KPRC: City continues to pursue loan for controversial developer
In November of last year, Richard Connelly shined some light on a seemingly arcane bit of business on Mayor White's agenda:
It's probably not a great idea for a city government to do business with a developer of low-income housing if that developer is the subject of an FBI probe that may bring down Dallas's mayor pro tem.
So it's likely a good thing that Houston didn't lend developer Brian Potashnik $2.3 million, as it planned to do at one time.
But how it reached that decision shows the city bureaucracy is still a wondrous thing to behold.
Approval of the two loans to Potashnik was on the agenda of City Council's Housing Committee November 15; the meeting ended before they reached the item, so discussion was rescheduled for November 21. Between those dates, committee chair Shelley Sekula-Gibbs was asked (by a Houston Press reporter) whether she knew about the FBI investigation.
It turns out she did, and had asked the city's director of housing, Milton Wilson -- all the way back in June, when a deal with Potashnik was first proposed -- to respond to her concerns about the Dallas matter. She never heard back from him.
"We have had some very ill-conceived, ill-advised relationships with…affordable-housing developers in the past, and we should be scrutinizing these things very carefully," Sekula-Gibbs says. "It really bothers me that we were not given more detail on this project."
Wilson says he didn't get back to the councilwoman because the proposed deal was dead, and had been dead since shortly after it first came up. (This all concerns the arcane and Byzantine world of HUD, so just accept the fact that both the housing projects in question have already been finished.)
Just to make things more confusing, the mayor's office tried to resuscitate the deal after its demise. Aides there wanted to redirect money to the project partly because the city had placed some Katrina evacuees in the apartment complexes.
So, as far as the council's Housing Committee was concerned, they were still being asked to get in bed with Potashnik and weren't getting any response to their concerns about that potential hookup. Wilson, however, says he would have told the committee to ignore the item if they had reached it at the November 21 meeting.
Right.
Here's a report on KPRC-2's website today:
A Dallas developer wants a $2.3 million loan from Houston, but some city council members say it's risky business as a bailout that could cost taxpayers, the KPRC Local 2 Troubleshooters reported Tuesday.
Brian Potashnik is developing apartment complexes in Houston and asking Houston City Council for a $2.3 million loan with your tax dollars. He's also at the center of an FBI investigation in north Texas.
The cash is needed because his company, Southwest Properties, missed out on federal funds that were linked to a development contract that he signed with the city. He lost the federal money because some city leaders said his company violated the contract.
"I don't want anyone to think they can not live up to their contract obligations and just come to city council and change the contract," Houston City Councilman M. J. Khan said.
The contract required Southwest Properties to secure certain bonds before building two senior citizen apartment complexes. But that did not happen and they were built anyway, the Troubleshooters reported. One of them is on Airline and the other is located on Aldine Bender near Interstate 45.
[snip]
White's staff has been pushing for the loan despite the broken contract.
"We entered into negotiations with the owner to try to find a way that we could mitigate the fact that they had not complied with the requirements of the contract," said John Walsh, the mayor's housing aide.
[snip]
Council members grilled him about the FBI investigation in Dallas, where city leaders are accused of taking free rent in exchange for approving his projects.
Potashnik told Houston City Council that he did nothing improper, but he would not talk to the Troubleshooters about any of it.
[snip]
Council members are getting the full court press for the loan, even from Mayor White, the station reported.
In a memo, White called both of the projects "high quality" and he alluded to the FBI probe in Dallas, saying it shouldn't be a problem in Houston, even if wrongdoing is found.
But enough council members are bothered about all of the questions surrounding the loan of tax money that the vote could be delayed Wednesday or council could vote it down.
It sounds like business as usual at City Hall. Maybe that is what Mayor White means when he talks about running the city like a business.
RELATED: Nonprofit's 'loan' helped builder profit (Dallas Morning News), Investors sue developer entangled in City Hall investigation (Dallas Morning News), Stacked deck (Dallas Observer), Firm in Dallas probe has housing projects pending in Houston (Houston Chronicle, 06/23/2005).
Posted by Kevin Whited @ 04/26/06 10:52 AM | Houston Miscellany | Print | Comments (1)
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