Trinity East's First Mistake Was Trusting Dallas City Hall

Trinity East's First Mistake Was Trusting Dallas City Hall
Daniel Fishel

Sure, there has been some local news coverage of the fact that a Fort Worth gas drilling company called Trinity East is suing the city of Dallas over some kind of drilling/fracking deal that went south. But man, let me tell you. When you drill down into that lawsuit, it has one hell of a story to tell about how Dallas City Hall really operates.

I don't feel like I'm on anybody's side in the suit itself — who's right, who's wrong, who shot John. Let the courts decide. But as an utterly engrossing window on day-to-day doings at City Hall, this lawsuit is better than anything you can find on reality TV.

The story starts in 2007 when the city was facing a $90 million budget shortfall in an operating budget of about $1.8 billion. That's 5 percent. If it were you and you had an annual disposable family budget of $50,000, that would be the same as being short by $2,500. Maybe not the end of the world, but where do you get the $2,500?

Dallas City Manager Mary Suhm was looking, and one way to get the extra money quick was by selling gas drilling rights on city-owned land. The City Council said OK, but they told her they would not go along with any "surface drilling" in parks, meaning there could be no drilling rigs on parkland. She could sell somebody the right to put a rig on some other kind of city land and drill sideways under a park, but there could be no rigs on the park itself.

Suhm said she got it. But then she went ahead and signed a contract with Trinity East explicitly including parkland, and she signed a letter of agreement with them saying she was "reasonably confident" she could win them the right to put up rigs and to surface drill on those park sites. At that point Trinity East wrote the city a check for $19 million.

But in August 2013, Suhm failed to get the votes she needed at council, and Trinity East was effectively denied the right to drill on those park sites. So Trinity is now suing the city for violating its contract but also for fraud, basically painting the whole deal as a scam.

And here is where it gets squirrelier and squirrelier. The only reason anybody even knew Suhm was trying to sell surface drilling rights in parkland was that council members Scott Griggs and Angela Hunt basically whacked the information out of the city secretary with pickaxes and dynamite. Suhm was doing everything she could to keep the deal quiet, and it sure looked like Trinity East was too.

The leases the city signed with Trinity East gave specific locational descriptions for all of the drilling sites that were not on parkland but referred to the two parkland drilling sites only by vague nicknames. Weird, eh? Wouldn't you think Trinity East would want to see those sites nailed down better in the contract? They nailed everything else down. Why refer to the two park sites only by code names?

In a May 15, 2013, interview with a Dallas Observer reporter, the president of Trinity East referred coyly to "certain documentation" he held dealing with "a discussion with the city" that led him to believe he was entitled to drill the way he wanted. OK, but if Trinity East had a written agreement with the city, why did that have to be a closely guarded secret?

City Council member Philip Kingston has suggested that both parties, Trinity East and Suhm, kept the deal secret because they knew their entire agreement was "ultra vires," a legal principle meaning they all knew Suhm was doing something outside and beyond her authority as city manager. Kingston thinks the city should at least consider that as a defense. The city would tell Trinity East, in effect, "You did a secret deal with Suhm that she and you knew was dirty when you did it. If you don't like what you got, sue her, not us."

He knows he won't get very far with that idea because of the extreme loyalty of the staff to the staff. Sure, it might be a good way to protect the taxpayers, but that is not what the staff is all about. The first thought in the head of the city attorney will be "How do I protect Mary?" And that's what I'm talking about here.

I don't know from ultra vires. It's over my head. But I know that ultimately the city staff answers only to itself, regards the council with contempt, cuts its own deals all the time all over the map and then ducks for cover behind the council if flak starts to fly. And I can cite more examples than you would ever want to hear.

But the example I like best is the case of Josh and Jenn Terry, a young couple I wrote about four years ago who wanted to rehab a small apartment building in North Oak Cliff. I have always felt their story was especially moving, because they were not some big drilling company with lots of lawyers and consultants who presumably know how the game is played and how to cut the corners. They were a young couple who wanted to invest some money and control the outcome by putting in their own sweat equity.

