Officials Launch Investigation Into Permit Building Closure

7800 Stemmons Fwy
7800 Stemmons Fwy | Image by CBRE

Dallas officials began a formal investigation on Thursday into what prompted the sudden removal of nearly 70 employees from the City’s new Development Services Department office at 7800 N Stemmons Fwy.

The building was bought in August 2022 for $14.2 million, and another $6.5 million in taxpayer money was spent renovating it.

On April 9, employees from the Development Services Department were “directed” to move back to their old space at the Oak Cliff Municipal Center on East Jefferson Boulevard because of reported code violations — a scenario Council Member Cara Mendelsohn (District 12) called ironic because the officials responsible for issuing permits could not satisfy the requirements for one of its own buildings.

“Most committees receive briefings to figure out how to move things forward,” said Mendelsohn, chair of the Ad Hoc Committee on General Investigating and Ethics. “That’s not the role of this committee. The role of this committee is to complete an investigation. I know I had asked for the answers as to who was involved, who made the decisions, how much money was spent on specific things, and the scope of specific steps.”

Jennifer Nicewander, director of the Office of Bond and Construction Management, began the meeting by giving a 26-page presentation that provided a timeline of the building purchase, inspections, improvements, and budget estimates. However, she did not address who was involved or explain the decision-making process.

“I was hoping there was more information that was coming,” Mendelsohn said. “I think it’s important those are items that need to be covered. This isn’t a witch hunt. We have to understand it. But what I know is that we can’t continue to purchase buildings and not have a very specific checklist of things that need to be done.”

For almost three hours, officials asked questions of City staff about pre-purchase evaluations, building inspections, the criteria for receiving a temporary certificate of occupancy (TCO), elevator functionality, asbestos abatement, and fire codes.

“First and foremost, I do want the committee to know that we fully own the delays” in occupying the building, said Andrew Espinoza, director and chief building official for the Development Services Department (DSD). “This is a project that’s had a lot of misconceptions. There’s also some confusion with the public, and we hold ourselves accountable for that confusion and for the delays.”

DSD has earned a reputation for inefficiency and dysfunction under outgoing City Manager T.C. Broadnax, who oversaw periodic permit backlogs and increases in crime, tax collection, and City spending during his seven years at the helm.

Still, Espinoza took the brunt of the scrutiny on Thursday, with officials asking him several times about what he knew and when he knew it, and what factored into his decisions to move into the building in December and leave it in April.

“Why did you do that?” Mendelsohn asked.

She and other council members asked that question multiple times during the meeting.

“It was a challenge to us,” Espinoza said. “We sent communication to staff to … stay on your floor. They didn’t. For the sake of making sure there’s not going to be interruptions in construction areas, I made the decision to send them back [to Oak Cliff]. There wasn’t any … incompetency. There wasn’t any life and safety issues. I just didn’t want the minutia of staff members going back and forth, going to different floors, and creating all types of stories that they perceived to be an issue. I wanted to put a stop to that.”

That turned out to be the crux of Espinoza’s argument — a point that council members on the committee seemed to have a difficult time swallowing.

“We have a bond construction manager on site every day,” Espinoza said. “We’re still working on IT stuff. We’re working on electrical stuff. We’re working on things, and sometimes, the intermingling of different systems can trigger something. There was not an issue when we issued the TCO. I just want to be very clear with that.”

When the City took possession of the building in September 2022, floors two, five, and nine were vacant. In December 2022, floors one and eight were vacated, and “permits were issued, and demolition and finish out began on vacant floors 1, 2, 5, 8, and 9 for Development Services staff,” the presentation by staff showed.

By July 2023, DSD staff was consolidated to floors one through five. A tenant remains on the seventh floor, but the lease expires in 2026. Floors six through 11 “are primarily planned for departments housed at [Oak Cliff].”

DSD employees in December 2023 began moving to the fifth floor, and a TCO was issued the same month. Through March, the same workers “continued transition” to the second and third floors.

Committee members repeatedly challenged Espinoza’s claim that he only moved the department back to Oak Cliff because of “roaming” employees. But Espinoza did not change his position.

“We expect our workers to be professional, and we expect them to stick to the rules and regulations,” he said. “We had sent communication to them that the fifth floor is the floor they need to be on. There’s no reason for them to be on any other floor when we issued the TCO.”

“I was super excited about [this building],” Council Member Gay Donnell Willis (District 13) said. “I still am. I thought it was a great idea to make all these departments together. … So, this is a big disappointment.”

She asked for emails City employees reportedly sent to managers and others about safety concerns at the building. Espinoza doubled down.

“Several employees were going to media outlets and council members about things that weren’t necessarily true,” he said. “I made the decision to move back to [Oak Cliff]. … [They were] frankly talking to the media and fabricating stories. It’s exhausting.”

To help ensure officials avoid a similar incident at this building and elsewhere, Nicewander said the City will use a third party “to see if there’s anything else we need to do” in evaluating properties for occupancy.

At Mendelsohn’s urging, committee members agreed to ask the Office of the City Auditor for an audit into what happened at 7800 N Stemmons Fwy. The scope will include an inquiry into the emails City employees sent to staff about working conditions at the building.

In addition to the $20.7 million spent to purchase and renovate the building, another $7.8 million is needed for electrical and mechanical upgrades and other work. The 10-year-plus capital needed for the building is projected at $9 million.

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