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Southwest Airlines Has a Union Fight on its Hands

| 40 mins ago

Reports rang out yesterday that Southwest Airlines was experiencing a heavy volume of delays and cancellations. No wonder: the weather was pretty fierce, especially on the east coast, and flights were grounded not only by Southwest but across the air travel spectrum. But if you’ve been paying attention, there’s another layer to the friendly, Dallas-based airline’s issues: Southwest finds itself locked in a struggle with the union representing its mechanics. Tensions have been growing, and service appears to be suffering. Whose fault that is depends on who you ask.

The dispute stems from the Aircraft Mechanics Fraternal Association’s outcry that its members are facing increasing pressure to turn the other cheek when it comes to possible safety issues. That came to light in this February 4 national story from CBS News. It features mechanics saying colleagues have been suspended for a month or more for things like pointing out issues that were outside the scope of what they were working on. The seven-minute spot has Southwest looking like a high-pressure operator, with mechanics told to keep their heads down, fix what they’re fixing, and get the planes back up in the air. Southwest, of course, says it takes any maintenance issues brought to its attention seriously.

It’s important to note here a couple things.

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Local News

If You’re Interested in the VisitDallas Mess, Read This Morning News Editorial From a Former City Attorney

| 50 mins ago

Art Hudman is a retired Dallas assistant city attorney, which, of course, gives him a special sort of insight into the VisitDallas kerfuffle. To catch you up: a city audit found that the nonprofit agency that city contracts to promote it may have been violating state law in how it kept track of its public funds, didn’t have clear indices in place to gauge whether it was spending its money effectively, and had been spending above its own policies regarding expenses. There were some other things, too. But that’s the boilerplate.

Earlier this week, a City Council committee declined to recommend the termination of its contract, pending it fixes some of the things that the audit called out. Today, The Dallas Morning News published a piece written by Hudman. He does not paint a pretty picture of the operations inside City Hall over his 18 year career.

VisitDallas presents a glaring example of what happens when we overlook oversight. Yes, the City Auditor’s Office uncovered problems. Unfortunately, that is like an oncologist reporting inoperable colorectal cancer to a patient who has gone decades without a colonoscopy or prostate exam.

Ouch.

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Commercial Real Estate

Details Emerge on Keurig Dr Pepper’s New Frisco HQ

| 1 hour ago

The ink has dried on Keurig Dr Pepper’s big deal for a 350,000 square-foot build-to-suit at The Star, a 91-acre mixed-use campus anchored by the Dallas Cowboys’ world headquarters and training facility in Frisco.

Bob Gamgort, chairman and CEO of Keurig Dr Pepper, said the new facility represents an exciting upgrade for its Lone Star seat of power. “The new location at The Star in Frisco will provide a state-of the-art work environment and exciting amenities that will energize our employees and enable us to attract top talent in the area,” he said.

Keurig and Dr Pepper merged operations in 2018. The $11 billion company has a second headquarters in Burlington, Massachusetts, and employs more than 25,000 in 120 offices, manufacturing plants, warehouses, and distribution centers across North America.

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Leading Off

Leading Off (2/21/19)

| 6 hours ago

Richardson Bribery Trial Continues with More Testimony. Mark Jordan’s ex-partner, Sarah Catherine Norris, testified that he was just using Richardson mayor Laura Maczka to get what he wanted instead of being in love with her. There were lots of unsettling details. Norris’s testimony continues today.

Southwest Cancels and Delays Tons of Flights. Yesterday, Southwest Airlines cancelled 440 flights and delayed 522—due to an East Coast storm as well as a tiff between the airline and its mechanics union. The disruptions totaled more than those of any other airline. And it seems as though passenger safety may be at risk if they can’t work out the mechanical issues.

Arrests Made Following Sex Trafficking Reports. DPD officers arrested four suspects yesterday after being notified of sex trafficking allegations at three northwest Dallas massage parlors. City officials also shut down the parlors.

The Star in Frisco Will Get New Office Building. The $190 million, 300,000-square-foot project was approved by the Frisco City Council. It will supposedly house Keurig Dr Pepper, moving from Plano, and be finished in 2021.

Get Ready for Some Serious Wildflowers. This past fall was Dallas-Fort Worth’s wettest on record, setting the stage for a particularly pretty wildflower season soon. Ennis and Cedar Hill will likely be the best places to get an eyeful of bluebonnets.

