Oakley & Palladium

A reader furnished this opinion from Ed Oakley justifying his Palladium vote. Let me know if it changes your position on the $43 million give away.

Voting for Victory By Ed Oakley, Dallas City Council, District 6	Response
During the 1992 presidential election, the catch phrase "It’s the economy, stupid," became a rallying cry for a nation mired in recession and growing unemployment. Now, ten years later, as our city and our nation faces renewed economic hardship, creative ideas instead of creative phrases are needed to stimulate growth and provide for a better future.	In case I wasn't watching, Bill Clinton did not carry Dallas, Dallas County or the State of Texas. We did not buy that. Granting tax abatements is not a creative idea, it is old news and has not worked yet.
As a member of the Dallas City Council, I recently voted in favor of the Sports Arena Tax Increment Finance District amendments. You may know it more readily as the Victory Project. However it is termed, this vote refers to the future development of the land around the recently completed American Airlines Center. Because so many have questioned why I voted as I did, I feel compelled to answer. And, although I won’t use the word "stupid," simply put, it really is about the economy and the betterment of the citizens I represent.	Oakley represents District 6. He was elected with an overwhelming majority from the northern precincts. Giving away $43 million in future property tax revenue will not be to the betterment of those citizens whose own property taxes are sky high.
In 1998 Dallas voters approved building a new stadium using a tax on rental cars and hotel rooms. Although this was a very close and divisive vote, in the end it provided for $125 million in future revenues to be combined with an estimated $135 million from the Center Operating Company (COC) in order to complete the world-class arena we know today as the American Airlines Center. COC is comprised of the Dallas Mavericks, the Dallas Stars, and Hillwood Developers. In the end, COC spent approximately $275 million to build the facility. Today, COC pays annual rent of $3.4 million per year to the City of Dallas. Additionally the City receives all business, personal, property and sales taxes on the facility.	How does $3.4 million per year come out to be a bargain when we have given away $125 million, plus the hotel/car rental sales tax which has caused a loss in convention booking? In addition, we do not get all sales tax revenue from the facility. Many items are exempt from sales tax per the Master Agreement.
Also during that time, a Tax Increment Finance District or "TIF" was created around the arena to allow the developer to be reimbursed $25 million for infrastructure improvements to the site. The City also invested $12.5 million in bonds and Dallas Water Utilities funds for site improvements including roadways, storm drainage and water/sewer engineering. Other improvements made to the site by COC, costing $25.4 million, will not be reimbursed and included civil site work, utilities, internal roads, and some frontage and service roads. The developers also restored a polluted site to the tax base.	This means that Hicks and Perot got to withhold $25 million from our general budget to put their project needs ahead of the streets in and near your neighborhood. The developers of the nearby JPI apartments faced the same "pollution" problems and removed the same amount of top soil and restored that large tract of land to the tax base without tax abatements. The Victory site will be taxed at the same rate it was as "undeveloped" land.
All of these infrastructure improvements now belong to the City of Dallas. Hillwood pledged to build $525 million in development on the 60-acre site, over 15 years to create enough tax base to pay for the public infrastructure plus interest. If nothing was built, they would not be fully repaid for their improvements. This was the status of the TIF at the time I took office as a City Councilman.	Unfortunately, again, Hillwood gets the right to purchase these so called “public improvement” in the future for pennies on the dollar of their worth. Just as they have the right in 30 years to purchase the Arena for pennies. Our tax dollars go into improvements that Hillwood gets to keep.
Recently, the City Council was asked to amend the TIF. The amendment would create a new subdistrict inside the existing Sports Arena TIF and shift the original repayment obligation to forty acres of the site. The remaining 22-acre site in the new subdistrict would require $49 million in additional infrastructure improvement to create a parking structure for retail only and a 1.5-acre park and plaza. In addition, these funds would be spent on relocation of a sewer main and new streets and streetscapes.	Again, Hicks and Perot and Palladium get to move their infrastructure needs ahead of your area's needs, but you have to pay your taxes anyway. We now have the most expensive roads in the city of Dallas around their arena.
