City Hall

Pssst. Listen. City Hall Says They Can't Find Files for $29.9 Million? No Accident.

At the end of last week, the Dallas City Auditor issued a report (copy below) saying the city handed out $29.9 million to housing contractors in a three-year period and forgot to keep any records to show whether any of the housing got built.

Oh, and they also forgot to keep any records to show how they decided who got the money to build the housing. Oh, and they also forgot to keep any records to show if the federal money involved (most of it) was spent according to what the law says federal housing money has to be spent on.

Oh, and they forgot to keep any records to show if the prices being charged by the contractors were reasonable, or, you know, even what the prices were. And they forgot a bunch of other stuff, too.

So this is what I want to tell you. They did not forget jack. They forgot nothing. No. People do not forget $29.9 million in three years. Would you? Does it ring true to you? They knew exactly what they were doing.

City Manager A.C. Gonzalez, who gets paid $400,000 a year, the same as the president of the United States, making him the highest paid city manager in the country, told The Dallas Morning News that he didn’t believe the audit:  “I would need to be shown directly as to that condition because it is outside of my experience,” he said.

He’s the captain of the ship. The ship just hit the pier. And he says it’s outside of his experience. I don’t know about you. I don’t want to hear that from my captain, especially if I’m his passenger, mainly because it’s such a weird thing for a captain to say.
But, look. Everything makes sense if you know what’s really going on, right? And there’s always a way to find out. It’s like what Soviet citizens had to do with Pravda, their official newspaper. You take the editorial page of The Dallas Morning News, paint it lightly with lemon juice to make the disappearing ink stand out, hold it upside down, go to the mirror and read it backwards between the lines:

In an editorial about all this on Monday, The Dallas Morning News said the whole thing, the missing documentation for the $29.9 million, was the work of one guy who’s no longer there — Jerry Killingsworth, retired head of the city’s Housing Department:

“Killingsworth had a well-earned reputation of trying to get projects moving on an ad hoc basis,” the News editorial page said. “The result was that decisions regarding affordable housing and the redevelopment of neighborhoods often appeared to be handled in the shadows of City Hall.”

Oh, my gosh! He was in the shadows? The shadows of City Hall? And he did $29.9 million worth of deals with no paperwork at all? In the shadows? So he’s the bad guy, I guess. It’s all on him. It was inside his experience.

Please let me tell you something about Jerry Killingsworth. I don’t know him personally. Our few encounters were chilly. But he’s a very Type-A guy. I have a lot of respect for him. I watched him testify as a government witness in a federal Dallas City Hall corruption trial in 2009. He was tough and unafraid of anybody. 

Another time, in 2009 while he was with the city, he got mad at the Dallas Housing Authority, a separate non-city entity, for failing to give him a job he said had been promised. He sued them for breach of contract. I don’t know how that came out, but the point here is that Killingsworth is not a lay-down.

Unless he is. Ever since his retirement in 2013, the city has been blaming every minor misstep and mishap in the history of City Hall on Killingsworth, especially in the protracted Lockey and MacKenzie  housing litigation (will explain in just a second).

Killingsworth’s response has been resolute radio silence. A couple years ago I tried to call him when I thought the blame-Jerry campaign had reached a point of utter absurdity. I got him on the phone, but he hung up on me. I notice that reporters for the News tried to reach him this week for the latest It’s-Jerry’s-Fault story. He did not respond.

So I will leave this to you. Mr. In-Your-Face, Mr. Don’t-Tread-On-Me retires. The city starts using him as a toxic waste disposal site for all the blame for everything since Adam ate the apple. And he remains absolutely silent. Do you think there could be some kind of an understanding there? 

So let me explain the Lockey and MacKenzie reference. Curtis Lockey and Craig MacKenzie are two developers who launched an entire campaign of litigation and federal administrative complaints against the city six years ago over a downtown office tower redo.

They filed a complaint with the U.S. Department of Housing and Urban Development alleging basically everything the audit released last week just confirmed: that the city’s housing department was taking tens of millions of dollars a year from the feds and handing it out to cronies without any record-keeping or oversight and without the slightest regard for the law, in fact using money legally dedicated to racial desegregation to develop fancy condos and apartments downtown, which the city was trying to keep racially segregated.

