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El Paso city council to consider hiring firm to investigate controversial financial adviser proposals

The El Paso City Council on Monday will vote on whether to hire a firm for an independent investigation into the financial adviser controversy.

The item on the agenda states: “That the City Attorney be authorized to engage Ross Fischer of Gober Hilgers, PLLC for the purpose of conducting an independent investigation of the actions by City staff, elected officials and vendors which led up to the solicitation of a new financial adviser for the City of El Paso in 2015. The investigation will be for the purpose of determining whether or not there has been violation of City of El Paso ordinances, policies or procedures.”

Attached to the item are two reports submitted by the Internal Auditor and the City Manager at the request of Mayor Oscar Leeser. The Mayor had said he would only be willing to spend tax dollars on an independent firm if the two internal reports were “not sufficient.”

City Rep. Larry Romero has been criticized for suggesting the City hire his former business partner, Noe Hinojosa as Financial Adviser without disclosing his ties with Hinojosa. Romero has said he did not disclose he had worked with Hinojosa because it was “12 or 15 years ago.”

The separate reports detail how the city began a Request for Qualifications process, seeking a new financial adviser when it was still bound by a contract with First Southwest until 2017.

The internal auditor report shows a detailed timeline of conversations and emails ranging from different periods from June 2012 to November 5, 2015.

It shows that in July 22, 2014 City Rep. Larry Romero “reminds Tommy Gonzalez, that is his personal opinion he would like the city to go out and see if we could look again at our financial adviser and companies we use for bond underwriting in the next couple of months.”

According to the auditor report, on August 27, 2014, Gonzalez wrote to the City’s Chief Financial Officer Dr. Mark Sutter asking: “during the budget process, the council asked that we look at taking this out for RFQ? Do you remember?” Sutter replied yes.

Then on September 11, 2014, Gonzalez wrote to Romero: “FYI During the budget process u also asked us to look at RFP for financial adviser. U had concurrence by majority of council I recall. Therefore I assigned Dr. Sutter.” That same day, Sutter asked purchasing director what “he would need to do to terminate First Southwest’s contract.”

The auditor shows Sutter asked Gonzalez for confirmation on moving forward with an RFQ as on October 16th and Gonzalez gave him the green light. The process continued until City Attorney Sylvia Firth wrote to Sutter months later on September 3rd, 2015, saying it’s the first she’d heard of city terminating the contract with First Southwest and asking if bond counsel had been consulted.

On September 25th, Firth again emailed Sutter saying “we very much need to talk before proceeding.”

The report issued by Gonzalez explains why city staff didn’t include the City Attorney’s office before issuing the RFQ, saying they just followed the regular process.

“When staff seeks out routine services such as financial adviser, accounting services, third-party administrators; the City Attorney’s Office is included at the end of the process to assist with the contract and necessary documents needed to go to Council for approval,” Gonzalez’s report states. It does not mention the contract with First Southwest needed to be terminated before term.

As for the staff’s decision not to notify council, Gonzalez’s report states that, too, is normal procedure because council does not require prior approval of all RFQs, only the ones that exceed over $50,000 or when they pertain to a Construction Manager at Risk or Design build project.

The report states several council members were displeased with the handling of the ballpark financing as early as August 1, 2013. The new council had taken office and Joyce Wilson was still the city manager. A video link attached to the report shows a clip from a council meeting where Representatives Lily Limon and Eddie Holguin pepper city and First Southwest staff with questions about the real cost of the ballpark. There is frustration with the staff’s inability to show updated debt models.

The report then mentions Representative Romero showed his displeasure in open session during a July, 2014 meeting. Romero asked Sutter about releasing an RFQ for a financial adviser.

Less than three months later, the city had decided to issue that RFQ, but neither council nor the City Attorney were notified.

Almost a year later, when City Attorney Sylvia Borunda-Firth’s office is asked to prepare documents to present the item before council, is when she contacts Sutter to express her concerns about terminating the First Southwest contract and other concerns regarding Estrada and Hinojosa, according to Gonzalez’s report. It does not describe what the concerns were, only that a review of the internal auditor found no issues.

In sum, Gonzalez’s report asserts regular procedures were followed when staff issued the RFQ without notifying city council or the city manager.

ABC-7 will continue reviewing details of the reports over the coming days and bring you updates.

Representative Romero has agreed to be a guest on ABC-7 Xtra Sunday, December 6 at 10:35 p.m.

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