Last week we examined the City’s legal shellacking regarding the Tax Increment Reinvestment Zone (TIRZ) for the Statesman PUD. In that article I mentioned that this is just the latest legal drubbing for the City and promised to discuss those legal losses in this installment. So here goes. (By the way the “Statesman PUD” does not mean that the Statesman is involved in the development. That term has come into common usage because the proposed development is at the old site of Statesman headquarters.)
Before starting the list I want to make a few points. One has to do with the City Attorney’s Office. I had a lot of experience with the City Attorney’s Office as a Council Member. That was a while back, but it was my experience that they tell the Council when the Mayor and/or Council Members are contemplating taking legally questionable actions. I can’t know for sure whether that occurred before the long list of recent City legal defeats (because City legal advice is given in private), but I suspect that it did.
The lopsided outcomes in these cases are enough to make a person think that Council majorities are ignoring legal advice and just doing what they want, regardless of the law. One way of saying that is that they believe they are “above the law.”
To be fair, and I noted this last week, the policies that led to the legal defeats we will discuss here were all put in place by the Councils led by Greg Casar (photo at top is from his X feed), when Casar was a Council Member and Steve Adler was Mayor. Casar is now a Congressman representing parts of Austin, San Marcos, San Antonio and points in between. I also noted that seven members who served on the Council when Adler was Mayor are still on the dais; and five of them consistently supported the legally disastrous policies.
The current Council majority appears to be slightly more careful legally, but has nonetheless closely followed the policy path laid out by the Casar-Adler Councils.
They also recently suffered their first embarrassing legal loss. As noted briefly last time, that was to the Save Our Springs Alliance leader Bill Bunch. Bunch won a temporary restraining order (TRO) forcing Mayor Kirk Watson and the Council to restore three minute limits for speakers at Council meetings, instead of two — pending a hearing on the temporary injunction. Judge Madeleine Connor also ordered Watson and the Council to stop the practice of making speakers who want to speak on multiple items lump all their comments into a single two minute speech. Under the TRO they have three minutes for each item.
Note, however, the word temporary. The follow-up hearing on the TRO — called a temporary injunction hearing — was just heard on Tuesday April 30. Also, the Council could likely solve the matter simply by passing an ordinance adopting “reasonable” rules that may or may not align with what Mayor Watson wrongly assumed he had the power to enforce. Instead he got a Temporary Restraining Order. (The word “reasonable” comes from the Texas Open Meetings Act.)
Shortly before press time the Austin Independent learned that Judge Daniella DeSeta Lyttle ruled, as Bunch had contended, that the City failed to follow the City Charter and to comply with the Texas Open Meetings Act in its failure to adopt meeting rules and procedures. Accordingly, the City did not have the rules in place that the Mayor was trying to enforce. The Court extended the TRO to an agreed-upon date of July 1, 2024, meaning that for now speakers will once again receive the three minutes they have historically had.
We’ll have more on this case later, but let’s move on to review the City’s legal disasters of longer standing.
Pilot Knob Water and Wastewater Infrastructure Fee Waivers
This is one of the more comical episodes of the Casar-Adler era albeit on a serious and expensive subject. The saga began in late 2015, toward the one-year mark of the (then) new 10-1/single member districts Council. Council Member Delia Garza (since promoted by voters to be Travis County Attorney) and John Michael Cortez, then Mayor Adler’s Chief of Staff, led the way in negotiating a deal that would waive between $50 million to $80 million in fees for installation of water and wastewater lines at the Easton Park Development, an area better known as Pilot Knob. That is a massive development outside the City limits in southeast Travis County.
The fee waivers would have stretched over the next 20 years. Without waivers developers would have to pay the fees. As Jo Clifton explained in the Austin Monitor at the time, “The money that the developer would otherwise have paid the utility for installation of those lines will be passed on to the Austin Housing Finance Corporation to fund more affordable housing,”
Garza and Cortez negotiated the deal with the lobbyist for the developers. That lobbyist was . . . wait, try to guess.
Delia Garza and John Michael Cortez negotiated the (Pilot Knob) deal with the lobbyist for the developers. That lobbyist was . . . wait, try to guess.
If you said Richard Suttle, also the lobbyist for Endeavor on the Statesman PUD, then you are right.
Full disclosure, I was on the Executive Team of Austin Water (the City’s public water utility) at the time of the Pilot Knob saga. As Clifton noted, however, Delia Garza and Cortez did not inform the utility of exactly what they were up to; even though up to $80 million in utility/ratepayer money was at stake. Nonetheless, to avoid any semblance of conflict, everything I report on Pilot Knob here (including above) comes from local press reports at the time; specifically from a series of very informative articles Clifton wrote in the Austin Monitor as the saga unfolded.
