city of el paso ethics findings

PRIVILEGED&CONFIDENTIALATTORNEY/CLIENTCOMMUNICATION

NOTAPUBLICRECORD

CITYOFELPASO

ETHICSINVESTIGATIONPRELIMINARYFINDINGSANDADVICE

FEBRUARY24,2016

By: RossFischer, SpecialCounseltotheCityofElPaso TheGoberGroupPLLC POBox341016 Austin,TX78734 [email protected] 5123541786

TABLEOFCONTENTSSCOPE&LIMITATIONS........................................................................................................................1INITIATIONOFSOLICITATIONNO.2015896R..........................................................................2PROFESSIONALMUNICIPALADVISORYSERVICES.....................................................................2FACTUALBACKGROUND..................................................................................................................................3

ApplicablePracticesorPolicies............................................................................................................5Mr.GonzalezsResponses...........................................................................................................................6InterviewwithNoeHinojosa.....................................................................................................................6OptionforSecuringAdditionalEvidence.............................................................................................7

STANDARDSOFCONDUCTAPPLICABLETOPUBLICSERVANTS..................................................7TEXASSTATUTORYSTANDARDS.................................................................................................................8

PersonalFinancialDisclosure(LocalGovernmentCode145&GovernmentCode572)8LocalGovernmentCode176(DisclosureofVendorRelationships).....................................10LocalGovernmentCode171(ConflictsofInterestforMunicipalOfficers).......................10

CONTRACTUALSTANDARDSOFCONDUCT.........................................................................................11PRELIMINARYCONCLUSIONS....................................................................................................................11RECOMMENDATION........................................................................................................................................12

CONDUCTIN2013PRECIPITATINGDELAYINBONDISSUANCE.........................................13BACKGROUND....................................................................................................................................................14RELEVANTCHRONOLOGY............................................................................................................................14ORIGINSOFTHEREQUESTTODELAY....................................................................................................15THELOCALGOVERNMENTCORPORATIONASADISTINCTLEGALENTITY........................15APPLICABILITYOFCORPORATESTANDARDSOFCARE................................................................16

TransportationCode431.101(c)..........................................................................................................16STATUTORYLIABILITYFORCORPORATEDIRECTORSANDOFFICERS.................................16

TexasNonProfitCorporationAct........................................................................................................16COMMONLAWDUTIESOFCORPORATEDIRECTORSANDOFFICERS....................................17STANDARDSPOTENTIALLYVIOLATEDBYDECISIONTODELAYBONDISSUANCEANDAVAILABLEREMEDIES..................................................................................................................................18

StatutoryFiduciaryDuties.......................................................................................................................18CommonLawDutiesofCareandLoyalty.........................................................................................18

TexasOpenMeetingsAct.........................................................................................................................19FiduciaryDutyEstablishedbyCitysEthicsOrdinance..............................................................19

AUTHORITYOFTEXASATTORNEYGENERALRE:CORPORATIONS.........................................20LEGALOPTIONS................................................................................................................................................20

OPENRECORDSANALYSIS................................................................................................................22BACKGROUND....................................................................................................................................................23CONCLUSION.......................................................................................................................................................25RECOMMENDATION........................................................................................................................................26


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SCOPE&LIMITATIONSAmongCouncilsdirectivesincommencingthisinvestigationwastoreviewtheactionsofallCityOfficersandpersonnel regarding theactionswhich ledup to the solicitationof afinancialadvisorfortheCityofElPasotodetermineiftherehasbeenaviolationofCOEPordinances, policies, regulations or procedures. Therefore, this analysis necessarilyinvolves one of the allegations that is currently being investigated by the Citys EthicsCommission. This analysis is intended to focus foremost on statutory or contractualstandards of care and analyze applicable City policies, but to respect the Citys ethicsenforcementprocedurebyleavingtheultimateresolutionoftheviolationsallegedbyJimTolberttotheCitysEthicsCommission.Itisimportanttonotethatthisanalysisstemsfrominterviewsconductedwithformerandcurrentcityofficials,aswellasareviewofpubliclyavailabledocuments.Todate,noefforthas been undertaken to forcibly compel the production of documents, communications,records,orfinancialpapers.ShouldtheCouncilwishtocompelsuchproduction,itsCharterandCodeofOrdinancesinvestsitwiththeauthoritytoissuesubpoenas.Giventhetimeframeimposed by the City Council, such formal investigatory avenues have been deferred forfutureconsideration.Thispreliminaryreport is limitedto factsknownat thetimeof itswriting. Ifother factssubsequently come to light, we reserve the right to supplement, modify, or revoke thisanalysisasappropriate.


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INITIATIONOFSOLICITATIONNO.2015896RPROFESSIONALMUNICIPALADVISORYSERVICES


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FACTUALBACKGROUND

SincehiselectiontotheCityCouncil,formerRepresentativeLarryRomerohasadvocatedforEstrada Hinojosa to act as the Citys Financial Advisor. According to an interviewwithformer City Manager Joyce Wilson, soon after being elected, Representative Romeroarranged for thepresident ofEstradaHinojosa,NoeHinojosa, tomeetwithhimandMs.Wilson. This meeting provided Mr. Hinojosa with an opportunity to tout his company.According toMs.Wilson, Mr. Hinojosa suggested that the City utilize a second financialadvisor.Ms.WilsonpointedoutthattheCityhadsolicitedproposalsforitsfinancialadvisorsin2012(aprocess inwhichEstradaHinojosasubmittedaproposal)and,asaresult,hadexecuted a fiveyear contractwith First Southwest.Ms.Wilson took no further action tofacilitatetheuseofEstradaHinojosa.Whenaskedaboutthemeeting,Ms.WilsondoesnotrecallRepresentativeRomerodisclosingapriorworkingrelationshipwithEstradaHinojosa,nordoessherecallRepresentativeRomeroindicatinganydispleasurewithFirstSouthwest.TheissueofchangingtheCitysfinancialadvisorisraisedpubliclyapproximatelyoneyearlater, at theCitys July22,2014,budgethearing.At thathearing,RepresentativeRomeroaddressed the Citys new city manager, Tommy Gonzalez, referring to a previousconversation and indicating his personal preference that the City seek a new financialadvisor.City Manager Gonzalez exchanged emails with Chief Financial Officer Mark Suttersporadically over the next few months regarding the issuance of an RFQ for municipalfinancialadvisorservices.ThetwoexchangedemailsshortlyaftertheJuly22,2014,budgethearing.TheCityManagerbroughtupthematterviaemailagainonAugust27,2014,leadingDr. Sutter to raise concerns about the timing of issuing an RFQ. In an interview, ChiefFinancialOfficerMarkSuttersaidthathehadseveralreasonsforbeingreluctanttoproceedwiththeFARFQ:(1)anongoingIRSauditofpreviouslyissuedbonds;(2)effortstoremodeltheQualityofLifebondissue;and(3)adesiretoavoidchangingfinancialadvisorsthroughthebondseasoninordertoindicatestabilitytotheratingagencies(atotalchangeinanentitysfinancialleadershipwouldbearedflagtoratingagencies).Ultimately,theFARFQwasissuedduringthesamegeneraltimeframeasthespring2015bondissuance.Mr. Gonzalez raised the issue again on October 16, 2014, which yielded the followingexchange(SeeExhibitA):

Mr.Gonzalez sendsablankemail toDr.Sutterwith thesubject line:StatusoffinancialadvisorsRFQ?

Dr.Sutterrespondsinrelevantpart:IassumethatwiththepublicstatementfromRepRomeroandnooppositionvoicebyMayororother


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Councilmembers(thatIrecall)theindicationtopursuetheRFQpriortoexpirationoftheexistingcontractwasastaffdirective.

Mr.Gonzalezreplied,Youarerespondingaccordingly. Idontknow

thatweneedtogivepeopleagreatdealof timetorespond. Iwouldthink 3/4 weeks. More like three weeks. I think those that areinterestedwouldrespond.

Thereafter, work began on developing an RFQ in accordance with the City Managersdirective. Dr. Sutter asserts that the FA RFQwas not submitted to the legal departmentbeforeitwasissuedbecauseitwasabidforrenewalofexistingservicesandthatthebidformhadpreviouslybeen reviewedby the legaldepartment. TheRFQwas, in fact, verysimilartotheoneusedin2012,whichultimatelyendedintheselectionofFirstSouthwest.Denise Grizzle, the City Comptroller, made some updates to the document and the onlychangeintheevaluationcriteriaalsocamefromComptrollerDeniseGrizzle.InordertodeterminewhethertheissuanceoftheRFQwithouttheexpressauthorizationoftheCityCouncilwasproper,thedecisionmustbemadeinlightoftheauthoritydelegatedtotheCityManagerbytheCharterandbytheCouncil.Generally,theChartermakestheCityManager responsible for the administration of city affairs, including directing andsupervising the administration of all departments. Since the Citys transition to a CityManagerformofgovernment,variousresolutionshavebeenadoptedbyCouncildelegatingcertain authority to the City Manager. Neither the Charter nor any of the resolutionsaddressingtheauthorityoftheCityManagerlimithisorherabilitytoinitiateanRFQ,nordothe applicable documents require Council initiation of an RFQ. Additionally, the CitysPurchasing Manual sets out a stepbystep process for the initiation of an RFQ. ThePurchasingManualdoesnotrequirethatanRFQforfinancialadvisorservicesoriginatewiththeCityCouncil.Ultimately,thecancelationoftheexistingcontractandtheexecutionofanewcontractwouldhave tobe approvedby theCityCouncil; however,nothing requiresCouncilapprovaltostarttheFARFQprocess.Ultimately, a Request for Qualifications for Professional Municipal Advisory Services(numbered2015896RandreferredtohereafterasFARFQ)wasissuedonApril28,2015,withadeadlineofMay20,2015.Fourresponseswereultimatelyreceived.Dr.Sutter,asamemberof theevaluationcommittee,acknowledgedthathebelievedthatFirst Southwest should have been penalized for failing to stand up and notify the CityCouncil regarding issuesrelated to theballpark financing.Healsoacknowledged thathiscommentslikelyswayedtheevaluationcommitteeagainstFirstSouthwest.(ItisimportanttonotethatDr.SutterhadnotyetseentheBradenReportthatanalyzedthecircumstancessurroundingtheballparkfinancing.)


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Dr. Sutter claims to havebeenunaware of the past relationship betweenRepresentativeRomeroandtheEstradaHinojosafirm.HestatedthathereceivednopressurefromeitherRepresentativeRomeroorCityManagerGonzalez to sway theoutcomeof theevaluationprocess,andhesaidthatneitherpersonexpressedapreferredvendortohim.ApplicablePracticesorPoliciesTheCitysPurchasingManualestablishestheapplicableprocurementprocesses,aswellasitsownethicalstandards.ThisevaluationnotesonlytherelevantareasofthePurchasingManual.

