Dallas City Manager Lays ‘Lemon on Stemmons’ at Former Officials’ Feet
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Dallas City Manager Kimberly Bizor Tolbert released a report on Friday detailing the city’s failures related to the infamous “Lemon on Stemmons” debacle.
Tolbert said she wanted to get out in front of an upcoming report by the Office of the City Auditor and be open and transparent about the mistakes that led to many millions of dollars in taxpayer spending on an office tower that was and still is unfit for occupancy.
As previously reported by CandysDirt.com, Dallas City Council approved the purchase of the 11-story building at 7800 N Stemmons Fwy in 2022 with the intention of updating it to serve as a “one-stop-shop” for permitting services. Ironically, when staff started moving into the new office in December 2023, it became apparent the building did not have the necessary permits and suffered from dozens of code violations. Staff were ordered to move back to their old offices in early 2024.
Now, it seems, Tolbert is acknowledging the city has not been equipped to handle real estate deals, despite it managing an extensive portfolio of properties (5,800 real estate assets, per Dallas Business Journal). New acquisitions that haven’t been previously approved by Dallas City Council or voters are now on pause, and the city will be undergoing a revamping of its processes when it comes to real estate.
The city is also going to finally give up on the Lemon on Stemmons and sell it in a bid to recoup as much of its losses as possible.
How Did Things Go So Wrong?
Tolbert said that city staff did not do their due diligence when it came to assessing the state of the building and the needs it was meant to fulfill. The previous owner of the office tower (Dallas-based Ricchi Group) did not provide the city with disclosures, and a third-party “surface-level review” commissioned by staff “failed to identify significant deficiencies in major building systems, including HVAC, electrical, and plumbing, as well as numerous [Americans with Disabilities Act] compliance issues.”
Additionally, the property only had about half the parking spaces that would’ve ultimately been needed to accommodate visitors, the more than 900 employees who would’ve been housed there, and 383 city fleet vehicles — a glaring oversight that should’ve thrown the estimated financials of the project into question.
“For such a large, impactful real estate acquisition, the City failed to be as thorough as it should have been and did not designate a clear project leader. It [has] also become clear that the City lacks a structured process for these types of investments,” Tolbert wrote.
On the financial front, the city spent $14.1 million to purchase 7800 N Stemmons Fwy. The third-party review of the building, which was conducted by the real estate company JLL, identified $1.2 million in immediate repairs that needed to be done and estimated another $1.4 million in additional repairs across 12 years. To date, the city has spent $29 million on the Stemmons building.
“The City has determined that bringing the building to an occupiable condition would require many millions in additional capital investment, currently not appropriated in the City’s adopted or planned budgets,” Tolbert’s report reads. “In the meantime, we continue to spend approximately $73,000 each month to maintain and secure the vacant structure, a cost that would persist throughout the renovation period.”
Possibly referencing former City Manager T.C. Broadnax and former Development Services Department (DSD) Director Andrew Espinoza, Tolbert’s report noted that the leadership responsible for the debacle was no longer working for the city.
Broadnax resigned in February 2024 to serve as city manager in Austin. Dallas City Council subsequently elevated Tolbert to serve as interim city manager before she was officially chosen to step into the permanent role in January of this year. Tolbert removed Espinoza from his position as director of DSD in June 2024. He stopped working for the city two months later.
Other former city officials who have moved on from Dallas include then-Assistant City Managers Majed Al-Ghafry and Robert Perez.
Speaking with The Dallas Morning News, Al-Ghafry said the only thing wrong with the building was one non-functioning elevator.
“They’re making a mountain of a mole hill,” he claimed.
Moving Forward…
Tolbert said she’s taken a number of steps to make sure the mismanagement that led to the Lemon on Stemmons fiasco doesn’t happen again.
In addition to suspending all real estate purchases not previously approved by the city council or Dallas voters, the city is commissioning the real estate firm CBRE (as part of an already-existing agreement) to audit its real estate-related operations, evaluate the city’s current asset portfolio, recommend staffing and technology upgrades, and help develop new policies and procedures.
Staff will also be moving to develop a Real Estate Master Plan that will function as “a foundational tool to guide the City’s long-term portfolio management and future strategic real estate decisions.”
Tolbert also touted some of her previous realignment initiatives, which include merging DSD with Planning & Urban Design to form the new Planning and Development Department and the creation of the Department of Facilities and Real Estate Management.
“These structural changes reflect the City Manager’s steadfast resolve to continuous improvement and responsible stewardship of public resources,” the report reads. “The City is actively continuing to reimagine the real estate processes to address the findings of the audit and other issues identified throughout this process.”
As for the Lemon on Stemmons, Tolbert suggested spending any more taxpayer money on the building would be imprudent. She pointed to significant improvements in permit turnaround times and the upcoming launch of a new online land management platform (DallasNow) as reasons for abandoning the one-stop-shop permitting idea.
“Given these improvements, a more urgent and fiscally responsible priority is to evaluate the City’s full real estate portfolio — including owned buildings, leased space, and surplus properties — to determine the most strategic way to house City staff and repurpose underused assets,” the report reads. “This work will be guided by a comprehensive Real Estate Master Plan, which will provide the framework for long-term portfolio management and strategic real estate decision-making.”
Is anyone in the market for an 11-story office tower spanning 228,322 square feet in northwestern Dallas? It’s a fixer-upper.
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At least she is owning the problem and not trying to sugar coat it but how many millions of our tax payer dollars will be lost?? And at the end of the day, we still have to pay exorbitant property taxes and our streets still have pot holes and Dallas Police is still wildly understaffed–no one comes when you call them. When do we get the value we deserve for all the money we put into the system??
so why blame others? she was deputy city manager from 2017 to May 2024
What about the compensation of the 40 people who were FORCED to move to this building when it was unsafe to be in? Or an apology to the employees that had their property broken into after NUMEROUS complaints to everyone in ROOM 115 about the conditions of this building. The City paid off the rent to the tenant in that building this year, but no sympathy or compensation to the employees who were negatively impacted by the unsafe conditions. City of Dallas provided no assistance or support to those affected by the unsafe conditions of the building. Not even a pizza party. Because no administrator, manager, supervisor, assistant building official, assistant director, or director cared as long as it wasn’t them, this catastrophic event led intelligent and skilled workers to leave or retire early.
Why do they keep throwing the director under the bus on this? Wasn’t Mr. Espinoza in Code Enforcement when city council bought this building? He received praise meeting after meeting for improving code and we recognized his achievements in shortening permit times several times when we moved him to development services. If it wasn’t his choice to move to that building because council is the one that bought it why does he keep getting roped into it? Kimberly Tolbert was deputy City Manager when we bought this lemon and actually played a role in buying it. Shouldn’t she be saying “I made a mistake” instead of “we made a mistake”? I get blaming Broadnax, but none of it was the fault of the Development Services Department since they didn’t buy it, didn’t choose when to move into it, and didn’t hire the contractor. Honestly council just messed up and lost a director that was doing a great job improving our permitting process. It got way quicker when he was there.