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Red Flags Raised Over Deal for Housing, Urban Farm in Lake Highlands

Council Member Adam McGough’s close relationship with an Atlanta-based nonprofit hoping to take over city-owned land in his district is under scrutiny.
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In February, City Councilman Adam McGough emailed City Attorney Chris Caso with a question about a “potential private employment opportunity.” If McGough accepted a “private paid position” with City of Refuge, an Atlanta-based nonprofit whose recently formed Dallas arm has proposed to build a $28 million development on 12 acres of city land in McGough’s council district, what steps would he “need to take to ensure there are NO charter violations” and no violations of the city’s ethics code?

It’s unclear how the city attorney responded to McGough’s question, shown among several emails from McGough that were posted on Twitter by the freelance journalist Steven Monacelli. The city attorney’s office says it can’t share privileged advice to a council member. (I’ve filed an open records request, which will likely be contested and sent to the Texas Attorney General for a ruling as to whether the emails can be released.)

Reached by phone Wednesday, McGough, who is featured in City of Refuge’s marketing materials as a “project champion,” says he wouldn’t share the advice he received from the city attorney’s office. But he says he has taken pains to avoid any conflict of interest between his role on Council and his relationship with the nonprofit.

“First of all, there’s no offer of any job with City of Refuge,” he says. “And second of all, there’s no anticipated offer of any job with City of Refuge.”

McGough has been among the most prominent cheerleaders for City of Refuge’s proposed Lake Highlands project, which would turn a city-owned lot at 12000 Greenville Ave. into a community center with an urban farm, housing, homelessness services, a cafe, and and a co-working space. 

He says that earlier this year he looked into whether there is a “mechanism that allows for a council member to be able to serve in a role that helps with a particular project.” There is, he says, but he ultimately abandoned the idea. “I was like, ‘Look, I think it’s going to be too—the perceptions of it could potentially have a negative influence on this.’”

City of Refuge-Dallas CEO Mike Reinsel says there was no consideration of making McGough a “direct employee” of City of Refuge. “We’ve talked about the possibility of a volunteer role if he was employed by another organization—the Dallas Foundation or a business organization that would maybe loan him to the project for a period of time, but not as a direct employee of City of Refuge,” Reinsel says.

Some city council members and City Hall gadflies have raised red flags about other aspects of the plan to lease the land to City of Refuge, which the Council will vote on next week. There was no open bidding process on the land. City of Refuge will have to raise a lot of money to make it work, or risk forfeiting the lease. And while the vacant lot itself has something of a long, tortured history—nearby homeowners (and McGough) helped kill a previous proposal to build housing for the homeless there, and South Dallas nonprofit Bonton Farms backed out of a previous iteration of the plan with City of Refuge—City of Refuge itself has only been involved in the Dallas area for a short period of time.

“What opportunities are we missing that we could have if we had gone through a normal RFP process here,” Councilman Chad West said at a City Council committee meeting earlier this week. “This is a no-bid land lease that has no underwriting.”

West said the council committee learned it would be briefed about the proposed 40-year lease for City of Refuge just three days before the committee meeting. He said he didn’t receive the lease itself until Saturday. “I still haven’t gone through the entire lease, and I still have questions I need answered,” he said.

West wanted to know why City of Refuge was given a full year to submit a site plan for approval. And even then, the language in the lease allowed for the nonprofit’s director to extend the deadlines to meet requirements like providing a site plan, construction and phasing schedule, a budget, and an operating pro forma “for up to six months … in his or her sole discretion.”

“We can’t just have this extended indefinitely without City Council approval,” West said in the meeting. Council members Gay Donnell Willis and Cara Mendelsohn had other questions about the deal, namely why the city didn’t initiate a request for proposal (RFP) process on the land. Mendelsohn said there are other nonprofit service providers in Dallas that offer similar programs that didn’t get a chance to be considered.

“The back we are turning on them is really shameful,” she said.

West motioned to keep the item in committee for another month, which failed. McGough said he was “encouraged by the questions” but ultimately called West’s motion a “delay tactic.” The full Council is expected to vote on the deal at its November 10 meeting.

McGough’s close involvement with the nonprofit has brought up additional questions about whether the City Council has done enough vetting of this proposal. The Arrow Consulting Group, which campaign finance reports show was paid $20,000 for work on McGough’s last City Council campaign, lists City of Refuge as a client.

In August, McGough asked a lawyer with the city attorney’s office whether it was appropriate to use his office’s budget to pay for a trip to Atlanta, where City of Refuge has operated nonprofit services for about 20 years. McGough says he believes other council members who have visited Atlanta to tour City of Refuge operations—including council members Omar Narvaez and Casey Thomas—similarly paid for the travel using their respective offices’ budgets. 

In council meetings, the officials who have visited Atlanta have, for what it’s worth, seemed impressed by what they encountered. Narvaez spoke highly of the organization on Monday, saying people like his brother, who was previously incarcerated, would greatly benefit from the services it provides.

Rensel, the CEO of the Dallas branch of City of Refuge, says he has been asked “a number of times” why his nonprofit is better equipped for a project of this scale than any other organization in Dallas. “There’s lots of great organizations here doing great work,” he says. “And that’s true. And maybe Dallas doesn’t need another organization, but I believe that City of Refuge in Atlanta is best in class in terms of that holistic, full wraparound model that empowers the vulnerable and marginalized out of the various crises of life.”

McGough says Lake Highlands residents and community leaders are excited about the possibility of City of Refuge taking over the lease at 12000 Greenville Ave. “This project stands on its own,” he says. “Look at the merits of this project. Look at the innovation. Look at who and how this is going to serve.”

That’s what he’d rather be talking about.

“The fact that we’re off talking about some of these other issues is disheartening to me because it takes away from the focus and the opportunity of what’s really going on here.”

Matt Goodman contributed to this report. 

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