Cindy Ramirez and Elida S. Perez
Shortly after winning election in 2013,city Rep. LarryRomerobeganpushing city officials to hire afinancial advising firm without disclosing his ties to the company, an El Paso Times investigation revealed.
Former City Manager Joyce Wilson and her staff rebuffed Romero's efforts in 2013 to hire Estrada Hinojosa and Co. of Dallas to be a financial adviser for the city government. The City Council in 2012 had awarded a five-year contract to First Southwest of Dallas, and Estrada Hinojosa had been an unsuccessful bidder.
But acting at the direction of City Manager Tommy Gonzalez, who replaced Wilson in 2014, city officials earlier this year began the process to replace First Southwest as El Paso's financial adviser.Emails obtained by the Times under the Texas Public Information Act showChief Financial Officer Mark Sutter in September approved a recommendation to award the contract to Estrada Hinojosa and terminate First Southwest.
That effort was halted by Oct. 1, the emails show. The City Council was never made aware thatthe request for qualifications for a new financial adviser was issued in April, that the city was preparing to terminate its financial adviser,or that the effort was abandoned.
The El Paso Times last week discovered an audio recording in which Noe Hinojosa, the president and chief executive officer of Estrada Hinojosa, told the Canutillo school board that heand Romero were former business associates. Hinojosa revealed his relationship with Romero —and also boasted of his ties to Gonzalez — during an ultimately successful bid presentation to the Canutillo school board in October 2014.
Wilson and Gonzalez told the Times they were never made aware of Romero's ties to Hinojosa.
Hinojosa confirmed his past business ties to Romero in an interview with the Times. Romero did not respond to multiple requests for comment.
The Times investigation into the city's attempts to seek a new financial adviser also discovered that Hinojosa had given multiple donations to one of city Rep. Emma Acosta's keyprojects. The donations were solicited by Carlos Aguilar III, a former county commissioner turned lobbyist who was implicated, though never charged, in a 2006 bribery scheme.
Acosta said she never asked Aguilar to solicit Hinojosa. Aguilar didn't respond to an email requesting comment.
Both Romero and Acosta serve on the City Council's Financial and Audit Oversight Committee.
At issue is a lucrative contract for financial advising, which pays a percentage of the city's financial portfolio or amount of bonds sold. The contracts are typically awarded through a competitive process.
The city in 2013 was getting ready to issue more than $60 million in bonds for the Downtown ballpark, and had $473 million in bonds for quality of life projects in its portfolio — both of which had been approved in 2012.
According to interviews as well as documents obtained by the Times under the Texas Public Information Act, Estrada Hinojosa had competed for the financial advising contract in 2006-07. First Southwest was awarded the contract. Estrada Hinojosa competed for the contract again in 2012 as the city entered into negotiations to build the Downtown ballpark, but the City Council instead voted to extend First Southwest's contract to September 2017.
Former city Chief Financial Officer Carmen Arrieta Candelaria confirmed that Hinojosa called her soon after the May 2013 elections asking to be considered as the city's financial adviser or co-adviser. She said she told Hinojosa that a contract was already in place and there were no plans to put out a request for qualifications.
Hinojosa said he had not done business with the city of El Paso since about 2000, and that the contract was an opportunity to get his company's name back out in the community.
"I took it upon myself to tell the story of how well our firm has done and what we can offer if the opportunity arose," Hinojosa said, denying any wrongdoing. "It's a very competitive business."
Wilson said that soon after Romero's election in spring 2013, Romero invited her to a meeting with a representative of Estrada Hinojosa to discuss the contract.
"I advised we had just completed a procurement process which this firm participated in but was not successful," Wilson said. "I advised Mr. Romero that I would not recommend reopening the (bid) process since we were in midst of several bond sales over next 12 to 18 months and we had just issued a new contract."
Estrada Hinojosaworks in different capacities with various cities, agencies and school districts across the state, includingtheEl Paso Independent School District,the Camino Real Regional Mobility Authorityand, previously, the Ysleta Independent School District.
The company last year was awarded the bid to be the financial adviser for the Canutillo Independent School District. During an interview with the board on Oct. 1,2014, is when Hinojosa touted his relationship with Romero and Gonzalez as he explained how he wanted to expand the company's El Paso presence.