ThePurchasingManualsTimelineforProcessingrequiresthatanRFQallowaminimumoffourweeks(dependingonitscomplexity)tosubmitaresponse.

Section 14.0 of the Purchasing Manual requires that an RFQ for a type ofservicenotpreviouslyreviewedbythelegaldepartmentmustbereviewedbythelegaldepartmentpriortotheRFQbeingissued.

TheCityManager,throughhispublicremarks,andtheChiefFinancialOfficerbothmaintainthattherewasgeneraldiscontentamongtheCityCouncilwithregardtotheperformanceofFirstSouthwest.However,therewasnoformaldirectionfromtheCityCouncilexpressingsuchdiscontentorformaldirectiontoseekanewfinancialadvisor.Asnotedabove,attheJuly2014budgethearing.RepresentativeRomeroclearlyindicatesthatheisspeakingforhimself,andclearlyalludestoapreviousconversationwiththeCityManageraboutchangingfinancial advisors. However, as discussed below, Mr. Gonzalez maintains that the entireCouncilwasawarethatRepresentativeRomerosrequestwasoneofmanybudgetprioritiesbeingadvancedinresponsetodirectionfromindividualmembersofCouncil.TheevidencesuggeststhattheCityManagerwishedtoseeashortresponseperiodfortheFARFQ.InanemailtotheChiefFinancialOfficerdatedOctober16,2014,heindicatedhispreferenceforathreeweekwindowforbidderstorespond:

Idontknowthatweneedtogivepeopleagreatdealoftimetorespond.Iwouldthink3/4weeks.Morelikethreeweeks.Ithinkthosethatareinterestedwouldrespond.

ThisdirectivecontradictstheCitysPurchasingManual,whichrequiresaminimumoffourweeks to respond to anRFQ. As the Citys purchasing director noted in an interview, ashortenedresponsetimeforsuchacomplicatedmattersendsoneoftwopossiblemessagestobidders:(1)theCityhasalreadydecidedwithwhomitwantstocontract;or(2)theCitydoesnt understand the complexity of the services it is seeking. When the FA RFQwasreleased, it included a threeweek responsewindow, consistentwith the CityManagersemailtoDr.Sutter.However,theRFQwasultimatelyamendedtoaddanadditionalweeksresponsetime,bringingthewindowtorespondtofourweeks,theminimumcontemplatedbytheProcurementPolicy.


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Mr.GonzalezsResponsesMr.GonzalezsubmittedresponsestoalitanyofquestionsposedtohimregardingtheeventsleadinguptoandfollowingtheissuanceoftheFARFQ.(SeeExhibitB)WhenaskedwhetherhehadanycommunicationwithNoeHinojosaoranyoneaffiliatedwithEstrada Hinojosa regarding the issuance of the FA RFQ, Mr. Gonzalez denies talking toHinojosaoranyofhisaffiliatesaboutthematter.HealsodeniesknowingofthepreviousworkingrelationshipbetweenRepresentativeRomeroandEstradaHinojosa.When askedwhether hewas acting at the sole direction of Representative Romero,Mr.GonzalezpointsoutthattheentireCouncil(anddepartmentheads)weremadeawareofallmattersuponwhichhewasworking. Hepointsoutthat inAugustof2014,ChiefBudgetOfficerLynlyLeeperemailedtheMayorandCouncil(threeseparatetimes)alistofCouncilsbudgetrequests.Oneachofthoselists(notedasItem45eachtime)wasarequest,initiatedonJuly22,2014,byRepresentativeRomeroto[r]eviewagreementswiththeCitysfinancialadvisorandbondunderwriters.Dr.Suttersaidthathewillreviewthecontractsandprovidefeedbackregardingtiming/optionsfordoingRFQ,etc.(SeeExhibitC)WhenaskedabouthispreferencethattheFARFQincludeathreeweekresponsetime(whentheCitysPurchasingManualrequiresafourweekwindow),Mr.Gonzalezdisputesthathewasgivingadirective,andassertsthathewasmerelysharing[his]thoughts.Healsoclaimsnottohavebeenawareofthepolicyrequiringafourweekresponsetime.Hepointsoutthatthestaffdidnotcorrecthim,butthatultimatelythestaffallowedfourweeksforbidderstosubmitresponses.InterviewwithNoeHinojosaInaninterview,NoeHinojosaindicatedthatthelasttimeLarryRomeroworkedforhisfirmwasinMay2000.HinojosaalsostatedthatRepresentativeRomerocalledhimshortlyafterbeingelectedtoCityCouncil in2013,expressedhis frustrationwithFirstSouthwest,andsaidthathewishedforEstradaHinojosatobetheCitysfinancialadvisor.HinojosaclaimstohaveinsistedtoMr.RomerothattheCityissueacompetitivesolicitationforqualifications.Mr.HinojosadeniesanycontactwithCityofficialsregardingthecontents,timing,orissuanceof the RFQ. He claims to have learned about the issuance of the RFQ from one of hisemployees.WhenaskedabouttheresponsetimefortheRFQ,hestatedthat10businessdaysisreasonableinhisbusiness.HeclaimsthatthelasttimehespoketoLarryRomerowasinJuly2015toinquireaboutthestatusoftheproposalevaluation(althoughheacknowledgessendingMr.Romeroatextmessageafterlearningofhisstroke).Mr.HinojosastatedthatMr.Gonzalez never solicited any favor, nor did they discuss any details of the request forqualificationprocess.


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OptionforSecuringAdditionalEvidenceWhile emails between Mr. Gonzalez and Dr. Sutter have been produced, there is nocorrespondencebetweenMr.GonzalezandeitherRepresentativeRomeroorMr.Hinojosa.AninternalauditperformedoftheCityManagerscitycellphonerevealednocallsbetweenMr.GonzalezscityphoneandMr.HinojosafortheperiodofJune2014throughNovember2015,andnotextmessagesbetweenthetwofortheperiodofJune2015throughNovember2015. However, for theperiodof June2014 throughMay2015,City staffwasunable todetermine theexistenceof textmessages. TheCouncilmaywish toconsiderwhether tosecure the CityManagers cityownedmobile phone and attempt to have textmessagesrecovered. Additionally, the City Manager owns a personal cell phone, which may alsocontainrelevantcommunications.

STANDARDSOFCONDUCTAPPLICABLETOPUBLICSERVANTSForthepurposeofrelevantstatelaw,CityManagerTommyGonzalezisapublicservantandlocalgovernmentofficer.Statelawprovidesforconflictsofinterestsforlocalgovernmentofficers,1 disclosure of business relationships between local government officers andpotential vendors,2 personal financial disclosure for certain public officers,3 and theestablishmentofoffenseagainstpublicadministration.4Thesestatutesareallintendedtoprovidesufficientinformationforthepublictodetermineifapublicservantissusceptibletoservinginterestsotherthanthoseofthepeople.In attempting to address the issue of conflicting loyalties, state law adopts somewhatarbitrary formulae and timeframes in order to construct a reasonable framework foridentifyingconflictsorothersignificantrelationshipsbetweenregulatorsandtheregulatedcommunity. Conformancewithstatestatutemaynotnecessarilyensurecompliancewithlocal standards. Because the City of El Paso Ethics Commission is currently consideringcertainallegedconductinlightoflocallyadoptedstandards,thisanalysiswillfocusonstatelawstandards,somecitystandards,aswellascontractualstandardsofconducttowhichtheCityManagerhasobligatedhimself.Inordertoconductameaningfulanalysisofwhetheraconflictofinterestexistsorwhetherapublicservantshouldbeprecludedfromparticipationinsomematter,therequiredlegaldisclosuresmustbecompletedfullyandaccurately.Onlywithfullandaccuratedisclosureoffinances and relationships can the statutes set forth above have ameaningful impact ongovernmental ethics. Todate, this investigationhasnot extendedbeyond the analysis ofpubliclyavailabledocuments,otherthantoseekwrittenanswerstoquestionsposedtoMr.1Tex.LocalGovtCode171.2Tex.LocalGovtCode176.3Tex.GovtCode572andTex.Loc.GovtCode145.4Title8,Tex.PenalCode.


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Gonzalez,RepresentativeRomero,andNoeHinojosa.Todate,answerstothosequestionshavenotbeenreceived.ShouldtheCityCouncilwishtoinquireaboutincometaxorbankingdocuments,itmayseektocompelproductionofsuchdocuments.

TEXASSTATUTORYSTANDARDS

PersonalFinancialDisclosure(LocalGovernmentCode145&GovernmentCode572)Chapter 572 of the Government Code requires that state officers file annual, personalfinancial statements with the Texas Ethics Commission. The Ethics Commission haspromulgatedaformthatincorporatesallofthestatutorilyrequireddisclosures.Chapter145of the Local Government Code requires municipal officers includingmembers of thegoverningbodyandtheCityManagerofcitieswithapopulationexceeding100,000,tofileapersonalfinancialstatementusingtheformadoptedbytheEthicsCommission,pursuanttoGovernmentCode572.Asmunicipal officers, bothMr.Gonzalez andRepresentativeRomero are required to filepersonalfinancialstatementswiththeCity.However,becauseMr.GonzalezalsositsontheStateRiskManagementBoard,heisrequiredtofileapersonalfinancialstatementwiththeTexas Ethics Commission as well. Therefore, any deficiency in his filing could result inenforcement not only in El Paso, but could also be enforced by either the Texas EthicsCommission,theTravisCountyDistrictAttorney,orboth.Thestatuteclearlysetsouttherequiredcontentsofapersonalfinancialstatement.Amongthoserequiredcontentsareallsourcesofoccupationincome.5Forthecalendaryear2014,Mr.GonzalezliststheCityofElPasoashisonlysourceofoccupationalincome.(SeeExhibitD)However,inMr.Gonzalezsemploymentcontract,heclearlyreservestherighttoengageinpaid,outsideconsultingactivities.TheCityCouncilmaywishtoseekcopiesofrelevantrecordstaxforms,bankrecords,etc.inordertoconfirmthatMr.Gonzalezreceivednootheroccupationalincomeduringcalendaryear2014.Also among the required contents are the amounts of expenses accepted under thehonorariumexceptionfoundinPenalCode36.07.Generally,apublicservantisprohibitedfromacceptinganhonorariuminconsiderationforservicesthatthepublicservantwouldnothavebeenrequestedtoprovidebutforthepublicservantsofficialpositionorduties.The only expenses that may be excepted under the honorarium exception are meals,transportation,and lodgingexpenses inconnectionwithaconferenceorsimilarevent inwhichthepublicservantrendersservices,suchasaddressinganaudienceorengaginginaseminar,totheextentthatthoseservicesaremorethanmerelyperfunctory.6AcceptanceofanimpermissiblehonorariumisaClassAmisdemeanor.

