Personal Finances

Austin Governed By the Well-to-Do

November 2014 elections may deliver
economic diversity in next city council

by Ken Martin
© The Austin Bulldog 2013
Posted Friday May 17, 2013 1:46pm

Mayor Lee Leffingwell has investments in stocks and mutual funds with an estimated value of anywhere from $159,000 to $643,000 (since shares are reported in ranges a more specific estimate is not possible).

He enjoys an annual income of $150,000 from all sources, roughly half of which comes from his mayoral salary of $77,688.

Mayor Pro Tem Sheryl Cole and husband Kevin Cole have a real estate portfolio valued on the tax rolls at $1.3 million and combined salaries of more than $100,000.

Council Member Mike Martinez and wife Lara Wendler have combined salaries of $186,000.

They own a couple of houses that are on the tax rolls for a total of more than $1.1 million; have 38 stocks that have a bare minimum value of $170,000 (and likely far more); and their other investments are conservatively estimated at more than $250,000.

Council Member Laura Morrison with her husband Philip Morrison reported owning 27 stocks, six bonds and shares in 31 mutual funds.

They live in a West Austin home valued at $1.9 million. The Morrisons drew dividends of more than $35,000 and rental income of more than $35,000, and their combined salaries are $173,803.

Council Member Chris Riley owns a downtown home with domestic partner Denise Brady.

The home, valued at $807,077, also serves as a four-plex and produces rental income of more than $20,000.

Council Member Bill Spelman reported owning stock in 26 companies and shares in 29 mutual funds.

With wife Niyanta Spelman he owns a Hyde Park home and two other rental properties in Austin, as well as an interest in undeveloped West Texas rangeland.

Council Member Kathie Tovo and husband Tom Hurt own or have interest in more than a dozen businesses; possess an extensive investment portfolio; and own approximately 26,000 acres of ranch land spread over four Texas counties that produced income of more than $500,000 last year from oil, gas, and land sales.

As it stands now, all seven of the city’s elected officials are comfortably well off. Just how wealthy they are is an open question. The sworn financial statements provide clues but the lack of required specificity prevents accurately quantifying the value of reported assets.

The good news is that these affluent and concerned citizens enjoy a level of financial security that allows them to use their intelligence and skills in service to the community. If they are rich it’s not because they capitalized on their elected positions.

Will geographic diversity spawn economic diversity?

City Council Member Chris Riley, an attorney, initially failed to comply with the Austin City Code by not fully reporting the financial activity of his domestic partner in his latest Statement of Financial Information.

The Austin Bulldog’s June 2, 2011, report covered similar discrepancies in Riley’s annual financial statements for 2009 and 2010.

Riley’s mid-year Statement of Financial Information covering the first six months of 2012, filed July 27, indicates that his domestic partner, Denise Brady, is an “attorney/state employee.” The report contains no other information as to Brady's specific employer, her income, investments, real property interests, debts, or boards of directors on which she may be serving, as required by City Code Sections 2-2-72(A) and 2-7-2(10).

Strong financial solvency is a trait shared by the mayor and other members of the Austin City Council. But properly reporting their income and assets proved to be a problem for some of the council members.

Austin Mayor Pro Tem Sheryl Cole failed to report her husband’s sources of income, clients, and board positions as required by City Code in her sworn financial statement filed March 12. 

She also did not include in the document four out of the eight properties she owns.

The Austin Bulldog discovered these, and several other, flaws in its review of the mayor and council members’ financial statements covering the 2011 calendar year.

The reports help citizens monitor possible conflicts of interest in government decisions by outlining elected officials’ sources of occupational income, gifts from non-relatives, board positions, business and real estate interests, and other personal financial information.

The Austin Bulldog opted to publish Austin City Council members’ state and City Code financial statements in this article to provide greater transparency and allow increased scrutiny of these elected officials.

The most significant changes reflected in the latest mid-year Statements of Financial Information submitted by Austin City Council members appeared in the statement submitted by Council Member Mike Martinez. He listed the names of 49 entities in which he and his wife, Lara Wendler, held, owned, acquired, or sold stock, or any other equity ownership having a value of $5,000 or more.

These holdings appear to represent an investment of at least $245,000, if each of the 49 stocks were valued at the minimum $5,000. These stocks cover a wide range of investment funds. None involve local companies. 

Martinez did not report these investments in his last annual report.

Seeking clarification, The Austin Bulldog e-mailed Martinez August 8 to ask if he owned these stocks during 2010—and failed to report them in his last annual report—or acquired them since January 1.

Martinez replied August 10: “After consulting with counsel, my wife and I have expanded the mid-year PFS (personal financial statement) to provide more information. The mid-year PFS accurately reflects our current situation.”

Martinez did not respond to a follow-up query to again ask if he had owned those investments last year and failed to report them.

Martinez currently has a new home under construction at 2314 E. 11th St., in Central East Austin near Boggy Creek Park. The 11,641-square-foot lot was purchased October 29, according to the Warranty Deed, and the building permit was issued May 31. The three-story, single-family residence being built by Olson Defendorf Custom Homes has 5,289 square feet, with 4.5 bathrooms and two garages, according to building permits downloaded from the city’s website.

Martinez’ financial statement indicates that he paid off three loans and took out three new loans. He also joined the board of directors of three organizations that benefit youth and social justice: Police Activity League, Community Shares of Texas, and Christopher Guild.

Other financial changes

City Council Members Chris Riley and Randi Shade may have violated the Austin City Code by not reporting the financial activity of their domestic partners.

Many financial statements filed by the mayor and other council members are incomplete or erroneous, and one annual statement is missing.

Perhaps a larger problem is that neither these elected officials (with some exceptions) nor the city staff is paying sufficient attention to ensure that these important statements are accurately prepared to fully comply with state law and the City Code. The penalties that apply to the more serious violations are not being enforced. And citizens are kept in the dark because few are aware these documents exist or where to find them.

These problems were discovered during The Austin Bulldog’s broader investigation aimed at bringing greater transparency to city government by giving citizens the tools to monitor the conduct of their elected officials.

Do Austin’s mayor and council members have conflicts of interest in the decisions they make? How would you ever know?

Aside from the fact that these officials are required to withdraw from even discussing something in which they have a substantial interest, the public is entitled to be informed of their financial interests so they can observe and monitor how these officials conduct themselves.

System lacks transparency