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A Tale of City Deals!

Many city real estate deals and physical development permitting decisions stink rotten to the high heavens, making for a tale of two such amazing city deals and much more.

Photo of the Houston Summit in appetizing glory

Let’s begin with A GREAT ECONOMIC LOSS to the city that was the deal to sell the Summit whole and entire to Lakewood Church “non-profit” organization.  See picture of the former home of the Houston Rockets where they won back to back NBA championships in 1994 and 1995.  The famous SUMMIT is located in prime area of land and was sadly sold lock, stock and barrel for a measly 7.5 millions dollars. The actual appraisal value of the SUMMIT property was significantly higher then and would have been handy now for sale to reduce the going budget deficit.  And better still, imagine a city permitting and other similar general service outlets in the Summit with all it’s abundant amenities, including parking.

Yes, the actual damage is already done but hold your nose just yet! Think for a moment of the SUMMIT and comprehend the sales price vs. opportunity cost to the city. While at it, deliberate on these two questions that immediately come to mind:
  1. WHY DOES THE CITY NEED A CHIEF DEVELOPMENT OFFICER WHO SELLS CITY PROPERTY BELOW ITS MARKET VALUE?
  2. WHY DOES THE CITY NEED A CITY ENGINEER (NOW A DEPUTY DIRECTOR CUM CODE ENFORCEMENT OFFICER) WHO MAKES BAD DECISIONS ON PROPOSED PHYSICAL DEVELOPMENT PERMIT APPLICATIONS? 
 
Notwithstanding, however, another example of waste of tax dollars is currently in progress. This time it is a building purchase and restoration deal for a dingy, used-to-be warehouse building built in early 1920’s. Once again the city’s two wise guys negotiated the purchase contract and approved the restoration work order for a soon-to-be home of the high traffic City Permitting Services. With their blessing the work is in progress and costing the city an arm and a leg.
 
Please see the photograph of the renovation building in the naked back alley property by downtown’s north end bayou.  Then view the construction cost displayed in the sign post -- $23,463,438.00 and counting!
 
Photo of the Houston Summit in appetizing glory

   Picture 1: Old Warehouse Renovation Project

 

  

Picture 2: Project Price Tag (and possibly counting)

 

Now the plan is to move employees of code enforcement from 3300 Main Street (building ALSO FOR SALE by the City), and other city employees from different sections of  Public Works and Engineering department from their current locations to this building that has inadequate parking and less than adequate SAFETY consideration for the employees and visitors to the faciltiy.  Did these plush decision makers consider peoples safety at all?

The distance from the building under restoration to its proposed parking lots (under the freeway) is quite far, particularly for women and other employees. Employees and visitors alike will be easy target for criminals wondering around unsafe parking lots.  The following table summarizes HPD crime report for the general vicinity of the building location.

 

 

This expensive restoration project is underway.  The city is spending about four times more to restore this old warehouse than 7.5 million dollars it sold the Summit.  And we wonder!  HOW MUCH TAX DOLLARS WAS SPENT TO PURCHASE THIS WAREHOUSE THAT HAS ONLY ONE DRIVEWAY ACCESS?

 

 Picture 3: The lone driveway

Information we obtained is that about 700 plus employees would be housed in this building and roughly 300 regular visitors per day seeking permits.  A total of about 1,000 people would be using this building daily with ONE POINT ACCESS.

Even for a subdivision, Ordinance NO. 99-262, Chapter 42 –190, requires a TWO POINT ACCESS for single-family homes that has over 150 lots.  "Any subdivision that includes more than 150 lots shall have at least two points of access separated from each other by a distance of at least 250 feet to a public street outside the boundaries of the subdivision."

And what about the FIRE CODE REQUIREMENT?  We believe that the fire department requires a TWO POINT ACCESS as well. We know this is an office building but why is this office building  getting safety requirement waivers? From a safety standpoint, single driveway will not hold a mass exodus in case of emergency.  It is evident that no consideration has been given to SAFETY. The code enforcement guru failed to comply with the same code rules he is entrusted to enforce!

It is quite interesting that the same high officials who were involved in the controversial ASHBY HIGH RISE APARTMENTS PROJECT where they blocked the development approval for the project  by denying them driveway access permit. It is public knowledge that that bad decision has brought a $40,000,000 lawsuit against the City. What a contrast? First they denied permit to ASHBY HIGH RISE APARTMENTS based on the DRIVEWAY ACCESS.  But this warehouse building that has just ONE DRIVE WAY gets the thumbs up. Bad decision like this for city is a serious competency problem! YOU BE THE JUDGE.    

