Monday, January 30, 2023 Jan 30, 2023
27° F Dallas, TX


How the son of Robert Strauss sweetened a sweetheart deal.
By Sally Giddens |

RICK STRAUSS, SON OF ROBERT, nephew of Annette, shrugs off the annoying hum of the helicopter that slowly circles above his Stonebridge Ranch. Cussing the August heat, he wipes the sweat from his upper lip and finishes an emphatic denunciation of a recent article about him in Fortune magazine. The story implied that he and his father, Democratic Party powerbroker Robert Strauss, exerted improper influence so Rick could buy his way into these multimillion-dollar rolling hills in McKinney.

But Strauss can only be bothered by the media for so long. He squints up at the chopper and chirps that its occupants are probably interested brokers, no doubt trying to cop a closer look at the heralded golf courses and home sites, valued at some $300 million. “They are out here all the time,” Strauss insists.

Actually, though, the airborne observers are more like circling vultures: an ABC camera crew, turned on to the Stonebridge story by the very magazine article Strauss is busily trying to put to rest.

What the ABC folks see is a vast, beautifully manicured, 6,230-acre spread decorated with country clubs and pocket parks and pretty brick homes. But pictures can be deceiving. You need a sense of smell to understand the nuances behind the slick coup Strauss pulled at Stonebridge. And ever since that Fortune article, reporters from Dallas to D.C. have been following the scent.

For nearly a year, Stonebridge has been tangled in the twisted, dirty sheets of the S&L nightmare called the Southwest Plan. As a director and part owner of First Texas Savings Association and Gibraltar Savings Association (co-owners and lenders for Stone-bridge), Strauss was one of the players who pushed the institutions to the brink of insolvency, insiders say. (The Strauss family owned 17 percent of the S&L.) But now Strauss arrives, freshly perfumed, to take command while dodging any liability.

Dad and Auntie Annette probably admire Rick’s perseverance: he’s patiently put up with the feds, hoping it will pay off. Pesky press or not, he wants to buy Stone-bridge Ranch, though in September he pulled his initial bid. Strauss is still trying to resuscitate the ghost of his own dead deal. If he has his way, he’ll get a great bargain. Because when a local and well-connected poker player like Rick Strauss meets some stay-pat carpetbagger of a federal employee, Strauss is probably going to win. Big.

“With what people hear about this place, they think I’m selling lake lots out here,” says a pouty Strauss of his baby. Strauss drives through the land he has developed with other people’s money, passing the tight brick homes being built along two gorgeous golf courses. He’s been in love with this land since late 1984, back when it was called the Flying M Ranch. Ross Perot had his eye on the property then too, and had negotiated to buy it. But Strauss wanted the land badly enough to pay Perot $8 million to let his deal drop.

Perot is happy with his payoff, and he should be, given what has since transpired in the Dallas real estate market. To some real estate observers, Perot is one of the lucky few to have gotten the best of Rick Strauss. But Strauss would likely say that it’s too soon to say who bested whom. The Stonebridge deal isn’t over yet.

Slick. Shrewd. Down and dirty. Strauss is known as a tough and cunning negotiator. And if he doesn’t win up front, real estate players say he’ll get you on the flip side. Strauss’s recent legal victory over WZMH Group Inc., the architects for his exclusive- and financially beleaguered-Claridge Condominiums near Turtle Creek Boulevard, is typical of his business style: he plays until he wins. In his suit, Strauss claimed that construction delays and other building and design problems at the Claridge caused him to lose in excess of $20 million. In July, Strauss and his Multi-Story Investments Inc. were awarded a $3.6 million judgment from WZMH for the inconvenience.

“Ricky’s good luck,” says one of his competitors, “is everyone else’s bad luck.”

No doubt, Strauss has had some lucky breaks. Several years ago, soon after he bought the Willow Creek apartments on North Central Expressway at Walnut Hill, the huge complex burned. Good luck for Strauss, since the project was a hard one to make work, according to others who bid for it. Bad luck for the insurance company that paid some $2 million.

Deals like that have enabled Strauss to five well, in a multimillion-dollar home in Old Preston Hollow. At forty-four, Strauss now calls himself president and CEO of RCS Investments, a firm that has developed real estate projects throughout the U.S. Strauss’s socially prominent family has long been aligned with the Democratic Party, so it’s not surprising that he has served in various appointed political roles, mostly during Mark White’s gubernatorial regime. But most of Strauss’s extracurricular service is on business-related boards of banks and other real estate associations. Strauss doesn’t even play golf on Stonebridge’s gorgeous and inviting courses. On the non-business side of the ledger, he has been interested in helping people who have learning disabilities. Several years ago, he was a recipient, along with other dyslexics including Cher, Tom Cruise, and Bruce Jenner, of the “Outstanding Learning Disabled Achiever” award from the Lab School of Washington, D.C.

Obviously, dyslexia has not hampered Strauss at the negotiating table. In the Clar-idge deal he was backed by a battery of lawyers, but even as a loner, he is the odds-on favorite in a business deal. In the Stone-bridge case, the stack-up was even more lopsided: Strauss basically beat out some mid-level federal employees. And what could have been a death knell for formerly undeveloped dirt forty miles north of Dallas may now be another baptism by fire for federal regulators.