To obtain these requested funds, a Council of Government grant would be sought in the amount of $6 million to pay for transportation connections. The $43 million balance would be reimbursed from additional generated property taxes over 20 years. To provide for this reimbursement, the developer would have to build $600 million on the 22-acres including $49 million in new public infrastructure. Only the City of Dallas, Dallas County, and the Dallas County Hospital District to the extent of their existing commitment will participate in this subdistrict.	There will be no "additional generated property taxes over 20 years" because any improvements are taxed at the same rate as the raw land during the life of the TIF. All revenue from taxes on the "improved" portion of the property go back into the TIF to be spent inside the TIF not added to the general budget.
The developer agreed to a post construction audit to certify that the entire $600 million development has been built and that appropriate developer fees were charged. The City will set the rates for the public parking and for special event fees for the park and plaza. Public Improvement District (PID) bonds will be sold to reimburse the developer. An insurance policy will be obtained by the developer to guarantee the bonds. The PID bonds will hold the first lien position on the project and the developer will also maintain the improvements so as not to burden the city’s general fund.	There is so much room in this deal for the developer to "fudge" the numbers. Secondly, all PID bond sales go against the city's total outstanding bonds and reduce the amount of bonds that can be sold at certain interest rates to do capital improvements in your area and the rest of Dallas outside the arena TIF.
A minimum of $385 million including 300,000-square foot of retail and 400 residential units and $49 million in infrastructure has to be completed by December 31, 2005. The remaining $165 million will have to be completed by 2006 to be able to qualify for the entire $43 million infrastructure reimbursement. Any delays or changes forfeit the obligations of the repayment of infrastructure improvements and any changes will require City Council approval. The Council will vote on specific Development Agreements related to the project and on all cash advances to the City to pay for the public infrastructure to insure all these and other obligations.	It does not matter how much or little is developed at this site because it will only make Downtown redevelopment more difficult. To make this size of development happen, it will be wall-to-wall concrete.
This is the background that brought us to where we are today. Now let me tell you what it means for our future and why I supported the proposal. If this 22-acre $600 million development is built, it will mean the citizens of Dallas will reap the rewards from property taxes generated at this site. In monetary terms over 30 years this means the Dallas County Hospital District could see $80 million, Dallas County, $55 million, the City of Dallas, $108 million, and the Dallas Independent School District $481 million.	This is just untrue. The new development may benefit the DISD because it is exempt from this last TIF give away, but none of the other taxing entities will get additional revenue on the improvements.
In addition to the potential billions in tax revenue, the other reason I supported the development is for what it could mean to the citizens of West Dallas, Oak Cliff, South Dallas, Uptown, Cedars and Oak Lawn in terms of convenient shopping and jobs. These areas need employment and retail outlets that do not require driving north or to the suburbs.	The upscale stores that Palladium untruthfully promised are beyond the means of the average resident of any of these areas. The promised increased jobs is another myth.
While we must work together with our neighboring cities for regional issues such as transportation, air quality, water issues, and other things, we are in competition with them to retain jobs and build a sound financial tax base. Dallas uses the penny sales tax to build The DART Light Rail Lines while our neighboring cities use theirs to build entertainment venues, sports venues, pay police, and even pay businesses to relocate to their city.	Most of our neighboring cities are in DART and will be waiting much longer to get light rail than us. Arlington is the only significant city that is not in DART or the T.
I support projects that have a long-term positive impact on the City, increase economic development, stimulate the local economy and create employment and job opportunities for the citizens of Dallas. I strongly feel that the Victory Project is capable of providing the economic stimulus that our City so desperately needs in order to remain competitive with our surrounding suburbs.	How is increasing the tax load on all other property owners a long-term positive impact while Hicks and Perot get to withhold their true tax responsibilities to spend on their own property?
Your input and ideas are very important to me and I would like to hear your suggestions. I am now online during council meetings and briefings if you have some comments or questions about what is going on in the City, please feel free to call or email me at edoakle@ci.dallas.tx.us. I look forward to hearing from each you.	Right! In 1998, we were promised the arena would be the economic stimulus to make all this happen on its own. $70+ Million later, we are still waiting.