5Tex.GovtCode572.023(b)(1).6Tex.PenalCode36.07(b).


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InhisswornpersonalfinancialstatementfiledwithboththeCityofElPasoandtheTexasEthicsCommission,Mr.Gonzalez reports the receipt of expensesunder the honorariumexceptionfromthreedifferentsourcesincalendaryear2014:

Expenses Reimbursed & SBDC Honorarium for the Quality TexasFoundation.

ExpensesReimbursedbytheStateofOfficeRiskManagement.

ExpensesReimbursed&HonorariumbytheCentralIntelligenceAgency.

Ineachinstance,Mr.Gonzalezfailstoreporttherequiredamountofthefundsaccepted.In an effort to determine the scope of the omitted value of honoraria received, counselundertooktoinspectfinancialrecordsofQualityTexasFoundation(theFoundation),ofwhichMr.Gonzalezisalsoaboardmember.AnanalysisoftheFoundationsfinancialrecordsrevealed:

The following payments to Tommy Gonzalez on March 20, 2014 (SeeExhibitE):

o $481.39paymentforInstructorTravelo $1,000paymentforInstructorFee

During2013,whileMr.GonzalezwasservingasaboardmemberofQuality

TexasFoundation,engineeringfirmFreese&NicholswasaBronzeLevelConferenceSponsoroftheFoundationsconference.(SeeExhibitF)Thisis noted only because multiple interviews with former and currentemployeessuggestedthatFreese&NicholswasapreferredvendorinMr.GonzalezseffortstooverhaultheCitysengineeringdepartment.

ThepaymentoftheinstructorfeeoccurredafterMr.GonzalezlefttheCityofIrvingbutbeforehejoinedtheCityofElPaso.Hewas,however,servingontheboardoftheStateOfficeofRiskManagementand,therefore,remainedapublicservant.Iftheinstructorfeewaspaid to Mr. Gonzalez by virtue of his status as a public servant, it may constitute animpermissiblehonorarium(sinceitispermissibletoacceptonlymeals,transportation,andlodging).If,however,itwasoccupationalincome,itshouldhavebeenreportedassuchonhispersonalfinancialstatementfiledwiththeStateandwiththeCityofElPaso.Mr.Gonzalezs2014personalfinancialstatementrevealednocommonbusinessinterests,gifts,orloanswitheitherLarryRomerooranypersonaffiliatedwithEstradaHinojosa.


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LocalGovernmentCode176(DisclosureofVendorRelationships)For vendors seeking to conduct business with a city, vendors must disclose certainrelationships that exist with city officials (and the city official is under a correspondingobligationtodisclosecertainrelationshipswithvendors).Thoughthelawhasbeenrecentlyupdatedtoexpandthetypesofrelationshipsthatmustbedisclosed,atthetimeofthe2015financialadvisorRequestofQualifications,Chapter176requireddisclosureofthefollowingrelationshipsortransactions:

Anemploymentofbusinessrelationshipwithalocalgovernmentofficer(orthe officers familymember) that results in the officer (or familymember)receivingtaxableincomethatexceeds$2,500duringthepreceding12monthperiod;or

Thevendorhasgiventhelocalgovernmentofficer(orafamilymember)oneormoregiftsthathaveanaggregatevalueofmorethan$250inthepreceding12monthperiod.

InitsresponsetothefinancialadvisorRFQ,EstradaHinojosasubmittedaConflictofInterestQuestionnaire, signed by Noe Hinojosa, which indicated that none of the triggeringrelationships or transactions existed. This comports with the sworn personal financialstatements which requires the disclosure of occupational income, gifts, and businessholdingsfiledbyMr.GonzalezandRepresentativeRomero.LocalGovernmentCode171(ConflictsofInterestforMunicipalOfficers)The Local Government Code establishes a formula for determiningwhether amunicipalofficerhasaconflictofinterestinamattercomingbeforetheCity. Thestatuteappliesinsituationswhereamunicipalofficerhassubstantialinterestinabusinessentityorpieceofrealproperty.Ifamunicipalofficerhasasubstantialinterestinabusinessentityhemust,before a vote or decision on any matter involving the business entity, file an affidavitdisclosingtheinterestandthenrefrainfromparticipationinthematter.Forthepurposesofthestatute,asubstantialinterestinabusinessentitymeans:

Thatthepersonowns10percentormoreofthevotingstockorsharesofthebusinessentityorownseither10percentormoreor$15,000ormoreofthefairmarketvalueofthebusinessentity;or

Fundsreceivedbythepersonfromthebusinessentityexceed10percentofthepersonsgrossincomeforthepreviousyear.

Therefore,ifeitherMr.GonzalezorRepresentativeRomerohadreceivedsubstantialincomefromEstradaHinojosaforthepreviousyear,thentheywouldhavetodisclosethatfactandabstain fromparticipating in the selectionof a financial advisor. However,basedon thesworn personal financial statement filed by each (which requires the disclosure of


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occupationalincome,gifts,andbusinessholdings),thereisnoevidencetosuggestthateitherhadastatutoryconflictofinterestwhenitcametothedecisiontoissuetheRFQortomovetheprocurementprocessforward.

CONTRACTUALSTANDARDSOFCONDUCT

Inhis employmentagreementwith theCityofElPaso,Mr.Gonzalezobligateshimself tofollowallApplicableLawsandAuthorities.Thattermincludesallstateandfederallaws,City charter,Cityethicsordinance, andallCity resolutions,policies, rules, regulations,orordinances.InSection2.7oftheCityManagerEmploymentAgreementauthorizestheCityManagertoengageinoutsideconsultantactivitiesbutexpresslyrequiresthattheConsultingServicesprovidedbytheManagerunderthetermsofthisparagraphmustbeconsistentwithstateandfederallaw.Section 6.2 of the City Manager Employment Agreement provides that good cause fortermination of the Agreement includes the failure to comply with Applicable Laws andAuthorities.AnyallegedcontractualviolationshouldbemadewiththeadviceandinputoftheCityAttorneysofficetomitigateanyclaimsthatMr.GonzalezmayassertagainsttheCity.

PRELIMINARYCONCLUSIONSThese conclusionsarepreliminary to theextent that theyarebasedon the inspectionofpubliclyavailabledocumentsandthatnoefforthasbeenyetmadetocompeltheproductionofprivatephonerecords,privatebankstatements,orthelike.1. Absenttheshowingoftheofferorsolicitationofaprohibitedbenefit,theissuance

oftheFARFQdoesnotappeartoviolateanyTexasstatute.

2. TheinitiationoftheFARFQdoesnotappeartoviolateanyoftheCityCouncilsdelegationofauthoritytotheCityManager.

3. ThedirectiontotheCitysChiefFinancialOfficertoutilizeathreeweekresponse

timefortheFARFQmayconstituteaviolationoftheCitysprocurementpolicy(thoughMr.Gonzalezdisputesthatitwasadirective).

4. IfitwereultimatelyproventhatMr.Gonzalezfailedtoproperlydisclosesources

ofoccupationalincomeonhispersonalfinancialstatement,orthatheacceptedanimpermissiblehonorarium,itmayconstituteaviolationofstatelaw.


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RECOMMENDATION

GiventheperceivedshortcomingsinMr.Gonzalezsfinancialdisclosures,itisrecommendedthat CityCouncil askMr. Gonzalez to providedocumentation fromall outside consultingactivitiesthathehasengagedinsincebecomingElPasosCityManager.Thisshouldincludetravelrelateddocuments, receipts, reimbursementsreceived,honorariareceived,andtaxformsreceivedfromanyentityotherthantheCityofElPaso.Thisinformationisnecessarytodetermine(1)whetherMr.GonzalezsCityandStatefinancialdisclosuresareaccurate,and(2)whetherhisoutsideconsultingservicesareconsistentwithhiscontractoriftheyconflictwithhisdutiestotheCityofElPaso.


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CONDUCTIN2013PRECIPITATINGDELAYINBONDISSUANCE


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BACKGROUND

WithinthescopeofworkestablishedbytheCityCouncilwastoreviewactionsofallCityOfficersandpersonnelregardingtheactionswhichleduptothesolicitationofafinancialadvisorfortheCityofElPasotodetermineiftherehasbeenaviolationofCityordinances,policies,regulations,andprocedures,commencingwithactionstakenin2013.Theoftcitedjustificationforseekinganewfinancialadvisorin2014wasageneralizeddiscontentwiththefinancingoftheballparkproject,specificallyadelayintheissuanceofthebonds.Infact,currentCityManager,TommyGonzalez,hasstatedthatatthecruxofhisconcernsabouttheperformanceofFirstSouthwestwasthefinancialadviceasitrelatestothetimingofthesaleofthebonds.7Thatdelaywasaddressedintheanalysisofbondcounsel,PaulBraden(theBradenReport).ThisanalysisisnotintendedtoretreadtheBradenReport,especially its chronology of and issues related to the ballpark financing. The BradenReport, however, brought to light the fact that the issuance of bonds by the El PasoDowntown Development Corporation, a local government corporation (hereinafter theLGC),wasinfluencedbypoliticalconsiderations.Thisanalysisfocusesonthedelayofthebondissuanceandwhethersuchadelay,whenpredicatedonpoliticalmotives,violatesanyapplicablestandardsofcare(andtotheextentthatastandardofcarewasviolated,whatremediesexisttoaddresssuchmisconduct).

RELEVANTCHRONOLOGYTheBradenReportaccuratelysetsforththerelevantchronologyoftheissuanceofbondsbytheLGC. Thepublicreleaseof theBradenReportraisedanother, todateuninvestigated,issue:thepoliticalmotivationthatappearstobethetruecausefordelayingtheissuanceofthebondsfortheballparkproject.

ThisinvestigationhasconfirmedthatthetransactiondocumentsfortheLGCtoproceedwithbond issuance including theTrustAgreement,MasterLeaseAgreement, andordinanceapprovingthemaster leaseandconsentingtothe issuanceofthebondswerereadyforconsiderationby theLGCand theCityCouncilwithindaysof theMarch28thdeadline toappeal the bond validation suit. Thesedocumentsweremade available to City andLGCofficers,whocontemplatedauthorizingthebondsoneitherApril23rdorApril30th.Inorderto comply with local publication requirements, it was decided that the transactiondocumentswouldbeconsideredatmeetingsoftheCityCouncilandtheLGCBoardonApril30,2013.Infact,noticewaspublishedintheElPasoTimesonApril25,2013,notifyingthepublic that the bond issuance would be authorized on April 30, 2013 (see Exhibit G).However,adecisionwasmadenot toauthorize issuanceof thebondsonApril30,2013.Consequently,noLGCmeetingwaspostedforApril30th,andnoitemregardingtheissuanceofbondswasincludedontheCityCouncilsApril30thagenda.

