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Mr. Stevens' Neighborhood

The beach seemed a peculiar place to find Michael Stevens on the morning of September 4. As Mayor Bob Lanier's $1-a-year "special assistant for housing and inner-city revitalization," Stevens had spent many months negotiating the purchase of the historic Rice Hotel, whose renovation is thought to be critical to the rejuvenation of downtown Houston -- at least by those with a stake in the rejuvenation of downtown Houston.

But on the day City Council was asked to approve the use of public money for the project, Stevens was winding up a week's vacation in Galveston. That morning, Lanier faced a Council uprising led by Michael Yarbrough and Judson Robinson III, who were indignant over the lack of details available on Stevens' plan, as well as the sudden appearance of the transaction on Council's agenda. Despite the

mayor's snarling displeasure, Council voted to postpone action on the matter for one week.

Stevens, however, knew he'd earned his leisure. The Rice Hotel was a done deal in his mind. The purchase price of $3 million had been negotiated. Two local banks had agreed to provide $24 million to turn the old building into loft-style apartments. A construction team, led by developer Randall Davis, had already been assembled. And removal of asbestos from the 83-year-old structure on Texas Avenue was under way.

As for the stubbornness of City Council, if the members needed another week to sign off on the use of some $19 million in future tax revenues for the Rice, Stevens figured that was largely a problem for the mayor. Lanier's administration would have to go through the motions of addressing the interests of a few elected officials.

Michael Stevens, on the other hand, only addresses the interests of Bob Lanier. It's more than a full-time job. By his own count, Stevens spends 60 to 70 hours a week attempting to carry out the mayor's urban-renewal agenda. Whatever time is left -- and, he'll tell you, it's not much -- goes to Michael Stevens Interests, his multimillion-dollar apartment development business.

Since his appointment in March 1995, Stevens has been omnipresent, speaking before almost every booster club, business association and building-trades group in the city. Invariably, his speeches point out how he and the mayor have invested the city with a new sense of promise. Projects that have stymied business and political leaders for almost a generation have become a reality, he says.

"In my opinion, we are going to create more momentum for downtown than has ever been experienced in our recent time," says Stevens, who at age 46 has the looks -- and the energy level -- of someone a decade younger. "I think most of that is happening, and I believe that people see it happening."

Maybe not just yet, but soon. After more than a decade of turmoil and stalemate, the demolition of Allen Parkway Village is finally under way, and work on a $50 million, federally funded mixed-income community could begin next spring. Long-awaited improvement to the neglected and decayed Fourth Ward is imminent as well. Houston Renaissance, a nonprofit that has been quietly accumulating land in the 90-block area, is awaiting nearly $15 million in federal grants to initiate a master plan to build 680 housing units.

Stevens is also the face and force behind Lanier's pet project, Homes for Houston, which aspires to provide 25,000 additional housing units by the turn of the century. Toss in a few other projects on the horizon -- the redevelopment of the Market Square and Midtown districts; conversion of Main Street to a pedestrian-friendly boulevard and substantial development in the Second and Third wards -- and it's easy to understand the faith and optimism that seems to ooze from Stevens' pores.

The only suggestion of a problem you're likely to encounter is that Stevens may be close to being overwhelmed. He's Lanier's point man on the ongoing reconstruction of the Albert Thomas Convention Center; he's the chairman of the Houston International Sports Committee, which hopes to bring the Olympics to town; and, if construction of a downtown baseball stadium is okayed by voters in a November referendum, he'll likely have a role in seeing that project to fruition, too.

But Stevens has come to see the challenge in global terms -- a sense of mission that is in keeping with what, by most accounts, is his substantial ego. Both he and the mayor fully expect their approach to urban redevelopment to become the standard nationwide.

Stevens recently spoke at a Harvard seminar on "new urbanism" at the invitation of Henry Cisneros, director of the U.S. Department of Housing and Urban Development. And with the groundwork for the mayor's goals in place, he's spent considerable time elsewhere, recounting for whomever will listen how the Lanier administration supposedly has revolutionized government's role in rebuilding inner-city America.

