Four Council Members Err in Latest Financial Statements

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Lee Leffingwell
Lee Leffingwell

Most Are Pretty Well Off By Local Standards, With Extensive Holdings in Real Estate and Investments

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.

This is the second year in a row The Austin Bulldog has reported that several Austin City Council members may have violated state law and/or City Code by filing flawed financial statements.

The latest review revealed what appear to be errors or omissions in the most recent financial statements of Cole and Council Members Mike Martinez, Bill Spelman, and Kathie Tovo.

When contacted, Cole, Spelman, and Tovo acknowledged they had some unintended errors in their reports and later filed amended statements. Martinez did not respond to requests for comment. 

City and state requirements

The mayor and council members—as well as candidates for these offices—are required to file two different kinds of annual personal financial statements: one in accordance with City Code Section 2-7-72, the other in accordance with state law, specifically Local Government Code Chapter 145.

The Austin Bulldog found that in many instances, council members reported accurate and complete information in one required report, but failed to report it in the other.

The city and state codes differ in the specific information officials are required to provide.

For example, state law does not require elected officials to report the spouse’s financial activity over which they exercise no control, but City Code does.

City Code also includes “domestic partners”—unmarried couples of the same or opposite genders that share resources and live together—in its definition of a spouse. State law does not recognize domestic partners.

Unlike City Code, the state law asks officials to include information on dependent children.

Both reports require officials to list all board and executive positions they hold, but City Code specifies they don’t have to include positions on entities owned by the city or created by the City Council.

The mayor and council members must file annual City Code statements covering the preceding year by the last Friday in April, and note any changes to the statements in mid-year updates due the last Friday in July.

They are also required to file a separate, state-mandated annual financial report no later than April 30.

Errors and Omissions

Although all City Council members filed on time this year, four of the council members’ reports covering 2011 appear to contain errors, omissions or both.

These statements must be sworn as correct and contain all required information.

Violations of the city’s financial disclosure provisions may be prosecuted in Municipal Court and are punishable by a fine of no more than $500, according to City Code Section 2-7-99.

City Code Section 2-7-41 describes the procedures for filing sworn complaints about potential violations.

Local Government Code Chapter 145 addresses financial disclosures for local government officers and includes possible criminal and civil penalties for failing to file, but none for filing incomplete or erroneous reports.

The Austin Bulldog outlined the apparent flaws for each council member’s report, below.

Mayor Pro Tem Sheryl Cole

In her City Code financial report filed March 12, Cole listed her City Council position as her sole source of occupational income.

She included no financial information on her husband, attorney Kevin Cole, who runs The Cole Law Firm out of their home.

Austin City Code Section 2-7-72(E) requires that city officials include in their financial statements “the source of income or assets and liabilities of their spouses.” This includes all sources of occupational income that exceed $5,000 in salary, bonuses, commissions or professional fees. 

If officials or their spouses are self-employed practitioners—as is Cole’s husband—they are required to report the names and addresses of clients or customers who paid them at least $5,000 over the course of the year. Cole did not report any clients for Kevin Cole.

Cole initially told The Austin Bulldog that she did not include any clients because she didn’t think her husband made more than $5,000 from any single client in 2011. However, Cole later called to say that her husband did have three clients that should have been reported: City of Waco, Hindsite 20/20, and Cynthia Amula.

The Austin Bulldog reported last year that it appeared Cole did not include in her statements covering 2008 to 2010 all of her husband’s required financial details, such as his law firm’s major clients.

Cole noted at the time that Kevin Cole had filed his own financial statements related to his service on the city’s Urban Renewable Board. However, Kevin Cole ended his service on that board in June 2010, and had not filed his own reports since 2009.

Financial information about a spouse is essential for the public to know if an official is barred from participating in certain discussions or votes due to the “substantial interest of a relative,” as outlined in City Code Section 2-7-65.

Also in her City Code report covering 2011, Cole listed only four properties in which she holds any legal or beneficial interest. The Coles in fact own eight properties—seven in Austin and one in Wichita Falls—worth a combined $1.3 million, according to Travis and Wichita County appraisal districts.

