The Great Land Grab

Indeed, the group's early mission was so vague that, at first, it couldn't qualify as a nonprofit under Section 501(c)(3) of the Internal Revenue Code. As described in its application, Renaissance proposed to act on a number of ideas, including "a comprehensive city plan" and "long-term strategies and programs" for rebuilding the inner city.

But the IRS envisioned no public benefit resulting from the group's stated intentions and, in a reply to Laguarta, noted that Renaissance "lacks charitable purposes and a targeted charitable class." The feds suggested it might more accurately be called a "civic league."

A month later, Laguarta packed off some additional information to the IRS, outlining Renaissance's goal of "transforming blighted, unproductive tracts of land in inner-city neighborhoods into low to moderate income housing developments ...." At that point, Renaissance was hunkered down at the drawing board, devising a plan for the Fourth Ward. But for the IRS, Laguarta sketched out a scenario that suggested the organization was working closely with the Lanier administration on broader possibilities.

Laguarta told the agency that Renaissance and mayoral advisor Michael Stevens had "identified and utilized municipal programs available to aid housing development" in the Fourth Ward. Laguarta added that he was also having discussions with the board of the Midtown Redevelopment Authority, a special taxing district, "to identify potential development sites."

Like the Fourth Ward, the Midtown district between the Pierce Elevated and U.S. Highway 59 is one of several key, interlocking components in Lanier's urban renewal strategy. The potential for Midtown, which borders the Fourth Ward to the northwest, has been greatly enhanced by property tax breaks that could total as much as $350 million over the next 30 years. Those subsidies were assembled by the Council-appointed board of the Midtown Redevelopment Authority, which is chaired by another close Lanier associate, Doug Williams.

Williams is on the city payroll at $112,000 a year, plus a generous benefits package. As the mayor's special assistant for inner city revitalization, he was hired to advance a series of urban redevelopment projects that include Midtown and the Fourth Ward.

Satisfied by Houston Renaissance's promise to build low-income housing, the IRS finally granted the organization its nonprofit tax exemption in November 1995, by which time the group's board had begun to flex and contract in significant ways. Burge, who was listed as a board member in Renaissance's early promotional literature, stepped back at the request of Lanier, who didn't like the idea of one of his closest friends on the receiving end of public money. He now has an "informal role" as an advisor, according to other board members.

The group also brought three African-Americans onto its board: insurance agent Bill Calhoun, a Republican who is vice chairman of the board of Unity Bank, the only black-owned bank in the state; attorney Jim Lemond, a former lobbyist for the law firm of Akin, Gump, Strauss, Hauer & Feld; and Third Ward developer Gerald Womack, who was active in Sheila Jackson Lee's 1994 congressional campaign and is now working on the City Council campaign of the Reverend James Dixon.

Two other original board members became paid consultants to the organization: Consultant Denis Calabrese stepped down to handle public relations and fundraising, while Barry Snowden, a member of Renaissance's first executive committee, became its legal counsel.

But the most prominent -- and troubling -- transformation was in Laguarta's role. In a brief document drawn up in 1995 and entitled simply "4th Ward Building Plan," Laguarta -- Houston Renaissance's founder and, at the time, president of its board of directors -- proposed that he and the group form a "joint venture" in which he would become the "operating partner."

In late 1995, Laguarta took over the day-to-day strategy of securing the Fourth Ward land in exchange for a $6,000-a-month fee, plus $3,000 for administrative expenses. He stands to make hundreds of thousands of dollars more in real estate commissions when his Fourth Ward contracts come to fruition.

Laguarta could probably use the money. In fact, his job with Houston Renaissance has been one of his more lucrative undertakings of late. Last July, the homebuilder filed for Chapter 11 bankruptcy protection, listing assets of $1.7 million against liabilities of more than $3 million, including about $30,000 owed to the IRS.

The bankruptcy petition shows that in the last three years Laguarta's annual income -- he owns National Homes Corporation and Laguarta & Company and is involved in a number of real estate partnerships -- has declined to about $40,000. Board president Frank Kelly explains that paying Laguarta was "essential" to Renaissance's ability to carry out its Fourth Ward plan.

"Julio brings to the table both the expertise in real estate development and the knowledge of the city and area," Kelly says. "We needed him to work full time on this thing, and the clear agreement was that he couldn't do that and be a member of the board. So he left the board, and we hired him."