Inanemailpublishedasanexhibit to theBradenReport, (seeExhibitH) thenExecutiveDirector, JoyceWilson, explained that, although the two entitieswere ready to proceed,7EmailsContradictCityManagersStanceElPasoTimes,December8,2015.


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[s]everalcouncilmembersraisedconcernsaboutthetimingofthisactivityinrelationtotheupcominggeneralelection,specificallybecauseoftheongoingcontroversyoverthisproject.Wilsonsaysthatshe,then,relayedthisrequesttothethenmayorandmayorprotem,anindicationthattherequestdidnotoriginatefromeitherofthoseindividuals.

ORIGINSOFTHEREQUESTTODELAY

Priortothisreport,Ms.Wilsonhadnotpubliclyidentifiedthe[s]everalcouncilmemberstowhomshereferredinheremailincludedwithintheBradenReport.InaninterviewonFebruary3,2016,Ms.Wilsonexpressedheropinionthatnobodydidanythingwrongwithrespect to delaying the bond issuance.However,whenpressed to disclose those councilmembersreferredtoinheremail,shedeclined.Sheindicatedthatshewouldspeaktoherattorneybeforedecidingwhethertonametheindividualswhodirectedthedelayofthebondissuance.Ms.WilsonsattorneymadecontactwiththereportsauthoronFebruary5,2016.Subsequently,Ms.WilsonslegalcounselindicatedthatshewasadvisingMs.Wilsonnottocooperatewiththisinvestigationanyfurther.Ms.Wilsonwasasked,throughhercounsel,toprovideasigned,writtenstatementidentifyingthecouncilmembersatwhosedirectionshewasacting.Throughherlegalcounsel,Ms.Wilsonhasdeclinedtoprovidesuchastatement.

THELOCALGOVERNMENTCORPORATIONASADISTINCTLEGALENTITY

ItisclearfromstatestatuteandfromtheLGCsoriginatingdocumentsthatitisadistinctentityfromtheCity.While it isconsideredtobeaninstrumentalityoftheCity, it isnotaseparatepoliticalsubdivision.TheresolutioncreatingtheLGCreadsinrelevantpart:

[T]heCorporationisnotintendedtobeandshallnotbeapoliticalsubdivisionorapoliticalcorporationwithinthemeaningoftheConstitutionandthegenerallawsoftheState,includingwithoutlimitationArticleIII,Section52oftheStateConstitution, and the City does not delegate to the Corporation any of itsattributes of sovereignty, including the power to tax, the power of eminentdomain,oritspolicepower.8

ThisisreiteratedinArticleVIoftheLGCsArticlesofIncorporation,whichreads:

[T]heCorporationisnotintendedtobeandshallnotbeapoliticalsubdivisionorapoliticalcorporationwithinthemeaningoftheConstitutionandthegenerallawsoftheState,includingwithoutlimitationArticleIII,Section52oftheStateConstitution,andnoagreements,bonds,debtsorobligationsoftheCorporationareorevershallbedeemedtobeagreements,bonds,debtsorobligations,orthelendingofcredit,oragrantofpublicmoneyorotherthingofvalue,oforbytheCity, except as provided by State law, or any other political corporation,

8ResolutionadoptedbyElPasoCityCouncilonDecember18,2012.


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subdivision,oragencyoftheState,orapledgeofthefaithandcreditofanyofthem.(SeeExhibitI)

Further,whileChapter394of theLocalGovernmentCode allows elected city officials toserveascorporatedirectors,itdoesnotrequiredualservice.NeitherGovernmentCode394norTransportationCode431requirecityofficialstoserveindualcapacities,andtheCityCouncil could have named other residents of El Paso to serve as directors of the LocalGovernmentCorporation.ThisisworthnotingbecauseitunderscoresthattheLGCdirectorsandofficersareactinginacapacityindependentfromtheirelectedorappointedstatuswiththeCity. In fact, theTransportationCodeprovides thatadirectorof a local governmentcorporationisnotapublicofficialbyvirtueofhisorherboardservice.9It isessential tonote that theLGCsbylawscreatedofficers for theLGC,naming theCityManagerastheLGCsExecutiveDirector,theCitysChiefFinancialOfficerastheCorporateTreasurer,andtheCitySecretaryastheLGCsSecretary.Subsequently,viaBoardresolution,theCitysDeputyCityManager forDevelopmentandTourismand theCitysComptrollerwere appointed as the LGCs Deputy Executive Director and Assistant Treasurer,respectively.Withthecreationoftheseofficers,eachindividualtookonthelegalobligationsofacorporateofficer.

APPLICABILITYOFCORPORATESTANDARDSOFCARE

TransportationCode431.101(c).Inauthorizinglocalgovernmentcorporations,theTransportationCodeexpresslyprovidesthat[t]heprovisionsoftheTexasNonProfitCorporationActrelatingtopowers,standardsof conduct, and interests in contracts apply to the directors and officers of the localgovernmentcorporation.Therefore,theLGCsdirectorsaswellasthoseCityemployeeswhom they named as LGC officers are subject to the standards of conduct generallyapplicabletodirectorsandofficersofnonprofitcorporations. Thosedutiesarediscussedimmediatelybelow.

STATUTORYLIABILITYFORCORPORATEDIRECTORSANDOFFICERSTexasNonProfitCorporationAct.Chapter22oftheTexasBusinessandOrganizationsCodeaddressesnonprofitcorporationssuchastheLGC.Thatlawrequiresthatadirectorshalldischargethedirectorsdutiesingoodfaith,withordinarycare,andinamannerthedirectorreasonablybelievestobeinthebestinterestofthecorporation.10Adirectorisnotliabletothecorporationforanactiontaken or not taken as a director if the director acts in compliance with the articulated9Tex.Trans.Code431.101(f)(1).10Tex.Bus.Org.Code22.221(a).


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standard.11Apersonseekingtoestablishliabilityofadirectormustprovethatthedirectordid not act in good faith, with ordinary care, and in a manner the director reasonablybelievedtobeinthebestinterestofthecorporation.12Withregardtocorporateofficers,theanalysisissimilartothatofadirector.Anofficerisnotliabletothecorporationoranyotherpersonforanactiontakenoranomissionmadebytheofficerinthepersonscapacityasanofficerunlesstheofficersconductwasnotexercisedingoodfaith,withordinarycare,andinamannertheofficerreasonablybelievestobeinthebestinterestofthecorporation.13

COMMONLAWDUTIESOFCORPORATEDIRECTORSANDOFFICERS

The development of the common law has resulted in various standards of conduct fordirectorsandofficersofcorporations,includingnonprofitcorporations.Thosestandardshavecometobeknownasthedutiesofobedience,care,andloyalty.Thisanalysiswilltouchonthedutiesofcareandloyalty.Thedutyofcarerequiresadirectororofficertobediligentandprudentinmanagingthecorporations affairs. Directors and officers must, as fiduciaries, exercise unbiased andhonestbusinessjudgmentinpursuitofcorporateinterests. Directors,orthoseactingasdirectors,oweafiduciarydutytothecorporationintheirdirectorialactions,andthisdutyincludes the dedication of uncorrupted business judgment for the sole benefit of thecorporation.14Thedefensethathasbecomeknownasthebusinessjudgmentruleprotectsa corporate director or officer who acts in good faith andwithout corruptmotive fromliability.However,thebusinessjudgmentrulewillnotprotectfromliabilityonewhoactsinbad faith orwith corruptmotive, norwill it protect fraudulent orultra vires conduct. Acorporatedirectororofficerisnotprotectedfromliabilitywhenthatpersonhasbreachedthe duty of care in a manner that amounts to gross negligence or an abdication ofresponsibilitiesresultinginafailuretoexerciseanyjudgment.15Anothercommonlawstandardapplicabletocorporatedirectorsandofficersisthedutyofloyalty.Thedutyofloyaltydemandsthattherebenoconflictbetweendutyandselfinterest.Violationsofthedutyofloyaltyoftenariseinsituationswhereacorporatedirectorengagesinselfdealingortheusurpationofcorporateopportunity.However,anytimethatanofficerordirectorplaces the interestsofanotherover the interestsof thecorporation,onemay11Tex.Bus.Org.Code22.221(b).12Section22.228providesadefenseforadirectorthat,actingwithordinarycareandingoodfaith,reliesuponthewrittenadviceoflegalcounselforthecorporation.However,neithertheLGCsofficersnordirectorssoughttheadviceofbondcounselwhendecidingtodelayissuanceofthebonds.13Tex.Bus.Org.Code22.235.14Ritchiev.Rupe,443S.W.3dat868,citingIntlBankersLifev.Holloway,368S.W.2d567,577(Tex.1963).15Millerpaper


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allegeaviolation.Adecisionbyacorporateofficerordirectortodelaytheissuanceofbondsinordertobenefitacorporatedirectorspoliticalfortunesmayprovideareasonablebasisforassertingthatthedutyofloyaltyhasbeencompromised.STANDARDSPOTENTIALLYVIOLATEDBYDECISIONTODELAYBONDISSUANCEAND

AVAILABLEREMEDIES

StatutoryFiduciaryDuties.As noted above, the Texas NonProfit Corporation Act requires that a director shalldischarge the directors dutiesin good faith, with ordinary care, and in a manner thedirectorreasonablybelievestobeinthebestinterestofthecorporation.16Failuretoadheretothisstandardcouldsubjectadirectororofficertoacivillawsuit,providedthatthelitigantcanassertaharmcausedbytheallegedbreach.

AlthoughtheLGChasnomembersorstockholders,anofficerordirectorwhoviolateshisorherdutytothecorporationmaybeheldaccountablebythecorporationitself.TheLGCboardcouldconceivablybringsuitagainstofficersordirectorswhohavebreachedtheirfiduciaryobligation to the entity. Such a remedy is virtually untested in the context of a localgovernmentcorporation,especiallywherethecorporatedirectorsarealsopublicofficials.Totheauthorsknowledge,nocourthasaddressedtheissueofwhethermunicipalofficersretainanyclaimtogovernmentalimmunitywhenservinginarelated,butdistinct,corporatecapacity.

