Dallas gives green light to sale of controversial downtown building reported for squatting and vandalism

The Dallas City Council on Wednesday gave the green light to the sale of the old Family Gateway building at 711 South St. Paul Street after the building was reported for squatting and vandalism. The property could sell for at least $2 million, the majority of which will go toward capital expenditures for redevelopment.

The vote was passed by 12 votes to 2.

Council members debated whether the city should demolish the building before the auction. The discussion oscillated between the city administration’s recommendation to put the building on the market as-is and Council Member Jesse Moreno’s recommendation to demolish the building before the sale because the property value was likely higher.

Moreno, who represents the area, said the city must determine the best use of the property. Just steps from City Hall, it is in an area where plans are in the pipeline for a high-rise building with office and retail space, as well as several entertainment venues near the Kay Bailey Hutchison Convention Center.

Dallas-based Hoque Global has been planning for years to build a nearly 50-acre neighborhood between Canton and Cadiz streets. In 2022, council members approved a $96 million tax incentive for the project.

“This building has become a magnet for activities that are not welcome in any neighborhood,” Moreno said at the meeting.

Others, like Council Member Jaynie Schultz, expressed concerns that a potential buyer might be willing to pay more to purchase the building along with the land.

Deputy City Manager Donzel Gipson said city council staff cannot estimate how the demolition will affect the value of the property, at least not before it is put on the market. The demolition alone could cost the city $250,000 or more. City staff said marketing of the property could begin as early as next month, with the sales period set for October.

Council member Paul Ridley proposed auctioning the property in two stages, with each buyer able to make two bids: the amount they would pay with the building and the amount they would pay for the property alone.

“This would allow us to determine who is really interested in the building,” Ridley said. “If there is no interest in the building, we would place the highest bid on the land only and then we would have a clear instruction to demolish the building as a condition of sale.”

The majority of the council agreed with Ridley’s recommendation. Twelve voted in favor of the sale. Moreno and Councilwoman Kathy Stewart voted against.

Moreno said The Dallas Morning News He expressed disappointment at the city’s “failure to develop prime land in the downtown core.”

“This property in my district has become a nuisance that the city owns and would likely have been demolished had it been private property under similar circumstances,” the council member said. He added that the building does not meet modern parking standards because the current design does not include parking. “I am deeply concerned about how the inadequacies of this property will impact the experience of visiting downtown Dallas,” he said.

The sale of the property comes amid growing calls to sell surplus assets to ease the burden of paying off a $4 billion pension deficit. The city’s real estate portfolio includes more than 5,000 properties.

The city administration came under criticism after inspections in May showed that the property in the city center was unsecured, easily accessible and littered with feces and broken furniture.

Moreno, who also chairs the Committee on Homelessness and Housing, issued a memo in May expressing concern that the city had not maintained its facilities to “the same high standard that we strive for our residents and business owners when it comes to properly maintaining a building.”

The site has been cleaned and interim city manager Kim Tolbert said officials have begun physical checks and are working with downtown vendors who serve the area’s homeless population. Moreno said he only discovered fresh graffiti on the building Tuesday morning.