 

"I think," Stevens said in a recent interview, "what we've done here is clearly focused at the national level, because as a government, we need to figure out a way to cut out the premium for having public involvement. Clearly, the city of Houston is doing things that are not being done elsewhere."

But just as clearly, all that activity raises a couple of significant questions: Is it actually working? And, to the degree that it is, what will be the ultimate price?

For years, Houston's political and business gentry has entertained visions of restoring downtown to its past grandeur. In the absence of political backbone, those visions remained nothing more than mere speculation or points of argument. Under Lanier, however, lack of will is not an issue, nor, apparently, is the meandering pace of the public process -- which, with the clock ticking on his third and presumably final two-year term, has become something of an obstacle.

In March 1995, Lanier took unprecedented action and appointed Stevens to "coordinate" the city's chief economic-development engines, the Department of Housing and Community Development and the Houston Housing Authority. Stevens' duties as Lanier's special assistant are carried out under the auspices of the Houston Housing Finance Corporation, a heretofore obscure nonprofit organization created in 1979 to provide a modest mortgage-assistance program financed by tax-exempt bonds.

As president of the HHFC's 13-member board, Stevens has placed the quasi-governmental agency at the center of the city's urban redevelopment strategy, where it enjoys the embarrassment of public riches once managed -- ineffectively, say many -- by city department heads. Tens of millions of dollars in tax subsidies, federal grants and loans, city housing funds and bond proceeds have been placed at Stevens' disposal. The treasure chest is earmarked for an inner-city transformation that even if only partially completed will be enough to secure Lanier's place in local history.

While Stevens' emergence as a player is sudden, it's not so surprising. Perhaps more than anyone else close to him, Lanier shares a kindred spirit with his special assistant. Both men amassed comfortable wealth as apartment developers, an enterprise where things are built and sold to satisfy an aggressive self-interest. And like Lanier, who was flattered into running in 1991 by a coterie of wealthy social friends and business peers, Stevens entered the political spotlight reluctantly, out of a sense of duty. Though he'd no doubt support any effort to overturn term limits and get Lanier another two years, talk in some circles has Stevens mounting his own campaign for mayor in 1997.

"All of a sudden, he's all over the place," says a local political consultant involved in one downtown development project. "I think that reflects not only what his job is, but his desire to have a lot higher profile."

But not that high. Like Lanier, Stevens arrived at City Hall to find that certain private interests can be served in the name of public policy. Indeed, Stevens owes some of his success to the kind of behind-the-scenes maneuvering at which Lanier excels -- and with which the mayor reduced Council to a legislative eunuch early in his tenure. Unlike many of Lanier's close advisors, Stevens has never had an office at City Hall. Instead, he operates out of his business address on Dairy Ashford in west Houston, where several employees from the city's legal and housing departments now report to work.

From there, Stevens has been able to negotiate free of much oversight, and more important, away from the influence of department heads and City Council.

A case in point is the Rice Hotel deal, the specifics of which had failed to trickle down to councilmembers before they were asked to approve it. Most were only peripherally aware that Stevens had been negotiating a purchase of the building since late last winter. That's when Randall Davis, a private developer known for his loft-style projects in and around downtown, lost the $5 million in financial backing he had lined up to buy the property from a group of German investors led by Christian Wolffer.

Davis approached Stevens about a possible partnership with the city, which had created a special taxing district in the Market Square area that included the Rice Hotel. At about the same time, Wolffer balked at renewing Davis' earnest money contract, and suggested he was ready to take bids from other developers. According to sources familiar with the negotiations, Stevens then stepped in.

"The Germans were backing out of the project," says one source. "I know they had a conversation with Michael Stevens where they indicated they were prepared to back out of the negotiations. At which time, Michael basically strong-armed them. He said, 'You'll never sell that hotel if you don't sell it to Randall Davis. In fact, you can forget about ever selling it.' "

 

One can be fairly certain that had those negotiations been subject to the glare of the public spotlight, they would have been handled differently. Which is both the beauty and the trouble of having someone like Michael Stevens representing the city. Without him, the Rice may have been sold to someone else, or it might not have been sold at all. We'll never know. But Stevens -- and we're paying him a dollar a year to make such decisions -- made it happen.