Cole listed her husband’s law firm and all eight properties in her state report filed later that month.

Cole also failed to report her service on the Texas Municipal League board and her husband’s board positions in her City Code report.

Kevin Cole serves on the boards of the United Way, St. David’s Foundation Community Health Access Committee, and Austin Public Education Foundation.

She did, however, report this information in her state report.

Cole said that these were all unintentional omissions, adding, “I’m certainly not trying to hide anything.”

She included in her state report that a dependent child received four South by Southwest music passes and two interactive passes as a gift from Brad Spies, a SXSW marketer who donated $350 to Cole’s 2012 re-election campaign.

Cole told The Austin Bulldog that these SXSW passes were in fact a gift to her, not a dependent child.

After notified of these apparent errors and omissions, Cole filed an amended City Code statement June 14 that included all of her properties and her husband’s board positions and major clients. She did not, however, add her husband’s law firm as a source of his occupational income.

Cole did not file an amended state report regarding the SXSW passes.

Council Member Mike Martinez

Martinez indicated in his mid-year financial update filed in July 2011 that he serves on the Austin Police Activities League board.

But he did not include the nonprofit in his most recent state and City Code reports.

Phil Contatore, executive director of the Austin Police Activities League, confirmed by e-mail earlier this month that Martinez still serves on the board. The organization also lists Martinez as a board member on its website (although the site erroneously identifies him as mayor pro tem, a position that went to Cole after the 2011 council elections).

City Code does not require officials to list executive or board positions on entities created by the council or owned by the city, but Contatore said the nonprofit is a separate entity from the city. This indicates it is a reportable organization.

Martinez did include some board positions in his recent state and City Code documents: He serves on Capital Metro and the Austin Firefighters Outreach Fund boards, and his wife, Lara Wendler, is a Friends of Christopher Guild member for the Center for Child Protection.

Council Member Bill Spelman

In his state-required report filed March 26, Spelman reported he owns a General Motors Acceptance Corp. bond worth between $5,000 and $9,999.

But Spelman did not report this same bond in his City Code report filed just weeks earlier. Officials are required by City Code to report ownership of any bonds worth more than $5,000.

In his state report, Spelman did not include a condo he owns on East 11th Street under the section that asks officials to list all property they held or acquired during the reporting year. He did, however, indicate that he received rent income from the property in another section.

Travis County Appraisal District records show that Spelman owns the condo, worth $95,123.

Like Cole, Spelman did not list his spouse’s board and executive positions in his report filed March 12, as required by City Code. His wife, Niyanta Spelman, is executive director of Rainforest Partnership Inc. and serves on the Asian and Pacific Islander American Health Forum board. Spelman included this information in his state report.

Spelman acknowledged by phone that his reports contained some errors that must have occurred amid his “hurry to get it done on time.”

 “I have the corrections in front of me, and I’m about to file them,” Spelman said. “We want to get it right.”

He filed amended state and City Code reports on June 11.

Council Member Kathie Tovo

Tovo, who was elected in June 2011 and remains the council’s newest member, provided extensive financial information related to her spouse, architect Tom Hurt, in both her state and City Code financial statements filed in April.

However, she failed to include her council position as a source of occupational income in her City Code financial statement. Officials are required to report all occupational income that exceeds $5,000 a year, and Tovo earns $62,795 a year as a council member.

In her City Code statement, Tovo mistakenly reported the address of a small office rental property her husband’s company owns as 809 West 14th St. The correct address is 409 West 14th Street.

Tovo said these were unintentional mistakes, and she would correct them in amended financial forms.

The Austin Bulldog also asked Tovo why she did not list in her state report a vacant lot her husband’s company owns on Lupine Lane. Tovo pointed out that she has no controlling interest in the property, and therefore state law does not require her to report it.

She also said, as a conservative measure, she added in an amended City Code report, filed June 15, a position she had from January 2011 to June 2011 on the Families With Children From China board and a position she previously held on The Dream Come True Foundation board.

The financial statements

Citizens can find out about the mayor and council members’ financial assets by reading their City Code and state financial statements. These statements can be obtained through an open records request or by visiting the city clerk’s office during regular office hours, although they are published here to increase accessibility.

