Investigator to review financial adviser search, former city manager for delay in ballpark bonds

City Council on Tuesday voted to hire an independent investigator to review both the recent search for a new financial adviser and the former city manager’s actions when she purposely delayed the sale of the ballpark bonds for an election.

The decision came after hours of sometimes hostile and suspicious questioning from city representatives aimed at current City Manager Tommy Gonzalez.

Gonzalez has been under the microscope after reports surfaced he green-lighted a search for a new financial adviser company at the suggestion of City Rep. Larry Romero in a public meeting.

Romero has been under scrutiny after reports showed he spoke with former City Manager Joyce Wilson soon after being elected in the Summer of 2013 about financial advising firm Estrada Hinojosa whom he worked with “a few months” in the early 90s. Romero did not disclose to Wilson he worked for the firm. Estrada Hinojosa had been chosen as the city’s financial advisor in the aborted search for a new company.

The City Manager has said all the council members expressed concern on the “financial advising” when he first met with them after being hired last Summer. Gonzalez said those conversations, and the fact that none of the city representatives objected when Romero in July of last year said in his “personal opinion” he believed the city should look for a new advisor led him to believe it was the entire council’s will to find a new financial advisor. He also said the city’s current financial adviser, First Southwest, had reached out to Gonzalez before moving to El Paso and informed him the City Council was “not happy” with them.

Several City Representatives were visibly alarmed by the decision. City Rep. Carl Robinson asked Gonzalez, “So does this mean we make big decisions based on the personal opinions of city representatives?”

Mayor Oscar Leeser was especially concerned the City deviated from the normal procedure to evaluate firms when it scored companies competing for the financial advising contract.

City employees said a committee led by the City’s Chief Financial Officer Mark Sutter scored the firms in a shared sheet in a consensus process, rather than individually as is standard practice. The group scoring is legally allowed but the City had admittedly never used that process before this evaluation.

“I was never able to get a clear answer on why we changed our procedures for this specific search,” Leeser said in an interview after the meeting. He said the fact that it was allowed was not a good enough reason.

The City’s CFO, Dr. Mark Sutter, also faced some grueling questions from City Council when the city representatives learned he expressed concern over First Southwest’s performance regarding the sale the ballpark bonds before the evaluation began. Two of the committee members evaluating the firms work directly under Sutter at City Hall and council members said it’s uncommon and inappropriate for the City CFO to lead such a committee.

Sutter admitted he made a mistake and said he stopped the process when learning of a report on the timeline of the ballpark bonds prepared by the City’s bond counsel firm, Norton Rose Fulbright, and showed to him by City Attorney Sylvia Firth.

The Fulbright report shows several factors led to the delay of the ballpark bonds but also demonstrates former City Manager Joyce Wilson purposely stalled on presenting the bond resolution to Council for four weeks from April 30, 2013 to May 28, 2013. That key decision meant the City had little time to work out an amended lease agreement with MountainStar Sports Group when contractor CF Jordan said the amount approved was not enough, before the market hit an unprecedented storm in mid-June. The decision to halt the election appeared to have cost the city $22 million in a sour financing deal for the ballpark.

Gonzalez said he stopped the process of looking for a new financial adviser when he learned of the Fulbright report because it showed First Southwest did not give bad advice to the Council regarding the ballpark bonds. Gonzalez still believes though that First Southwest had a responsibility to tell the City Council of the effort to stall the bond issuance. The Fulbright report shows First Southwest warned the former City CFO and the City Manager that it was risky to wait on the issuance because of the election.

Despite that warning, Wilson delayed the issuance because of concerns over “the ongoing controversy” of the ballpark so close to election between stadium supporter Steve Ortega and Leeser.

Wilson claims unidentified City Representatives at the time first brought up the concerns over the timing of the issuance and the election. She now says she “doesn’t remember” who those councilors were. In the report, she stated former Mayor John Cook and former Mayor Pro-Tempore Ann Lilly gave her the green light to delay for the election. But both Cook and Lilly deny Wilson’s explanation, saying they never talked to Wilson about delaying the issuance of the bonds for the election.

On Tuesday, City Representatives Claudia Ordaz and Mayor Oscar Leeser challenged Gonzalez on his claim that he did not know of what led to the delay in the ballpark bonds, pointing out emails between First Southwest and him in the fall of 2014 that detail the timeline of the bonds.

Though the email from First Southwest to Gonzalez omits a key and consequential decision: that the city issuance of the bonds was purposely delayed for the election – a fact that is highlighted in the Fulbright report Gonzalez learned of in October 2015 when he stopped the financial advisor search.

The City Council also approved on Tuesday to have the investigator review if Wilson acted appropriately when she knowingly halted the sale of the bonds for the May 2013 election.

Cit Rep. Emma Acosta who made the motion to hire the investigator and review both the financial adviser search and Wilson’s prior actions, also wants the investigator to evaluate if if it was ethical for a First Southwest Vice President to donate to Ortega’s campaign knowing the bond issuance was purposely on hold.

Council will also have the investigator review its open records policy to ensure it’s being transparent with the public.

Only City Rep. Michiel Noe voted against the motion, saying he supported an independent investigation but had problems with the way the investigator was chosen.

Ross Fischer of Gober Hilgers, PLLC was chosen mostly based on a recommendation from City Attorney Sylvia Firth.

Noe said the City Council should have the opportunity to vet and choose an investigator. City Rep. Peter Svarvbein agreed with Noe but voted to support the investigation.