$19 million city project turns into an embarrassment thanks to John Galo
The City of Laredo hooked a big economic development fish as it reeled in Allen Davidoff to bring an outlet mall to the El Portal shopping center in 2006. But because of interference from then-councilman John Galo, Davidoff fell off the line, swimming away to El Paso to build.
City revenues from a successful outlet mall are immense. The little town of Mercedes, Texas, for example, population 13,000, increased sales tax revenue by more than 300% when their Simon outlet mall opened in 2006. The once sleepy town now draws more than $1 million a month in sales tax, and attracts more than 7 million people a year. Other Texas towns with outlet malls tell similar success stories, luring Mexicans and Texans to do more than shop, but also visit museums, theaters, restaurants, hotels, and more.
So the $19 million price tag for El Portal, a taxpayer funded shopping center on the bank of the Rio Grande, made some sense, as long the city rented the facility to a developer who could deliver an outlet mall.
Allen Davidoff was the perfect candidate. an energetic entrepreneur who took an outlet mall to El Paso, after the Laredo City Council pulled a contract for El Portal out from under him.
John Galo led the charge against Davidoff, questioning the wisdom of offering El Portal for $1.25 a square foot when other downtown spaces charge more.
"That is not a good bid amount," Galo told the city council as it was set to accept Davidoff's bid.
Davidoff tried to explain to Galo that beyond the $1.25 per square foot rent, he was also paying 3% of his sales to the city, a percentage that could have translated to even more millions of dollars each year for Laredo, with the right businesses in place.
But Galo didn't want to hear Davidoff's explanation. He had another reason for cutting Davidoff out of the deal, a reason that had nothing to do with true economic development for the city.
Two years after Davidoff submitted his bid to rent El Portal, and having spent hundreds of thousands of dollars in preparations to carry out his proposal, Galo asked the council to vote to terminate Davidoff's bid.
The city manager and city attorney tried to explain to Galo that terminating the bid was unethical, but still, Galo refused to listen, according to records from the Laredo City Council. Though Galo didn't initially have the support of the city council, eventually he chipped away at the arguments for continuing with Davidoff, and found enough votes to end the contract.
El Portal was a noble cause, intended to draw a fresh crowd of shoppers to downtown's southern boundary along the Rio Grande, an area that continues to be a no man's land for business, well after the $19 million El Portal center had been built.
Though the city was able to find a business to pay more per square foot on the approximately 35,000 square foot facility, very few shoppers go there. And the $19 million economic development project that had offered so much hope to Laredo's struggling downtown, ended up a disaster and an embarassment that's cost the taxpayers big time.
If John Galo showed such poor judgement and lack of ethics on the El Portal deal for Laredo, think about how much damage he'd be able to do to Webb County.
It's your tax money. Don't let John Galo get his hands on it.
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