In anaudio recording of that meeting that is posted on the district's website, Hinojosa was asked by a board member if he planned to have a permanent office in El Paso. He said he planned to do so, then outlined a series of governments that he planned to work with, including the city of El Paso.
Hinojosa said he had an office in El Paso about 12 years ago "with a gentleman named Larry Romero, who about two years ago called me and said, 'Mr. Hinojosa, I just wanted to let you know that I ran for City Council.' And I said, 'Why did you do that?' Because we tried to get into the bond (business) that was really heavy back then but it was a little frustrating for me in terms of how we had to go out and get this and the opportunity to compete comes very seldom."
When Romero ran unsuccessfully for the El Paso Community College Board of Trustees in 2000, an El Paso Times story listed hisemployers at the time as the El Paso Diablos and a Dallas-based financial adviser.
Romero’s biography on the city’s website and his profile on the LinkedIn social network list jobs he’s held going back to 1980, but neither mentions his work with Hinojosa.
Hinojosa also touted his relationship with Gonzalez as he toldthe Canutillo school board about his expansion plans.
"The city of El Paso, Tommy Gonzalez, the new city manager, someone who I've known literally eight years. We have worked very closely in the past, in his past, in my past. So I'm very hopeful."
In an interview with the Times, Hinojosa said he has had an "arms-length" relationship with Gonzalez, having served as an underwriter in several cities where Gonzalez has previously worked, including Dallas and Irving.
Gonzalez said he has had relationships with numerous financial advisory firms while serving in Texas municipal governments, including Estrada Hinojosa and First Southwest.
"Throughout my career I have worked with many financial advisers and underwriters. I first recall meeting Mr. Hinojosa in the '90s, when the city I was working in heard a presentation from his firm," the city manager said.
Although the city's financial adviser contract with First Southwest runsinto 2017, the city in April posted a request for qualifications for a financial adviser, records show. Sutter, the city's chief financial officer, said he posted the bid solicitation after City Council members expressed dissatisfaction with First Southwest during a July 2014 budget hearing.
But video of the meeting shows that Romero was the only one to raise the subject.
“This is more directed toward Mr. Gonzalez," Romero said."I had mentioned to you before (but) just as a reminder —my own personal opinion—but I would like to see the city go out to see if we can look again at our financial adviser and the companies we use for the bond underwriting in the next couple of months,” Romero said.
Gonzalez asked Romero if he meant to search for bond underwriting or financial advising, to which Romero replied “advising.”
“I’m sure the city manager and I talked about his comments … but I don’t remember any other direction from the city manager,” Sutter said.“That’s something that now we (city staff) are more particular about — how we take direction.”
Gonzalez said other council members, whom he didn't name, expressed concerns over the way First Southwest handled the sale of bonds for the new Triple-A baseball stadium in 2013.
"Several council members had shared their displeasure on how the ballpark financing issues had been handled," he said. "Pursuant to that public dialogue, I did concur that the RFQ go forward."
Four companies responded with bids for the financial adviser contract, including First Southwest and Estrada Hinojosa, according to records obtained under the Public Information Act.
On Sept. 1, city Purchasing Agent Haydee Pena sent an email to Assistant City Attorney Sol Cortez saying Estrada Hinojosa had won the financial adviser bid.
"The RFQ is priority for Dr. Sutter and would like a quick turnaround. Please let us know by whenyou could have the agreement drafted. In addition, we will also need to terminate the currentcontract," Pena wrote in the email, which was obtained by the Times through an open records request.
On Sept. 22, Pena wrote that Cortez had said she was reviewing to see if the city was compliant with recent changes in state law.
However, on Oct. 1, Sutter sent an email saying: "This procurement process is on hold for now."
Sutter and Gonzalez said they learned in September that concerns raised about First Southwest's performance on the ballpark bonds were unfounded.
"I was very aware that council was not satisfied with the actions that had taken place regarding the ballpark financing. However, what I did not know were the details surrounding the direction given to the financial advisers," Gonzalez said. "When our city attorney shared that information, I directed staff to withdraw the RFQ."
Officials with First Southwest declined to comment.
