Bus lane foes allege conflicts of interest

Two Uptown board members disclose ties to firms that own Post Oak properties

Two members of an economic development board pushing a plan to run a center bus lane along Uptown’s Post Oak Boulevard have financial ties to companies that will be paid for land in the project’s right of way.

Earlier this year, Uptown Chairman Martin Debrovner and secretary and treasurer Kendall Miller disclosed financial interests in two of the more than 30 parcels the board will purchase with public funds to expand Post Oak.

Collectively, three companies that own property along Post Oak — Weingarten Realty Investors, WMJK and Hines Interests — stand to receive about $6 million of the roughly $47 million budgeted for rightof-way acquisitions if average appraisals done by an outside company last year hold.

A third member of the Uptown development board, Louis Sklar, filed a similar affidavit earlier this year because he is a former senior executive at Hines Interests. But according to his affidavit, he does not make enough of his current income from the company or own enough stock, for instance, to have a “substantial interest” in the company as defined by state law.

The board members appear to have followed state law; they have not voted on items with specific or special financial benefit to them, instead voting more broadly to support the bus plan.

Critics contend that the financial disclosures should have been filed in early 2014, when a consultant’s report was issued listing the properties to be purchased along retail-laden Post Oak Boulevard.

The board has taken several unanimous votes dating to 2013 to support the general principles of the $200 million bus rapid transit plan, which also involves Metro and the Texas Department of Transportation. The express buses would connect a future Bellaire Tran-

sit Center with the Northwest Transit Center near Interstate 10 and Loop 610, stopping at dedicated platforms along Post Oak.

Opponents say the plan will disrupt the flow of traffic on Post Oak and discourage drivers from wanting to traverse the bustling corridor. At recent town hall meetings and news conferences, they’ve also said that the plan is a real estate deal disguised as a transit project.

“The point is they are spending taxpayer money, and the public should have known from the get-go who stands to gain,” said Wayne Dolcefino, who is working as a consultant for opponents. “These conflict-of-interest statements came too late.”

Uptown officials contend that they have appropriately disclosed the potential conflicts and that opponents are merely launching a last-ditch effort to derail the bus plan. Utility work is slated to begin next month. Uptown President John Breeding said the allegations have no merit, and the board has taken many steps to mitigate conflicts of interest.

Last year, the board brought in a Norton Rose Fulbright attorney to advise on conflicts of interest and the right-of-way acquisitions. A separate rightof-way committee has been formed to review offers before sending them to the full board, though Debrovner sits on that committee. Debrovner, a former Weingarten Realty vice chairman, said he already recused himself from a vote on the company’s property. Debrovner still owns $15,000 or more of the fair market value of the business and more than 10 percent of his gross income came from Weingarten last year, according to his affidavit.

Concerned about conflicts

Any appraisal above $500,000 and any offer that exceeds fair market value by more than $50,000 requires Federal Transit Administration approval. As for why the affidavits weren’t filed sooner, Breeding said they waited until right-of-way offers were imminent.

“Our board of directors is much more concerned about (conflicts of interest) than just your average person,” Breeding said. “Really, from the very beginning, we said, ‘How can we do this and how can we support it and how can we set up a system that is as transparent and as free from conflict as possible?’ Honestly, it comes up all the time because we build roads and streets in the area.”

Miller, president of Tanglewood Corp., has taken the most heat. Tanglewood, under the name WMJK, owns and manages the Post Oak Shopping Center on the corner of Westheimer and Post Oak. The bus deal calls for almost 7,000 square feet to be taken from the center, at a price of about $1.2 million if early appraisals hold.

“It should matter that we’ve gone to a great deal of trouble to get this right and when somebody says otherwise, or has been hired to say otherwise, they need to be corrected,” Miller said. “Reputations are at stake.”

Debrovner, a longtime member of the Uptown economic development board, said he anticipated critics might “throw rocks” and acknowledged that the Uptown project presents more potential conflicts of interest than any project he’s worked on before. But that, he said, is why the board asked to bring in outside counsel.

As for his membership on the right-of-way committee, Debrovner said he probably has the most real estate knowledge on the board. He called any rightof-way payment to Weingarten

“minuscule.” Early appraisals put that payment at about $256,000.

“I have been retired for many years,” Debrovner said. “I knew that when the Weingarten property came up, I can excuse myself.”

‘No concern whatsoever’

Mayor Annise Parker said she has “no concern whatsoever” about the Uptown deal, but she acknowledged some of the transparency concerns that have long dogged tax increment reinvestment zone boards. Under a TIRZ, property tax revenues within the zone’s boundaries are frozen at a base level. The amount collected above that level, known as the increment, is funneled back into the zone to pay for infrastructure and capital improvements in hopes of spurring private development.

Though they were initially intended as a tool to fight blight, the city has also used TIRZs to help speed efforts in areas targeted for redevelopment.

“Every time we use citizen volunteers for a tax increment reinvestment zone, there is a potential for a conflict of interest because by definition we put people on those tax increment reinvestment zones who either live in the area or own property in the area,” Parker said. “But we have very strict rules against

self-dealing. They have to recuse themselves from any votes that would benefit themselves.”

The potential conflicts of interest in the bus plan run even deeper when looking at the entire Uptown District Board of Directors.

The district levies a property tax and basically serves as a management district, promoting projects such as the bus plan but with no authority over TIRZ funds. Under state law, the members are required to be landowners or long-term tenants or to work on behalf of landowners in the district.

The 12-member board includes two TIRZ members and at least eight other directors with current or former ties to companies in the right of way. Chief among them is well-known developer Ed Wulfe, whose Wulfe & Co. owns BLVD Place along Post Oak. He called any benefit to his company “minimal and basically almost irrelevant.”

Wulfe is well acquainted with the potential conflicts of interest that come with economic development boards, and he said his policy is to recuse himself when his property is involved.

“I can’t think of anyone that is doing this from a self-interest view,” Wulfe said.