METRO (nontransparently) makes $7.2 million real-estate deal
The Chronicle's Rad Sallee reports that METRO is continuing its transformation from regional transit organization to real-estate development organization:
Metro is buying two blocks along its light-rail line in Midtown from a developer the agency expects will buy the property back and build transit-friendly residential and business space.
In a transaction unprecedented in the agency's history, the Metropolitan Transit Authority board voted March 22 to spend $7.2 million for the blocks bounded by Main, Holman, Travis and Winbern, next to the Ensemble station of Metro's light rail Red line.
The idea is to sell the tract back to developer Robert H. Schultz of RHS Interests for at least the same price after Schultz's partnership is ready to build. Schultz approached Metro with the proposal, he and Metro said.
Agency spokeswoman Raequel Roberts said Metro knows of no other instances in which a transit agency has bought land to hold and sell to a private company for what is known as transit-oriented development.
The board did not discuss the purchase publicly when it voted for the transaction, but Schultz and Todd Mason, Metro's vice president of real estate services, since have outlined the plan for the Houston Chronicle.
Recall that METRO CEO Frank "Procurement Disaster" Wilson recently asserted that his organization operates "in a completely transparent manner." The bolded excerpt must be another example of that transparency at work!
The Chronicle story devotes two whole paragraphs (!) out of 28 to skepticism over the deal:
But City Councilman Michael Berry, who chairs a council committee on transportation and is in the real estate business, disagrees with the whole approach.
"Metro has completely lost focus," Berry said. "They're supposed to be in the business of moving people, and instead they want to be real estate developers."
That's balance, Chron style.
A while back, Tom Kirkendall wrote:
We already know that Metro does not perform particularly well at that which it is chartered to do. In view of that, it's not a good idea for Metro to be getting into the notoriously speculative real estate development business, where it can lose even more money. Indeed, our local government already has a dubious record of boondoggles in that area.
Charter, schmarter! There's world-class light-rail utopia to be constructed here, with just a little (okay, a lot of) real-estate-development help from the regional transit organization. Never mind how many bus routes might not have suffered "service adjustments" (translation: cuts) had this money been invested in bus service (in line with the 50% increase in bus service promised in the 2003 referendum). We want Houston to be world-class, don't we? World-class doesn't come without some costs!
UPDATE (04-06-2007): The Chronicle's Rad Sallee reports today that Harris County officials say METRO will not be allowed to hold the property free of taxes:
The Metropolitan Transit Authority will have to pay taxes on property it plans to buy and hold for private development next to its rail line, or provide a good reason why it shouldn't, tax officials said Thursday.
Todd Mason, Metro vice president of real estate services, responded that the project's benefits in increased transit ridership and eventual tax revenue would outweigh costs in taxes or lost interest stemming from the purchase. And if the project falls through, he said, Metro will probably be able to sell the land at a profit.
He declined to speculate on whether Metro will challenge the assertion that it must pay property taxes.
BLOGVERSATION: Lou Minatti, Lose an Eye, It's a Sport, Houston's Clear Thinkers.
RELATED MATERIAL FROM THE ARCHIVES: Eminent domain power concern local property rights groups, METRO looks to real estate development for revenue, From METRO Solutions to Galleria redevelopment? , METRO to build the Danger Train Hotel, METRO's trying to emulate Dallas with new development, It's full steam ahead at METRO's Real Estate Development Dept., Frank Wilson: This is not your father's METRO, Maybe Tilman Fertitta could build a Park & Ride ferris wheel?, METRO acquires downtown property for future needs, Wolff Cos. frets over government agency's venture into real estate, AstroWorld site developers seek management district designation.
Posted by Kevin Whited @ 04/05/07 09:55 AM | Print |
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