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18 comments
holmantx
holmantx topcommenter

good wrap up.

I think the car wash guys are in trouble.

Staff just hasn't been spanked hard enough to care if you shine a little light on 'em.  Maybe they really ARE impervious to anyone but the Feds.

bettyculbreath
bettyculbreath

As a member of the Dallas City Plan Commission the Ordinance required an SUP to drill in Parkland it did not prohibit drilling on parkland. The gas company was completely mislead and  and money stolen by City to balance their budget in my opinion at the urging of then Mayor Tom Leppert and Mary Suhm  followed his orders.There would be no lawsuit if the City would simply return Trinity East 19 million dollars ,I don't think there is a Court in this Country (maybe Dallas)

that will allow Dallas to sign a contract receive the money and not deliver what contract said they must provide.Dallas leased land to Trinity with the clear understanding it was for drilling gas, trinity did not get use of land so Dallas did not follow it's own contract, if their claim is the SUP process then they should not have accepted the $19 million until after SUP was granted. City Council should give money back and not waste another dime of Tax money to fight this crazy notion that they somehow have a right to $19 million dollars for not fulfilling a signed contract. 

d-may
d-may

I'm curious. What would you have had the city do in the Josh and Jenn Terry case?
Let's reiterate:
1) Josh and Jenn try to do their homework and get a Zoning determination letter from the city. The letter clearly says that "Yes, multifamily is allowed... as long as it hasn't been vacated for more than 6 months." Josh and Jenn may not have read that last part, but it was clearly in the code when they bought it. 

2) Josh and Jenn apply for building permit, and tell the city that everything is good -and the city takes them at their word, as the city does not have the staff to check out every aspect of the code for every building permit. 

3) City Staff later learned (from some other means) that Josh and Jenn were not correct about everything being up to snuff. So staff put a hold on the Certificate of Occupancy. They then explained the problem, that the property had been vacant for more than 6 months and therefore had lost its grandfathered rights. (That's clearly written in the code if you read it.)


What should the city have done after finding the error?

A) Enforced the law (as they did)
B) Decide that "Well, shucks, look at that, we made a mistake. I guess the law doesn't matter now, oops". 

You want to know what real corruption looks like? Pick B above. I bet you would start seeing a lot more "mistakes" be made.
Don't get me wrong, the situation sucks. The building permit should not have been made, and the couple should have read their zoning code closer. But the city staff did exactly what they should have done -and what the law demands they do- after having made the mistake. 


What is the point of zoning if you are just going to throw it out whenever it doesn't fit what you want to do right then?

okhobieman2002
okhobieman2002

Boys...

It exists ....

Read the last decade of Huntsville, TX

Or

The History of the Galveston Moody clan.

Compost happens.

Learn and keep the internal auditor employed.

hwy77
hwy77

One might invoke a different Latin term here, especially for Dallas taxpayers: caveat emptor. Trinity East, apparently a subsidiary of Keystone Energy, knows their way around oil & gas deals. But  taxpayers are on the hook for any negative outcomes, such as swaying slides and quaking see-saws in parks or $30 million lawsuits in court. Developers and investors are protected, at worst, and may make some big bucks. That's what is called a government/business coalition. Collaboration is a thing these days. Ita sit.

pak152
pak152

"If it were you and you had an annual disposable family budget of $50,000, that would be the same as being short by $2,500. Maybe not the end of the world, but where do you get the $2,500?"

well about looking at cutting the budget first before looking at where to get the additional money

gordonhilgers
gordonhilgers

No secret here that Dallas is one of the most corrupt cities in North America: What does anybody or anyone not understand about creating a huge city with no real reason to even exist here, a massive seven-million collective of mainly subjects and all-too-few actual citizens, that has been erected far and away too far away from the watchful eyes of those in Washington D.C. who have enough stones to stick reasonable principles and the eagle-eyes needed to watch the hands? 

