Wednesday, February 17, 2010


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Bethlehem City Council on Tuesday reached a consensus to notify the city controller and auditors that Mayor John Callahan's administration spent $335,000 in casino host fees and other money last year without council's approval.

Council had also been considering a resolution warning the administration that it will take future action -- such as a formal censure or reprimand -- if it ever happens again.Councilwoman Jean Belinski, who had pushed council to consider repercussions, was not at the meeting, and the resolution got no sponsor Tuesday.

''We already expressed our will as strongly as we can. I think it's time to move on,'' councilman Gordon Mowrer said. ''If they do it again, they're in major trouble.''City business administrator Dennis Reichard, who had apologized in public for the oversight, said after the meeting he has already contacted the auditors.

Council solicitor Christopher Spadoni had recommended against formally censuring the administration on this infraction, saying the money went to legitimate city uses.

While some council members have said they don't have a problem with what the money was spent on, they resented the administration cutting out council's check on how taxpayers' money is spent.

Council President Robert Donchez emphasized that the money wasn't ''misappropriated,'' but internal controls were violated.The violations stem from the city's use of host fees from Sands Casino Resort Bethlehem and money from the treasurer's escrow fund earmarked for specific purposes.

Council passed ordinances a little more than a year ago that require council's approval before spending money in those accounts if it's more than what's in the budget.

The host fees from the casino, which opened in May, exceeded what was budgeted by $335,600 last year. The administration spent the extra money on medical expenses.

The city also budgeted to borrow up to $1.8 million from the treasurer's escrow fund to pay bills, with the understanding the city would pay it back by the first quarter this year.

The city borrowed $1.8 million in the summer and paid it back. Then it borrowed another $2 million in the fall and paid back $200,000, ending the year with what was in the budget, according to Reichard.

Reichard has said he thought he followed the law requiring the treasurer's escrow because he ended the year with borrowing a net of $1.8 million from treasurer's escrow. Taking responsibility, Reichard said the spending of casino fees was an oversight.

Councilwoman Karen Dolan compared the oversight to council not yet renewing the Environmental Advisory Council, which must be done every three years. Dolan, who pushed for the council's creation, said even she had forgotten it was up for renewal and, technically, the city is in violation.

''Should someone sue us or reprimand us?'' she said. ''I think not.''

City Council is working on that renewal.Councilman Eric Evans is also reintroducing an ordinance that former Councilman Joseph Leeson Jr. introduced last year for tighter controls on the casino fees and treasurer's escrow fund.

More than 100 people turned out Tuesday to voice opposition to two proposed apartment complexes in Frisco.

The planned complexes are dependent on acceptance into the state's Housing Tax Credit program, which provides federal tax incentives to developments with rents at below-market rates.

The complexes also would set aside a certain number of units for Section 8 voucher-holders from the Dallas Housing Authority.

Late into Tuesday night, the City Council discussed the projects and spent more than an hour in executive session consulting with the city’s attorney. Just before midnight, the council voted 4-to-1 to write letters supporting the projects to the state, which will decide in July which projects get funded. City support is key in the developers’ applications to the state for funding.

“This is about providing low-income housing and a plan to get us there,” Deputy Mayor Pro Tem Bob Allen said.

Several council members said that residents had some valid concerns about impacts to traffic, utilities and schools. They also noted that the projects were too early in the process to have answers but that the developers would be held to Frisco’s high standards.

Council member Bart Crowder said he believed that some of the fears from residents about the projects were greatly overstated and he believed the agreement with Inclusive Communities Project was appropriate.

Council member Scott Johnson, who cast the sole vote against the letters of support, said he heard lots of reasons why the projects weren’t a good fit for the city.

“I have yet to hear why they’re good for the community,” he said. “On this day and this issue, I choose principle over pragmatism. This is not something I support.”

The proposed projects are part of a three-year agreement with the nonprofit Inclusive Communities Project that the City Council approved in October 2008.

In return for making the units available to Dallas clients first, the nonprofit is giving the city $2 million that will be passed on to the developers as low-interest loans to build their projects.

The agreement with Inclusive Communities Project is the first of its kind in North Texas. The nonprofit made similar offers to other cities. Frisco was the only one to accept. The responses from Flower Mound and McKinney prompted lawsuits by Inclusive Communities Project. Flower Mound's suit is pending. McKinney is working out a settlement.