CommonLawDutiesofCareandLoyalty.BecausetheLGChasnomembersorshareholders,asuitallegingaviolationofthedutyofcareorthedutyofloyaltywouldhavetobebroughtbytheLGCitself.TheLGCsBoard,thecompositionofwhichhaschangedsignificantlysincethebondswereinitiallyissued,couldvotetopursuecivillegalactionagainstaformerorcurrentofficer/directorthatissuspectedofbreachinghisorherduty. Asnotedearlier, theBoarddidnotsecure insurance for itsofficers; regardless, the LGCs indemnification provisions do not apply to conductundertakeninbadfaith.AlawsuitofthistypemayprovetobeoneoffirstimpressioninTexasjurisprudence.Therearemanylegal issuestobenavigated,especially in lightofthefactthatthedirectorsandofficerswerealsomunicipalofficials.OnewouldexpectthedefendantsinsuchacasetotrytocloakthemselvesintheimmunityaffordedtoCityofficers;however,forthereasonssetforthabove,theTransportationCodeappearstoimposetraditionalcorporatestandardsofcareonLGCofficersanddirectors.Additionally,thereisnothingineithertheTransportationCode431orLocalGovernmentCode394thatbestowssovereign immunityonmunicipalofficialsservingonaseparatecorporateentity.Further,actions taken inbad faithwouldundermineanyclaimsofofficialimmunityassertedbydefendants.Thereappearstobeno16Tex.Bus.Org.Code22.221(a).


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caselawopiningontheliabilityfacedbymunicipalofficersservinginafiduciarycapacityontheboardofa localgovernmentcorporation.However,arecent federalcase fromthe5thCircuitconcludedthat,whileaschooldistrictwouldnotbeaproperdefendantinacivilRICOlawsuit,individualformerboardtrusteeswereproperdefendantsinsuchacivilaction.17TexasOpenMeetingsAct.Ms.Wilsonsemail suggests that severalcouncilmembersexpressedconcernabout thetimingofthebondauthorization.TheLGCismadesubjecttotheTexasOpenMeetingsActbytheTransportationCode,theLocalGovernmentCode,andtheLGCsownincorporationdocuments.Totheextentthatdirectorsengagedindiscussionsregardingthedelayofbondissuance or if an officer polled a majority of the board regarding that issue thoseindividualsinvolvedcouldbeallegedtohaveconspiredtoviolatetheAct.FiduciaryDutyEstablishedbyCitysEthicsOrdinance.The LGCs Bylaws expressly make its officers and directors subject to the Citys ethicsordinance.TheCitysethicsordinance,initsfirstsentence,imposesafiduciaryobligationonitsofficersandemployees:

Allcityofficersandemployeeshaveafiduciarydutytothecitizensofthecitytobe ethical in fulfilling the responsibilitiesof theirpositions.At the very least,beingethicalincludesbeingdisposedtocomplywithalllawsthatapplytoonesposition.18

Clearly,theLGCofficersanddirectorshaveafiduciaryobligationtotheLGCitself.Normally,thisfiduciaryobligationwouldbelimitedtotheLGC,sincethebondedindebtednessisnotattributedtotheCityitself. Hadthepaymentofdebtbeenlimitedtopaymentfromhoteloccupancytaxes,theresidentsofElPasomaynothavefacedanyfinancialharm.However,thestructureof theballpark financing involvesanappropriationofCitygeneral funds. Inordertomakethefinancingfeasible,theCityobligateditselftoappropriatepublicfundstocoveranyshortfallinhoteloccupancytaxes.Thedelayofbondissuanceresultedinmillionsof dollars more in debt service. Although quantifying harm to taxpayers may provechallenging, a resident could still assert that, by delaying the bond issuance for politicalreasons,theculpableofficersordirectorsbreachedtheirfiduciarydutytothecitizensofElPaso.InadditiontothedecisiontodelaybondissuancebytheLGC,therewasaseparatedecisionmadetoremovetherelatedCityresolutionfromtheCityCouncilsApril30,2013,agenda.Thiswouldbeadecisionmadebyindividualsactingintheirpublicasopposedtocorporatecapacities. AnyofficialswhowereinvolvedinthedecisiontodelayCityapprovalofthe17TheGilRamirezGroup,L.L.C.v.HoustonIndependentSchoolDistrict,CaseNo.1320753(5thCir.May18,2015).18ElPasoCodeofOrdinances,Section2.92.101(A).


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bonddocumentsandwhoarestillinofficecouldbesubjectedtoasworncomplaintwiththelocalEthicsCommissionallegingaviolationofhisorherfiduciaryduty.

AUTHORITYOFTEXASATTORNEYGENERALRE:CORPORATIONS

TheTexasBusinessOrganizationCodeauthorizestheTexasAttorneyGeneraltoinvestigatethe organization, conduct, andmanagement of a filing entity or foreign filing entity anddetermine if the entity has been or is engaged in acts or conduct in violation of: (1) itsgoverning documents; or (2) any law of this state.19 Additionally, the same statuteauthorizestheAttorneyGeneraltoinspect,examine,andmakecopiesofcorporaterecordstotheextentthattheAttorneyGeneralconsidersitnecessaryintheperformanceofapoweror duty of the Attorney General.20 A record of the entity includesminutes and a book,account, letter, memorandum, document, check, voucher, telegram, constitution, andbylaw.21Therefore,theAttorneyGeneralisvestedwiththeauthoritytoinspectdocumentsandinvestigatelegalviolationscommittedbydirectorsorofficersoftheLGC.Additionally,theAttorneyGeneralisstatutorilyempoweredtomaintainacorporateintegrityunit,whichisauthorizedtoassistintheenforcementoflawrelatingtocorporatefraudorothersimilarlegalactivities.22Additionally, the Texas Property Code empowers the Texas Attorney General to initiateproceedingsallegingabreachoffiduciarydutybycertainnonprofitentitiesoranentitysfiduciaryormanagerialagent.23

LEGALOPTIONSShould the City Council wish to pursue this matter further, the following options areavailable:1. TheCityCouncilmayseektocompelMs.WilsontoidentifythoseLGCdirectorsatwhose

directionsheacted.ThismaybedoneviatheCouncilssubpoenaducestecumauthority;alternately,theLGCBoardmayconveneandauthorizeapresuitdepositionofMs.Wilsonoranotherofficer/directortodeterminewhethergroundsexistforasubsequentlawsuit.

2. The City Council may refer the matter to the Attorney Generals office who hasjurisdictionovercorporationsgenerally,nonprofitcorporationsspecifically,andbondissuancesforfurtherinvestigation.

RegardlessofwhethertheCityCouncilpursuesanyoftheaboveoptions,seriousthoughtshouldbegiventocontinuingtoserveindualmunicipalandcorporatecapacities. IfCity19Tex.Bus.Org.Code12.153.20Tex.Bus.Org.Code12.151.21Id.22Tex.GovtCode402.0231.23Tex.Prop.Code,Chap.123.


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officialsareinclinedtocontinueservingindualcapacities,itisrecommendedthattheLGCdirectors:(1)securetraininginthestandardsofconductfacingcorporateofficers;(2)useLGCfundstopurchaseinsuranceforLGCdirectorsandofficers;or(3)both.


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OPENRECORDSANALYSIS


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BACKGROUND

AmongthescopeofworkauthorizedbytheCityCouncilwastoreviewtheCityofElPasoprocesses and procedures regarding responses to open records requests to verifycompliancewiththeTexasPublicInformationAct.The Citys current process for handling public information act requests has recentlyundergonereviewandmodificationinconjunctionwiththeleansixsigmaprogram.Thisreportsauthorhasreviewedupdatedprocessmapsandpresentationsoutliningchangestothe process. Of the resulting recommendations, the inclusion of the City Attorneysdepartmentearlierintheprocessislikelythemostsignificant.Tworecent incidents seem tohavegeneratedconcernamong theCouncilwith regard tocompliancewiththeTexasPublicInformationAct.ThefirstinvolvesthefailureoftheCityto timely produce emails of Chief Financial Officer Mark Sutter. The second involvesallegationsthatwereraisedduringthecourseoftheinvestigationthatstaffwithintheCityManagers officewere deeming responsive documents as nonresponsive because theirreleasewouldcontradictpublicstatementsmadebyCitymanagement.Thefirstincident,involvesarequestfromtheElPasoTimessubmittedonNovember9,2015.In responding, the City failed to provide responsive emails to and from the Citys ChiefFinancialOfficer,MarkSutter.ItwasdeterminedthatDr.SutterhaddirectedtheCitysITstafftosearchsubfoldersandfilesonhislaptopsharddrive.TheITstaffagreedtoconductthesearchasdirected,butthenfailedtoactuallydoso.Whenthemistakewasraised,thesearchwas conductedproperly and the resulting documents released. ThemistakewasdescribedasahumanerrorbytheCityAttorneyandthereisnoevidencetoindicatethatwasanintentionalomission.ThesecondincidentalsoinvolvesdocumentsallegedlyresponsivetoapublicinformationrequestfromtheElPasoTimes.ThefollowingrequestwasreceivedbytheCityonSeptember15,2015:

TheperiodcoveredbythisrequestisJan.1,2014,toAug.31,2015.I am requesting any listing, documents, spreadsheets, etc., of proposed orcompleted projects submitted by individual city council members forconsiderationbycitystaff.Ialsoamseekinganydocumentationthatdetailsthestatusoftheserequests.Myrequestisreferringtoproposed,completedorprogrammedprojects.Iamrequestinginformationonprojectsthatareproposed,approvedoradoptedthatweresubmittedbyindividualcitycouncilmembersforconsideration.Iamseekingallemails,textsorcommunicationstoorfromtheleadershipoftheCID(FredLopez,MonicaLombrana),aswellasCityManagerTommyGonzalez,regardingprojectsproposedbyindividualcitycouncilmembers.


