Dalcor Properties Revealed as Public Face of Low Income Housing Deal; Warren Buffett’s Berkshire will be Real owner

Hearing 11-14- TEXAS HOUSING- Bonds pic 1

(Left: Teresa Morales, Texas Housing Department; Dale Dodson, Dalcor; Unidentified,  Hearing Transcript Reporter- Photo by Jim Bigham)

The latest information about the project was revealed recently, during a required Texas Dept. of Housing Bond hearing, held Tuesday Nov. 14th at the Walter Branch Library. About forty attendees listened as citizens expressed their concerns and asked questions of Dalcor owner Dale Dodson and State official Teresa Morales.

Concerns varied as a 45 year resident inquired about HUD blocking Harvey funds because Houston continues to concentrate affordable housing in low income neighborhoods. This concentration was a common theme of concern.

Others asked about the displacement of current residents and questioned the sales price of $50 million for parcels valued at $10.5 million by HCAD today. Crime and the inability of Houston to address long simmering public safety issues in the area were also raised.

These hearings can produce very revealing information.

In response to a question about the financial transaction, Dalcor’s Dale Dodson stated that the price was simply a multiple of the income the property generates and $50 million is fair. He tried to claim that there was no public money involved in the deal, citing no City of Houston tax abatement as an example. This is true as there are no City of Houston funds to be used.

However, during follow up questions, he admitted that Berkshire Hathaway will be the actual owner (99% limited partner) and that Dalcor Properties, who is not placing any funds into the deal, will be paid later as the 1% general partner. Indeed, he admitted that the $30 million in federal tax credits is actually public money, and ‘if we don’t get it, someone else will’. The developer fee is listed at $12 million, with no capital invested and apparently little or no financial risk for Dalcor, a very sweet deal it seems.

Dodson also responded to a question about how long Dalcor must hold the property before selling, stating fifteen years, but then he rambled a  bit about perhaps an early exit with the State of Texas Housing Department’s approval.

Directly questioned, Teresa Morales with the Texas Housing Department admitted that Dalcor could be allowed to sell their stake at any time with State approval. The real answer to how long must they hold the property is 15 years for the actual proposed owner Berkshire Hathaway, and little to none for Dalcor. There appears to be no public notification or input in this process.

This is the perfect example of why these public hearings, that allow direct questions by citizens, are critical.

First, we would not have known the actual structure of the deal. Dalcor is simply the operator recruited by Berkshire Hathaway. They are placing ZERO money into the deal, not a penny. When I asked the question repeatedly Mr. Dodson became frustrated and asked in reply, why does that matter? He then revealed that Dalcor is just the front man here. Berkshire will get the $30 million in federal funding (via tax credits) and Dalcor will get a fee much later.

This project has been presented as Dalcor’s deal from the beginning. Now we know it’s really Warren Buffet’s affordable housing investment company. The claim that no public money is being used was more than just a slip up by Mr. Dodson. The fact is without federal tax money this deal never happens.

Second, the holding term is much less strict than we thought. While the property will remain income restricted for a generation, Dalcor could leave very early and Berkshire at fifteen years.

Hearing 11-14- TEXAS HOUSING- Bonds pic 2

Elected Officials, Management District, and SCA Deeply Involved But Report Nothing

The appearance of City, State officials and their staff was staggering, as they made no effort to inform the community about this project, despite having been in the loop for months. TIRZ No. 20 Directors Corky Fowler and Dale Davidson (and SCA Officer), State Rep. Gene Wu and staffer Beth Martin, and Southwest Mgmt District’s Alice Lee were all in attendance.

It’s very hypocritical for these individuals to attend a required State of Texas hearing when their organizations, the TIRZ No. 20 and Southwest Management District, have refused repeatedly to hold this type of public forum. They will not answer questions at their public board meetings and refuse to hold any type of town hall, with citizen questions of Officials conducted on the record. The idea that a recording and transcript would be produced must shock their minds.

Rep. Gene Wu claimed at the hearing that he has taken no position but then provided a supporting statement – if it’s better than now (after rehab) I think- more power to you. He described a distressed property of broken windows, junk cars, and broken fences, all City of Houston violations that could be addressed today. Make no mistake, Wu is completely for this project and by keeping quiet and not representing the community he will help it succeed.

According to Dalcor’s Dodson and Randy Plitt, Alice Lee with the SW Management District has held numerous conversations with Dalcor about this project. She reportedly arranged a presentation to the Houston Apartment Association in support of this proposal.

Sharpstown Civic leaders first learned about this project in an August 2nd letter announcing the Vista on Gessner proposal. Pat Menville stated at the SCA’s Nov. 13th board meeting, that they sent a reply letter which simply told Dalcor the SCA hoped it would be a good project. There is no evidence that any due diligence or research was conducted. Despite claims the SCA was only notified in an Oct 13th letter, they learned about it much, much earlier. For some reason the SCA Officers did not even report this to the SCA Board of Directors or the community.

More about the SCA’s involvement soon.


1 comments On Dalcor Properties Revealed as Public Face of Low Income Housing Deal; Warren Buffett’s Berkshire will be Real owner

  • This is exactly how we ended up with the brand new three story ‘mixed income’ Bissonnet Gardens apartment at 7500 Bissonnet and Bonhomme Rd. Braeburn Residential Partners, LP obtains $2.5 seed money from the CoH Housing and Community Development Department for a proposed $15.8 million project. They also received a $13,372,308 tax credit.

    The subsidized rent that is collected pays the note for 15 years (notice that same term?) and the investors own the property outright after it is paid off. With zero dollars invested.

    Mike Laster was in on that one too. Not sure if Gene Wu was in office 4 years ago but that is also in his district.

    The whole thing was a sham.

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