Written by Staff
To Irving Citizens:
Like most everyone, I want an Entertainment Center in Irving. Not for me, but for the good of Irving. However, I don’t think we have to “give away” the choicest location in Irving in order to make a deal. I believe we can make a deal on legitimate and reasonable business terms where Irving has a choice not only about developers but about terms of the deal and return on investment.
While the Supplemental Agenda contained only three items numbered 35, 36 and 37, what actually comprisedthe packets kept changing. It changed as late as 10:00 p.m. on Tuesday night before the Work Session on Wednesday. I ask you how the staff is supposed to digest and recommend any item which it has not held at least a week in advance. Why were these items placed on a “supplemental agenda”? There is an MOU in place with ARK that won’t expire for another month. LCG is pushing and ARK is pushing to settle a lawsuit. LCG stands to lose everything if the judge sets a court date and tosses the case, which is a very real possibility. ARK stands to lose their “hold card” if the case is tossed or settled without them. So they push. Irving stands the most to gain by waiting out the court.
All three legal voices of Irving, the City Attorneys, the outside legal Counsel advising us on LCG matters, and our Bond Counsel all advised us against entering this contract. Yet, staff put it on the supplemental agenda with a recommendation.
Put all that aside and take a quick look at what is really at stake. Irving has a prime piece of property, one we have spent billions on, preparing it for success. We put our money here in this property with DART and the Convention Center and the Hotel rather than bid to keep the Cowboys. This is our diamond, our star. Yet, we seem to want to give it away after all we have done to make it what it is.
This developer is asking us to give it to him, and along with it, provide parking and walkways. In this deal the City would give ARK, the developer, 40 years of ALL excess Brimer tax which is currently averaging approximately $4.2M per year. (Project that figure and see where it leads.) In addition they are asking for all Tiff money for 40 years! The City would collect no property tax because we would own the property. We would agree to give up all state and local sales tax. We also would agree to give up all mixed beverage tax collected. And we would get no fees from any of the parking we built! To top it all off, the contract is for a 99 year lease. To try and skirt provisions in the Charter, they give the opportunity of renewal every 30 years AT THEIR OPTION or our purchase at the market value of the day! We have no choice in the matter at the 30 year intervals. In other words, we have no options and there is no revenue source that we have not given up. For all practical purposes, it is a 99 year lease for which they pay $1 per year for the first 30 years. There is no return on our investment. The ROI is 0.
In addition to these figures being ludicrous, there are other provisions that are illegal by our Charter. The City is prohibited by Charter from binding any future Council for more than 30 years. We cannot give up 40 years of anything. It also seems that the way the 99 year lease is constructed is a violation because is circumvention of the intent of the charter. Thirty years is the maximum amount of time that the council can commit and then it MUST be renegotiated.
We have no say or control over what goes in this EC. We have no control over the process because ARK struck the audit clause. In addition they will not provide an anti-assignment clause, meaning that they could assign or sell the project at any time without our consent or approval. We could have LCG back, a company we engaged in legal battles or someone equally as bad or worse.
ARK will only guarantee 100,000 visitors per year. LCG guaranteed 9,000 visitors per day. That is a huge discrepancy! Again we are getting nothing. Only 50,000 square feet of restaurant space is allotted, and we have absolutely no control over what restaurants go there or who the proprietors are.
The City has required no business plan or market study from ARK. Who does business like that? The City has no oversight over the project, no say in its future and no control over its vendors, yet we own it. There was no RFP. This is wrong. All of this is wrong. We are trying hard to make the same mistake twice – get ourselves into a very bad contract where we have no ROI, no control, no audit rights, and a distinct possibility for legal action. We need to be writing the contract. We do not need to be signing a contract that the developer is writing.
Members of council have repeatedly asked staff to provide them with materials and information regarding other meaningful developers that the City of Irving has contacted; other venues around the country and their successes or failures; expected ROI (rate of return) on this venture; ARK’s actual qualifications (not their financials) such as other projects of this type that they have completed and their success, any other development projects, etc.; and market comparisons such as debt ratios, project costs, projected revenues, and city participation models. Yet, the staff has not done this, and they (Tommy Gonzalez, et.al.) feel the need to jump the gun and recommend this project with immediacy, even as incomplete and one sided as it is.
If on Wednesday or Thursday the Council voted to postpone any action, you can thank those who voted against this deal. You can encourage those who supported this zero return deal to stop pushing and look for the “right” deal, one that brings the City money, not costs the City money. This is not a good deal for us, at least not now or yet. If on Thursday, the Council voted to forge ahead, you can rest assured that we are jumping into another nightmarish deal with no hope of returns for the City. You can encourage your Council to stop at the next juncture because there will be one…. There are too many holes in this contract for it to stand as it is. Please encourage all Council to look around and see the mistakes that other cities are paying for and keep Irving from making the same ones. Please encourage your council to wait for what the attorneys tell us with much assurance will be a positive and speedy judgment for Irving in the LCG lawsuit where we will owe nothing at which time we can deal freely with ARK or any developer and not with one hand tied behind our backs as we find ourselves doing currently.
Jacqualea Cooley and Joyce Pittman