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Inresponsetotherequest,thelegaldepartmentdistributedtherequesttotheappropriatedepartments.Theresponsivedocumentswerecompiledby theCityManagersofficeanddeliveredtotheCityAttorneysofficeforlegalreview.Ultimately,399pagesofresponsiveinformationwerereleasedtotheRequestor.Atissueiswhethertwoparticulardocumentswereresponsiveand,ifso,whethertheywereintentionallywithheldbytheofficeoftheCityManager. The documents were among those provided by Fred Lopez of the CapitalImprovement Department to Martin Bartlett in the City Managers office. Mr. Bartlettdelivered the documents to Public Information Officer Juliet Lozano. However, the twodocumentsatissuedidnotmaketheirwaytotheCityAttorneysofficeor,ultimately,totheRequestor.Theconcernisthatthedocuments(attachedasExhibitsJ&K)were(1)responsive,and(2)withheldbecausetheydidnotcomportwiththeCityManagerspublicstatementsthathegaveonlygeneraldirectionwithregardtostreetresurfacingpriorities.OnedocumentisentitledCapitalImprovementProgramPriorityProjectsByDistrict.24Thedocumentcontainsachartforeachcitydistrict.ThechartentitledDistrict2ResurfacingPlan includesachronologyofevents in theprocess,aswellaswhethereachstep in theprocessiscompletedorpending.Theprocessisshownas:

CityManagerReview CityRepresentativeReview EPDOT:CreateprioritizationplanforDistrict2streets CIPPlanning:ReviewprioritizationplanforDistrict2streets EPDOTtoreprioritizeplanbasedoninputfromRep.Romero Construction:EPDOTtocreateschedule

Theconcernappearstobethat,becausetherelevantportionofthedocumentshowsthefirststep in the process as City Manager Review that its release would contradict publicstatementsthattheCityManagergaveonlygeneraldirection.Regardlessofthemotive,adeterminationwasapparentlymadebytheCityManagersstaffthatthedocumentwasnotresponsiveandwas,therefore,notproducedinresponsetotherequest.Thedocumentitselfcertainlyappearstobealisting,document,orspreadsheetofproposedorcompletedprojectssubmittedbyindividualCityCouncilmembers,anddetailsthestatusofthoserequests.Similarly,itincludesinformationonprojectsthatwereproposedandapprovedbyindividualCityCouncilmembersforconsideration.Whilethedocumentdoesnot identify council representatives by name, it does organize the project by eachrepresentatives district, and includes projects that were requested by individualrepresentatives.Forexample,thedocumentlistsasaprojecttheremovaloftheTimberwolf24Thesedocumentswerecontinuallyupdatedbystaff.TheattachedExhibitJisdatedMay4,2015;thedocumentprovidedtoMs.LozanohadthesametitlebutwasdatedApril12,2015.ItisincludedwithinExhibitM.


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RoundaboutinDistrictTwo.Thisprojectwasconductedinresponsetoarequestsubmittedby an individual council member. Further, the document at issue was identified asresponsivebythedepartmentcompilingresponsivedocuments.TheseconddocumentisaCapitalImprovementPlanStatusUpdatedatedAugust14,2015.Its purposewas to track start dates and end dates for design and construction of streetprojectsbydistrict. This reflectsa revised format, requestedby theCityManager in thesummer of 2015, so that he could begin utilizing the spreadsheet inmeetingswith Cityrepresentatives and to track funding and other information by district. Like the otherdocument,itappearstofallwithinthescopeofdocumentssoughtbytherequestinthatitdetailsthestatusofprojectssubmittedbyindividualcouncilmembers(i.e.,theremovaloftheTimberwolfRoundaboutinDistrictTwo).Further,itwasidentifiedasresponsivebythedepartmenttaskedwithidentifyingresponsivedocuments.Aspartofthisinvestigation,Ms.Lozanowasmadeawareofthisissue,providedwithcopiesofthetwodocumentsatissue,andwasaskedtoansweralistofquestions.(SeeExhibitL)In response to the questions, Ms. Lozano acknowledged that she andMonica Lombrana(InterimDirectorof theCapital ImprovementsDepartment)madethedeterminationthatthedocumentswerenotresponsivetotheRequest.(SeeExhibitM)Asjustificationforherdecision, Ms. Lozano asserts that the documents do not reflect projects submitted byindividualcouncilmembers.Sheclaimsthattheprojectslistedinthesedocumentsrelateto the Capital Improvement Plan none of these projectswere submitted by individualcouncilmembers. Instead theywere added to the Plan through the extensive processesoutlinedabove.Herconclusionisquestionable.Ascitedabove,oneobviousprojectthatwassubmittedbyanindividualcouncilmemberasopposedtogoingthroughthestandardprocedurewastheremovaloftheTimberwolfRoundaboutrequestedbyRepresentativeRomero. Thisproject doesnot appear tohave gone through thenormalprocess for theapproval of a CIP project, butwas a removal of an approved improvementmade at therequestofonecouncilmember.

CONCLUSIONItdoesnotappearthattheseincidentsarereflectiveofsystemicproblemswiththeCitysmethodofhandling requests forpublic information. The first instance appears tobe aninadvertent mistake, which was identified and remedied. The second instance is moreproblematic in that thePublic InformationOfficermadethedeterminationas towhethercertain documentswere responsive, disregarding the initial evaluation of the applicabledepartmentandfailingtoprovidetheCityAttorneysofficewiththeopportunitytoofferanindependent analysis. No process can perfectly safeguard against individual efforts toundermine it. This is recognized by the Public Information Act itself, which provides acriminalpenalty25foranindividualthatimproperlywithholdsinformation:25Amisdemeanorpunishablebyafinenottoexceed$1,000,sixmonthsconfinement,orbothfineandconfinement.


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Anofficer forpublic information,or theofficersagent,commitsanoffense if,withcriminalnegligence,theofficerortheofficersagentfailsorrefusestogiveaccessto,ortopermitorprovidecopyingof,publicinformationtoarequestorasprovidedbythischapter.26

Consequently, the Citys Public Information Officer and that persons agents shouldexercise cautionwhen determiningwhat is considered responsive information. The bestapproachistoprovideanydocumentationthatisreasonablyconsideredresponsivetotheCityAttorneysofficeforalegalanalysisanddetermination.

RECOMMENDATIONConsiderestablishingarequirementthatalldocumentsinitiallycompiledinresponsetoarequestbeprovidedtotheCityAttorneysofficeforlegalreview,andprohibitingthePublicInformation Officer or her designees from making a determination as to theresponsivenessofadocument.

26Tex.GovtCode552.353(a).

Exhibit A

a. Did you have any communication (conversations, emails, text messages, telephone calls,etc.) with anyone on city council, including but not limited to Representative Romero,pertaining to issuing an RFQ for a new financial advisor (the FA-RFQ) before or afterthe July 22, 2014 budget hearing? If so, please describe in detail those communications.

Since my arrival in El Paso, at individual meetings with council members, I did hear aconsistent message that the Council members were not pleased with the advice fromthe financial advisor. They conveyed concern regarding how the bond sale washandled and were displeased with the advice they were receiving internally from staff.

I heard from the following Council members:-Representative Lily-Representative Romero-Representative Acosta-Representative Robinson-Representative Noe-Representative Holguin-Representative Limon-Representative Niland

I did inform First Southwest and they asked for permission to meet with council. Theyproceeded to meet with the City Council

Still after those meetings I was told by Representative Niland Yes bring that back allday long so we can vote on it.

b. Did you have any communication (conversations, emails, text messages, telephone calls,etc.) with anyone on your senior staff, to discuss issuing an FA-RFQ before or after theJuly 2014 budget hearing? If so, please describe in detail those communications I did ask for updates via email from Dr. Mark Sutter, our Chief Financial Officer I also made a comment about the length of the RFQ

(Please see exhibit 1)

c. What gave you the impression that either you or Representative Romero had theconcurrence by majority of council (as opposed to solely Rep. Romero) to issue the FA-RFQ? Did you re-listen to that portion of the city council meeting where proposed issuinga FA-RFQ to determine whether his remarks were generally approved by City Council?

d. Was it your impression and/or belief that you could/can proceed to issue a request forqualifications at the request of a single representative? The information below is the response for questions (c,d) The very first task I had to tackle when I arrived in June 2014 was to address the

budget that needed to be filed by June 30, 2014. The City was faced with a $7.9M deficit at the time The July 22, 2014 meeting where Representative Romero requests from staff to

look at putting out an RFQ for a new financial advisor is a 2014 Budget Meeting( meetings are available on Citys homepage)

From July 21-July 24, 2014 departments presented their budgets to Mayor andCity Council (meetings are available on Citys homepage)

After each presentation, Mayor and City Council would discuss the budgets andmake requests of the City Manager and departments

All of these requests were placed on a master list that was shared with CityCouncil on August 4, 2014 to allow Mayor and City Council time to review thelist and have the opportunity to make additions/changes/voice concerns beforethe budget was finalized (Please see exhibit 2)

The Budget Request list was sent to Mayor and City Council a second time onAugust 11, 2014 (Please see exhibit 3)

The Budget Request was again sent to Mayor and Council a third time on August12, 2014 (Please see exhibit 4)

Exhibit B

The only items on the budget request list that are voted on are the items that havea budgetary impact (Please see exhibit 5)

The creation of this list is part of the budget process When the request was made by Representative Romero at the July 22, 2014

meeting, Mayor and City Council did not comment The Council did not vote on the requests because the list was a part of the follow-

up items to the budget process Mayor Leeser and City Attorney, Sylvia Firth were both present at the July 22,

2014 meeting and did not mention the Norton Rose Fulbright report nor theemail from previous City Manager

Since I had already received negative comments regarding the bond sale and theperformance of First Southwest, I did not question Councils concurrence

When the issue about the FA-RFQ came up and I had to present my report toMayor and City Council on December 7, 2015 my staff passed out the BudgetRequest lists to Mayor and City Council to remind them once again about theprocess

e. Did you have any communication(conversations, emails, text messages, telephone calls,etc.) with Estrada Hinojosa, including but not limited to Noe Hinojosa (hereinaftercollectively Hinojosa) pertaining to issuing an RFQ for a new financial advisor (theFA-RFQ)? If so, please describe in detail those communications.

No I did not have communication with Estrada Hinojosa pertaining to issuingthe RFQ for a new financial advisor

f. Did you have any communication(conversations, emails, text messages, telephone calls,etc.) with Hinojosa pertaining to the language or terminology to be included in the FA-RFQ? If so, please describe in detail those communications

No I did not have any communication with Hinojosa pertaining to thelanguage or terminology included in the FA-RFQ

g. What authority do you believe you had to issue the FA-RFQ without full City Councilauthorization?

I was not directly involved with the issuance or the process used to issue theFA-RFQ, however as part of the process to create the report requested byMayor Oscar Leeser on November 25, 2015 I requested the informationpertaining to this issue

As detailed in the report submitted to Mayor Leeser on Dec. 2, 2015 andpresented to Mayor and City Council on Dec. 7, 2015, please see explanationbelow pulled from the report pg.3

Why didnt staff go to Council for approval prior to issuing the RFQ? Staff followed the regular process in place to go out for an RFQ. The task of releasing an RFQ is an operational function that falls under thedirection of the City Manager. For clarification purpose, it is important tonote that the Citys financial adviser answers to the Chief Financial Officer. As part of the regular process all RFQs/RFPs/Bids over $50,000 must go toCouncil for final approval. Staff was in the process of preparing the necessarydocuments to go to Council on the financial adviser RFQ. A self-imposed City resolution requires Council approval prior to issuanceof RFQs only when the City is going to request a Construction Manager atRisk or Design Build project.(please see exhibit 6) This year City staff has gone before Council prior to issuance for thefollowing four projects:

o CMAR: Chihuahuan Desert Zoo Projecto CMAR: Multi-Purpose Cultural and Performing Arts Center(Arena)

o Design Build: Spray Parks (citywide)o Design Build: Eastside Regional Sports Complex

Examples of staff going out for RFQs prior to Council approval include:o Lobbyist for legislative priorities: $98,000o Third Party Administrator: $45,149,599o Supplemental Benefits: $652,000o Articulated Buses: $217,441,184o 311 Call Center: $5.4 million

Additionally, I believe the explanation in questions a,c,d help clarify why Ibelieved we had authorization to go forward with the FA-RFQ

h. Is it your understanding or belief that the FA-RFQ required City Attorneys Reviewbefore issuance? If so,why was this not done?