One problem with the approach taken by Delia Garza and Cortez was that they apparently didn’t tell many other folks about the money involved. According to a report by Clifton, six Council Members said in the days after the vote that they were not aware that the Easton Park MUD agenda item included tens of millions of fee waivers. That included five who voted for the item. Mayor Adler also claimed that he was not aware of the fee waivers, even though his chief of staff was a leader in negotiating the deal. Also claiming to have been left in the dark was then City Manager Marc Ott. The Monitor reported that Ott said that he didn’t realize that the agenda item included a financial disbursement, based on the agenda language.
Ott later wrote in a memo, once again as reported by Clifton, “Any capital recovery fees that are waived, in general, will result in higher water utility rates,” to cover the costs for which the funds from the waived fees were intended.
Local resident Brian Rogers, who had been a leader on a task force looking at water utility finances, sued the City. He claimed that the Council’s vote violated the Texas Open Meetings Act because the massive expenditure was not adequately disclosed to the public. Rogers also maintained that the waiving of the fees was illegal under state law. He was represented by Bill Aleshire. Aleshire is the former Travis County Judge; that is the top executive official in a Texas county (not a judicial position). Aleshire is one of the attorneys on the Statesman PUD/TIRZ case we covered last week, and also the lead attorney on a current suit against Project Connect.
A judge ruled in Rogers’ favor on the open meetings question and voided the Council vote. The Judge did not rule on the legality of the fee waivers. The decision not to rule on the fee waiver question was based on the reasoning that the City’s loss on the Open Meetings question voided the approval of the fee waivers. Ultimately Delia Garza and her Council colleagues backed down on the fee waivers and never posted them again for consideration.
Champion Tract
Aleshire also won an Open Meetings Act suit against the City for a 2016 vote in which, again in Jo Clifton’s description, “the Council agenda failed to notify them (a group of neighbors) that Council would be approving waivers of the Lake Austin Watershed Ordinance and the Hill Country Roadway Ordinance.”
Aleshire’s client in that case was the Lake Austin Collective, a nonprofit group that, according to its website, “advocates for and empowers Lake Austin area neighbors, and works to protect our beautiful and irreplaceable Hill Country.”
Land Development Code
Aleshire hasn’t been the only attorney defeating the City at the Courthouse. For example attorney Doug Becker won two cases voiding Council actions on the Land Development Code. The most significant of those was a March 18, 2020 ruling by Judge Jan Soifer that threw out first and second reading votes by the Adler Councils on a new Land Development Code (LDC).
Soifer ruled that the Council violated state law by refusing to provide notice to property owners and by denying their petition rights. Attorney Fred Lewis of Community Not Commodity was also heavily involved in those suits. So was was longtime attorney-mediator Michael Curry, as a legal strategist.
The second suit by Becker was a motion to enforce the permanent injunction obtained in the first suit. This involved late in the term actions on Land Development Code items by the final Adler Council – with Casar already gone to Washington. The City also lost that case. Judge Jessica Mangrum (also the judge on the Statesman PUR/TIRZ case) ruled that the Council had violated the permanent injunction (in the first LDC case), and state law, three times by failing to give proper notice and by hindering property owners right to protest. Judge Mangrum voided the three ordinances. That was in December 2023. Then, on April 30, Mangrum awarded the plaintiffs $175,000 in legal fees.
Left, screenshot of then Mayor Steve Adler during a 2020 discussion of the Land Development Code. Right, current Mayor Kirk Watson (photo from City webpage) who just suffered his first legal defeat as Mayor.
The current Council, led by Mayor Kirk Watson, mailed notice to homeowners, albeit a tad vague, and then rolled through changes to the Land Development Code that are arguably even more sweeping than those attempted by the majority on the Adler Council. (Council Members Alison Alter and Mackenzie Kelly voted no.) So far no legal challenges have been filed. Part 2 of that effort is currently working its way through the Planning Commission and the Council.
A Sick Leave Policy That Only Helped One Person
Still another Council vote voided by courts was an ordinance introduced by Council Member Greg Casar that required Austin businesses and nonprofit organizations to provide sick leave to their employees. While most Austinites, including this one, would likely agree that everyone deserves sick leave, many people on various sides of the issue pointed out at the time that Texas law and the state constitution do not give cities the power to require businesses to provide sick leave. I’m guessing that the City’s lawyers were among those who told the Council that.