"Sometimes you have to push, sometimes you have to pull," said one acquaintance of Stevens'. "And sometimes you have to take out a two-by-four and beat the shit out of these guys, and that's exactly what they did. You don't get this kind of deal without that kind of entrepreneurial effort."

By July, the deal was in place. To buy the hotel from Wolffer, Stevens committed $1 million of HHFC's tax-exempt bond proceeds, plus a $2 million note. The finance corporation also incorporated another nonprofit, the Houston Redevelopment Authority, which was funded with a $4 million bank loan. Then, the Houston Redevelopment Authority and Davis' Ocky Davis Corporation formed a limited partnership, Rice Ventures. Davis, who had put no money into the deal, was awarded controlling interest of the venture, 40 percent of the hotel's revenue stream, a $500,000 development fee and a 4 percent management fee. His cut is contingent upon his successful renovation and the leasing of roughly 350 loft-style apartments, which will rent for $650 to $2,000 per month. Davis' construction costs will be funded by $24 million in bank loans. A portion of that financing will be secured with about $9 million in federal housing funds, the use of which required Council's approval.

The fact that they hadn't participated in the structuring of the deal, then were suddenly called upon to sanction it, clearly miffed a number of councilmembers when the Rice proposal was first presented to them on September 4.

The experience, of course, was not unprecedented.
"What I don't like is how this administration brings stuff to us at the last minute, and makes us the bad guys," Yarbrough says. "If we don't approve it, we lose an opportunity."

Yarbrough was especially disturbed by the sudden emergence of the Houston Redevelopment Authority. Ostensibly, it was created for the sole purpose of owning the Rice Hotel, in order to protect the assets of the HHFC. But the agency's articles of incorporation impose no limits on its responsibilities, instead positing a broad mandate to "promote, develop, encourage and maintain housing, employment, commerce and economic development."

More important, the authority's three-member board -- which includes Stevens -- apparently has no accountability or connection to City Council.

"City Council creates the Houston Housing Finance Corporation," Yarbrough said later in an interview, "gives it the authority to raise money, appoints its board members, and then it goes and creates its own monster."

A local businessman -- who stressed that he admires Stevens and believes he has done good for the city -- shares some of Yarbrough's fears. He predicts a greater role in the future for the redevelopment authority, which, of course, will operate out of Stevens' office.

"I think there's clearly a blurring of the distinction between where the city's responsibility begins and ends and where this nonprofit's does," he said. "What they'd like to see happen is this whole rock and roll business of making money. They see themselves as a catalyst, throwing money around and making things happen. They don't see themselves as a passive conduit, as you'd normally associate with the public sector."

On September 9, a few days after Council voted to delay the Rice proposal, the Lanier administration hosted a special meeting, ostensibly to mollify African-American Councilmen Yarbrough, Jew Don Boney and Judson Robinson III before the next vote. Despite the stab at harmony, the underlying tensions were plainly evident.

At the front of the room sat Lanier's A-team of white males: special assistant Stevens; city planning director Bob Litke; city finance director Richard Lewis; Stevens' assistant, Doug O. Williams; and Vinson & Elkins attorney Bob Randolph, who, as the HHFC's bond counsel, drew up the articles of incorporation and by-laws for the Houston Redevelopment Authority.

To the councilmembers, the issue was twofold: as elected officials, they had been virtually ignored; and, notwithstanding the city's stated commitment to diversity, those elected to protect the interests of minority constituents had been denied the opportunity.

"Do we have to accept that Randall Davis will do this on good faith, after we've given him the development contract, a controlling interest and a percentage of the profits?" asked Boney, who pointed out that with a population that is 28 percent black and 28 percent Hispanic, Houston has a "new majority."

 

"We cannot tell Randall Davis who to hire," Stevens replied.
Argued Boney: "This deal would not work without the city's participation, and anyone who comes to the city and says, 'We need your help,' they need to find a way to make sure there is inclusion. I don't see what we get out of this in terms of my constituency."