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Local News

The Forest Park Medical Center Fraud Trial Begins This Week

| 20 hours ago

In December of 2016, the U.S. Department of Justice filed indictments against 21 suspects related to their alleged involvement in a complex and widespread fraud scheme centered around a chain of high-end luxury hospitals branded as Forest Park Medical Center. There’s a shell of its flagship up Central, the building having been bought by Medical City but is still awaiting redevelopment as a specialized surgical center. The feds alleged that the foundation of Forest Park was a big scam to get high out-of-network payments from insurance companies. Some of the founding doctors involved are accused of offering and receiving kickbacks for patient referrals. The chain built six hospitals, all of which were thrown into bankruptcy as its physician founders started getting indicted. Total assets ballooned to more than $1 billion before they fell. I wrote about all this in a feature for D CEO in 2015.

Since then, 11 of the defendants have pleaded guilty. One of the founders—and the first to get popped, in 2015—was anesthesiologist Richard Toussaint, and he pleaded guilty a few months after the indictments and volunteered to testify against his colleagues. His indictment was salacious and included brazen allegations, including billing for procedures during times he was on a private jet as well as receiving surgery himself.

Will Maddox of D CEO Healthcare Daily reports that the long-awaited trial of the remaining 10 defendants began today. It’s expected to last two months.

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Local News

Rediscovering Little Egypt

| 1 day ago

KERA’s great reporter Bill Zeeble takes a look at how a couple of professors at Richland College and their students are rescuing the history of the rural community founded by former slaves Hanna and Jeff Hill, named for the Egypt Chapel Baptist Church that was in the area. Little Egypt existed from the 1880s until about 50 years ago. A taste:

“We had electricity but we had no running water,” Gloria McCoy says. “We didn’t have any indoor plumbing. We had the outhouse. And we had butane gas. And we did have a telephone.”

This was the 1950s. The McCoy house actually had Little Egypt’s only telephone, says Gloria’s older sister, Joann.

“People in the neighborhood did not have phones but a lot of them got their calls there [her house], and we would run up the road and tell them, ‘So-and-so! Telephone’s for you!’” Joann says.

It’s important to revisit this history. For one reason: there are still communities in the area, like Sandbranch, that aren’t much removed from these stories.

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Sports

Is Errol Spence Jr. on His Way to Becoming a Global Phenomenon?

| 1 day ago

Nearly two years ago, in the May 2017 issue of D Magazine, sportswriter Joe DePaolo profiled a boxer out of DeSoto named Errol Spence Jr. None of the editors on staff had ever heard of him, but we took DePaolo’s word for it that this fighter was something special. Since then, the undefeated welterweight has earned a worldwide following. He’s also found a fan in Jerry Jones: on March 16, Spence will defend his IBF title belt against current WBC lightweight champ Mikey Garcia at AT&T Stadium. Yesterday, he showed up to the weigh-in like a young legend, in a turtleneck. We caught up with DePaolo to get his reaction.

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Local News

Leading Off (2/20/19)

| 1 day ago

Angela Paxton Pushes for Bill Benefitting Hubby. She says Senate Bill 860, which she introduced, has “literally nothing to do” with Ken Paxton’s felony charges over securities fraud and failure to register as an investment advisor. Attorney and ethics expert Buck Wood says, “The very activity she is legalizing here is what he got indicted over.”

Family of Girl Killed in Atmos Gas Explosion Releases Video. It shows Michellita Rogers filming herself getting ready for a cheer competition (typical tween stuff!) before the screen flashes and goes to black—that would be the moment the Rogers’ house exploded. Michellita’s father, brother, and grandmother all suffer from brain injuries from the blast. Her mother wants lawmakers to pay attention.

Tom Dundon Buys Into the Alliance of American Football for $250 Million. The Dallas billionaire’s sports investments include the NHL’s Carolina Hurricanes (as owner), the Trinity Forest Golf Club (co-founder), and Topgolf (primary investor). The AAF is a filmmaker’s attempt to succeed at what the XFL failed to do. Coincidentally, Vince McMahon is trying to do the same thing next year.

Sweethearts for 60 Years Die in Farmersville House Fire. Del and Betty Lou Sergent’s daughter lives next door. There was nothing she could do to save them.