I was not directly involved with the issuance or the process used to issue theFA-RFQ, however as part of the process to create the report requested byMayor Oscar Leeser on November 25, 2015 I requested the informationpertaining to this issue


Why didnt staff include the City Attorneys Office prior to issuance of theFinancial Adviser RFQ? Staff followed the regular process in place for the issuance of a RFQ. When staff seeks out routine services such as financial adviser, accountingservices, third-party administrators; the City Attorneys Office is included atthe end of the process to assist with the contract and necessary documentsneeded to go to Council for approval. When staff elects to outsource a certain operational function, such asCMAR construction projects, Sun Metro/LIFT Administration (First Transitand MV Transportation), the City Attorneys Office is part of the processfrom the very beginning. (Please see exhibit 7)

i. When did you first become aware that the contract with First Southwest would have to beterminated in order to retain services of another financial advisor?

1. Did you believe that such termination would be for convenience or cause?2. What led you to reaching such a belief?3. When did you become aware of the applicable notice requirement for

terminating First Southwests contract?

As I have mentioned I was not directly involved with the issuance or the process usedto issue the FA-RFQ and was not familiar or involved with the details regarding thetermination of the contract

However, when the FA-RFQ became an issue and City Attorney, Sylvia Firth told meabout the Joyce Wilson email and the Norton Fulbright Report I immediately directedstaff to cancel the FA-RFQ

After the RFQ was cancelled on October 13, 2015, it was explained to me that thetermination was part of the process and that Council authorizes the termination notstaff.

Staff was simply handling the administrative work for the actual vote by Council

j. Why did you direct the Chief Financial Officer to utilize a three-week response periodwhen the Citys procurement policy requires a minimum of four weeks to respond to anRFQ?

Were you familiar with the procurement policy before you directed staff to require athree-week response period?

To clarify the comments being referenced in this question was NOT adirective, it was merely me sharing my thoughts

On a regular basis, the CFO receives information from various financialadvisors wanting to do business with the City, because of that, in myopinion, companies are interested in responding to an RFQ

I was NOT aware that the policy required four weeks, I do rely on staff tofollow policy and bring items to my attention that are not consistent withpolicies in place

In this case, staff did not clarify the policy with me after my email but theydid follow the policy.

As detailed in the report submitted to Mayor Leeser on Dec. 2, 2015 andpresented to Mayor and City Council on Dec. 7, 2015, please see timelinebelow pulled from the report pg.5

-FA-RFQ released 4-28-15-Proposals due 5-27-15

k. Why the City Attorneys Office was ultimately consulted with respect to the FA-RFQ?Whose idea was it to involve them?

As I responded in question (h), I was not directly involved with the issuanceor the process used to issue the FA-RFQ, however as part of the process tocreate the report requested by Mayor Oscar Leeser on November 25, 2015 Irequested the information pertaining to this issue


Why didnt staff include the City Attorneys Office prior to issuance of theFinancial Adviser RFQ? Staff followed the regular process in place for the issuance of a RFQ. When staff seeks out routine services such as financial adviser, accountingservices, third-party administrators; the City Attorneys Office is included atthe end of the process to assist with the contract and necessary documentsneeded to go to Council for approval. When staff elects to outsource a certain operational function, such asCMAR construction projects, Sun Metro/LIFT Administration (First Transitand MV Transportation), the City Attorneys Office is part of the processfrom the very beginning.(Please see exhibit 7)

As part of the regular process in place for RFQs, the City Attorneys Office isincluded at the end of the process when staff seeks out routine services such as afinancial advisor.

Staff had completed the process and was ready to place the item on the CityCouncil agenda, so the CFO and the Purchasing department went to the CityAttorneys Office to prepare the contract and the necessary paperwork.

It was then that Sol Cortez the City Attorney that handles purchasing itemsshared the item with City Attorney, Sylvia Firth

At that time, Sylvia Firth emailed the CFO to alert him that she had concernswith the solicitation

As detailed in the report submitted to Mayor Leeser on Dec. 2, 2015 andpresented to Mayor and City Council on Dec. 7, 2015, please see timeline belowpulled from the report pgs.5,6 &7

Why was the decision made to stop the Financial Adviser RFQ process?As previously mentioned, part of the RFQ process requires staff work withthe City Attorneys office to create the contracts and necessary documents totake to Council for approval. Below is a timeline of the flow of informationthat lead to the City Manager directing staff to terminate the FinancialAdviser RFQ process:

September 1, 2015 Staff informed Assistant City Attorney SolCortez about the need to create the necessary documents to take theaction to Council for approval. September 3, 2015 City Attorney Firth reached out to ChiefFinancial Officer Mark Sutter to inform him that she had concerns.City Attorney Firths concerns are related to Financial Advisers (FA)Estrada and Hinojosa. September 21, 2015 Chief Financial Officer Sutter asked InternalAuditor Edmundo Calderon to assess FA Estrada and Hinojosa andreport back any concerns. Internal Auditor Calderon reports that hedid not find any concerns. September 25, 2015 Chief Financial Officer Sutter follows up withCity Attorney Firth and she again said she was concerned about theintent to terminate the contract with First Southwest. They discussscheduling a meeting about contract issues. September 27-28, 2015 Chief Financial Officer Sutter and CityAttorney Firth discuss scheduling a meeting about contract issues.Chief Financial Officer Sutter also tells City Attorney Firth that hehas spoken to City Manager Gonzalez about the City Attorneysconcerns. October 1, 2015 Chief Financial Officer Sutter place FinancialAdviser RFQ on hold. October 8, 2015 Chief Financial Officer Sutter and City AttorneyFirth discuss the City Attorneys concerns a second time. Theconcerns are related to Financial Advisers First Southwest. October 12, 2015 City Attorney Firth sends Norton Rose Fulbrightreport to Chief Financial Officer. October 13, 2015 Chief Financial Officer Sutter responds to CityAttorney Firth regarding Norton Rose Fulbright report. October 13, 2015 City Manager verbally directs Chief FinancialOfficer Sutter to halt the solicitation for requests for qualificationsfor a financial adviser after receiving information from City AttorneyFirth and Chief Financial Officer Sutter. October 19, 2015 Purchasing Department sends Notice to Expireletters to the four Financial Advisor vendors. November 17, 2015 City Manager Gonzalez receives the JoyceWilson email from City Attorney Firth. December 1, 2015 Norton Rose Fulbright report released to allowCity Manager and the public to review the information pertaining tothe financing of the ballpark. This is the first time City ManagerGonzalez has access to the report.(please see exhibit 8)

It is important to note that I have created a team called the Legal ImplementationTeam (LIT) to address legal issues that have been lingering for a while and todiscuss major legal issues ahead of time. The team includes the City Attorney andseveral of her staff and members of the City Managers staff.

When I questioned the CFO on the fact that the FA-RFQ had not been included inany of the LIT meetings, he responded that he did not include the item because itseemed routine and was not a major issue.

l. When did you first become aware of any prior relationship between RepresentativeRomero and Estrada Hinojosa? How did you learn of the prior relationship? I dont recall hearing about the relationship from anyone The relationship came up with media Prior to that I was not aware that actual employment ever took place

m. By proceeding to issue an RFQ for financial advisor, is it reasonable for one to reach theimpression that Representative Romero could improperly influence you in theperformance of your official duties? If not, please state in detail why it is not.

No it is not reasonable for one to reach that impression I believe I clearly shared in my response in questions (a) that Representative Romero

was not the only member of City Council that had concerns about the performance ofFirst Southwest in its handling of the ballpark bond sale

In my response to question ( c ) I have shared that during the July 22, 2014 Budgetmeeting, Mayor and City Council members all made requests during those sessions

Representative Romeros request is #45 out 147 requests Additionally, in my response in question (k) I have shared in the timeline that I was

not made aware of the Joyce Wilson email and the Norton Rose Fulbright report untilSeptember and October 2015

These two documents clearly state that First Southwest was directed to hold off on thebond sale, until after the mayoral election

This information proved that First Southwest had not mishandled the ballpark bondsale, they were following the directive that they were given

This information led me to immediately stop the RFQ from going forward It is important to note that I received the Joyce Wilson email from the City Attorney

on November 17, 2015 I received the Norton Rose Fulbright report on December 1, 2015 at the same time

that the City Council and the public received the report To make sound decisions it is important to have all of the facts, the two documents

that I referenced above should have been shared with me when I arrived in June 2014or at the minimum at the July 22, 2014 budget meeting, when Representative Romeromade his request

I firmly believe if the City Council members had received the two documents that Ireferenced above, they would not have made the comments they shared with me

As a point of clarification, I still believe it was first Southwest fiduciary responsibilityto have said something in public to City Council

n. By proceeding to issue an RFQ for financial advisor, is it reasonable for one to reach theimpression that Estrada Hinojosa could improperly influence you in the performance ofyour official duties? If not, please state in detail why it is not.

No it is not reasonable for one to reach that impression

o. By proceeding to issue the RFQ for financial advisor, is it reasonable for one to reach theimpression that you were unduly influenced by kinship, rank, position or influence ofRepresentative Romero? If not, please state why it is not

No it is not reasonable for one to reach that impression It is an everyday occurrence to have Mayor and Council make requests

I have instituted a new process for all council requests As detailed in the report submitted to Mayor Leeser on Dec. 2, 2015 and presented to

Mayor and City Council on Dec. 7, 2015, please see information below pulled from thereport pg.7&8

How are Council Requests handled by the City Manager and City staff? October 4, 2015 City Manager Gonzalez implements a Council Requestprocess in order to address:1. Council concerns that staff does not follow through on Council requests2. Public perception that the City Manager and City staff respond to Councilrequests without following processes.

This allows the assigned staff in the City Managers Office to send the request to the appropriate department and receive a response and track allrequests. In the first month, October 4-November 4, 2015, staff received 497inquiries/requests and addressed 432 of those requests(Please see exhibit 9)

p. By proceeding to issue the RFQ for financial advisor, is it reasonable for one to reach theimpression that you were unduly influenced by kinship, rank, position or influence ofEstrada Hinojosa? If not, please state why it is not

No it is not reasonable for one to reach that impression

q. By proceeding to issue an RFQ for financial advisor, is it reasonable for one to reach theimpression that Representative Romero could unduly enjoy your favor in theperformance of your official duties? If not, please state why it is not.