Two days later, at the September 11 Council meeting, the answer was unequivocal: not much, if it threatens Lanier's urban revitalization plans. The mayor, who bucked the national trend by increasing the city's affirmative action goals, took the opportunity to note that private developers had refused to take part in past city projects because they had found such bureaucratic encumbrances as minority-allotment goals and the prevailing-wage law too onerous. Under those provisions, Lanier stressed, "We'll shut down development in this city."

Stevens' job, as he explains it, is to avoid that by eliminating what he calls the "premiums" associated with the use of public money. While those so-called premiums typically are necessary to ensure that public money reaches the entire community, and not just a favored few, Stevens points out that "project after project after project" has begun in blighted African-American and Hispanic neighborhoods.

"We are not removing City Hall from this at all," he maintains. "We are delivering to them quality projects at a more rapid pace, at a better price.

"You cannot pick through a transaction every time it comes in. If I brought a project to you that was well thought out, and you got 14 people involved, all of whom want to make changes to it, the project would change, the cost would go up and my interest would dwindle. Those types of things cannot be done and keep the development community willing to walk through the door."

Not coincidentally, perhaps, this approach has been stepped up in the wake of a torturous process to pick a developer for a $150 million convention center hotel. It took two years to bring competing proposals to the Council table, and many City Hall observers say the lobbying was as intense as anything they'd witnessed before.

Late last year, the FBI hatched a sting operation that has allegedly implicated several councilmembers in a bribery scheme related to minority participation in the final contract for the hotel project that the city was to negotiate with developer Wayne Duddlesten. Stevens was a late-comer to the proceedings, but is now leading those negotiations for the city.

Perhaps if the project had been handled like the Rice Hotel, with Stevens involved from the beginning, there'd be no dark clouds, swollen with who-knows-how-many indictments, hovering over City Hall.

"Michael Stevens is not going to play the game that City Council wants him to play," says one person who's familiar with both Stevens and the machinations of City Hall, "which is, 'Hey, I want this guy doing this project, that guy doing that project.' That's their way to make sure their constituencies get a piece of the economic outcome, and there's nothing wrong with that. But the way Stevens sees it, it's bullshit."

Stevens and Lanier have at least one other common trait: an aversion to the most benign form of criticism. When first contacted by the Press, Stevens was outwardly defensive, pointing out that he gets nothing more than a dollar a year as the mayor's special assistant. That, he implied, ought to allow him the benefit of the doubt.

"I donate all sorts of stuff so people do not criticize me for what I do," he said stiffly. "Nothing will keep me above criticism that is unwarranted, but ... if I'm giving instead of taking, and I don't do projects with the city, then people who look into anything that goes on will find nothing to look at. I can stand clean and above reproach, and that's my objective."

But it's not always easy to give people like Michael Stevens, or Bob Lanier for that matter, the benefit of the doubt. They operate in an environment where public accountability is expected, but obviously prefer doing things the way they did them in the private sector. Much of their wealth has resulted from their reshaping of real estate to conform to their own standards and dreams. As a result, the pursuit of more wealth or, in some cases, power, becomes its own reward.

What, if anything, would change that?
Fear, says Stevens, who was raised in Lamar Terrace and has lived in Houston his entire live. "I was very concerned about the crime in the city of Houston," he says. "I had considered leaving. I thought it had become a very dangerous place to live."

 

But Stevens was rooted in the city. He had graduated from the University of Houston in 1973 and began his career with a financial consulting firm, eventually rising to vice president. He then became a top executive and major shareholder with Insyte Corporation, a publicly held holding company with a substantial real estate portfolio. In 1981, he formed Michael Stevens Interests, which at one point owned or managed some $300 million worth of real estate, largely apartment projects and office buildings.

Stevens had met Lanier in passing around the time of his graduation from UH. Later, they came to know each other better as fellow developers. When Lanier entered the 1991 mayor's race, promising to use any resources available to put more police on the street, Stevens joined the campaign. Never one to approach anything halfheartedly, he immersed himself in the election effort and became a valuable fundraiser for Lanier.