The state and city do not post the statements online, largely leaving it to media outlets to publish and report on these documents.

On June 5, the Sunset Advisory Commission, whose membership is dominated by Texas lawmakers, unanimously voted against a proposal to post sworn financial statements on the Internet, the Austin American-Statesman reported. Commission members cited concerns that elected officials could become victims of identity theft or other crimes. The article noted that much of this information is already available on media websites.

The most recent reports, linked below, were filed earlier this year and cover 2011. The latest City Code reports for Spelman, Tovo and Cole—and Spelman’s most recent state-required report—are all corrected statements filed after The Austin Bulldog notified them of possible errors and omissions.

Links to individual financial statements covering previous years are also listed below.

Lee Leffingwell
Lee Leffingwell

Mayor Lee Leffingwell—Leffingwell reported Julie Byers as his spouse in both reports covering 2011. His only occupational income is from serving as mayor, though he reported Byers earned some income (less than $10,000) in 2011 as a registered nurse at Seton Hospital. The couple owns two homes: their residence in Northwest Austin, valued at $538,320 according to Travis Central Appraisal District, and a vacation house in Loup City, Nebraska. In his state report, Leffingwell reported 29 stocks between he and Byers. Leffingwell holds shares in Applied Materials, Microsoft, Intel, and others. Leffingwell draws retirement income from the Delta Pilots Retirement Trust, military, and social security. He serves on the boards of Capital Area Metropolitan Planning Organization (CAMPO), Pecan Street Inc., and the Mayor’s Fitness Council.

City Code Statements for 2008 through 2010 (29 pages)

City Code Statement Mid-Year 2011 (4 pages)

City Code Statement for 2011 (6 pages)

Local Government Code Statements 2004-2010 (238 pages)

Local Government Code Statement for 2011 (30 pages)

Sheryl Cole
Sheryl Cole

Mayor Pro Tem Sheryl Cole—Cole reported her City Council pay as her only source of occupational income in her most recent state and City Code reports. She included in the state report her husband’s occupation as an attorney at The Cole Law Firm, but did not include it in her City Code report. In addition to their $791,099 Northeast Austin home, the Coles own four rental properties in Austin with a combined value of $450,332, according to the Travis County appraisal district. The Coles also own a $53,739 property in Wichita Falls, Texas, and two vacant lots in Austin worth a total of $32,500. Cole reported owning shares in 10 mutual funds in her latest state report.

City Code Statements 2008-2010 (45 pages)

City Code Statement Mid-Year 2011 (4 pages)

City Code Statement for 2011 (5 pages)

Local Government Code Statements for 2005 through 2010 (189 pages)

Local Government Code Statement for 2011 (36 pages)

Mike Martinez
Mike Martinez

Council Member Mike Martinez—Martinez reported Lara Wendler as his spouse and noted in his latest City Code report that she made at least $100,000 last year as chief of staff for a Texas senator. The Texas Tribune lists Wendler as chief of staff for State Senator John Whitmire (D-Houston). Martinez also reported that Wendler received between $5,000 and $10,000 from HDS Retail distribution. Martinez reported that he owns two East Austin properties: his current residence valued at $138,992 and a home under construction on East 11th Street valued at $872,135, according to the Travis County appraisal district. Martinez reported in his City Code report that he and Wendler own a combined 20 stocks and 18 bonds. Martinez reported five loans, two of which were paid off in May 2011.

City Code Statements 2008-2010 (35 pages)

City Code Statement Mid-Year 2011 (7 pages)

City Code Statement for 2011 (8 pages)

Local Government Code Statements for 2005, 2006, and 2008 through 2010 (120 pages)

Local Government Code Statement for 2011 (9 pages)

Laura Morrison
Laura Morrison

Council Member Laura Morrison—In her latest statements covering 2011, Morrison reported that her husband, Philip Morrison, makes at least $100,000 a year as a physics professor at University of Texas at Austin. Her only listed source of occupational income is from her position as council member. Morrison reported owning 22 stocks, 9 bonds and shares in 30 mutual funds. Morrison owns stock in Dell, AT&T, FedEx and other business entities. She and her husband earned income from three properties worth more than $2 million. The Morrisons live in a West Austin home the Travis County Appraisal District valued at $1.4 million, which they also rent out. They earn rent from another house in North Austin valued at $438,018 and a condominium in Portland, Oregon worth $206,570. Morrison did not report any board positions.

