Galveston, tell the council to say no Thursday to developer Tofigh Shirazi.
The city government has been consistently emasculated by Shirazi’s constant bullying and threats of litigation ever since he came to town expecting special treatment 16 years ago.
When the Beachtown tax reinvestment zone was created in 2002, city leaders agreed to reimburse him $9.3 million for infrastructure. Not content with sewer and water pipes, he also wanted free landscaping, sidewalks, streetlights, beach walkovers, lawyers and consultants. Done, said the mayor.
He promised to build houses, a hotel, and other structures to generate enough new property taxes to pay him back for his infrastructure in 11 years, but he asked for a 40-year obligation from the public. No problem, said city leaders.
The city created two new committees, TIRZ 13 and the Redevelopment Authority, to oversee the zone. Although the primary purpose of the TIRZ 13 committee is to approve his payments, Shirazi demanded that he be its chairman. You got it, said the council.
By 2013, by when he had committed to create $156 million in value, his project was valued at only $59 million, $30 million of which was for land, not structures.
Yet he installed infrastructure with a vengeance, exceeding his limit by $2.5 million, and demanded public reimbursement for it all. He charged $110,000 extra to camouflage his sewer lift station as a clock; paid over $400,000 for beach walkovers when the budget was $120,000; installed concrete streets with brick pavers when asphalt was specified. That’s OK, said the TIRZ 13 committee.
His spending has never been audited. Accountants reviewed Shirazi’s invoices to confirm they were “related” to zone projects, but “(w)e were not engaged to, and did not, perform an audit ...” We don’t need that, said the RDA.
Disappointing tax revenues combined with excessive infrastructure made the interest rate on the public’s ballooning debt to Shirazi critical. The rate was a floating one, declining over time from 7.3 to 3.25 percent. That reduced the public’s “daily” interest obligation to Shirazi from $2,400 to $1,070. Despite the decrease in the cost of money, Shirazi demanded the high rate.
When the RDA moved to hold him accountable, Shirazi asked council to replace its members (including me). They’re outta here, said the mayor.
Shirazi asked to negotiate with the new RDA, but he required them to meet behind closed doors and withhold all negotiations from “the media, the public or any other persons:” “Any action taken in open meeting will not mention the specific terms and conditions ...” Our lips are sealed, said the RDA.
With no opportunity for public comment, the RDA agreed to relieve Shirazi of the obligation to build any more taxable structures; reimburse him for all infrastructure plus more in the future; and permanently pay interest at 7.3 percent. We don’t want any controversy, said the city manager.
Now Shirazi has asked council to “approve, authorize, adopt and incorporate” this one-sided deal.
Instead of rubber stamping the RDA’s concessions to Shirazi, the council should do something long overdue: audit his spending.