fisher's project for two weeks while the city attorney researched Texas' conflict-of-interest law.
... Later, they would learn what Mr. Fantroy already knew. State law doesn't prohibit council members from having a financial relationship with someone who does business with the city as long as they follow the so-called disclosure/abstention procedures.
... Mr. Backes, who had built an established development company called Provident Realty, said the flare-up marked the beginning of the end of his partnership with Mr. Fisher.
... The venture hit shaky ground, Mr. Backes said, when, he stumbled across a payment invoice several weeks before the Sept. 10 council meeting. He learned then that J.L. Security was working on one of their apartment projects in Denton.
... "This stuff with Fantroy was totally against the way we'd conducted business," he said of Provident Realty. "It's just not good to do business with public officials, period."
... Ms. Miller said her discovery of financial ties between Mr. Fisher and Mr. Fantroy was her first inkling that political shenanigans might be invading the approval process for affordable housing projects.
... Ms. Miller said she did not call federal investigators despite her concerns about the Fisher-Fantroy connection.
   Mr. Fantroy said his company no longer has a security contract with Mr. Fisher. He said their past relationship was legal and above-board. But he acknowledged that the Sept. 10, 2003, council meeting might have prompted the FBI to start looking into the nexus between affordable housing developers and City Hall.
  "Sure," he said. "But that's just my opinion."