Travels with Doug

Info:Correction Date: August 29, 1996
Travels with Doug
From wastewater to housing, fast-tracker Doug Williams has been a key mayoral operative -- with little oversight

By Brian Wallstin
Two weeks after Bob Lanier's first inauguration in January 1992, the new mayor's administration began looking for a consultant to oversee the Greater Houston Wastewater Program, a $1.5 billion project to overhaul the city's sewer system.

A selection committee was formed, and Lanier dispatched his executive assistant, Doug O. Williams, to monitor the selection for his office. In the summer of 1992, the committee chose a joint venture between California-based Montgomery-Watson Americas Inc. and Brown & Root, one of Houston's largest contractors. Lanier promoted Williams from executive assistant to director of the wastewater program, and charged him with administering the management contract for the largest public works project in Houston history.

It was an awesome responsibility: from day one, Montgomery-Watson/Brown & Root was doling out hundreds of lucrative city contracts, worth millions of dollars, to nearly 200 engineering, architecture and construction firms. Outside of the Lanier administration, Williams might have seemed an odd choice to direct such a massive undertaking. He had never before worked in city government, having spent his 25 years with R.G. Miller Engineering, where he helped the firm grow from two employees to about 50.

But Williams had one key credential that made him uniquely suited for the Lanier administration. A former chairman of the Houston Contractors Association, he had cachet with every building-trades firm in the city. And he had been one of Lanier's most effective fundraisers during the former banker/developer's first bid for office, paying particular attention to the engineering, architecture and construction firms that might have an interest in working on the Wastewater Program. Without their help, it's unlikely Lanier would have had $3 million with which to run his initial campaign.

So the atmosphere at City Hall -- already made tense by the FBI's bribery sting of councilmembers -- must have darkened considerably last week after the Chronicle reported on its front page that the wastewater program had also become the subject of an FBI investigation, and that investigators were "raising questions" about Williams.

The Press has since learned that although Williams was, in fact, contacted by the FBI, he is not the target of any investigation. Neither, apparently, is the Greater Houston Wastewater Program. Still, the story brought a unprecedented amount of unwanted attention to the low-profile Williams, who is universally recognized as both a nice man and one of Lanier's key advisors. He was on hiatus from that role for most of last year after making an ill-advised move from City Hall to take a position with a subsidiary of Montgomery-Watson. But he left that job after less than a year and is back with Lanier, serving as the mayor's "deputy assistant for housing and inner-city revitalization." It's a position that has once again put Doug Williams at the center of the action in the Lanier administration -- once again with almost no outside oversight.

Williams' current boss is developer Michael Stevens, Lanier's unpaid "special assistant" and president of the Houston Housing Finance Corporation. Beyond that small fact, however, information about what Williams does and how he's paid is remarkably hard to come by. Calls by the Press to Lanier's staff about the mayor's deputy assistant were met with an annoying ignorance. At first, no one professed to even know Williams' phone number. It took several calls to finally confirm that Williams is not a city employee.

Repeated calls to Williams' office were not returned. Stevens' secretary requested that questions regarding Williams' employment with the finance corporation be put in writing, but she reported having had no luck pinning either man down to answer them.

Finally, Stevens returned a call. But he seemed to know precious little about Williams, including his status at the housing finance corporation.

"He functions as a staff employee," Stevens said. "I just do not know whether or not he is paid as a consultant, or whether he is an employee."

Ironically, in light of last week's events, Williams was gone from the wastewater project when someone did raise serious questions about the city's contract with Montgomery-Watson/Brown & Root. An audit released in July 1995 by City Controller George Greanias concluded that the contract lacked oversight and was susceptible to possible "waste, loss and misuse." According to the audit, the city had no independent means of determining if it was getting the best deal, because costs and expenses were first reviewed by Montgomery-Watson/Brown & Root.

"These weaknesses," Greanias' auditors reported, "result in the potential for concealing design or construction problems from the city."

The audit also pointed out more than $630,000 in overpayments, though that amount was later reduced to $30,000 when Public Works and Engineering director Jimmie Schindewolf produced a separate "supplemental agreement" between Montgomery-Watson and Brown & Root. The agreement revealed an increase in salary costs that was never reported to City Council. Auditors estimated that the agreement would cost the city an additional $1 million or more.

