The city of Dallas spends hundreds of thousands of dollars a year to lease an underground tunnel. That money is a big part of the budget for a nonprofit that operates Thanks-Giving Square — a private park and meeting space in downtown.
And according to a contract signed in the early 1970s, the city will have to keep paying for another 23 years to lease the pedestrian tunnel running underneath the Square on Pacific Avenue.
Dallas’ lease with the Thanks-Giving Foundation, the nonprofit running operating the square, is budgeted to be over $500,000 for the upcoming fiscal year. That money makes up a significant part of the foundation’s total contributions and operating budget, according to the nonprofit’s tax statements.
The deal nets the city under $50,000.
The agreement was signed in 1972 for a 75-year period, with a three-year rate increase tied to a consumer price index — but without a termination clause.
Kyle Ogden is the president and CEO of the foundation. He says the lease payments are important to Thanks-Giving Square.
“Its an important part of the finances, no doubt about that,” Ogden told KERA. “The city does pay us an annual payment and it is significant and it’s an important part of our constitution of finances here.”
The debate among city council members about the contract comes at a time when city officials are trying to fund billions in police and fire pension liabilities — and approve a budget. Council members found out about the contract while trying to see what real estate assets the city could monetize to help pay for city services.
"I’m concerned that the city subsidizes the vast majority of this nonprofit’s budget," District 1 Council Member Chad West told KERA in a text. "The financial commitment represents over $600k per year when we have urgent needs elsewhere, such as keeping our libraries open and funding the police and fire pension."
Council members voiced frustration and confusion about the contract earlier this month. Some said staff presented them with inaccurate information when first asked about the contract, while others questioned what would happen if the city simply stopped paying the lease.
The council signaled its support for holding the funds while staff figures out the specifics of the contract. Some elected officials said during an early September meeting they were not in favor of the freeze and said it could hurt the nonprofits involved with the lease.
But to Ogden, who is the only foundation executive listed in its tax statements as earning a salary and was paid over $130,000 in recent years, the issue isn’t with the specific contact between the city and the foundation.
“The issue is really that…people that aren’t part of the city now and people who aren’t part of the foundation now, made the decision that it was a good thing to connect the city of Dallas underground,” Ogden said.
“The city made lots of investments in the tunnel system, one of which was a lease from us.”
Ogden says lack of investment into the tunnels has landed the city in its current situation.
Obsolete investments?
The series of tunnels, called the Dallas Pedestrian Network, running underneath downtown connect — or previously connected — specific buildings. There’s little official marketing for the system now, except for a blurb on the city’s tourism arm, the Visit Dallas website.
“Explore three miles of underground tunnels and sky bridges full of shops and restaurants. Major entrances at Thanks-Giving Square, Renaissance Tower, One Main Place and Bank of America Plaza. Closed evenings and weekends,” the website reads.
Ogden said sometime after the lease was signed in the early-1970s, the city turned in a different direction.
“Somebody came not long after that and said ‘that’s not a good idea, lets abandon the tunnels…that’s not an important part of the future of downtown Dallas’,” Ogden said. “That decision obsoleted a lot of investment that had been previously made, including this agreement that was made and in place with the Thanks-Giving Foundation.”
Laura Miller, the former mayor of Dallas, said in a 2005 New York Times article that the pedestrian network was a mistake.
“If I could take a cement mixer and pour cement in and clog up the tunnels, I would do it today,” Miller said in the article. “It was the worst urban planning decision that Dallas has ever made. They thought it was hip and groovy to create and underground community, but it was a deal knell.”
Regardless of the origins of the contract, it was clear during the council’s discussion that city staff, along with elected officials, had conflicting information about the deal.
City staff originally told a council committee the lease runs the city just $65,000. But that was the cost when the contract was signed in 1972.
"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 earlier this month.
‘Whatever the community needs’
The Thanks-Giving Foundation aims to “establish, maintain and support religious, charitable, scientific or educational agencies, institutions, or projects and to give thanks at all times to God,” according to the group’s tax statements.
The foundation runs and maintains Thanks-Giving Square on Pacific Avenue in downtown Dallas. The main building — which houses the Hall of Thanksgiving — was designed by Philip Johnson.
Craig Davis, president and CEO of the city’s tourism arm, Visit Dallas, and Liz Cedillo-Pereira, a current Dallas assistant city manager, both sit on the foundation’s board of directors, according to the group's website and tax statements.
“We kind of allow ourselves to do whatever the community needs,” Ogden said about the foundation. “We talk about connecting, convening and inspiring as…our tools, if you will, of community work.”
Ogden said that includes hosting a National Day of Prayer luncheon for the last 43 years, a memorial for the six Dallas Police Department officers who were murdered in 2016 —and fundraising over $500,000 to bring business to local restaurants during the COVID-19 pandemic.
The foundation is also setting up screenings of "Join or Die", a documentary about America’s “civic unraveling through the journey of legendary social scientist Robert Putnam,” according to the film’s website.
The shell-shaped building in the center of the square houses the Hall of Thanksgiving, which serves as a meeting space and chapel. The city council hosted a special called meeting at Thanks-Giving Square in 2023.
‘Our best path forward’
Right now, the city is under a November 1 deadline to submit a plan to remedy billions in unfunded police and fire pension liabilities. City officials will also have to approve a new budget in the coming weeks.
The council signaled its support for holding the funds budgeted to pay the over half a million-dollar lease until it could figure out the details.
“What happens when we don’t pay the bill?” District 9 Council Member Paula Blackmon asked during an early-September meeting.
If the city doesn’t pay, it would be in default of the contract with Thanks-Giving Foundation, according to the city’s attorneys.
“[The contract] is very specific of nonpayment of rent is caused to specific…penalties and all kinds of stuff,” Ogden told KERA. “That’s really not a real option going forward, to just ignore it or pretend it doesn’t exist.”
Ogden said if the city stopped making the payments — which has no termination clause — it would be cause of legal action. Plus, he says it wouldn’t be right.
“I would argue there is a fairness issue there too,” Ogden said. “It doesn’t make sense, there’s an equity issue there…I don’t think the city wants to be known for not upholding contracts, and there’s no question that there is a valid contract here.”
Ogden said there isn’t really a debate about the deal.
“Our best path forward is to look at the revenue side of the agreement, and try to figure out if there is a way to create more revenue that more nearly matches the expense,” Ogden said. “That’s really [the city’s] best chance at…what I call ‘making lemonade’.”
Another way the city could monetize the area, to Ogden, is to back up the foundation’s effort for a Thanks-Giving District.
That plan calls for “knocking down walls and creating a pedestrian-first European style square in the surrounding area,” according to a letter Ogden sent to city officials.
The council is slated to finalize the city’s budget at the end of September.
Got a tip? Email Nathan Collins at ncollins@kera.org. You can follow Nathan on Twitter @nathannotforyou.
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