I want to catch you up on a story I told you about in September, concerning Josh and Jenn Terry, both 29 years old, who were rehabilitating an apartment building in North Oak Cliff. It's sort of a Halloween story.
Before starting their project, the Terrys checked in with the city to make sure their zoning was OK. The city said it was. Full steam ahead.
Then, after the Terrys already had invested two hundred grand, the city changed its mind. Nope. Tear it all out. It's illegal. Two hundred grand be damned.
Board of Adjustment
The city told the Terrys they could appeal their case to something called the Board of Adjustment. (Whenever you hear this term, "Board of Adjustment," I want you to picture a large wooden plank with a mechanism of steel plates and huge thumb-screws and a place for you to lay your head so that your skull can be "adjusted.")
Some catch-up. As I told you in the first column ("Tough Noogies," September 9), the Terrys bought an 87-year-old apartment building in the King's Highway Conservation District on Winnetka Avenue in North Oak Cliff and were rehabbing it with the city's express consent.
In fact, before they did a lick of work, Josh Terry checked with City Hall. The city didn't just say the zoning was good. They sent Terry a full copy of the 36-page March 23, 1988 city ordinance establishing the conservation district to prove to him that he was legal.
The ordinance included a lot-by-lot map of the district showing the proper zoning for every single property. The Terrys' lot was on the map with notations showing it was for use as multi-family or apartment.
Good to go, right?
That's what they thought. They poured money into the place. The city gave them building permits and even allowed them to go through the first steps of getting a "Certificate of Occupancy," meaning people would be allowed to live there. They couldn't get the final certificate until the work was done, but everything was moving along swimmingly.
And then bang! The city shut them down. No more building permits. No certificate of occupancy. The Terrys reminded the city they already had OK'd the whole thing. The city said to them what it has repeated in public hearings and in e-mails to me: It said the Terrys' inquiries and applications for permits had been "processed [by the city] in error."
But even after the city admitted its mistake, the city maintained it still couldn't allow the Terrys to complete their project.
This is a big, old, square brick property that nobody would ever try to turn into a single-family home. So if it can't be an apartment building, it can't be anything. The only thing it's good for is demolition.
In order to shut the Terrys down, city staff embarked on a major research project, digging up old utility bills and building permits, most of which wound up supporting the Terrys. But the city folks found enough scraps of paper here and there to hang a hat on, and on that basis they told the Terrys they were out of luck.
I said at the time that stuff like this does not happen out of the blue. City staff doesn't jump like that even if you drop a bomb on them. Somebody's got to be behind the scenes turning the screw—somebody special.
The city told the Terrys if they didn't like what was happening to them they could always go to the Board of Adjustment (imagine the words, BOARD OF ADJUSTMENT, printed in big black letters with blood dripping off them and scary music and haunted house screams in the background).
Oh, no! Not the BOARD OF ADJUSTMENT!!!!!
But before we take you down to the...BOARD OF ADJUSTMENT!!!!!...allow me to share a little tidbit with you. At a certain point in all of this, I learned that a member of Board of Adjustment, a gentleman named Christian Chernock, had expressed an interest in buying the Terrys' apartment building some time before they got it.
A real estate agent named Guillermo Reyes confirmed to me that Chernock had come to him about it: "He expressed an interest to buy that house," Reyes told me. "But he didn't phone up and continue. It wasn't serious. I never had offers from him."
OK. But there was "interest."
The property eventually went into a complicated HUD foreclosure. Terry was able to buy it out of the foreclosure before an auction by being a bit clever, a bit ahead of the game.
Chernock, by the way, has insisted that he cannot comment on any of this because of the rules governing the Board of Adjustment—by law a "quasi-judicial" agency.
But the fact is that Chernock has been very involved in the case, according to a trove of City of Dallas e-mails that I finally obtained in spite of over-the-top efforts by the city to keep them from me. The e-mails between city officials, some of whom are city staff working for the Board of Adjustment, contain phrases like "Christian Chernock is very much interested..." and "...regarding my conversations with Christian Chernock," all having to do with shutting down the Terrys' permits.
Some of them deal specifically with Chernock's suggestions about technicalities in the law that might be used to take away the property's longstanding status as a multifamily property. Steve Long, the Board of Adjustment Administrator, writes to Donnie Moore, chief city planner for the board: "Christian Chernock is very much interested in how the City has determined that then NC use has been discontinued for 6 months"—a reference to an obscure technical provision having to do with water bills that could be used to shut Terry down.
To be fair to Chernock, his involvement in the matter took place before it became an official Board of Adjustment case. When it did become a case, it went to a panel of the board that is not the panel on which he serves. But all of his approaches were through the staff that reports to him in his official capacity as a city commissioner.
I spoke to another investor in the area, Mark Smith, who also had wanted to buy the same property Terry bought. He said he was disappointed not to get it but gives Terry credit for being quick.
Smith told me how Chernock's role looks to him, as somebody in the same business: "It reeks of sour grapes to me," he said. "I think he is leveraging his status with the city board he is on, for one, and for two, I think there's a lot of sour grapes, because he didn't get the building."
I also spoke to another longtime experienced investor in the area whom I respect, who would speak to me only on condition of anonymity because he has business at City Hall. He told me Josh Terry made his own bed by failing to play by the political rules of North Oak Cliff, in particular by failing to defer to Chernock.
Mark Smith, like the Terrys, is a relative newcomer to the area. He says that kind of talk sounds like a bad line from a Mafia movie.
"You need to kiss the ring of somebody?" Smith asked. "Are you saying there is a godfather in this area, and you have to have his blessing to go do a property if it's one that's in the godfather's line of doing business? Give me a friggin' break!"
There are godfathers. I'm not saying Christian Chernock is one of them. That would make him a good deal more important than he is. But there is a web of insider dealing that works its way down from city council members through their appointees to the street, and City Hall is totally beholden to that machinery.
I always laugh when people here say they don't want Chicago-style ward-heeling politics in Dallas, like we don't already have it. The difference is that in other cities it's a little bit out in the open where a newcomer could at least figure it out before losing his right arm.
You better kiss the ring. And make sure it's the right ring. Otherwise, you could wind up being taken down, down, down the stone staircase into the...OH NO! NOT THE ...
BOOOOARD OF ADJUSTMENT!!!!
Yeah, Josh and Jenn Terry went before the Board of Adjustment. I attended. Even I got scared, and I've been down there a billion times before.
The Board of Adjustment has multiple panels of appointed citizen board members who sit separately to consider cases. This case did not go to the same panel Chernock sits on. But all of the same city staff were there—Long, Moore, the lot.
Terry made his case brilliantly, I thought. Four members all sat there nodding yes to everything he said.
Then they voted. Three of the four members present voted in favor of overturning the staff and allowing Terry to finish his property and rent it out, one against. Josh and Jenn Terry were beaming. I was beaming, and I don't beam.
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Then the board explained to them. (Imagine a scary Boris Karloff voice now.) Ah, yes, my pretties. You see. It takes four votes to win. So you lose.
They lost! They can't finish the property! Three members agreed they were right. Only one disagreed. But it takes four votes to overturn the city staff.
But you know what could happen now? Some real clever guy over there in North Oak Cliff who's been watching all of this closely could offer the Terrys 50 grand to take this little messy-mess off their hands.
See how I think. That's what happens, my little ones, when you put your head in the...OH NO! NOT THE...BOARD OF ADJUSTMENT!!!