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Dubious Deal

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"Rather than having to face x-number of years left on his lease, which was his legal obligation, we're doing him a favor by letting him out of his obligation," Wulfe says.

A court will now decide what was legally right. Ali sued Wulfe, Houston Gulfgate Partners and the Gulfgate Redevelopment Authority, the city-created nonprofit that oversees the TIRZ.

Ali isn't asking for much — just the $150,000 he invested in build-out costs and equipment.

"When I first came to this country, I was worked 100 hours a week, easy, the first seven to eight years," says Ali, who has a small jewelry shop in Northwest Mall. "I think I took three or four days off the whole time. But that's how it is: When you leave your own country for another, you just can't sit around."

Wulfe's attorneys have asked the court to dismiss Ali's lawsuit. A hearing has been set for September. In the meantime, Ali's attorney has attached an order against Gulfgate mall, meaning any judgment rendered against Wulfe and Houston Gulfgate Partners would be enforceable against the property.

That legal action could impact a $40 million construction loan Houston Gulfgate is seeking. It could also hold up a $5 million loan that the Gulfgate Redevelopment Authority needs to purchase the mall from Gulfgate Partners.

And Wulfe admits he's having trouble marketing the mall. Since purchasing the property almost 18 months ago, he has yet to secure a major anchor tenant. Until he does, what exactly he will do to the Gulfgate mall is up in the air.

"Everything is driven by anchor tenants," Wulfe says. "That determines what happens in terms of what we build, what we demolish or whatever."

Wulfe's track record shows earlier successes. In 1993, he bought the Meyerland Mall from the Resolution Trust Corporation, which took over the assets held by failed savings-and-loan associations. Wulfe tore down some of the mall and redeveloped it into a thriving shopping center. Perhaps because he was using his own money, Wulfe didn't terminate any leases, nor did he buy anyone out to make room for the renovation. A few years ago, he sold Meyerland, reportedly for $80 million.

Wulfe says that "ultimately" the Gulfgate redevelopment will happen as well. Until then, the city has upped the taxpayers' stake in the deal. Last month, Council approved a 185-acre expansion to the TIRZ to help redevelopment of blighted commercial properties adjacent to the mall. According to Wulfe's revised project plan, the additional $4.6 million in public improvements planned for the expansion will protect the public's original $14 million investment.

"By and large, the thing that was most frightening was the neighborhood, which was really in very bad condition, blighted, run-down," Wulfe says. "The demographics show the average income is very low, low to moderate. We need to lift up the entire area."

If the project works, it's a pretty good deal for Ed Wulfe. According to his TIRZ development agreement, Wulfe will lease the mall for $1 a year for 50 years, receive a $500,000 development fee and, as "exclusive" leasing agent, will command a fee of $4 per square foot. He'll also be paid an $8,000 monthly "management" fee.

As for Husein Ali, he's making ends meet with his jewelry business while his court case continues. He says it'll be a while before he recovers from the Gulfgate cookie-store fiasco.

"My wife wanted to buy a house," says Ali, "but I put all of our money into the cookie store. I was there day and night for a month to build that store. It's bigger than money to me."

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