The city of Dallas is raking in nearly $50,000 in revenue annually by subleasing an underground tunnel for public use. The only issue? It’s paying more than $500,000 to rent and maintain the property.
Council member Chad West, who chairs the Government Performance and Financial Management Committee, flagged the issue Wednesday as the City Council worked its way through its $5 billion budget proposal.
West put forth an amendment to put the money budgeted to rent the property — over $500,000 — into a reserve fund, at least until city officials determine the scale of losses the city’s experiencing and the legal ramifications of the contract.
“I think anytime, no matter how small the item is, or if it’s a one-off, we have a fiduciary duty as a council to hold funds aside until we can vet out a contract or vet out a situation,” West said.
A majority of the council supported the West’s proposition, though some were concerned about the impact on the nonprofits subletting the space.
The property in question, the Thanks-Giving Square tunnel at 1627 Pacific Ave., is connected to a miles-long network of pedestrian tunnels underneath downtown Dallas and is part of a 75-year leasing agreement signed in 1972.
Assistant City Manager Donzell Gipson said the contract had language that increases the lease amount with the consumer price index every three years.
“I think the initial minimum value was $65,000, and over the last 50 plus years, it has escalated and grown to that half a million dollar mark,” Gipson said.
Council member Jaynie Schultz was against West’s amendment. She said putting the money in a reserve fund could harm nonprofits like the Thanks-Giving Square Foundation, which are contractually owed the money.
“These are innocent nonprofits that are about to be victimized because we have a system that needs some repair,” Schultz said.
The city leases the pedestrian tunnel from the Thanks-Giving Foundation, which oversees and owns an interfaith shrine at Thanks-Giving Square. The city does, however, own the underground Bullington truck terminal, which was built to relieve traffic and currently services buildings above ground, including the Mosaic building and the Santander Tower.
A bulk of the city’s revenue comes from the maintenance of the truck terminal.
City officials said they didn’t know if Dallas could get out of the lease. Interim City Manager Kim Tolbert told council members that city officials are trying to figure out the city’s next move by looking at the expenses and legal ramifications surrounding the contract. All they needed was time.
