In the midst of his seventh run for public office – this time for the Texas Railroad Commission – new documents are coming to light showing that Houston real estate investor Gary Gates defaulted on a loan of over $1 million from Bayou City taxpayers.

On April 29, 1998, the City Council of Houston passed Ordinance No. 98-330 entering into a loan agreement with Gates’ company, APTDF, Ltd.

The loan was for $1,120,000 for rehabilitation costs in connection with Gates’ Deerfield Apartments located at 10001 Club Creek Drive. The interest rate for the taxpayer-backed loan was set seven percent annually. Gates personally guaranteed the loan.

The loan matured on November 28, 2000, but Gates defaulted. Gates continues to report his ownership of APTDF, Ltd on his personal financial disclosure as a candidate for the Railroad Commission.

At the same time Gates was defaulting on a million dollar loan from the City of Houston, he was telling other government agencies of his extensive finances. In defense of his right to keep possession of his adopted children against charges of child abuse by Texas Child Protective Services, Gates claimed over $40 million in real estate and $2 million in cash savings.

Gates told Brad Tyer of the Houston Press that he had spent over $150,000 on the CPS case. District Judge Thomas Stansbury ultimately found evidence of abuse, but determined that CPS had not lawfully entered the Gates’ home during their investigation and ordered Gates’ adopted children returned to his possession.

In 2007 the City of Houston sued Gates’ company seeking to have the Deerfield Apartments closed due to rampant criminal activity, including capital murder, aggravated assaults, narcotics distribution, and prostitution on the premises. The suit alleged that Gates had tolerated the criminal activity and failed to abate it.

Since defaulting on the Houston loan, Gates has spent millions on six losing runs for local school boards, the State House, and the State Senate. Despite being rejected by his neighbors six times, Gates is now hoping his personal wealth will propel him to statewide office.

The Texas Railroad Commission oversees the regulation of Texas’ oil and gas industries. Gates has no experience in the energy sector, and has been relying on disgraced Rep. Jim Keffer (R–Eastland) and his staff for advice in the race.

Gates faces former Rep. Wayne Christian in the May 24 runoff. Christian earned accolades as a Taxpayer Champion during his time in the legislature and oversaw oil and gas policy on the Energy Resources committee.

Tony McDonald

Tony McDonald serves as General Counsel to Texas Scorecard. A licensed and practicing attorney, Tony specializes in the areas of civil litigation, legislative lawyering, and non-profit regulatory compliance. Tony resides in Austin with his wife and daughter and attends St. Paul Lutheran Church.


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