City Auditor's Integrity Unit Flawed Report Ethics Review Commission Meeting 505 Barton Springs Rd. July 29, 2014

City Auditor’s Failures Failure to properly apply the Code. Failure to act within prescribed authority. Failure to notify of findings. Failure to provide a copy of report before distribution!

No Authority to Rule No provision of the City Code authorizes the Auditor to conclude that a City Official has violated the conflict of interest prohibitions in 2-7-63 and 2-7-64. The Ethics Review Commission is the only body authorized to determine whether someone has violated 2-7-63 and 2-7-64, after undertaking a rigorous public process to guarantee basic rights and fairness. After undertaking a public review process, the Ethics Commission may consider five sanctions to reflect proportionality of the alleged violation.

City Auditor Admits: No Authority to Decide Jason Hadavi, the Chief of Investigations over the city Auditor’s Integrity Unit testified at the June 11, 2014 ZWAC Hearing as follows: “First, I’d like to stress that our role in this is fact finders, not decision makers.”

Prohibition on Conflict of Interest § 2-7-63 PROHIBITION ON CONFLICT OF INTEREST. (A) A City official or employee may not participate in a vote or decision on a matter affecting a natural person, entity, or property in which the official or employee has a substantial interest; provided, however, that this provision shall not prohibit any member of the city council from participating in a discussion relating to a petition certified to the city council by the city clerk which petition seeks the recall of said member of the city council. may not participate in a vote or decision on a matter affecting a natural person, entity, or property in which the official or employee has a substantial interest;

Disclosure of Conflict of Interest § 2-7-64 DISCLOSURE OF CONFLICT OF INTEREST. (A) A City official shall disclose the existence of any substantial interest he may have in a natural person, entity or property which would be affected by a vote or decision of the body of which the City official is a member or that he serves as a corporate officer or member of the board of directors of a nonprofit entity for which a vote or decision regarding funding by or through the City is being considered. shall disclose the existence of any substantial interest he may have in a natural person, entity or property which would be affected by a vote or decision of the body of which the City official is a member

Definitions - Affected § 2-7-2 DEFINITIONS. In this chapter: (1) AFFECTED means in the case of a person, entity or property, means reasonably likely to be subject to a direct economic effect or consequence, either positive or negative, as a result of the vote or decision in question. For instance, a person or entity owning real property, entering into a contract with the City, or seeking a permit or franchise is “affected” by votes or decisions such as zoning of the property, approval of the contract, or granting of the permit. Affected does not include those persons or entities who are subject to an indirect or secondary effect from official action. Creditors, independent contractors, or guarantors of a person “affected” by a vote or decision are not also deemed to be “affected” by virtue of their relationship with the affected person. The vote or decision need not be the only producing cause of the economic effect or consequence reasonably likely to result. In determining whether a person, entity or property is or was “affected by” a vote or decision, it shall not be necessary to prove the actual existence or occurrence of an economic effect or consequence if such effect or consequence would be reasonably expected to exist or occur. Additionally, a vote or decision to place a matter on a ballot is deemed to affect a person, entity or property to the same extent that the results of the election would effect the person, entity or property. (1)   AFFECTED means in the case of a person, entity or property, means reasonably likely to be subject to a direct economic effect or consequence, either positive or negative, as a result of the vote or decision in question. Affected does not include those persons or entities who are subject to an indirect or secondary effect from official action. 

ZWAC Agenda Items At Issue February 13, 2013 URO – Phase 2 Ordinance April 10, 2013 Austin Energy Waste Disposal Contract August 14, 2013 Special Events Ordinance

CAIU Report Characterization of ZWAC Agenda Items Report characterizes these as “TDS agenda items.” February 13, 2013 URO (Phase 2 Ordinance)– “TDS representative in attendance advocated for a particular definition.” April 10, 2013 Austin Energy Waste Disposal Contract – “TDS requested their contract [Not the agenda item] with the City to be extended before the rebid process.” August 14, 2013 Special Events Ordinance – “TDS expressed concerns about stakeholders not having input in ordinance development.”

Edward M. Shack letter report Over 30 years of experience – governmental ethics and conflicts of interest. URO and Special Events Ordinance “affected all haulers similarly without any direct economic effect to any particular hauler.” Austin Energy Waste Disposal Contract – “TDS was not being awarded the contract, was no longer in competition for that contract,” and ZWAC was only considering whether to recommend awarding to another hauler. No fact finding – “all information readily available from the City staff’s backup documents.”

Edward M. Shack Conclusion “If ‘direct economic effect’ were to extend to TDS on agenda items such as those set forth in the CAIU’s Report, where any possible economic effect on TDS is so extremely remote, then it becomes highly likely that many other members of City Boards and Commissions are also violating the conflict of interest rules.”

Questions – “Direct Economic Effect” Standard: What was actually before the ZWAC on each of these agenda items? Where is the analysis concerning the “direct economic effect”? How is it that “items of interest to TDS” equates to “direct economic effect”?

Daniela Ochoa-Gonzalez’s Status Not an employee of TDS. Owned and operated Solurso. Solurso contracted with TDS to train AISD staff and students on the proper sorting of food waste and other specific organic materials from the AISD waste stream for composting.

Auditor’s Incorrect Interpretation of City Code Our City benefits from expertise on Boards and Commissions. Auditor’s interpretation places City Officials in jeopardy. Without action to repair some of the damage, potential repercussions for those serving or considering service.

ZWAC Unanimous Action - June 11, 2014 -“All members present” “Zero Waste Advisory Commission disputes the City Auditor’s conclusions and objects to the process followed to arrive at these conclusions.” ZWAC “recommends that the Austin City Council reform the reporting, investigatory and ruling process of the city Auditor’s office.” ZWAC “recommends that the Austin City Council direct the Ethics Review Commission to assess” the City Auditor’s Report.

Request Ethics Review Commission finding that the CAIU’s Report contained conclusions that were beyond the City Auditor’s authority Ethics Review Commission finding that the City Auditor failed to follow the Ethics Review Process carefully outlined in the City Code.

Request Ethics Review Commission finding that the CAIU’s Report failed to apply the “direct economic effect” standard of the City Code. Ethics Review Commission recommendation to the City Council that the City Auditor retract the report.

Request Ethics Review Commission recommendation that the City Council reform the reporting, investigatory and ruling process of the City Auditor’s office.