Dallas is the only city I know of in which the so-called (typically white) powers-that-be-but-do-not-live-with-thee put a federal judgeship on hold for almost a decade until those ghostly snowflakes could find a "decent Democrat" who was part of the club and would be willing to quietly abuse the spirit of the law while revealing in solid words in black-and-white that...what?  Me worry?  The ultra vires concept is really relatively simple: If a corporation begins to assume powers beyond its specific scope or purview, its contracts, while not necessarily "void", are "voidable".  Therein lies the crux of the so-called biscuit or doughnut we call Dallas.  That gap between "void" and "voidable" is as wide as the entire span of the Atlantic Ocean--and then some. 

Perhaps the Dallas City Council should invest in some real good body language experts, because, aside from straight-ahead mental telepathy, the old end-around, commonly known in elementary school as "playing post office" is a common "rabbit trick" on both sides of the Trinity trickle.  Whoever has the actual "phone list" is probably not going to be talking about it any time soon. 

What gives me a case of the guffaws is that, quite literally, this is all about gas.  Gas.  Can you believe it?  The crude relations of "the gassy ones" are not exactly a gas are they?  Gas, by the way, is synonymous with an archaic meaning: inflation.  In the 18th Century, when a man (or woman) suffered from "inflation", the probable cause was too much haggis, a Scottish pudding dish manufactured of "sheep's pluck", i.e. heart, liver, and lungs and then minced with onions, oatmeal, suet, spices and stock, all of it encased in an animal's stomach. 

Urp. 

As we have all sorta witnessed, the 2008 derivatives and credit-default-swap scandal, much of it still coming into sunlight, was nothing but "gas" too.  Manipulation of inflation is a long-standing game between the "bulls" and "bears" of Wall Street and beyond, and the bubble blows up (all gassy inflation, nothing but air and trumped-up leveraged pricing schemes supposedly protected by a number of hedging tactics and tranches) causing the "bulls" to profit wildly, and then the bubble deflates--and the "bears" have a bankruptcy and debt-vulture feast of the relatively naive roadkill: That's the "so-called free market" in a pecan shell, that supposed delicacy in which the nuts drop while still green. 

Those left alive in the future will look at Texas, the grease-burner-barons and the gassy ones the way we see the Borgias and their "insider trading of a sexual variety", all pomp and those victimized "nothing but circumstance".  I envision a future in which a soi-distant scion of Rush Limbaugh will be broadcasting in the noonday sun, an asbestos suit protecting him from what we formerly knew as "the good and bad weather" by which Texas and commerce have always operated, and he will tell the world, "It's a beautiful day in America, and indeed, the temperatures are only 193, now let's get those Liberals down on the carpet for a grin!  How 'bout it?"

Those left to live inside full-body condoms more than likely will not be applauding his performances. 

schermbeck
schermbeck

There's something missing here that I can't quite put my finger on...let's see....oh yeah, the 3 years of sweat equity Dallas residents like Ed and Claudia Meyer put into making sure these permits were denied because they were bad policy despite the ridiculous  manipulation of the system by the city manager and legal staff to make sure they made it through unscathed. Thanks to their homework, the CPC had already denied the TE permits at a meeting two days before Xmas 2012 - a full two months before the secret agreement everyone knew was shaping the fight became public via the DO (thanks again). Had it not been for folks like the Meyers, Trinity East would have it's permits. The story isn't that that TE got sdouble-crossed by City Hall or Suhm after being promised their permits - Official Dallas tried very, very hard to prevent that. It's that people like the Meyers made it impossible for the TE-Suhm/City Hall conspiracy to succeed even though the odds were stacked heavily against them. When news of the secret Suhm agreement broke, I seem to remember a certain local curmudgeonly columnist predicting that while the permits might be denied, there was no way this scandal would cost Suhm her job. Thank goodness the Meyers didn't share the same cynicism. They weren't spectators in a fight between titans. They were the Davids that slew two Goliaths at the same time.

joecook
joecook

great assessment-connecting of the dots!


dallasdrilling.wordpress.com
dallasdrilling.wordpress.com

I for one am hoping for a trial so that we can see and hear testimony from both sides of case in order to fill in missing pieces of info. If the City of Dallas chooses NOT to use our data/arguments for creating a better, stronger ordinance, then they will have to throw Mary under the bus as you mentioned. Although,Mary's argument was always, "just doing what you asked me to do" regarding the council's need to save money without raising taxes.(See article on infrastructure disaster) She already mentioned that on record.