The city’s response to those charges has been consistent, based on two tenets: 1) Sorry, we can’t find the records. 2) Anything that did happen, Jerry did it. Oh, sorry, he’s retired now, and this is all outside the city manager’s experience.

Let me show you how far outside the experience of the city manager this stuff is. Here is the merest meager sampling of an entire cache of authentic internal city of Dallas emails that I keep on a micro SD card in my sock drawer (maybe), dealing with the early days of the Lockey and MacKenzie meltdown.

Lockey and MacKenzie had a project that was going to be too integrated for City Hall’s taste, but nobody was dumb enough to sign on the dotted line killing the project for that reason. So city officials were sending them on a crazy North Korean fire drill, where one official says, “Oh, you have to get that other official’s signature first,” and then the other one says, “No, you have to go back and get his signature first.” The point was to wear them down and wait them out until their investors pulled the rug.

I have that whole email trail. Everything — everything — was copied to then City Manager Mary Suhm and then assistant city manager A.C. Gonzalez, who is now our $400,000 current city manager:

Telling a guy to change dates on a document:

From: Killingsworth, Jerry
Sent: Thursday, June 04, 2009 2:39 PM
To: Haywood, Bryan
Cc: Gonzalez, AC
Subject: RE: 1600 Pacific Avenue ECO Briefing
Bryan, you didn’t remove the dates. Here’s the problem. 

From Gonzalez to another guy, saying, yeah, change it:

From: Gonzalez, AC
Sent: Thursday, June 04, 2009 4:04 PM
To: Zavitkovsky, Karl
Subject: FW: 1600 Pacific Avenue ECO Briefing
Pls help with this

From Economic Development Director Karl Zavitkovsky saying A.C. wants the dates changed:

From: Zavitkovsky, Karl
Sent: Thursday, June 04, 2009 4:06 PM
To: Haywood, Bryan
Subject: FW: 1600 Pacific Avenue ECO Briefing
Jerry has a point. Change the language to reflect his email.

From Killingsworth to Curtis Lockey saying we had to gut the financing for your building but you can still have a parking garage (note the cc’s):

From: Killingsworth, Jerry [mailto:[email protected]]
Sent: Friday, March 06, 2009 10:07 AM
To: Curtis Lockey
Cc: [email protected]; Gonzalez, AC; Suhm, Mary; [email protected]; Brideau,
Charles; Obeso, Mark
Subject: 1600 Pacific Project
Here’s is a summary of yesterday’s Board Meeting. The $102M Bond inducement was rescinded but the prepayment rights were preserved for the parking garage.
I have tons of these, but you catch the drift. They copy each other on everything, and they read everything, and they do it for two reasons: 1) At the city manager end, they want to know. 2) At the Killingsworth end, he is painstaking — he is absolutely meticulous — in creating a seamless trail of documentation to show that Killinsgworth never did a damn thing in a shadow in his whole damn life.

What are we supposed to think he is, an idiot? He’s going to go off in a shadow and do tens of millions of dollars a year in federally financed deals and hide them from his boss?

Answer: No, he’s not an idiot. Neither is his boss. They’re smart. And, by the way, these are career bureaucrats. Far from being sloppy about paper, they live and die by paper.

Some paper is good paper. You keep that paper email trail hooked up like a steel tow-chain in case some fool tries to accuse you of doing something in a shadow.

But some paper is bad paper: all those inspections and inventories and requests for proposals, those point systems for awarding contracts, those formal policies, all that stuff the feds say you have to keep in your files. You know what? That stuff is just a bear trap for somebody to catch you in. So you know where it is? It’s outside your experience.

The Morning News editorial, either naively or … oh, let’s just say they did it naively … spouts the party line from City Hall. We forgot. Jerry did it. In the shadows. It’s outside our experience.

OK that’s my rundown. And, see what I mean? It would be mysterious beyond comprehension if they really gave away $29.9 million without basic bookkeeping. Nothing here is a mystery. Nothing here is beyond comprehension.

A16-008 - Audit of HOU Contract Monitoring 03-18-2016 (1) by Schutze

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Jim Schutze has been the city columnist for the Dallas Observer since 1998. He has been a recipient of the Association of Alternative Newsweeklies’ national award for best commentary and Lincoln University’s national Unity Award for writing on civil rights and racial issues. In 2011 he was admitted to the Texas Institute of Letters.
Contact: Jim Schutze