City of Dallas employee Carl Wagner, left, is a longtime friend and business associate of home builder Kenneth Williams, right.
“City employee Carl Wagner has been placed on leave pending an internal investigation.
The house is brand new, but water leaks through a wall, soaking the bedroom carpet. Rain gutters are missing along the edges of the roof. A blank spot in the bathroom marks where a walk-in shower was supposed to be.
“It’s been a nightmare,” said Jimmy Isbell, who owns the one-story house in southeast Dallas.
At age 75, he is afraid he’ll hurt himself stepping in and out of the bathtub. He and his wife have had to sleep on a mattress in the living room. “I’ve actually called this a demon house,” he said.
Courtesy of the city of Dallas, his new house was built as part of a program to demolish and rebuild dilapidated houses owned by people with limited incomes — mostly older and disabled residents.
But at least eight of the houses have had problems — and all of those homes were built by the friend of a city official who sought special permission to help get his pal some work, a Dallas Morning News investigation has found.
Jimmy Isbell, 75, and wife Deborah Isbell, 58, are still waiting on fixes to their house, which was built through a city program to demolish and rebuild dilapidated houses owned by people with limited incomes. They say their house is riddled with problems, including missing rain gutters.
The city awarded $825,000 in federal funds to Kenneth Williams, a Fort Worth pastor and home builder, in 2015. A basic background check would have revealed that he misstated his financial history on his application and had been barred from doing similar work in Fort Worth.
Dallas officials would not say whether the city knew that Williams is a childhood friend and longtime business associate of a city official who played a key role in hiring him, Carl Wagner.
The story of how Williams came to work for the city is emblematic of problems that have dogged the Dallas housing department. Officials there have a history of being sloppy with federal moneyand failing to vet whom they do business with, even though providing housing that’s affordable for poor and working-class families is one of Dallas’ most pressing needs.
Such fumbles cost taxpayers, because the feds can order cities to repay money that they don’t spend properly.
Federal officials are investigating the city’s housing department and have subpoenaed records related to the program Williams participated in. The subpoena, which focuses on the former city housing director, Bernadette Mitchell, was issued in December, after The News started requesting records from the city.
Mitchell left the department last year; she did not respond to a request for comment.
When reached by phone, Wagner referred The News to the city’s media office and abruptly hung up. The News then formally requested interviews with Wagner and the new housing director, David Noguera. A city spokesperson said the request was declined.
So The News sent the city spokesperson and Wagner a list of 25 questions outlining our findings. Wagner did not respond. The city did not provide detailed answers. It issued a brief statement saying that it was cooperating with the federal probe, which was “a result of actions by the previous administration.”
The city no longer offers the home-rebuilding program. But housing officials have proposed a new program for home repairs and reconstruction. They would not say if their process for vetting contractors has changed.
Williams acknowledged delays and problems with his work but said that the city’s budget of $103,000 per house did not leave much room for profit. Other Dallas builders have made similar complaints; records show the city was struggling to find contractors when it hired Williams.
Williams said he fell deep into debt trying to finish the houses and help people in need.
“I let my heart overrule better judgment,” said Williams, who is the senior pastor at New Spirit of Prayer church in Fort Worth.
But our investigation — based on interviews, property records, court documents and hundreds of pages of records from the cities of Dallas and Fort Worth — found that Dallas officials overlooked multiple red flags in Williams’ past.
‘They’re best friends’
Williams, the builder, and Wagner, the city employee, have known each other since childhood, Williams told The News. The men, both 58, grew up together and went to the same church in Fort Worth.
They went on to attend the Southwestern Assemblies of God University, a Bible college in Waxahachie.
In the late 1980s, the men were involved in a Fort Worth real estate deal and opened a Christian ministry, public records show. They later worked together at Williams’ construction company, according to Wagner’s resumé.
Williams’ ex-wife, Denice Williams, said the men often socialized throughout the years, chatting on the phone and having dinner at each other’s homes.
“Carl knows everything about Kenneth and Kenneth knows everything about Carl,” she said. “They’re best friends.”
In the 1990s, Williams struggled financially, according to his bankruptcy records.
But after his friend Wagner got a job in the city of Fort Worth’s housing department in 2000, city records show Williams found steady work there.
While Wagner was running a city program to paint houses that were in disrepair, City Council minutes show Williams had put in a bid. He was eventually paid at least $43,000 for work, city records show.
Wagner also oversaw hiring workers to remove lead paint from houses. City records show Williams got more than 70 such contracts, worth $475,000.
Williams said he got the jobs on his own, with no help from Wagner.
In 2005, Fort Worth awarded a nonprofit run by Williams a $255,000 contract to build homes to sell to low-income families.
But the nonprofit used the houses as collateral to back a loan, court records say. When that caused a house sale to fall through, Fort Worth said Williams’ nonprofit owed the city money. The nonprofit filed for bankruptcy and sued the city.