City Code Statements for 2008 through 2010 (33 pages)

City Code Corrected Mid-Year Statements for 2009 and 2010

City Code Statement for 2011 (5 pages)

Local Government Code Statements for 2007 though 2010 (111 pages)   

Local Government Code Statement for 2011 (28 pages)

Chris Riley
Chris Riley

Council Member Chris Riley—Riley lists his City Council position as his only occupational income. Riley, who is not married, reported no spousal information. He reported one gift from Denise Brady, worth between $1 and $10,000, in his most recent city report. He reported owning shares in five mutual funds. Riley owns a historic downtown home that serves as a four-plex valued at $526,985, according to Travis Central Appraisal District. He earns rent from the two upstairs units. Riley reported that he serves on the boards of Capital Metro, CAMPO, Central Texas Clean Air Coalition and the University of Texas’ Environmental Science Institute.

City Code Statements for 2008 through 2010 (34 pages)

City Code Corrected Mid-Year Statements for 2009 and 2010

City Code Statement for 2011 (5 pages)

Local Government Code Statements for 2009 and 2010 (50 pages)

Local Government Code Statement for 2011 (25 pages)

Bill Spelman
Bill Spelman

Council Member Bill Spelman—Spelman reported that the University of Texas at Austin, where he works as a public policy professor, is his sole source of occupational income. (He does not draw a City Council salary because the Texas Constitution, Article 16, Section 40(b) bars state employees from getting paid to serve on local governmental bodies). He reported no occupational income for his wife, Niyanta Spelman, as she is an unpaid executive director of the nonprofit Rainforest Partnership. Spelman reported ownership of 19 stocks,two bonds, andshares in 27 mutual funds. The Spelmans live in a Hyde Park home valued at $349,109 and receive rent income from three Austin properties worth a total of $654,566. Spelman also owns a partial interest in four tracts of undeveloped West Texas ranchland in Irion County.

City Code Statements for 2008 and 2009 (46 pages)

City Code Statement for 2011 (5 pages)

Local Government  Code Statements for 2009 and 2010 (74 pages)

Local Government Code Statement for 2011 (34 pages)

Kathie Tovo
Kathie Tovo

Council Member Kathie Tovo—Tovo reported sources of occupational income for her husband at Hurt Partners Architects, and for herself at the Bob Bullock Texas State History Museum and/or State Preservation Board, where Tovo said she worked part time for a brief period until resigning to run for City Council in 2011. She added her City Council position as a source of occupational income in an amended City Code report filed June 15. Tovo listed nine architecture and energy clients between she and her husband, including Theatre Action Project, Exxon Mobil, and Reliance Energy. She reported rent income from 800 Christopher Street, a single-family house valued at $346,443, according to the Travis County Appraisal District. She and Hurt own a home on West 32nd Street valued at $460,745, and Hurt owns an empty lot on Lupine Lane worth $75,000. She and Hurt have “undivided interest” in ranch and mineral development land in Ector, Winkler, Atascosa, and Loving counties. They also have interest in two other properties owned by two of their companies. Tovo reported 11 business associations, including Ratliff Riker LP, Cumberland Fifth LLC, Pearl Cat LP, Pearl Cat Management LP, West 14th LLC, and McCottage LLC.

City Code Statement for 2010 (7 pages)

City Code Report for 2011 (8 pages)

Local Government Code Statement for 2010 (42 pages)

Local Government Code Statement for 2011 (49 pages)

Related Bulldog Coverage:

Council Member Mike Martinez Reports Big Gains in Financial Assets, August 17, 2011

Council Members Riley and Shade May Have Violated Austin City Code, June 2, 2011

This report was made possible by contributions to The Austin Bulldog, which operates as a 501(c)(3) nonprofit to provide investigative reporting in the public interest. You can help to sustain The Austin Bulldog’s reporting by making a tax-deductible contribution.

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