Standard stuff, right?
- Jack Curtis
- May 2
- 3 min read
Every time I look into what City Leaders have done on this data center deal, I become even more convinced that they have no understanding of basic risk management practices. Whether it's legal risks (you know, basic laws like the Open Meetings Act), effective counterparty due diligence, reputation risk, or compliance risks, they seem to have no idea how to do anything here that isn't absurdly negligent.
One example that everyone knows: Our illustrious City Manager never bothered to read the Thermo deed with Luminant before he signed it. If that weren't bad enough, we're lighting our money on fire suing Vistra because the Council approved development agreements for a project that they knew was adversely deed restricted for that very purpose.
They also threw in the extra bonus of selecting a developer that has never built so much as a sno-cone stand, let alone a multi-billion-dollar-exceedingly complex hyperscale data center. Y'all...the level of incompetence here is mind-boggling.
The latest example is no exception to this gross incompetence theory (I mean, why expect anything less at this point, really).
The People's Champ put out a couple of posts that show the MSB hasn't paid its subcontractors -to the tune of $2.1 million dollars. So, of course, those subs are now starting to file liens against the property. Awesome. Great work, everybody.
The issues with MSB are obvious, but you may think that the City can foreclose to prevent any further loss and protect its security interest. Normally that's the right way to think about it, because - duh - why wouldn't they be able to do that?
Ya, except in this case, the City can't actually foreclose for the mechanics' liens. They should be able to, but they can't.
Why? Because Nate Smith didn't include this in the documents.
I'm not a lawyer, but I used to manage construction lending for a bank. All of our DoT's and construction agreements had language that specified default for uncured mechanics' liens - meaning we could foreclose to prevent further encumbrances or clouding of title. They would read something along the lines of this:
“Grantor shall keep the Property free and clear of all mechanics’, materialmen’s, or other liens arising from work performed on the Property. The filing of any mechanics’ lien that remains unsatisfied after thirty (30) days’ written notice and opportunity to cure shall constitute an Event of Default under this Deed of Trust. Upon such default, Beneficiary may exercise all remedies, including foreclosure and sale of the Property under Texas Property Code § 51.002.”
Standard stuff. Boilerplate. Any competent lawyer would include them in the docs, and any competent administrator should know the risks and make sure the City's interests are protected.
But the agreements with MSB don't have this language in them.
There is no lien-free covenant, no default trigger for unpaid liens, and no practical mechanism for the City to step in if contractors go unpaid and start filing liens. And I don't see a way for them to do this under general foreclosure law, either.
This isn't a minor technical oversight. It is a material gap in the City’s protections.
A reasonably competent government or real estate lawyer drafting an economic development agreement involving this type of large public conveyance would almost certainly have included it in the document language. But not Nate, apparently...
Side note: Given Nate's prior conflicts of interest with MSB, it can make these obvious deficiencies seem even more suspect. However, I'm not totally convinced this isn't just bad lawyering - at least to some degree. But, regardless, it still leads us back to why conflicts-of-interest need to be taken seriously to begin with.
So, as it stands now, Maxwell and his minions basically sold public land for pocket change with almost zero protections for taxpayers. This wasn’t a negotiation — it was the City prostituting public assets to a no-name developer on absurdly favorable terms.
Now the City has to sit back and watch as the property gets liened out right in front of its face.
Honestly, though, I find it somewhat poetic considering all the corners they cut to get us here and all the gaslighting they did after the fact. You reap what you sow.
Here are the documents if you'd like to review them as well:
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