From the beginning, the Stonebridge deal may have been too complicated for the feds to get. But one thing’s for sure: it was a very inside deal-too inside for observers like House Banking Committee chairman Henry Gonzalez, the San Antonio Democrat who tried to put brakes on the deal as it neared closing.

Here’s how it worked: Strauss originally orchestrated the purchase of the Stone-bridge property, but it was actually his S&L, Gibraltar Savings, that bought the property in August of 1985 for $136 million. Strauss’s S&L then put Strauss, as manager and part owner, to work at improving the property, investing $164 million into the raw land to put in roads, country clubs, and other amenities and paying Strauss $2.9 million a year to do it.

When Gibraltar met its doom, as another S&L that had invested too much in real estate, the government came in to run the thrift and made it part of the Southwest Plan. The feds began what is basically a bankruptcy procedure that would have ren- dered all contracts-including Strauss’s- null and void. So before that could happen, Strauss says, the federal regulators and the directors of Gibraltar decided to pull Stone-bridge out of the quagmire and protect it in subsidiary corporations that would allow Strauss to continue to do business. And be paid for it, of course.

That action, which Strauss can carefully document, has been the focus of most of the stories about a “sweetheart deal” at Stonebridge. That is, until the possibility that Strauss might actually get to buy the property from the government became the new hot topic of conversation. If Strauss closed the deal for, say, $50 million, one figure being leaked here and there, taxpayers would bail out the balance of the $300 million deal. With that kind of sweetener, Strauss can surely profit in the long run.

But on this heavy August day, Strauss ignores the talk. He looks lustily at the $300 million prize that he thinks will soon be his outright for a fraction of that cost-perhaps as little as ten cents on the dollar, according to sources close to the deal. With his bid for the property, he has convinced the feds that even though he had a hand in pushing the S&L he partially owned into insolvency-the same S&L that owned a chunk of Stone-bridge, the same S&L that paid him $2.9 million a year to manage the property and promised him 25 percent of the profits-he should be the one to purchase it. At a discount. And though the feds easily were won over to Rick’s thinking (“I’m the obvious buyer for the property because I know it better than anyone else”), all the while Strauss has had to battle The Hearsay. The Hearsay that whispers no one else wanted the property because of Strauss’s lucrative management contract. The Hearsay that in muffled voice implies that Papa Bob twisted some arms in Washington.

Despite such griping, even by a House banking committee chairman, Strauss is confident that Stoaebridge will see a happy ending. Fortune did print a letter from Bob Strauss and a stilted “clarification” that backed away, somewhat, from the original article, but only after “bare-knuckled pressure was applied at the highest levels of the magazine,” according to a magazine source. The elder Strauss denies any hint of a power play. He is often quoted as saying, “1 do have influence, and the reason I have it is that I don’t sell it, or use it.”

And now, even the specter of a news crew buzzing around Stonebridge in a helicopter can’t cast a shadow on Rick Strauss’s sunny day. Rick feels confident that if he could just get the gossips to come out-or down-for the grand tour, if he could just show them what he’s done with those 6,230 acres, if they knew him as well as the regulators do, then he could convince them that he is not peddling swampland at Stonebridge.

“This development can be more successful than Las Colinas,” Strauss brags, ’If EDS and JCPenney move to Legacy office park, we do well. We do well if they move here. In Las Colinas, they only do well if they get a corporate relocation.” If only all of the FSLIC’s assets in Dallas were this “troubled.” (He does admit that commercial development at Stonebridge is obviously behind projections.)

Strauss is torn, he says, between fighting back at the negative publicity or just letting it go. His newest slogan for the press is taken from a package of sugar he picked up recently while shopping for a boarding school for his daughter: “Never explain. Your friends do not need it, and your enemies won’t believe it anyway.”

“We happen to be one of the few positive things going on in the city right now,” Strauss says, “and I don’t know why everybody wants to kill it. I don’t have any liabilities on [Stonebridge], so if they destroy it, it’s not like I’m on a bunch of notes.”

True. The liability for Stonebridge these days is on the back of the Federal Savings and Loan Insurance Corp., which as conservator for the property is responsible for maximizing its value and minimizing its cost for those who hold the ultimate liability, namely U.S. taxpayers. Though real estate insiders find it hard to believe [“I don’t see how the government could be that stupid to sell the property to Ricky when the industry has already turned up its nose at the antics,” says one], by the time this article sees print, it is likely that Strauss will be bidding again for Stonebridge. Even with the press on Strauss like hunting dogs. Even with chairman Gonzalez asking tough questions. Even with Strauss calling the feds’ hand.

As Stonebridge’s manager, Strauss has acted like an owner since First Texas/Gibraltar put the old Flying M under contract back in February of 1985. Even Strauss admits that buying the property from the government now is a little strange.

Taxpayers may end up paying for it. But for Rick Strauss, well, he just feels like he is buying something he already owns.

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