Act II: The Mayor's New Career
By Alex de Marban, Fri., July 19, 1996
It's not exactly the free market approach, but it may be Bruce Todd's. Earlier this Spring, a little more than a year before Todd's planned abdication of the mayoral throne, Todd, along with his wife, public relations specialist Elizabeth Christian, and several prominent and influential friends, assembled Todos, an informal, six-person association offering economic analysis, public relations, consulting, lobbying, and advice on government rules and officials. According to an article in the local daily on May 7, "Todd's role, based on expertise he gained as mayor, could include advising corporate clients on tax abatements and working with community groups." In the article, Todd promises compliance with the city's ethics ordinance, and says he won't participate in projects involving the city "for a period following his departure from the city council." The length of that period goes unsaid.
Less than two months after embarking on Todos, Todd announced a bold senior year mayoral plan to auction off numerous city operations to the private sector. Those services -- valued collectively at tens, perhaps hundreds of millions of dollars -- are the Water and Waterwater Utility, trash collection, health clinics, parks and recreation, and the convention and visitors bureau. Additionally, over the past year, Todd has sought to privatize the mother of all city operations -- the $3 billion Electric Utility Department (EUD). Bear in mind that privatization is no easy feat. At today's council meeting (July 18), Councilmember Daryl Slusher will propose a resolution stalling internal staff efforts on privatization without direction of the council. A council plurality on privatizing even one of the operations could be years removed -- long after Todd's ethical intermission ends. Until that time, the departments and operations will likely be studied and re-studied for strengths and weaknesses, and the effect of privatization on them will be abundantly considered. That's where Todos could come in.
Already, two Todos associates have done work that could have an impact on whether the EUD is privatized. Those two are the state's premier economist, Jon Hockenyos, owner of the economic forecasting firm Texas Perspectives, and Greg Hartman, manager of the southwest region of MGT of America, a national management consulting and public policy research firm.
Three weeks ago, they released a study on the effect of deregulation on Texas' electric utility industry, a study which the State Legislature will no doubt use when considering deregulation in the next legislative session. If deregulation occurs, the EUD's monopoly could end, increasing the likelihood for privatization.
To be fair, the study isn't exactly a convincing argument for deregulation, and therefore isn't a strong argument to begin privatizing the EUD. It contends that after deregulation, small businesses and home-owners, who are the majority of electric utility customers, will see a sharp increase in their electric bill, while large electric customers, like chip manufacturers, will see a decrease.
But despite the study's findings, there's no reason Hockenyos or Hartman won't one day be eligible to perform more studies affecting the EUD. Todd already has a well-chronicled past with his EUD privatization efforts, and partly because of that, he and his business allies will always be thought expert on the subject. The study, which cost less than $100,000, was paid for by the Association of Electric Companies of Texas (AECT), a Hockenyos client. Texas Utilities is an AECT member company. It is also the EUD's most aggressive suitor, and, many believe, Todd's pick to commandeer the EUD. You may recall that Todd's EUD proposal lapsed last summer when publicity arose that several Todd allies lobbied for Texas Utilities. Those lobbyists included Todd's 1994 campaign consultant, Don Martin, his former mayoral aide, Kristen Kessler, and Todd's father-in-law, George Christian.
But Hockenyos says his company's link with Texas Utilities is irrelevant -- it's only one of seven AECT members -- and that he's trying to focus his efforts on the state and national levels to avoid conflicts of interest. "The study is what it is," he says. "Somebody [at the local level] may read it and say we need to do something based on it. But I'm not trying to do anything at the local level."
Hartman offers supporting testimony, saying the study was not prompted by Todd's efforts to privatize the EUD, and, in fact, was initiated before the creation of Todos. He adds that Todos is an informal group of firms, and his participation in it is peripheral at best -- he doesn't office out of Todos' swanky, 12th floor suite at the downtown Franklin Plaza, but remains at his office on Lavaca Street. Hartman says he's had only a few conversations with Todd about potential projects, all outside the state, and sees his Todos membership as a way to improve his network. "My relationship is informal; no money has ever changed hands, no documents have ever been signed," says Hartman, a former chair of the city's Ethics Commission, and Comptroller John Sharp's former executive assistant. "We just agreed to help each other out. I've never planned to use Todd to get work. I would never put myself in a situation where I was using the mayor's influence to get business. There's plenty of other work around the country. I'd rather use the mayor to expand my work there. The mayor can say, `Hey, in Detroit they're going to need someone to do some performance work.'"
But Hartman, who promises to avoid projects involving the city for at least "a year or two," doesn't guarantee that his company won't one day benefit from Todd's current privatization efforts. Some of the performance reviews done by MGT of America, primarily outside Texas, have involved health and human service agencies. Todd, remember, wants to privatize the health care clinics, part of the city's Health and Human Services Department. "At some point, when I'm still working with Todd, it may be appropriate to bid on city projects. I'm not saying I'd do it. It would be too much trouble, but I don't want to commit to any-thing now. I can't commit a company of 70 people [at MGT] to not doing any work in Central Texas."
The two remaining Todos associates are Pam Reed, a former commissioner with both Travis County and the Texas Natural Resources Conservation Commission (TNRCC), and Claire Arenson, a lawyer and former chief hearings examiner with the TNRCC. Arenson, a sole practitioner, currently represents several companies with permit applications before the TNRCC. (One of those clients is Griffin Industries, which was in the news recently when Slusher charged his Place One council opponent Jeff Hart with environmental insensitivity for representing Griffin's animal rendering plant in Bastrop County, which has been cited for numerous alleged environmental violations by, incidentally, the TNRCC. Arenson, however, isn't involved with the Bastrop County case.) Like Hartman, she promises no involvement with City of Austin projects for "a good while."
But considering the scope of Todd's privatization goals, that could prove difficult in the long run. And with his Todos co-workers' protracted history of government involvement, curious connections could arise.
Waste Management, Inc. (WMI), represented by Todd's aformentioned allies Kessler and Martin, is a leading candidate to take over some of the city's waste collection and storage efforts. As mentioned above, Todd wants to privatize the city's garbage collection efforts. Already, WMI is competing with two other trash companies to rent out its waste landfill to the city, once the city's current one closes with the opening of the new airport in 1999. Arenson says she doesn't represent WMI, or any local garbage companies, but that doesn't mean she won't do so after the mayor's waiting period, when WMI may request her representation before the TNRCC. In fact, given Todd's understanding of city government and his contacts therein, the state and federal pull that his co-workers bring to the table, and their experience in helping the private sector, it's possible that Todos will reap huge benefits from Todd's current privatization efforts.
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