The audit also discovered that much of the documentation accumulated during the selection process was either "lost" or discarded, including the charts and graphs used by committee members to evaluate the finalists. That particular finding led Greanias to question the process the city followed to award the lucrative contract.

Though Williams was not named in Greanias' audit, his role as director of the wastewater program is consistent with his role in what might be called Lanier's "Tool Cabinet," a group of middle-aged, brick-and-mortar white guys who make up the inner sanctum of the Lanier administration. Along with Williams, there's Public Works director and co-chief of staff Schindewolf, Metro board chairman Billy Burge and Michael Stevens.

One characteristic shared by members of the Tool Cabinet is their questionable bureaucratic credentials. Burge's term as Metro chairman expired more than a year ago, yet, with Lanier's passive approval and the acquiescence of Commissioners Court, he has refused to step down. Schindewolf was ostensibly appointed Lanier's co-chief of staff, along with Republican political operative Dave Walden, but then simply assumed leadership of Public Works and Engineering, the city's largest department, without having his appointment ever going before City Council for approval.

Stevens, as the mayor's special assistant, "coordinates" the efforts of the city housing and community development department and the Housing Authority. That dovetails nicely with his chairmanship of the housing finance corporation, a publicly owned nonprofit that issues tax-exempt bonds for inner-city projects. Stevens isn't paid, nor is he accountable to anyone but Lanier.

Williams has his own interesting story to tell about what he did in the Lanier administration. During the transition, he lobbied to become the new mayor's chief of staff. When Lanier went with a two-headed approach, he made Williams an executive assistant, which allowed for a certain fluidity of assignments. Williams directed the mayor's popular School Safety Sidewalk program, and took over as chief building official after Hal Caton retired amid a building-inspection scandal.

But Williams has been most closely associated with the wastewater program. Among the innovations he introduced was the so-called "fast-track approval process," which is geared toward appeasing contractors who are reluctant to bid on slow-moving municipal projects. One element of the fast-track process was the wastewater project's so-called small business enterprise program, in which qualified small and minority-owned firms could be considered for contracts and subcontracts.

One of the program's strongest supporters was Marvin Williams, a senior vice president of strategic planning for Montgomery-Watson. Throughout the selection process, Marvin Williams was an aggressive advocate for increased minority involvement, and to make sure black and Hispanic councilmembers knew it, he hired Larry Berkman, a consultant and City Hall lobbyist.

Berkman is often described as "camped-out" at City Hall, particularly when there are large construction projects up for grabs. He's something of an anomaly -- a white former construction contractor, he's also struck a close association with the minority community, which has long complained of getting short shrift on city construction projects. Berkman was active in Sheila Jackson Lee's congressional campaign, along with Marvin Williams, but he says many minority councilmembers have become "friends through the years."

Those friendships kept Berkman busy late last year, when he worked the Council chambers on behalf of Wayne Duddlesten's tax-subsidized convention center hotel proposal. Berkman was a paid consultant of Turner Construction Company, which will build the hotel and has promised to give minority subcontractors 30 percent of the work.

Berkman, who recently appeared before the federal grand jury investigating possible bribery charges involving the hotel contract and councilmembers, also acknowledges a "good, loyal" friendship with Doug Williams. Before Berkman had heart bypass surgery last spring, the two men engaged in a weekly tennis match.

They never talked business, Berkman says. And though they spent hours "trying to kill each other on the tennis court," they never talked about the wastewater project contract. That, according to Berkman, was of no particular significance to his job as a Montgomery-Watson consultant.

"I was hired by Montgomery-Watson to do marketing for everything Montgomery-Watson did," Berkman says, "except the Greater Houston Wastewater Program."

In the spring of 1995, Williams left the wastewater project and took a position with Operational Services Inc., a subsidiary of Montgomery-Watson. Sources say Williams was hired away by Jarl Molander, a Houston-based vice president for Montgomery-Watson. Molander, who was a frequent visitor to Williams' city office, was one of the signers on the company's contract to manage the wastewater program.