Errol Spence Jr. Rocks Turtleneck at Presser for Hometown Fight. The look says “legend in the making.” Find tickets for the AT&T Stadium bout here.

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Local News

VisitDallas Is Here to Stay, For Now

| 2 days ago

On Tuesday, VisitDallas CEO Phillip Jones came before city officials publicly for the first time since a scathing city audit against the organization he runs. That audit found, among other things, a dearth of data making accountability impossible, commingling of funds required by state law to be kept separate, and some weird compensation things traced to Jones himself, such as a loan that Jones admits was used outside the confines of organizational work.

The outcome: VisitDallas isn’t going anywhere, at least for now, despite ample concern about whether the nonprofit charged with attracting events to the city has been using its public funding appropriately. A motion by Councilman Philip Kingston to cut ties with the organization—it would’ve recommended to Council that the city terminate VisitDallas’ contract and directed the city manager to open up the bidding to a new vendor—failed. Only Kingston and mayoral candidate Scott Griggs voted in favor. Instead, the committee decided to bring the briefing in front of the full Council at a later date. Too, VisitDallas is to work with the city to implement more than a dozen solutions to problems raised by the audit between now and an update in May.

In other words, the committee is opting for an improvement plan. Not all are pleased.

“I do not see credibility in the plan to improve VD,” Kingston said.

Jones, who sheepishly deferred questions to his chair-elect after the meeting, wasn’t subjected to quite as much heat as you might’ve expected. As Griggs pointed out after the meeting, the long audit report and time constraints of the committee format are at least part-culprit for that. About an hour of the hour-and-a-half-long period was used up going through the most striking points of the audit as well as the city’s recommendations and VisitDallas’ official response. Those recommendations boiled down into two parts: improving oversight and monitoring over VisitDallas contracts and reporting and improving reliability and accountability of controls over VisitDallas’ performance measures and expenses. And then VisitDallas went, saying in many words that it would comply.

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Local News

A Sneak Preview of How Today’s VisitDallas Council Meeting May Go

| 2 days ago

In Leading Off this morning, Tim noted that VisitDallas will finally face the City Council after a disastrous audit found that the city has no earthly idea about whether the $30 million it annually delivers to the tourism agency is being spent wisely. The audit found that VisitDallas spent just shy of $150 million in hotel occupancy taxes over a five year period ending in 2017. Except it’s not just hotel occupancy taxes—VisitDallas takes other public monies it earns through its Public Improvement District and commingles it with the taxes. That is against state law, which requires nonprofits to keep those things in separate accounts.

Tim had a nice breakdown in January about all the problems the audit uncovered, including expenses that sailed well above its own policies, maintaining unreliable performance reports, and slacking on the money it is contractually obligated to reinvest in our aging convention center. The agency has also lent hundreds of thousands of dollars against the performance raises of its $700,000-a-year CEO Phillip Jones. Nonprofits are only supposed to loan money to its executives if it’s for a purpose related to the operations of said nonprofit; Jones has said he was using the loaned money to help pay for medical treatment for his son’s Lyme disease. That about catches you up.

Today, the Council will be briefed on all the corrective actions that VisitDallas is promising. Like setting up a separate bank account for the public funds, per state law. And having a third party analyze performance metrics against their spending. And making annual payments for improvements to the convention center. And some other things. VisitDallas’ contract is up with the city in 2020.

But the damage may be done. I point you to this statement from Councilman and mayoral candidate Scott Griggs.

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CRE Opinion

DFW Office Space Demand: The New Normal

| 2 days ago

With 2018 in the rearview mirror and the first quarter of 2019 upon us, the most popular question asked of our team continues to be: “How much runway is left in this cycle?” I will answer this question the exact same way we answered it at this time last year: we honestly don’t know. However, as we stated last year (and likely the year before), the fundamentals in the Dallas-Fort Worth office market continue to be healthy, with demand keeping up with or exceeding new supply and providing positive leasing activity (and thus, future absorption).

I have referred to the performance of this cycle as “the new normal” many times, and for good reason. DFW’s job and population growth, relative affordability, diversified economy, business-friendly climate, and central location will continue to lay the groundwork for healthy real estate gains. That said, as we look at 2019, let’s take a deeper look at a few key metrics: supply and demand, rental rate and vacancy performance, capital markets activity, and finally, trends shaping the market in the years to come.

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