The regular council salary of $30,000 a year and a full-time job on the
side apparently isn’t nearly enough for some councilmembers. According to city
records, a firm partially owned by Eric Mitchell is slated to reap a cut as a
subcontractor for a project administered by the city’s aviation department.
This, despite prohibitions in the city’s ethics ordinance that no councilmember
may receive financial “benefit from any contract with the city.”
Aviation officials, however, insist that Wormley, Mitchell &
Associates, an insurance outfit directed by Mitchell, does not have a
subcontract. They say the records are wrong.
One error, then, would be an aviation report released June 21 that details
the participation of disadvantaged business enterprises (DBEs) in the
construction of the Austin-Bergstrom International Airport. In the report,
Mitchell’s company is listed as one of two subcontractors for Rodriguez
Engineering Laboratories, a company doing materials testing for the
project.
On June 22, city aviation director Charles Gates said that Mitchell’s
company should not have been listed. He learned of the error, he said, just
after the report was released. “Mitchell came up to me and said he had given
the contract to one of his partner’s companies, like Anderson-Wormley or one of
those companies.” Anderson-Wormley, however, a real estate company partly owned
by Mitchell’s father-in-law, does not have a license with the state board of
insurance.
Moreover, the only name that consistently shows up on city records is
Wormley, Mitchell & Associates. The minutes from the December 8, 1994,
council meeting show that the council unanimously approved, without discussion,
a $120,000 contract with Rodriguez Engineering Laboratories to provide material
testing at the new airport. The agenda backup materials, like the aviation
department’s DBE report, list Mitchell’s company as one of two
subcontractors.
According to a videotape that concurs with the minutes, Mitchell did not
attempt to abstain from the vote, as councilmembers normally do when a conflict
of interest arises.
More recent documents also show that Mitchell’s company is to benefit from
the contract. According to the first invoice submitted to the aviation
department on June 14 by Rodriguez Engineering, Mitchell’s company is expected
to receive 5% of the $120,000 contract, or $6,000. The invoice shows that
Mitchell’s company has not yet received payment. The owner of Rodriguez
Engineering, Oscar Rodriguez (not the assistant city manager of the same name),
says that’s because his company has completed only a small portion of the
contract, slightly more than $1,000. He adds that his company has been insured
by another Mitchell firm, Anderson, Wormley & Mitchell for the past two
years.
Moreover, only Mitchell’s company shows up on the subcontract disclosure
form which Rodriguez Engineering submitted to the aviation department.
Nonetheless, says Thomas Brown, the department’s DBE liason officer, the name
of Mitchell’s company is irrelevent since it’s actually not a subcontractor for
Rodriguez Engineering.
“I believe Rodriguez told me that he has a blanket insurance policy [with
Mitchell’s company] that covers all his projects,” Brown says. So Mitchell’s
company “is not a subcontractor, even though it’s listed like that. What
happened was, when the package went to council, Rodriguez was trying to show
that he had some African-American participation, I believe. They are not
subcontractors, they simply have an insurance policy with them.”
However, according to the city’s Department of Small and Minority Business
Resources (SMBR), insurance agencies can be counted as subcontractors to
inflate DBE percentage requirements, as long as they’re certified as a DBE, and
as long as the prime contractors list the DBE as a subcontractor. Mitchell’s
company recertified its classification as a DBE on June 12, according to SMBR
officials.
On Friday, June 23, Mitchell was reached on his car phone and questioned
about the contract. An incensed Mitchell replied, “No comment,” then terminated
the call. Afterwards, his executive aide called The Austin Chronicle,
threatening legal action if this reporter ever again attempted to talk to
Mitchell. He has not responded to requests for a description of the legal
action being considered.
Regardless of whether Mitchell’s company should be listed as a
subcontractor or not, the question remains as to whether he is in violation of
the aforementioned ethics policy. John Steiner, a city attorney, replies, “I
don’t know.” He said that past, present, and future facts would have to be
looked at in order to determine a violation, a decision that would not be in
the hands of the city attor-ney’s office. “If it is to be resolved, the Ethics
Review Commission would be the ultimate forum.”
Rev. Marvin Griffin, Bruce Todd’s commission appointee said, “I don’t see
how that’s wrong. A lot of businesses that have business with the city probably
use Eric’s company for insurance. Now is he receiving pecuniary benefits from a
city contract? I’m not sure of that. That’s something that needs to be looked
into.”
n
Despite resounding accolades for the city manager’s proposed,
no-nonsense budget, the council isn’t satisfied. Some want more expenditures in
certain areas, others want to stabilize taxes.
Councilmembers Ronney Reynolds and Brigid Shea are both questioning the
suggested one-cent increase in the effective property tax rate, and the 29%
hike in the transportation fee.
“At the present time, I can’t support a transportation fee increase, or a
transportation fee, period,” said Reynolds, after department heads presented
the budget to councilmembers on June 28. “And right now, I don’t support a
one-cent tax increase.”
Regarding the tax increase, Shea concurs. “I don’t think it’s necessary. I
think we’ve gotten a very clear message from the public to live within our
means.” She also plans a meticulous look at whether revenue from the current
transportation fee is being used appropriately.
While no one else expresses outright contempt for the increased levies –
Councilmembers Gus Garcia, Max Nofziger, and Jackie Goodman even find them
acceptable – they have their own concerns about the proposed $286 million
general fund budget, up 5% from last year’s $271 million.
For one, Garcia, who credits the council’s $1.6 million allocation for a
baseball stadium and “significant legal expenditures” as prime factors in the
increases, wants more money going to Health and Human Services. Currently,
$61 million is on the drawing board for the department, approximately
$1 million less than it got last year.
Nofziger has two main beefs. First, the proposed budget accounts for only
25 new police officers next year, but the city needs 47 to meet the goal of two
officers per every 1,000 residents. “I want to see if we can follow through on
that.”
And, along with Reynolds and Garcia, he laments the proposed allocations,
or lack thereof, for the Parks Department. While the city’s extensive system of
parks is already inadequately maintained, the budget recommends $100,000 less
for the Parks Department than last year.
Goodman seems most concerned that the National Council Action and the
Center for Women’s Business Enterprises – programs designed to help women-owned
businesses secure city contracts – are on the chopping block.
For now, Todd won’t say whether he’s identified any shortfalls or overruns
in the proposed budget. “I won’t be formulating that until the end of August.
That’s what the budget process is for.”
n
Today in council:
* A vote on whether to provide water to Lantana, Freeport’s 700-acre tract
adjacent to their proposed PUD;
* A vote on whether to award a cargo warehouse contract to major campaign
donators (see “Naked City”);
* Public hearings on the budget and the encampment ordinance. n
This article appears in July 14 • 1995 and July 14 • 1995 (Cover).