No it is not reasonable for one to reach that impression As mentioned in my response in question (o) Mayor and Council make requests

everyday I have worked towards instituting a customer focus to address the requests and

concerns of the community as well as Mayor and Council I firmly believe that the Mayor and Council requests come from their constituents and

the needs of their districts, so I work to address their requests when possible As you see in the Council Requests documents staff and I strive to address the

requests big and small Some examples include:

District #1-expediting and starting the process for Robinson StreetDistrict #2-basketball court resurfacingDistrict #3-bulb outs on Manor Place to reduce speedingDistrict #4-Securing funding for Futureland ParkDistrict #5-legal implementation process guided the pace and helped to implementannexation in the Far East for the long awaited Eastside Regional ParkDistrict #6-Pavo Real facility improvementsDistrict #7-basketball court resurfacingDistrict #8-bulb outs at El Barrio Park to address speeding and excessive trafficMayor-Requests for department support on various community initiatives

r. By proceeding to issue an RFQ for financial advisor, is it reasonable for one to reach theimpression that Estrada Hinojosa could unduly enjoy your favor in the performance ofyour official duties? If not, please state why it is not.

No it is not reasonable for one to reach that impression Throughout my career, I have worked with various companies in different cities and I

hold them all to the same standards, no matter the situation

As detailed in the report submitted to Mayor Leeser on Dec. 2, 2015 and presented toMayor and City Council on Dec. 7, 2015, please see information below pulled from thereport pg.7

What is the City Managers affiliation with First Southwest? Estrada andHinojosa? While I was City Manager in Irving, the firm of Estrada and Hinojosa wasrepresenting a private developer proposing an entertainment project to the city thatcould have had a major financial impact on the city. The interaction was not a positiveone, because I was insisted that it was Mr. Hinojosas fiduciary responsibility to advisethe Irving council of potential financial risks.(Note: During that same time First Southwest was the City of Irvings financial advisor)

s. Is there any basis for concluding that you recklessly disregarded an applicable policy orprocedure by initiating the FA-RFQ without explicit City Council approval? If not pleasestate in detail why there is not

No there is no basis for concluding such an assertion Despite the fact that I was not directly involved in the issuance of the FA-RFQ, I have

stated that I rely on staff to follow policy. As City Manager, however, I am ultimatelyresponsible for any and all actions of my staff. I firmly believe that staff followed theprocess and policies in place

The report submitted to Mayor Leeser on Dec. 2, 2015 outlines in great detail all offthe actions taken by me and my staff

My responses in questions (a) share in detail that Council shared concerns with meabout the ballpark bond sale and were not happy with First Southwest

In questions (c,d) I shared in detail that the request made in open session during abudget meeting by Representative Romero was part of the budget process and thecouncil request master list was shared with Mayor and Council three times before thebudget was adopted and there were no concerns raised

I have also shared in question (g) that only Design Build and ConstructionManagement at Risk RFQs have to go to Council for approval before issuing an RFQ

t. Is there any basis for concluding that you recklessly disregarded an applicable policy orprocedure by ordering that the response time for the FA-RFQ be reduced to three weeks,when the Citys procurement policy requires a minimum of four weeks to respond to anRFQ? If not, please state in detail why there is not

No there is no basis for coming to such a conclusion My response to question (j) fully explains what my intent was, please see response

below To clarify the comments being referenced in this question was NOT a

directive, it was merely me sharing my thoughts. On a regular basis, the CFO receives information from various financial

advisors wanting to do business with the City, because of that, in myopinion, companies are interested and are ready to respond to an RFQ

I was NOT aware that the policy required four weeks, I do rely on staff tofollow policy and bring items to my attention that may not be followingpolicy

In this case, staff did not clarify the policy with me after my email but theydid follow the policy.

As detailed in the report submitted to Mayor Leeser on Dec. 2, 2015 andpresented to Mayor and City Council on Dec. 7, 2015, please see timelinebelow pulled from the report pg.5

-FA-RFQ released 4-28-15-Proposals due 5-27-15

Exhibit C

Exhibit D

Type Date Num Memo Clr Account Split Debit Credit

Tommy GonzalezCheck 04/01/2013 3074 X 1010 Cash in bank - Comerica Chk 4210 Customer Training 1,079.75Check 03/20/2014 2981 X 1010 Cash in bank - Comerica Chk 9200-02 Instructor Travel 489.31Check 03/20/2014 2982 X 1010 Cash in bank - Comerica Chk 9200-01 Instructor Fee 1,000.00

12:10 PM Quality Texas Foundation02/02/16 Transaction List by Vendor

January 2013 through December 2015

Page 1

Exhibit E

Invoice

Date6/19/2013

Invoice #1586

Bill ToFreese and Nichols, Inc.Cindy Milrany4055 International Plaza, Suite 200Fort Worth, TX 76109

Ship To

Quality Texas Foundation201 Woodland ParkGeorgetown, Texas 78633

P.O. Number Terms Due Date

6/19/2013Rep

Thank you for your support! Total

Item Code DescriptionQuantity Price Each AmountQuest sponsorship Bronze Level Conference Sponsorship 1,000.00 1,000.00

Please make all checks payable to: Quality Texas Foundation

Quality Texas Foundation is certified as a 501(c)(3) organization.Tax ID# 74-2703727 Texas Vendor ID# 74-2703727-4

Please contact Quality Texas at 214-565-8550 with any questions regarding this invoice.

We appreciate your continued support of Quality Texas.

$1,000.00

Exhibit F

Invoice

Date8/22/2014

Invoice #1700

Bill ToFreese and Nichols, Inc.4055 International Plaza, Suite 200Fort Worth, TX 76109

Ship To

Quality Texas Foundation201 Woodland ParkGeorgetown, Texas 78633

P.O. Number Terms Due Date

8/22/2014Rep

We look forward to working with you! Total

Item Code DescriptionQuantity Price Each AmountExaminer fee Examiner Training Fee - Kim Thieme 1,100.00 1,100.00Examiner fee Gary Soward (Training Only) 1,100.00 1,100.00

Please make all checks payable to: Quality Texas Foundation

Quality Texas Foundation is certified as a 501(c)(3) organization.Tax ID# 74-2703727 Texas Vendor ID# 74-2703727-4

Please contact Quality Texas at 214-565-8550 with any questions regarding this invoice.

We appreciate your continued support of Quality Texas.

$2,200.00

Exhibit G

Exhibit H

Exhibit I

CAPITAL IMPROVEMENT PROGRAM - PRIORITY PROJECTS BY DISTRICT - 5/04/15

1 Rim-Hague Enhancements Project Scope Primary Lead Secondary Lead Start Date Completion Date

Intersection Improvement

Project

Extend curbs, ADA ramps, landscape median,

landscape improvementsJames Fisk Rudy Valdez 4/9/2015 6/5/2015

Irene Ramirez Javier Reyes Complete Complete

Fred Lopez Irene Ramirez Complete Complete

Richard Bristol Rudy Pino Complete Complete

James Fisk Rudy Valdez Complete Complete

Oscar Jaloma Mario Cruz 5/11/2015 5/20/2015

Jim Fisk Rudy Valdez 5/4/2015 5/21/2015



Richard Bristol Rudy Pino 7/6/2015 7/10/2015

2 District 2 Resurfacing Plan Project Scope Primary Lead Secondary Lead Start Date Completion Date

Street ResurfacingResurfacing, ADA ramps, and other

improvements when necessaryHarold Kutz

Gilbert Guerrero

James Fisk4/9/2015 Pending


Ted Marquez Irene Ramirez Complete Complete

Richard Bristol Harold Kutz Complete Complete

James Fisk Kevin Smith Complete Complete

Richard Bristol Harold Kutz Complete Complete

Richard Bristol Harold Kutz 4/8/2015 Pending

2 Timberwolf Roundabout Project Scope Primary Lead Secondary Lead Start Date Completion Date

Street Rehabilitation ProjectRemove roundabout, remove water meter, install

new asphalt at Timberwolf and MathiasRudy Valdez James Fisk 4/9/2015 5/8/2015


Fred Lopez Ted Marquez Complete Complete

Richard Bristol Rudy Pino Complete Complete

Irene Ramirez Fred Lopez Complete Complete

City Representative Review

EPDOT: Approve traffic control plan

EPWU to remove water meter, Irene to contact Alan Shubert

EPDOT: Relocate stop signs

CIP Planning: Create landscape plan for curb extension areas and median

Construction

ECM: Create estimate for revised plan

CIP Planning: Jim and Rudy to meet with adjacent homeowners regarding

landscaping

CIP Planning: Create Alternative design & EPDOT to create CAD dwg

City Manager Review


EPDOT to complete AutoCAD drawing of new curbs and median

City Manager Review

City Manager Review


CIP Planning: Review prioritization plan for District 2 streets

EPDOT to reprioritize plan based on input from Rep. Romero

EPDOT: Create prioritization plan for District 2 streets

Construction: EPDOT to create schedule

1

Exhibit J

Rudy Valdez James Fisk Complete Complete

Rudy Valdez James Fisk 5/7/2015 6/5/2015

3 District 3 Arterial Lighting Project Scope Primary Lead Secondary Lead Start Date Completion Date

Arterial Lighting for Viscount and

Yarbrough

Install arterial lighting in median using new

spacing standardVikki Ruiz Rudy Valdez 4/9/2015 8/27/2015

Vikki RuizMargaret

Schroeder4/27/2015 5/1/2015

Richard Bristol Rudy Pino 5/4/2015 5/28/2015

Vikki RuizMargaret

Schroeder6/2/2015 8/28/2015

3 Viscount Landscaping Project Scope Primary Lead Secondary Lead Start Date Completion Date

Landscaping Enhancement

Project

Install landscaping in median and southerly side

of roadwayJim Fisk Rudy Valdez 5/4/2015 8/27/2015

Joe VelaMargaret

Schroeder5/4/2015 5/8/2015

Joe VelaMargaret

Schroeder5/11/2015 8/27/2015

5 Pebble Hills Arterial Lighting Project Scope Primary Lead Secondary Lead Start Date Completion Date

Arterial LightingInstall arterial lighting in median using new

spacing standardVikki Ruiz Rudy Valdez 2/16/2015 3/20/2016



Vikki RuizMargaret

SchroederComplete Complete

Richard Bristol Rudy Pino 4/13/2015 4/2

city of el paso ethics findings

Documents