A COST/ WASTE ANALYSIS:

The tax dollars wasted and intended to be wasted by the so- called High Officials in the Public Works and Engineering Department for 2010 and following years: 

  1. Approximately six million dollars ($6m) in unnecessarily high officials salaries.
  2. SUMMIT BUILDING sold for $7.5 million compared to the actual value of about $50 million.  NET LOSS was $42.5 million.
  3. Restoration of the old warehouse building for city employees to move in is costing over $ 23,000,000.
  4. Cost of overseeing construction is undetermined at this point but expected to be in the hundred thousands. The person in charge of supervising the building construction is Ms. Susan McMillan.  Ms McMillan is a recently retried city employee who possesses neither a degree in engineering nor experience in construction. 
  5. Cost of moving employees from various locations to new site is reliably estimated to cost millions.

 

With all this money, the city could have built its own building to accommodate all of its employees.  The waste of TAX DOLLARS we know are summed up to roughly  $78,000,000; and the impending waste from the law suit is about $ 40,000,000. YOU DO THE MATH!   Bad decisions like these create serious competency problems for the City.   

And another question comes to mind.  Based on what CREDENTIALS was the restoration contract awarded to Susan McMillan and/or her associates, and who authorized the contract?

In a nutshell, awarding contract to an acquaintance with no construction background and selling plush city property at a shockingly low price both stink rotten to the high heavens. Who is responsible for this waste?  What are the perceived roles of the Director of Public Works and Engineering and the Director of the Planning and Development departments?  Could it possibly be that certain highly placed officers have some personal interests in the city purchased warehouse property as it is presently rumored in some quarters? 

 

Other Subtle City Deals to Boot

I.  MUNICIPAL PERMITS FEE HIKES, Who stands to gain?:

In the long running comedy of errors in city financial matters, two names feature prominently in Houston media reports and beyond.  These names are Andy Icken, Mayor’s Chief Development Officer, and Mark Loethen, City Engineer.

As we had observed and posted earlier that despite the hoopla about city budget deficits, the City continues to hire and promote certain choice employees. City Council voted to raise municipal permits fees, hoping to reduce budget deficit.

Again, other BIGGER, BITTING QUESTIONS come to mind…

How is it possible for the City to raise permits and service fees for the tax-payers and yet promote its permitting services employees to higher positions at the same time? This kind of double standard practice would definitely drag the city into deeper financial trouble. And more seriously, it appears that the City is trying to reap a windfall from its citizens in order to accommodate the interests its high salaried officials.  How prudent is the move to simultaneously promote Mark Loethen, P.E., to Deputy Director? How uniquely versatile is Mr. Loethen such that he is also placed in charge of Code Enforcement?  Was this fellow, and few others like him, simply the ‘blessed’ beneficiaries of windfall fee hike dollars coming out of the pockets and purses of average Houstonians who can hardly afford it at this hard economic time?

II.  FROM THE DESK OF CITY CHIEF DEVELOPMENT OFFICER, fast forward to “Buckfund.com, Ashby Apartment.”

Buckhead Investment Partners has announced that it will appear before the Houston City Council to ask that the original uses designed into their proposed building at 1717 Bissonnet be allowed. The City had approved, then revoked approval of a Traffic Impact Analysis by an acknowledged traffic engineering firm, the key principal of which is former assistant head of Traffic Division for the City, which concluded that the project will not have a material adverse impact on Bissonnet and that no mitigation is warranted. This practice is unprecedented in the City of Houston.

 

 

Architect's Rendering of proposed building at 1717 Bissonnet

Buckhead Investment Partners Inc. believes the City’s arbitrarily application of the Driveway Ordinance to force the developer to eliminate mixed-use amenities completely contradicts City officials’ statements that they want new development inside the Loop to create a “walkable Houston”. They posit that the action not only removes predictability from the development process but also results in the loss of millions of dollars in value to their project; and deprives the adjacent neighborhoods of substantial amenities, and the City of significant tax revenues.

Is this a case of new breed of movers, shakers, takers and, of course, tax payer losers?  We the inquiring tax-payers of Houston must wake up and ask, Who are these blessed wise guys?

Solution?

Simple! An under-carpet investigative sweep at the desks of City Chief Development Officer and City Engineer cum Chief Code Enforcement Officer should produce straight and resolute answers. It is important for the future growth of the City that city officers act professionally in the best interest of Houstonians; that city government follows the law consistently as written; and that development decisions, civil service ethical standards, laws and codes, are not contorted to reach political ends and to satiate private financial appetites.

Let's help keep 'em honorable!

 

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