Texas governor Rick Perry boasts that his state is business-friendly. But San Diego real estate developer Richard Allen has learned a hard lesson: Texas is really friendly to Texas-based businesses, but it can be downright hostile to out-of-state companies that dare to compete with in-state enterprises — especially if those home-state firms are run by a Texas icon.
An icon such as, say, Ross Perot Jr. He is the son of billionaire and two-time independent presidential candidate Ross Perot Sr., a Texas hero.
A federal criminal indictment filed July 23 has shed much light on how Allen’s company was bound and gagged in red tape, while its competitor, an operation headed by Perot Jr., was mollycoddled by officialdom. According to the indictment, the politician who continually frustrated Allen and massaged Perot raked in $950,000 from a lobbyist who was on Perot’s payroll. A large chunk of that money allegedly went to hassle Allen’s firm, although much of it went to help unrelated companies snag local government contracts.
In the late 1990s, Allen’s San Diego–based Allen Group began quietly planning to develop the Dallas Logistics Hub, or inland port, which would be located near an airport, two major railroads, and the confluence of three interstate highways. It would be a distribution hub for arriving freight, much from overseas, and an ideal location for warehouses. It would be located in southern Dallas and some nearby communities — economically, the other side of the tracks in that metro area. Initially, the project could provide up to 60,000 jobs to people who needed them.
Perot Jr. has a similar logistics hub on the more affluent side of town, in a master-planned community that spans parts of Dallas’s neighbor, Fort Worth. The owner is a Perot company named Hillwood Properties.
Years before the indictment came down, some Dallas media, particularly the Dallas Observer, saw that Allen was going to get the shaft and Hillwood the shekels. By 2006, Allen was on his way to acquiring 6000 acres, and according to the Observer, Perot complained to the Fort Worth Chamber of Commerce that Allen’s plans were a “direct threat” to Perot’s northern hub.
In 2010, two Allen-related entities filed Chapter 11 bankruptcies. Because he had personally guaranteed some loans, Allen himself went into bankruptcy. The first two bankruptcies were completed in 2012, and Allen’s in 2013. A scaled-down project is now going forward.
Allen does not blame all his troubles on the bribery scandal. Yes, local governments held up his approvals and stepped in his path many times. But the Great Recession of 2007–2009 walloped lenders and slowed down or stopped numerous projects, and the Allen Group was one of the victims.
But July’s indictment tells a revealing story. The primary target of the grand jury is John Wiley Price, an elected Dallas County commissioner. The Commissioners Court, which includes the commissioners and a judge, presides over a number of critical matters, including the awarding of contracts, setting of tax rates, granting of subsidies, and the like. Price, an African-American Democrat, has served since 1985.
Also indicted is Kathy Louise Nealy, a registered lobbyist who advertises that she does “political consulting” for well-heeled Texans, among others. She often set up her clients with dinners and meetings with Price. Without naming Hillwood Properties or Perot Jr., the indictment refers frequently to “Business H,” and Dallas media agree that the letter H represents Hillwood.
A key issue in the indictment is the granting of free trade zone status to the Allen Group’s project. A free trade zone is an economic area in which goods can be handled and exported without the intervention of customs authorities. The Dallas County Commissioners Court had to give its okay in this matter. Hillwood wanted one of its own properties added to Allen’s application. Nealy, with Price’s help, lobbied for Hillwood. At one point, Price pulled Allen’s application from the agenda until it included Hillwood’s property, says the indictment. Later, “Price continued to delay the Commissioners Court’s discussion of the issue and the approval of the [free trade zone],” says the indictment.
As Commissioner Price publicly advocated for Hillwood, “Price and Nealy conducted secret, concealed transactions to advance [Hillwood’s] interests,” says the indictment. During the period in which Price promoted Hillwood, Nealy forwarded Price $166,000 in the form of car payments, real estate, and cash transactions, according to the indictment.
While this was going on, a group of prominent Dallas-area minority business leaders wanted an equity position in the Dallas Logistics Hub project in return for political assistance. Allen would have none of it.
Price kept insisting that the reason he was blocking Allen Group was that the company didn’t permit minorities to participate in the project sufficiently. An example was the rejection of political assistance from the African-Americans in exchange for a piece of the action. Says Allen, “The complaint that we didn’t allow minorities to invest was pretty hollow. They weren’t interested in participating as investors but as consultants.”
At the time of the bankruptcies, Allen’s project had dropped from 6000 acres to 5300. As the company and Allen himself exited the Chapter 11s, the acreage was down to 4000. Then Allen Group sold more land as it paid off creditors, and the project now is down to 1600 acres. “That land will continue to be developed over a number of years,” Allen says. Hillwood has bought land in the South Dallas area, some of which Allen Group lost in the bankruptcies, “and they [Hillwood] are very much a competitor.”
Commissioner Price “clearly was an obstructionist — flagrant in terms of his efforts to stop the free trade zone,” says Allen. Price also frustrated several approvals and helped block a bridge that the project needed. Price’s “relationship with Perot was one that I was not aware of necessarily at the time, but I am aware of it now.”
Did Allen share information with the Federal Bureau of Investigation? He is not talking.
Does he plan to file a civil suit against Hillwood and the Perot interests? Allen doesn’t want to discuss that, either. “Once the case gets under way, a lot more of what went on — that I am not aware of myself — will come out,” he says. Information from the case will determine “whether we would have a [civil] case against Price or Perot.”