Interim City Manager Jesús Garza told Council he’d enlist former staffers, but didn’t get Council approval for their pay (art by Zeke Barbaro / Getty Images / Garza photo by John Anderson)
Independent investigators found that Jesús Garza violated city ethics rules when he awarded lucrative contracts to two consultants – one a longtime Garza deputy and another a longtime ally of Mayor Kirk Watson – without seeking City Council approval.
The findings, which confirm Chronicle reporting from one year ago, were published in a report issued by the Office of the City Auditor on Nov. 8. Investigators with accounting firm Weaver and Tidwell found that early into Garza’s tenure as interim city manager, he authorized the two contracts with Joe Canales and Laura Huffman (the latter through her consulting firm CivicSol) that would pay each individual $268,375 and $285,000, respectively, throughout 2023.
Now, the Ethics Review Commission will decide what to do with the complaint that prompted the outside investigation (city code requires that complaints against Council members, their direct staff, or Council appointees – like the city manager – be investigated by an outside group rather than the city auditor). If commissioners agree that Garza violated city policy, they could formally reprimand Garza, even though he left the city in April. The hearing could occur at the ERC’s December meeting.
The total payments to Huffman and Canales far exceeded the level of expenditure the city manager is allowed to authorize without Council approval, per the City Charter (at the time, the amount was $76,000). “While a salaried city official,” the investigators wrote in their report, “[Garza] used his official position to secure a special privilege” for Canales and Huffman.
“[Garza] used his official position to secure a special privilege” for two friends – Report from accounting firm Weaver and Tidwell
To do that, Garza – with, according to the report, the help of the city’s Chief Financial Officer Ed Van Eenoo – used an existing contract the city had in place with consulting firm PFM Financial Advisors. Subcontracts under the 2017 master agreement with PFM were then executed with Huffman and Canales that indicated they would perform the kind of financial advisor services the city had originally contracted with PFM to provide. This was the basis for Garza’s ethics violation.
But, the report reads, Huffman and Canales worked as “de facto Assistant City Managers” and reported directly to Garza. Our sources indicated that the two consultants had their hands in a variety of city projects, which fell outside the scope of the PFM contract, and that Huffman was perceived to be working closely with Watson.
The outside report does not contain many new facts that were not already reported in our Sept. 15, 2023, story (the anonymous complaint that triggered the outside investigation was filed two weeks later). Interviews conducted with Garza and Van Eenoo did reveal, however, the CFO’s involvement in the scheme and that – according to Van Eenoo – Garza said he had deployed similar schemes when he was Austin’s city manager in the late 1990s and early 2000s.
When our story published, Council reaction was muted. When we presented our findings to Council, most declined to comment. Others said they didn’t have enough information.
Only Watson commented on the record. “Council brought in Garza to stabilize this huge and complicated organization in the wake of a major upheaval,” Watson said at the time. Watson also claimed Garza “brought in several experienced professionals who know how to make this organization run well. That’s good management.”
Reached this week, the mayor said, “I’ll respect [the ERC] process and let it be completed.”