Emails obtained by the Times showthat Romero was not the only council member with an Estrada Hinojosa connection.
The company has given two $500 contributions to city Rep. Emma Acosta's "Movies Under the Stars" series, which shows films in the summer at different parks in her district.
The contributions were the result of an email to Hinojosa from Aguilar, a longtime controversial figure in El Paso politics.
"Hello Noe," Aguilar's June 3, 2014, email says. "Attached you will find a request to sponsor 'Movies in the Park,'a summer event here in El Pasothat is spearheaded by Representative Emma Acosta. Please contact me withany questions you may have. Your prompt response to this is trulyappreciated."
On July 1, 2014,Hinojosa responded,"(W)e will be happy and honored to help with this cause."
Estrada Hinojosa made a $500 contribution in July 2014 and another $500 contribution in February.
Acosta said she had "no idea" why Aguilar solicited Hinojosa to donate to one of her signature projects.
“I’ve known Carlos Aguilar since he was a trustee at the community college, then he was a commissioner … youknow these people,” Acosta said. “He’s not a personal friend of mine, but you know them.”
When asked why she accepted a contribution from a company interested in obtaining a city contract, Acosta said,"I was not aware, until recently, that the Hinojosa firm had submitted a proposal for services to the city."
She addedthat a number of firms with city contracts are sponsors of her summer film series.
“I have always disclosed all sponsorships on a regular City Council agenda for purposes of transparency,” Acosta said. “We send out hundreds of letters, over 200 letters every spring to get contributions,”
Aguilar was a two-term county commissioner and became a lobbyist after being voted out of office in 2002.
Aguilar was identified in federal court testimony in 2012 as an intermediary of former County Judge Anthony Cobos in an effort to extract payments for Cobos' support on projects.
Ruben “Sonny” Garcia, who pleaded guilty to corruption charges, testified in the trial of co-defendant Cirilo “Chilo” Madrid. Garcia said Aguilar and Cobos pushed him for money in exchange for Cobos’ support of awarding Garcia’s company, LKG, a contract to run a federally funded children’s mental-health program.
Aguilar was not charged in the case.
Romero nominated Aguilar for the City Plan Commission earlier this year, but withdrew the nomination in the wake of a public outcry.
City Rep. ClaudiaOrdaz said she first became aware of Estrada Hinojosa's interest in the financial adviser contract after receiving an odd text message in November 2014.
Gonzalez was organizing a trip to Dallas for Ordaz and city Reps. Dr. Michiel Noe and Ann Morgan Lilly. He sent a text message setting the date for Dec. 17.
Hinojosa responded to the text exchange: "This is Noe Hinojosa. Hope all is well. I don't think I'm supposed to be getting these texts yet."
The city manager said he misfired the text message to Hinojosa, whose first name is the same as city Rep. Noe's last name.
Gonzalezsaid he took council members to visit projects he was responsible for during his workin Irving, and for meetings with companies interested in coming to El Paso. He said Hinojosa was not part of the trip.
Ordaz said she learned after receiving the text that Estrada Hinojosa was interested in taking over as the city's financial adviser.
“Why on earth would the city be interested in hiring this new firm when First Southwest has been doing a good job?” Ordaz said.
“The city manager said he didn’t know about this, that he had only met Noe Hinojosa for the first time last year during a TxDOT visit to El Paso,” Ordaz said.
The Texas Transportation Commission met in El Paso in October 2014. Ordaz and other city officials, including the city manager, attended an event during the commissioners' meeting, she said.
Gonzalez said he doesn't recall saying that he met Hinojosa for the first time in 2014.
In February, Ordaz and other elected officials and city leaders attended El Paso Days in Austin.She said Hinojosa approached her at the closing reception in Austin and insisted his firm should be the city’s new financial advisers.
“He was really aggressive and he was driving it home that he should get the contract,” Ordaz said. “I told him I hadn’t seen any wrongdoing with First Southwest.”
Elida S. Perez may be reached at 546-6137;eperez@elpasotimes.com; @ElidaSPerezEPT on Twitter.
Cindy Ramirez may be reached at 546-6151; cramirez@elpasotimes.com; @EPTCindyRamirez on Twitter.