By the time the legal wrangling was over in 2011, Fort Worth had foreclosed on the house and — while denying wrongdoing — paid a $141,000 settlement to the nonprofit to avoid more litigation.
As part of the deal, Williams personally agreed never to seek federal funds through Fort Worth’s housing department again.
From Fort Worth to Dallas
By 2015, Williams had a new construction company, called Dry Quick Restoration.
Wagner had quit his job at the city of Fort Worth and started working for the city of Dallas, where he helped manage a program to demolish and rebuild rundown homes.
Williams said he heard about the program from other builders in the area — not Wagner. But he said having his friend running things there made him more comfortable.
Before he submitted his application to the city, Williams needed training on how to work safely with lead paint. Wagner had a side business doing that training, his firm’s website says. Williams’ application includes copies of training certificates issued by Wagner’s company.
Williams acknowledged he paid Wagner for the training but said he didn’t recall how much. Housing officials would not comment on whether that arrangement would be allowed under the city’s conflict-of-interest code.
Williams said he didn’t think it was an issue to get trained by a city employee: “I thought it would have been a plus.”
Homebuilder Kenneth Williams included this training certificate in his application to work with the city of Dallas. The consultant group is run by his friend and city employee Carl Wagner. The city would not say whether this arrangement would be allowed under its ethics code.
Williams’ application listed his brother-in-law as a reference. He had recently remodeled his brother-in-law’s home, Williams told The News,and he thought it was the best, most recent example of his work. It’s unclear if the city knew the reference was a family member.
And where the application asked whether he or his business had ever filed for bankruptcy, he wrote “No.” But according to federal court records, Williams or his organizations had filed for bankruptcy at least seven times. One of the cases — involving the church he leads — is still active.
Williams said someone at the city told him the bankruptcy question applied only to his new construction company, not to himself or his other businesses.
Despite these issues, the city offered Williams as one of a handful of contractors to families that qualified for the house-rebuilding program. Eight chose him. Some said later that they were drawn to Williams because he was a pastor and seemed trustworthy.
New contractors are typically not allowed to build more than one home at a time, documents show. But Wagner wrote a memo to his boss at the time, Bernadette Mitchell, asking for an exception for Williams and another new contractor.
Mitchell said yes.
In fact, Williams got more houses to rebuild than the other contractors. He agreed to complete them all within five months.
Delays and problems with the houses
The city was supposed to reimburse Williams’ company periodically after inspectors checked his work, according to city documents and emails.
But in some instances, records show, he was paid ahead of schedule.
For example, he got $5,600 for meeting energy efficiency standards and $38,000 for general expenses early on in construction, even though a city timetable shows those payments were scheduled to come at the end of the project.
Records show that Wagner authorized those payments. The city declined to comment.
All of Williams’ houses ran many months behind schedule, city records show. And because the owners had to find their own housing during the rebuild, the delays cost them.
A widow in her 60s, who works part time as a crossing guard, said she was shelling out about $800 a month to rent an apartment. One man did not live to see his home finished. The last family returned home more than a year and a half later than promised, according to city records and interviews with the families.
Internally, an employee in the housing department raised the alarm. In emails to Wagner and his bosses, the employee said Dry Quick payments were being approved without following protocol. Work wasn’t being completed on time and subcontractors weren’t being paid.
“We have what appears to be a problem! Dry Quick appears to be in a FAILURE TO PERFORM situation,” the employee wrote in 2016.
The employee said he was “CONCERNED! NO, WORRIED!”
Mitchell, the head of the housing department at the time, wrote back asking that he “discuss these situations before sending this type of email.”
By the time the work was done, 68-year-old Janeal Potts happily traded her old house for what she believed to be a new-and-improved one. “I haven’t felt this safe and comfortable and at peace in a long time,” she said. “God is good.”
But all the homeowners, even Potts, say they discovered problems.
Lights that flicker when someone turns on the vacuum. A toilet that doesn’t flush. Water that shoots out of the front of a house when an outdoor faucet is turned on.
Angie Fox, who lives with her 84-year-old mother in Pleasant Grove, said there is a gap above their home’s foundation. She said she has seen mice scurry through and believes they are eating through insulation.
Angie Fox, who is paralyzed and uses a wheelchair, explains some of the construction problems in the home that she shares with her elderly mother, Mary Hollis, left. Among them: she says the contractor did not build a wheelchair ramp leading to the backyard.
In order to get new houses, the families had to agree to live in them for 20 years. But Fox worries her house won’t last even that long.
She turned to Google to spread the word.
“Kenneth has hid behind the Bible,” Fox wrote in a scathing online review. She added that his company “must’ve learned how to build a house on YouTube!”
Williams said he did the best he could with the funds he had. “I was trying to help these old people and it was going sour for me,” he said.
The families say the city has promised to fix their houses — and the job will go to someone other than Williams.”