Last year, Williams described his $100,000-a-year job with Operational Services Inc. as "government relations" liaison, charged with the solicitation of municipal contracts for the operation and maintenance of wastewater systems. Perhaps Williams thought no one would notice, but the new job put him in the position of selling Montgomery-Watson's services to his former employer, which had begun privatizing its new wastewater treatment stations.

The Press could not determine whether Williams quit OSI or was asked to leave. Apparently, though, his hiring infuriated a few people at Montgomery-Watson, which had its eye on future city contracts and feared even the appearance of a conflict of interest.

"Jarl brought in Williams without senior management's approval," says one source, who believes Williams was pressured to leave. "They were not comfortable at all. It was too close, and Montgomery-Watson didn't want to look bad."

Also unclear is when Williams left OSI: neither he nor Molander responded to a request for comment. Therefore, it's hard to pinpoint exactly when Williams was back at City Hall as "deputy assistant to the mayor for housing and inner-city revitalization."

Stevens was unable to speak specifically about Williams' duties at the finance corporation, though the words "assist"and "recommend" were prominent. He eventually did confirm that Williams is a consultant to the finance corporation, though he doesn't know how much he's being compensated. Nor was Stevens sure when Williams might have begun work for him. "Sometime in the last three to six months" was his best guess.

The mystery surrounding Williams' new mayoral appointment is reflected in the vagueness of Stevens' job description as Lanier's unpaid housing advisor. Despite the broad responsibilities, the operation is run out of Stevens' business address on Dairy Ashford, a good 20-minute drive from City Hall. There, according to Stevens, he "coordinates" a murky pool of funds comprising proceeds from the finance corporation's tax-exempt bond issues, city housing money and federal grants.

Most recently, the Houston Housing Finance Corporation put up $3 million to help purchase the Rice Hotel, though which pot of money the funding came from is anyone's guess. The Rice was turned over to private developer Randall Davis, who plans to spend $20 million to build loft apartments. In a speech last week, Stevens mentioned that other projects are on the immediate horizon, including the demolition of Allen Parkway Village. A $40 million campus-style, mixed-income development is planned for the site.

Despite the public largess that makes such projects possible, Stevens makes no effort to disguise his -- and the mayor's -- contempt for the bureaucratic process. His job, he explains, is a fast-track approach similar to the one employed by Williams for the Greater Houston Wastewater Program. Its major test has been Homes for Houston, which hopes to encourage private builders to construct 25,000 housing units by the year 2000.

The project has been slow getting off the ground, mostly because providing housing in the initially targeted neighborhoods close to downtown has not proven popular with builders. The program was recently expanded to include any land within the boundaries of the city.

While Williams -- a master implementer, by all accounts -- might be able to help with Homes for Houston and other projects, his employment with the Housing Finance Corporation could eventually pose a conflict for the Midtown Reinvestment Zone, a tax increment financing district covering a potentially desirable swath of land between downtown and the Texas Medical Center. The district was created by city ordinance, and allows a board of directors to reinvest the tax revenues generated by new construction back into the district.

The problem is that Williams is chairman of the Midtown Zone. City Council approved Williams for the position in April 1995, shortly after he announced that he was jumping ship from the wastewater program to Montgomery-Watson. But instead of questioning Williams about the revolving door act, councilmembers praised him profusely for his efficient management of the Greater Houston Wastewater Program.

Likewise, when he was reappointed this May to chair the Midtown board, Council was aware -- or should have been -- that he also worked for the Houston Housing Finance Corporation.

Last week, at the monthly forum of the Downtown Houston Association, Stevens announced that construction of multifamily housing was due to begin in Midtown in "six to nine months." Like Council, Stevens apparently won't consider the possibility of a conflict between Williams' finance corporation contract and his City Council appointment. Midtown has made no requests for funding from the finance corporation, Stevens says, and he seems willing to cross that bridge only if and when he comes to it.

Either that, or he's got a pretty good sense of humor.
"The City Council pretty much has a say-so on everything that Midtown does," Stevens says, "so there's really a major oversight program.

In the August 22 story "Travels with Doug," staff writer Brian Wallstin erroneously reported that Jimmie Schindewolf was never confirmed by City Council as director of the city's Public Works and Engineering Department. Schindewolf's appointment was unanimously approved by Council on May 19, 1993.


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