District 3 Council Member José Velásquez will receive a civic ethics sanction stemming from a complaint that he failed to list past sources of income and affiliations on city financial disclosures.

The overview

Daniel Llanes, president of the Govalle/Johnston Terrace Neighborhood Plan Contact Team, in July filed a city ethics complaint against Velásquez over the omissions. The complaint alleged four separate city code violations in some of Velásquez's mandated financial filings both as a City Council candidate and elected official.

Velásquez, a first-term council member for Southeast Austin's District 3, was elected in a runoff contest last December.

The complaint alleged Velásquez left out details about income he'd received in past years from the East Austin Conservancy, a local housing-oriented nonprofit, as well as information about his role on the conservancy's board.

The alleged violations included:
  • Failing to list the East Austin Conservancy as a substantial source of income in 2022 on a statement of financial information filed with the city as a council member in 2023, while later noting a personal conflict by listing the conservancy as an income source in a recusal affidavit he filed ahead of a City Council zoning vote
  • Failing to list other income sources on his 2021 financial statement filed in 2022 as a council candidate
  • Failing to list his role on the East Austin Conservancy board on 2021 and 2022 financial statements
Llanes' original July complaint and related documentation may be viewed here. An Aug. 11 response from ethics attorney Ross Fischer, representing Velásquez in the matter, may be viewed here.

What happened

During an Aug. 23 hearing over the complaint before the Austin Ethics Review Commission, Velásquez—through Fischer—admitted to three of the four counts.

To those three, Fischer said the mistakes were all de minimis, or minor, accidental and revised as soon as they were uncovered. To the fourth, he denied any issue with information related to the conservancy position in the most recent disclosure.

“These are inadvertent omissions that were promptly remedied, promptly corrected,” Fischer said. “Further, transparency was not undermined because it was obvious—on his social media pages, on his campaign collateral—that he had been affiliated with the East Austin Conservancy. So this was not a secret; this was not something that someone could only learn from looking at the [statements of financial interest].”

Commissioners voted 6-2 in favor of a sanction over the three items following that admission while also determining there were no grounds to take action on the fourth allegation.

“I don’t see how a lack of transparency could be considered de minimis,” commission Vice Chair Mary Kahle said. “I’m not an attorney, but I can figure out that that means minor or not very important, and I think that transparency is incredibly important in this city.”

Commissioner Michael Lovins agreed, saying while financial reports can be complex, diligence is expected from elected officials.

“I’m sensitive to the complexity of making sure that you dot all your i’s and cross all your t’s when you’re a first-time candidate,” he said. “But I’m a little troubled that someone who wants to have this much influence over our city can’t figure out what that [financial disclosure] provision means just by looking at it; I’ll just be blunt.”

Commissioners William Pumfrey and Ed Espinoza, who is married to Mayor Pro Tem Paige Ellis, voted against. Both said they believed the errors were inadvertent and didn't rise to the level of the sanction under consideration.

“I’ve worked on hundreds of campaigns,” Espinoza said. “Most campaign violations are inadvertent. ... But there’s also something to be said, if 95% of them are inadvertent, I would say a lot less proactively correct them. In this case, they’re saying something that as soon as he learned about these issues, he did something about them.”

Velásquez didn't respond to a request for comment as of press time.

The outcome

The commission's chosen sanction, a letter of admonition, is reserved for minor or unintentional violations.

The letter is the second lowest on a scale of five sanction options the ethics review board has for infractions. The lowest, a notification letter, can be used for “clearly unintentional” mistakes, while the harshest, a recommendation that an elected official be recalled, is reserved for more serious cases.

According to the city, the ethics commission's counsel is now drafting the sanctions letter. It will then be reviewed by Chair Luis Soberon and, once approved, issued to Velásquez and posted online.

The context

Velásquez's ties to the East Austin Conservancy became public as part of the contested rezoning of the Borden Dairy Co. plant in East Austin approved by city officials earlier summer. The issue came up as Endeavor Real Estate Group—the developer seeking to rebuild the 21-acre industrial site into an expansive residential, hotel and commercial project—offered the conservancy funding for its affordable housing efforts in the area through the redevelopment's community benefits package.

Velásquez, who represents the surrounding District 3, removed himself from the zoning debate before council took up the case this year after learning of the developer-conservancy partnership.

While Fischer said he cited his relationship with the East Austin Conservancy in a recusal affidavit at that time based on advice from city lawyers, he had not shown those ties in past financial documents he'd submitted to the city, which Llanes said prompted his complaint.

During the August hearing, Fischer said the omissions were unintentional and that Llanes’ complaint amounted to “retribution and petty scheming.”

“He did the right thing when this zoning case came to the City Council,” Fischer said. “He sought legal advice; he relied on the law department’s advice; he disclosed his relationship, and that bothered some people, obviously.”

Bill Aleshire, an attorney representing Llanes through the complaint process, said the corrections were overdue.

“Late disclosure of these kinds of things that are financial disclosures also cheat the voters out of information that they should have had during the election. They should have been able to see the information that is finally, only in July of this year, going forward,” he said.

Diving in deeper

The ethics commission's action may have come in just under a possible time limit.

Fischer suggested Austin's ethics process may fall under the scope of the local preemption measure House Bill 2127, dubbed the “Death Star bill” by its critics, which will go into effect Sept. 1. Once law, HB 2127 could block or roll back local city and county ordinances on a range of topics—including local government code—meaning any sanctions imposed in September or beyond may be open to legal challenges.

Aleshire pointed to that issue and praised the sanction vote in a statement following the hearing.

“Who would have thought that the first threat to sue Austin over the Death Star bill would come from an Austin Council [member] trying to repeal financial disclosure requirements of Austin’s Ethics Ordinance? But that’s exactly what Velasquez’s attorney argued even though the Act doesn’t take effect until September 1st,” Aleshire wrote in an email. “We are pleased that Council Member Velasquez will be held accountable for concealing sources of income from voters during the election.”