According to one adviser to Lanier's first campaign, Stevens hungered for a bigger piece of the action after incumbent Kathy Whitmire was eliminated in the general election to set up a runoff between Lanier and state Representative Sylvester Turner. Stevens was willing to put his money where his heart was, contributing $10,000 to Lanier's runoff effort. And as the election drew near, he was assigned a new role.

"He was one of the inner-circle guys on the finance committee," says the adviser. "When we'd have a finance committee meeting, maybe one or two of them would chime in about what the campaign ought to be doing. You'd kinda roll your eyes when these guys did this -- it was like, 'Hey, raise money, don't give advice.' But Stevens would be one of those saying, 'Lanier, you need to be saying blah, blah, blah.'

"Then about two weeks before the [runoff], Lanier got him in there to provide oversight on disbursements, making sure that if we had $50,000, it was spent right, say, over the next three days on salaries, media, whatever."

Following Lanier's victory, Stevens tried to influence at least one mayoral appointment, pushing fellow fundraiser Doug Williams -- now Stevens' "deputy assistant for housing and inner-city revitalization" -- for the chief of staff position. Williams, an old friend of Lanier's who would sell his share of a small engineering firm to join the administration, was equally devoted to the campaign, and he and Stevens became close while trolling for contributions from real estate, financial and construction executives.

At one point after the election, they paid a visit to Lanier's home to make Williams' case. But the new mayor, who was tired from the campaign and nursing the flu, quickly grew impatient with the blatant lobbying. Other Lanier advisors showed up and argued, successfully, that Williams was unqualified because he had no political experience. The mayor eventually appointed Dave Walden and Public Works director Jimmie Schindewolf as co-chiefs of staff.

As for Stevens, Lanier hoped to capitalize on the developer's financial skills. After appointing Stevens to the board of the Houston Housing Finance Corporation, Lanier asked him to analyze the budgets of the city's housing department and the Housing Authority and, according to Stevens, "give him an idea of what was there." Stevens also examined the assets of the HHFC, and reported to the mayor that a refinancing of bonds issued in the early 1980s could generate as much as $15 million in cash.

By early 1995, Stevens had been appointed president of the housing finance corporation's board, replacing Reuben Casarez. Shortly after, Stevens says, he and the mayor began discussing the creation of a new position to coordinate the city's housing programs and assist in getting downtown projects off the ground.

"As we went along, by natural evolution, the mayor asked me if I'd be willing to spend considerable time organizing these efforts," Stevens says. "He also wanted to move toward single-family housing production at a heavy level, and it had become obvious that without coordinating all the housing organizations, we couldn't maximize the benefit."

At the March 1995 meeting of the HHFC board, Stevens announced that Lanier wanted the city's housing program to be ranked "number one in the country." Toward that end, Stevens would become a special assistant to the mayor. The board authorized a $150,000-a-year budget for the position, funded by the HHFC, though Stevens would draw no salary.

Council approved the mayoral appointment in May, and the mandates began to fly. When the HHFC board convened in June, Stevens announced Lanier's desire that 1,500 new housing units be built in the next 12 months. Within 60 days, Stevens told the board, he wanted builders to begin construction of 50 houses. Stevens also asked the board to "kick up" the finance corporation's down payment assistance program, with the goal of putting families in 1,000 of the new units.

 

But private builders -- who would make or break the entire effort -- were reluctant to jump aboard. Stevens met with 20 homebuilders, who demanded a market study before they would commit to an inner-city construction blitz of such a scale.

One project that got off the ground quickly was a homebuyers' assistance program in the Inwood Forest Village subdivision. Stevens wanted the HHFC to provide a $20,000 grant that would allow Gateway Homes to close quickly on four houses. The fact that Gateway's president, Tyler Todd, also happened to be an HHFC board member, and stood to directly benefit from the program, did not seem to be a concern to Stevens -- and it still doesn't.

"That was not a grant to Tyler Todd," he says. "That was a grant to all the [builders] in that area."

Not originally. According to the minutes of the July 1995 HHFC meeting, another board member, city housing director Margie Bingham, was uncomfortable with the grant. After some discussion, Stevens and the board agreed to fund grants for two other builders constructing homes in the subdivision, raising the grant amount to $60,000.

