Dubious Deal

Special tax zones are already stimulating growth-a thriving cottage industry of attorneys, lobbyists, high paid consultants, developers and questionable financial projections

A A A Comments By Brian Wallstin Thursday, Aug 5 1999

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Wulfe's track record shows earlier successes. In 1993, he bought the Meyerland Mall from the Resolution Trust Corporation, which took over the assets held by failed savings-and-loan associations. Wulfe tore down some of the mall and redeveloped it into a thriving shopping center. Perhaps because he was using his own money, Wulfe didn't terminate any leases, nor did he buy anyone out to make room for the renovation. A few years ago, he sold Meyerland, reportedly for $80 million.

Wulfe says that "ultimately" the Gulfgate redevelopment will happen as well. Until then, the city has upped the taxpayers' stake in the deal. Last month, Council approved a 185-acre expansion to the TIRZ to help redevelopment of blighted commercial properties adjacent to the mall. According to Wulfe's revised project plan, the additional $4.6 million in public improvements planned for the expansion will protect the public's original $14 million investment.

The city's TIRZ policy is increasingly controversial: On July 20, 1,200 people protested a proposed TIRZ for the Memorial City area.

Phillippe Diederich

Vinson & Elkins attorney Robert Randolph provides legal services to nearly a dozen TIRZs while helping legislators broaden the state law on tax-increment reinvestment.

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"By and large, the thing that was most frightening was the neighborhood, which was really in very bad condition, blighted, run-down," Wulfe says. "The demographics show the average income is very low, low to moderate. We need to lift up the entire area."

If the project works, it's a pretty good deal for Ed Wulfe. According to his TIRZ development agreement, Wulfe will lease the mall for $1 a year for 50 years, receive a $500,000 development fee and, as "exclusive" leasing agent, will command a fee of $4 per square foot. He'll also be paid an $8,000 monthly "management" fee.

As for Husein Ali, he's making ends meet with his jewelry business while his court case continues. He says it'll be a while before he recovers from the Gulfgate cookie-store fiasco.

"My wife wanted to buy a house," says Ali, "but I put all of our money into the cookie store. I was there day and night for a month to build that store. It's bigger than money to me."