In response to residents' concerns, the city of Frisco posted background about the agreement on its Web site in recent days. As part of the written explanation, City Manager George Purefoy states:

"If Frisco had not negotiated the agreement with ICP, then the likely outcome would have been a federal lawsuit. After 14 months of litigation, the McKinney Housing Authority is negotiating a settlement agreement with ICP which establishes the same general parameters as the Frisco agreement, except it includes a longer-term agreement (5 years vs. 3 years) and it pays some of ICP's attorneys' fees."

Several residents at Tuesday's meeting said they were willing to pay for the legal fight.

"We are letting the threat of a lawsuit determine what will happen in the city of Frisco," resident Sotirios "Chris" Tsongas said.

Some of the council members said late in the meeting that the threat of a lawsuit did not factor into their decision to contract with the Inclusive Communities Project.

“This is about what’s in the best interest of the city,” Mayor Maher Maso said.

"If Dallas can't handle its own problem, it shouldn't become Frisco's," Frisco resident Dody Brigadier said. "I've never known any Texan to back down from a fight, and here you are."
Betsy Julian, president of Inclusive Communities Project, declined to comment about Tuesday's proceedings.

Residents' concerns about the projects ranged from possible increases in crime to decreases in property values. They were concerned about the ability of nearby roads to handle the traffic from such large complexes. And they were concerned about what the projects would mean to the school system.

The projects are competing for funding through the state's Housing Tax Credit program. It's a competitive process. Developers in the Dallas region have applied for more than $92 million in tax credits for 60 projects. The state has about $10 million available for the region this year.
Developers for the two Frisco projects both admitted Tuesday that they weren't high on the state's project rankings.

"We don't think the odds are great, but we do love Frisco and would love to build in Frisco," said Chris Applequist with San Antonio-based Versa Development Co., which proposes building 200 units on more than 12 acres near Bicentennial Park.

The other project, by Songhai Development Co., proposes building 150 units on 10 acres on the south side of Stonebrook Parkway east of Woodstream.

Julian said last week that she believed there would be plenty of interest from Dallas Housing Authority clients wanting to live in Frisco. They are part of the so-called Walker Settlement, which stems from a 1985 lawsuit over black residents' being forced to live for decades in segregated slums in Dallas.

That settlement has allowed thousands of black families to move into predominantly white neighborhoods. It also created the Walker Project to promote fair housing and support the class members. In 2004, the Walker Project became the Inclusive Communities Project.

Frisco already has two apartment complexes enrolled in the state's Housing Tax Credit program to provide low-income housing. The Preston Trace Apartments, at 8660 Preston Trace Blvd., were approved through the state's tax credit program in 2004.

The Stonebrook Village Apartments, at 7500 Rolling Brook Drive off of Stonebrook Parkway, also receive tax credits, but it was unclear how long the units had been in the state program.

Toyota is considering a recall of its hot-selling Corolla subcompact after complaints about power steering problems - another blow to the world's largest automaker already reeling from a string of recalls for safety troubles.

Despite pressure from some lawmakers, President Akio Toyoda said he won't be attending the U.S. congressional hearing on the automaker's quality lapses, entrusting the job to U.S.-based executives - though would consider an appearance if the committee requests it. He said he wanted to focus on improving quality worldwide.

"I trust that our officials in the U.S. will amply answer the questions," Toyoda said Wednesday in his third news conference in two weeks. "We are sending the best people to the hearing, and I hope to back up the efforts from headquarters."

He said Yoshi Inaba, who heads Toyota Motor Corp.'s North American unit, was more familiar with the U.S. situation and was the best executive to deal with the hearing. Toyoda said he was still making plans to go to the U.S. and dates have yet to be set.

But in an alarming disclosure that could widen Toyota's recall crisis, the executive in charge of quality controls, Shinichi Sasaki, said Toyota was taking seriously the complaints about power-steering problems in the Corolla, the world's best-selling car.

Speaking at Toyota's Tokyo office, Sasaki said the company was putting customers first in a renewed effort to salvage its reputation and would do whatever is necessary if a Corolla fix is needed.

He said it was still uncertain if a Corolla recall would be necessary, but it is an option the automaker is considering.