It will be interesting to see how big of a role Vonciel Hill plays in this story, since she has become the preserver of Mary's dignity/co sponsor of Mary's accent into heaven.

bvckvs
bvckvs topcommenter

@bettyculbreath

That's the part I don't get about this, too.  Even if the contract was a legitimate one, the company seems to be willing to just let the city break it without any penalty.  So how in the hell does our Republican mayor justify keeping the money... and why?  It seems like he should be happy to be let out of his contract this easily.


dallasite2009
dallasite2009

@d-may  Where did you get your information?  Jim's prior story says that Josh and Jenn were able to prove the property didn't lose its intended use when it was vacant, and then the city changed its mind and told them it was never MF in the first place.  So they then showed the city old permits for the property showing the city labeled it as MF, and the city decided they didn't recognize them.  Am I reading this wrong?  What more research can you do if the city tells you it is MF, if it shows as MF on a map they give you, if there are city issued permits stating it is MF, if the building was constructed as MF and if they give you a CO saying you can develop it as MF?  At some point that qualifies as "misleading" rather than a "mistake" that the taxpaying citizen is at fault for.  It sounds like you are a city employee without knowing any better.

gordonhilgers
gordonhilgers

One more thing: Oscar Pistorius says, "Hey there!", and besides, whoever thought of building a full-metal automobile with wheels that are triangular?  "Roll on, Trinity, roll on!"  That's how Joe Stanco of Victor Dada put it.  The Trinity River is perhaps the only "river" on the planet where indeed it is entirely possible one can put one's toe in the same river twice, three times, and all the way up to nine times, thus completely discombobulating Heraclitus's notion about the dynamic flow of time.  Space: A balloon yet to be filled with gas.

bettyculbreath
bettyculbreath

@bvckvs @bettyculbreath  City of Dallas refuse to amend it's Ordinance and held the zoning case for month's telling the company it had to submit a request for SUP.City Attorney then said current City Ordinance need to be changed to address concerns of distance of wells which were 600 ft now it's 1500 ft under amended Ordinance.City of Dallas drug this process out so long and then when it finally got to Council  Ordinance change and SUP permit the ordinance made the drilling  harder to meet distance requirement so City Council passed Ordinance and denied SUP request.That was almost 3 years from the time they took the money and continued to string the company along. In all my years of service on City Plan Commission and this is my third time down there I have never witness anything like this.

bettyculbreath
bettyculbreath

@bvckvs @bettyculbreath  The contract was signed under Mayor Tom Leppart at the time the City of Dallas was millions short on their annual budget.The Ordnance in place allowed drilling by SUP however the distance from certain things was 600 ft. many people wanted the distance 1000 to 1500 ft from at the time contract was signed Mayor Leppart and Suhm knew SUP was needed but they took money prior to SUP being granted, implying that it was routine process, what happen is the City Ordnance was changed which made it almost impossible to get SUP.City took money because they needed it for budget  changed Ordnance after they took money. City should simply return money I don't think any Court in this Country will allow anyone to take money deliver nothing and keep money.

bvckvs
bvckvs topcommenter

@bettyculbreath @bvckvs

The problem there is that the city officials can't just up and change the zoning laws.  They have to have the approval of the citizens they represent.

And since the people don't seem to want to do that, then the Republican mayor should accept the fact that he can't honor the contract, pay back the fee, and count himself lucky that he doesn't get sued.

By entering into a contract he knew he couldn't honor - he was exercising "bad faith".  That means that if the company is forced to sue us, they won't just get back the fee they paid, they'll get back TRIPLE the amount in "treble damages".

 
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