Dallas to Continue Paying $500,000 to Lease Underground Tunnel

Dallas will continue paying half a million dollars to lease an underground tunnel under Thanks-Giving Square amid concerns that the city doesn’t generate the type of revenue to justify the costs.

City officials briefly paused funding last year when City Council member Chad West, who chairs the Government Performance and Financial Management Committee, pushed for city staffers to assess if it can recover the cost of maintaining the property.

On Wednesday, council members voted to release funds that were set aside. How the funding continues next year will become clear once budget discussions progress.

Background on the Issue

“Staff expects some cost savings this fall, but is unsure whether our cost will be zeroed out because we apparently have to give a one year notice to the tenants for amending their contracts,” West told The Dallas Morning News.

This means that the city will be on the hook for these payments until new contracts are set in place.

At issue are two separate ends of the tunnel system. One is the pedestrian walkway the city leases from Thanks-Giving Foundation, which oversees an interfaith shrine at a downtown square.

The second, the city-owned Bullington Street truck terminal, services four buildings above ground, including the Mosaic building and the Santander Tower. The city derives revenue from the use of the truck terminal but the income barely covers the total expenses.

Financial Concerns

Put together, the city’s lease payments and the cost of operating the truck terminal have resulted in unrecovered expenses of an average $440,000 annually, over the past three fiscal years.

City officials have asked for appraisals of the truck terminal and value of services the city offers, West said. The city can begin renegotiating the contracts with the nonprofit and the four buildings after the appraisals come back.

“I believe that staff must ensure we are diligent to negotiate the best deal possible for the city, but will continue to push for an expeditious end to this longtime waste of taxpayer money,” West said.

Contract and Lease Agreement

Much of the scrutiny has been directed at a 75-year agreement the city signed with the Thanks-Giving Foundation in 1972. The contract had language that increased the rent for the tunnel every three years, based on the consumer price index.

“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,” Assistant City Manager Donzell Gipson said last year.

Nonprofit and Expansion Plans

KERA reported the city’s payments to the nonprofit form the bulk of its operating budget, indicating the nonprofit’s reliance on public dollars to sustain its operations. CEO Kyle Ogden has since then revived a campaign to expand the 3-acre park which holds the shrine into a new “Thanks-Giving District” that would mirror tourist attractions like Klyde Warren Park.

Whether those plans are realistic remains to be seen. Ogden briefed council members last month about plans that would require a $30 million investment that could get $10 million from the North Central Texas Council of Governments as long as the nonprofit can raise the rest of it.

Next Steps and Discussions

A bulk of the discussions around maintaining the property have occurred in closed session, and might have centered around the legal ramifications of getting out of a signed contract between the nonprofit and city.

In public meetings, city staffers have suggested measures that could combine the lease payments with the costs of operating the truck terminal and pass it on to the above-ground building operators who use them.

John Johnson, who oversees the city’s real estate and facilities, said there was “noted opposition” to that idea.

Conclusion

The city of Dallas is continuing to pay $500,000 to lease an underground tunnel under Thanks-Giving Square, despite concerns about the revenue generated by the property. The city is exploring options to renegotiate contracts and reduce costs, but it remains to be seen what the outcome will be.

Frequently Asked Questions

Q: How much is the city paying to lease the underground tunnel?

A: The city is paying $500,000 to lease the underground tunnel under Thanks-Giving Square.

Q: Why is the city concerned about the lease payments?

A: The city is concerned because the revenue generated by the property does not justify the costs of the lease payments and operating the truck terminal.

Q: What is the Thanks-Giving Foundation?

A: The Thanks-Giving Foundation is a nonprofit organization that oversees an interfaith shrine at a downtown square.

Q: What are the plans for the 3-acre park that holds the shrine?

A: The nonprofit has plans to expand the park into a new “Thanks-Giving District” that would mirror tourist attractions like Klyde Warren Park, but the plans require a $30 million investment.