Moreover, the board changed the grant program's income requirements so that families bringing home 100 percent of the median income could qualify for assistance. For instance, the finance corporation's guidelines now allow mortgage assistance to a family of four earning between $52,000 and $64,000, depending on where they plan to live.

Some community groups have complained that the HHFC's new income parameters have essentially undermined the intent of affordable housing programs in order to meet the mayor's goals. Indeed, federal guidelines call for government subsidies to be earmarked for those earning no more than 80 percent of median income, or roughly $37,000 for a family of four.

Stevens and the board continued to fiddle around the edges of the city's housing programs, searching for a mechanism that would spur an increase in construction. They eliminated a zero percent mortgage program and replaced it with market-rate loans, reduced by an interest-free $10,000 from the city. That was expected to increase the program's yield from 17 families to about 100.

The finance corporation also funded predevelopment expenses to launch construction of 110 homes on land in Spring Branch and North Houston previously occupied by apartments owned by the Resolution Trust Corporation, a federal depository for assets from failed savings and loans. In 1993 and 1994, Lanier's administration bought ten of the foreclosed complexes and resold eight of them at a significant profit. Two of the complexes were demolished and the land set aside for single-family homes.

Then, last November, Lanier and Stevens decided to coordinate all the city's housing assistance options under a single program. Thus was born Homes for Houston, an ambitious plan to produce 25,000 housing units by the year 2000 through a combination of new construction and rehabilitation. The total cost: $1.5 billion.

While the goal is laudable, Homes for Houston is also clearly intended to bring glory to Lanier. Stevens appointed a public relations committee of HHFC board members, which was given a $250,000 budget to develop a marketing strategy for the program. That was later increased to $400,000, most of which has gone to an outside contractor, Goswick Advertising.

Early on, the firm came up with a set of objectives geared toward gaining "national recognition for the city of Houston's housing efforts." Goswick also recommended spreading the word about the "federal funds brought to Houston through the mayor's aggressive efforts."

Homes for Houston was announced, amid much fanfare, in February, and immediately ran into difficulties. One was that builders were still slow to warm up to inner-city home construction. Exacerbating that problem were hurdles faced by prospective homebuyers: while eligible for a $6,000 subsidy, they still had to come up with a 3 percent down payment. Moreover, buyers were asked to fund part of the administration of the program -- about $500,000 -- by paying a $75 application fee, plus several hundred dollars in "participation fees."

Though the program has been improved -- the participation fee has been waived for lower-income buyers, and up to $3,500 in additional assistance is available under certain conditions -- Homes for Houston continues to struggle. The latest figures show that less than 400 families have received assistance through the first seven months of the highly touted program -- about 45 percent fewer than was projected and well off the hoped-for pace of 5,000 a year.

 

Prospective buyers have also been slow to respond to the aggressive public relations effort. Jeff Smith, a $3,000 a month consultant hired by Stevens to market the program, reported in July that about 900 would have to "graduate" from the Homes for Houston education program every month to meet the mayor's goals. The average attendance in the first seven months -- 160 -- has been nowhere close to that.

Stevens, of course, remains optimistic. "We are clearly looking for the right place to land," he says. "This is a fine-tuning process. Today we have over 250 houses that are under construction under programs for affordable housing. We have over 1,300 lots bought by people in the city of Houston. We're now doing things in the inner city to allow the housing production to occur at a much higher level."

But while assistance to low- to moderate-income homebuyers has only increased marginally since the city's housing programs were consolidated under Stevens, spending by the finance corporation has gone up considerably. In fact, since Stevens took over as president, a little more than 18 months ago, the agency's expenses have exceeded income by more than $1 million.

Stevens argues that much of the spending has actually been "investment" in public-private partnerships, and will be recouped by the HHFC. Yet no such partnerships were funded through the first six months of 1996, and the roughly $700,000 invested in partnerships in 1995 has been largely negated by payments to lawyers and consultants. By this year's end, those expenses will total close to $800,000 -- all of it new spending since Stevens became president.

The agency's budget took a big nick earlier this year with the hiring of Doug Williams, whom Stevens had pushed for the chief of staff position following Lanier's election. Williams didn't get that job, but he's done all right for himself.

