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Denton councilman voted on Buc-ee’s while his firm brokered land deal

By   /   December 7, 2015  /   News  /   No Comments

A Denton city councilman voted for $9 million in incentives to land a Buc-ee’s gas station last week even though his company is broker for the sale of two acres of land for the project. He says he won’t take a commission on the deal.

Wikipedia photo

BIG BUCKS — A Denton city councilman voted for $9 million in subsidies to get a Buc-ee’s travel center, even though his real estate company is representing a landowner who will sell 2 acres to Buc-ee’s for the project. The councilman said he won’t take a commission.

Councilman Greg Johnson was one of five “yes” votes (against two “no” votes) to approve 25 years worth of sales tax rebates for Buc-ee’s to locate at Interstate 35E and Lillian Miller Parkway.

While Johnson previously tried for years to sell the primary 38-acre parcel that will be sold to Buc-ee’s, he dropped the listing several years ago, he said. That parcel is owned by his friend and business associate, John “Sparky” Pearson.

RELATED: Denton approves $9 million in subsidies to get a big gas station

Johnson said he’s done a lot of work for Pearson, and when he was broker on the I-35E parcel, he tried for years to get Pearson to sell the land for apartments — since that’s about all that could go there without an underpass at Brinker Road — to no avail. Pearson is now selling the land to Buc-ee’s himself, with no representation, Johnson said.

But his company, Verus Real Estate Advisors, is still the broker on an adjacent, two-acre parcel that will be sold to Buc-ee’s, too. Johnson said Buc-ee’s decided to add the two-acre sliver of land on the recommendation of its civil engineer, who recommended its inclusion “to have a more square site.”

Johnson said he had previously talked to the city attorney’s office about his firm’s representation, and was told his interest didn’t meet the threshold for a conflict of interest. However, he initially decided to recuse himself from participating in discussions about the Buc-ee’s project to avoid the appearance of a conflict.

City of Denton photo

Denton Councilman Greg Johnson

State law defines a conflict of interest as a financial interest of at least 10 percent of the office holder’s personal or business income. The sale of the two-acre sliver equated to about 1.5 percent, Johnson said. However, he decided to file a conflict of interest disclosure anyway, and abstained from several closed-door meetings on the project.

Later, he changed his mind.

“The more I thought about it, the more I thought that’s really kind of a weasel-out move,” to recuse himself, Johnson said.

Council members should vote on projects if they don’t have a conflict, and because of the recusal, he was unable to answer questions from constituents about the project, even though nobody else on the city council has commercial real estate experience, he said.

So on Tuesday, Johnson voted with the majority to approve the $9 million incentive package that will reimburse Buc-ee’s for infrastructure costs, including $7.4 million in improvements to three Interstate 35E intersections, a water and sewer line and a road.

“I think it’s a great project,” he said.

Johnson said he is waiving the commission for the sale of that two-acre parcel.

“My company will receive zero dollars. I will receive zero dollars,” he said. “There will be no compensation.”

Marc Moffitt, a Denton real estate professional, said Johnson may not get any commission, but he still has an agency relationship with the sellers and is required to represent their best interests, not the city’s.

“These relationships and fiduciary requirements are at direct odds with serving the citizens and putting their interest first in all matters,” he said.

Another Denton resident, financial adviser Kyle Eaton, publicly questioned Johnson’s involvement in the deal, saying even though it might not meet the law’s definition of a conflict, it could still be an ethical conflict.

Johnson said, “There’s a contingent that’s always looking for a smoking gun” in Denton, and although some are skeptical of his claim he won’t benefit from the project, it was more important to him to vote than profit off the land sale.

“I’m not motivated by money,” he said. “My business has been blessed.”

Johnson and Pearson are listed as members of a limited liability company called Arg East Hickory Partners, which Johnson said was set up with others to rehabilitate a building in 2008.

“That entity hasn’t existed in about six years,” he said.

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Deena formerly served as staff reporter for Watchdog.org.