Despite the clear illegality and pleas from local business owners to slow down and give the measure deeper consideration, Casar’s proposal sailed through the Council in February 2018, with Ora Houston and Ellen Troxclair voting no. Predictably, a group of business owners, and the conservative Texas Public Policy Foundation, sued. Just as expected and predicted, the Casar ordinance was quickly declared unconstitutional by the 3rd Court of Appeals. That decision was later affirmed by the Texas Supreme Court.
Not a single person ever got sick leave as a result of Casar’s initiative. Casar’s sick leave ordinance did, however, help one person. That person was Greg Casar, who promoted his passage of the item in his campaign for Congress. The sick leave policy also helped him gain national recognition in the first place. For instance The Nation covered the issue adoringly, with their first story headlined, “Austin Just Brought Paid Sick Leave to the South.” The Nation continued to praise Casar and the policy even after courts struck it down and no one got sick leave. For instance the magazine again touted the sick leave policy in an article announcing Casar’s run for Congress, but did not report that the sick leave policy was struck down.
One clue to why the City has experienced so many legal losses, beyond just the sick leave case, can be found in the governing philosophy Casar expressed in an exit interview with the Austin American-Statesman before leaving to run (successfully) for Congress. Speaking of the number of his policies overturned by either the courts or the legislature, Casar said, “Part of my strategy is to do as many good things as we can, because they (courts and the legislature) won’t undo all of them.”
“Part of my strategy is to do as many good things as we can, because they (courts and the legislature) won’t undo all of them.”
Greg Casar to the Austin American-Statesman as he departed from City Hall to run for Congress
In this approach it appears that the legal and policy chaos, the costs to taxpayers and the loss of City powers in battles with the legislature are just collateral damage from getting a few “good things” in place; if not good for the City of Austin, at least good for Greg Casar.
Police Oversight Setbacks
In the waning days of 2021 the City of Austin got a legal spanking from a lawyer-arbitrator in a “Contract Dispute” filed against the City by the Austin Police Association (APA). The dispute was heard by Hearing Examiner/arbitrator, Lynne M. Gomez of Houston. Gomez was “selected by the parties” — that is in an agreement between the City and the APA. Gomez ruled that the City violated its labor agreement with the APA and also ordered the Office of Police Oversight (OPO) to not “threaten individual members of APD (Austin Police Department).”
The APA filing alleged that the City “failed to abide by terms of Article 16 (of APA’s labor contract with the City) by allowing OPO to investigate complaints, collect evidence and interview witnesses in direct violation of the express language of the contract.” The City did not deny that the agreement limits the powers of the OPO in this way, but questioned whether the case was “arbitable;” claiming that APA had missed deadlines for filing.
The City also maintained that since the City Manager has authority over APD then she or he can assign powers and duties to the OPO outside the labor contract. Farah Muscadin, then director of the City’s Office of Police Oversight testified, according to the arbitrators summary, that OPO’s, “purview is not limited by the agreement because she reports to the City Manager, and the City Manager’s authority over her office comes from the Charter.”
Arbitrator Gomez rejected these and other City arguments and ruled that “APA has established by a preponderance of evidence that the City has violated Article 16.” In rejecting the City’s claims of authority for OPO beyond the labor agreement Gomez wrote, “These statements seem to suggest that the City agreed to Article 16’s provisions simply to persuade APA to approve the current Agreement, yet believing that the City Manager retains the authority to direct Director Muscadin to act contrary to Article 16’s provisions. But the City Manager too is bound by Article 16 and violates the Agreement by directing or permitting Director Muscadin to ignore its provisions.”
The arbitrator also listed seven points on which the City was “ordered to cease and desist.” The first six had specifically to do with the technical powers of the OPO, but the last one read that the OPO could not “threaten individual members of APD” or engage in “monitoring individual officer’s conduct.” This was based on a letter that Muscadin wrote to APD management after not getting her way in a particular case.
Some readers may believe, as I do, that the City needs stronger police oversight powers. But, due to the illegal way the City handled this situation, they ended up with less oversight powers than they had before they were sued.
Epilogue
Some of these policies pursued by the Casar-Adler Councils might have been good things in a less complicated world. But, clearly, whatever their intention, those Councils were — at best — reckless in complying with the law. That cost the City not only legal fees, but credibility and, among other things, could provide ammunition for more attacks on the City’s powers by the legislature.
Likely the next court action will be a ruling in the suit against Project Connect, which could come at any moment.
Will the City be able to stop its losing streak in that case? And is the current Council’s first major legal stumble an aberration or a sign of things to come? Stay tuned.
(This article was amended to add the parenthetical reference after the first paragraph pointing out that the Austin American-Statesman is not involved in the Statesman PUD.)
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