In early 1992, the mayor appointed him director of the $1.5 billion Greater Houston Wastewater Program, where he had oversight of a management contract held by Montgomery-Watson Americas. In a clumsy revolving-door exit, Williams left the city for a short while last year for a $100,000-a-year job with Operational Services Inc., a subsidiary of Montgomery-Watson Americas.

Though Lanier subsequently admitted that perhaps such neat little transitions should be discouraged through ordinance, he nonetheless welcomed Williams back after less than a year at OSI. In February, the mayor named him "deputy assistant for housing and inner-city revitalization" and put him to work with Stevens. His annual salary, which is funded by the HHFC, is $112,000, plus a $13,000 annual pension-fund payment, a $550-a-month car allowance and an expense account, plus a $36,000-a-year administrative assistant.

In July, Stevens' "assistant to the mayor" budget was increased to $200,000. Stevens likes to point out that he "donates" office space, as well as other expenses associated with running the housing operation from his business address on Dairy Ashford. Yet his budget includes $40,000 for a secretary, $42,000 for "administrative" costs, $10,000 for office expenses, plus a $50,000 contingency fund. There is also a line item for $40,000 in accounting services, though the HHFC already pays $5,000 a month to a contract consultant to handle the agency's books.

Lawyers working with the HHFC have done especially well. Longtime general counsel Mickey Norman is paid by the hour, which in recent years has ranged from $70,000 to more than $90,000 annually. In the last 18 months, he has received some $50,000 in additional fees for work on the Homes for Houston project.

More troubling is HHFC funds paid to attorney Barry Palmer. Stevens and the board have authorized more than $30,000 to Palmer for work on various projects, including the purchase of the Rice Hotel. Stevens acknowledged -- without apology and little elaboration -- that Palmer's firm, Coats, Rose, Yale, Holm, Ryan & Lee, is also employed by his private company, Michael Stevens Interests.

"Lots of law firms do business with my company," he offered. "He is not the only one."

For the most part, the ranks have closed tightly behind Stevens. Few people who know him have anything but praise for his volunteer effort, and many clearly stand in awe of his business savvy and personal charm. Those who did agree to talk about him -- real estate types, city employees, consultants, HHFC board members and developers who have city projects pending -- did so with the understanding that they would not be quoted by name.

Indeed, it's difficult to take issue with a man who apparently has subjugated his own business interests for what he believes is the public good. As for what Stevens stands to gain in return, no one knows, except to say -- and this opinion is shared universally -- that he certainly doesn't need the money.

 

But Stevens' busy role has caught the attention of friend and foe alike. And almost all agree that it's unusual.

"I have real mixed emotions," says one city employee close to the ongoing development action. "I'd like to see the Rice go. I'd like to see Fourth Ward work. But the downside is that it's been taken out of the public view and it's become closed-door meetings with Michael Stevens making deals with Randall Davis. Why was Randall Davis chosen without anyone else having the opportunity, especially people who have wanted to work on it for years?"

Judging by their reaction to the Rice Hotel proposal -- which was approved 11-2, with one member absent, on September 11 -- the majority of councilmembers appear willing to go along with whatever Stevens and Lanier put before them. A few expressed wariness over losing legislative oversight to the HHFC, which will collect the $750,000 a year in tax increments collected from the Market Square special district.

Councilman Boney, whose south-side district encompasses some of the city's oldest and most fraying housing stock, points out that councilmembers have no one but themselves to blame for their exclusion from the decision-making process.

"The question of oversight and accountability is one that requires eternal vigilance," Boney said in a recent interview. "And that's our responsibility, and it means councilmembers cannot be asleep at the switch."

Whether that happens remains to be seen, and most certainly, the opportunity will present itself again before long. Things are happening fast, and the only person in a position to really keep up with the flurry of activity is Michael Stevens. At this point, there doesn't appear to be much that can slow him down.

"I think we're producing a very positive result for the community," he says. "And in a way that will perpetuate itself after the mayor is gone, after I'm gone." And, for better or worse, after the money is gone.


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