The City of Dallas is budgeted to pay over $500,000 to lease access to underground tunnels in downtown that earn under $50,000 in revenue. Now, elected officials want to know why — all while trying to figure out a way to remedy the city’s grossly underfunded public safety pension and balance a multibillion-dollar budget.
But according to one city council member, it took city staff three weeks to get the information.
"Staff's explanation of what the lease entails, who the lease is with, and even how much the lease is for, has changed three or four times since the mid-August...meeting," District 1 Council Member Chad West told KERA in a text on Wednesday.
West introduced a motion to keep those funds in reserve until city staff had firm answers on the contract, during Wednesday's City Council meeting.
The lease for a pedestrian tunnel under 1627 Pacific Avenue — or Thanks-Giving Square, a park and public meeting space in downtown — has been in place since 1972 and was approved for a 75-year term, according to a staff memo presented to the council in late June. The memo also indicated the city pays just $65,000 for the lease.
But that was the original price when the contract was negotiated in the 1970s — and it increases every three years “based on [the] Consumer Price Index,” according to a city staffer.
The city is budgeting just over $512,000 for the lease in fiscal year 2025.
The city subleases space in the pedestrian tunnel and collects over $48,000 annually. It’s also responsible for the tunnel’s maintenance and repairs. And the 75-year contract — which staff said is with the foundation associated with Thanks-Giving Square — has no termination agreement in place.
District 6 Council Member Omar Narvaez said during the meeting he wanted to introduce a motion about the issue — but decided not to because of the confusion over the contract.
"The implications that could cause is us getting sued for some piddly money that we didn't even know was there or not there," Narvaez said.
West said he found out the city also owns the truck terminal under Thanks-Giving Square that "services four privately-owned corporate towers." Between the expenses of the tunnel lease and the truck terminal — the city is on the hook for over $600,000 in contracts.
"The lack of accountability and transparency surrounding this $600k [plus, per year] real estate contract is disturbing," West said in a text. "[It] tells me that we cant wait any longer to uncover, report on, and reassess all of the city's real estate assets, both owned and lease, as our taxpayers deserve no less."
Donzell Gipson, an interim assistant city manager, told the council on Wednesday the city tries to recoup maintenance funds from leasing access to the truck terminal.
"In theory, whatever we spend related to servicing the truck terminal, we in turn charge our customers...for the reimburse cost," Gipson said.
But Gipson said later in the meeting, there were issues with actually collecting the money. Since the contract is so old, and the tenants using the truck terminal change over the years, sometimes new tenants don't want to pay their bill, according to Gipson.
"When we go to make our annual collections...sometimes there are disputes relative to new ownership that suggest that they don't have record of this agreement," Gipson said.
District 11 Council Member Jaynie Schultz said during the meeting she would not support the motion to freeze the funds.
"I think its not responsible because we could end up...with unintended consequences that end up costing us more ," Schultz said. "We don't know. with clarity, what it will do to the Thanks-Giving Square Foundation."
Schultz said the foundation has been a long time city partner and "one of the most important and iconic" architectural pieces in Dallas.
"I don't want to do any damage at all, potentially, to them," Schultz said. "If it turns out...its not hurting anything and all that, then please we can make a budget adjustment all year long."
With a majority of council signaling their support for freezing the fund, West's amendment to put the funds in reserve while staff figures out what the contracts entail, was approved.
Got a tip? Email Nathan Collins at ncollins@kera.org. You can follow Nathan on Twitter @nathannotforyou.
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