Austin council member receives sanction, attorney uses 'Death Star' law as part of defense

District 3 City Council Member José Velásquez will receive a sanction for failing to report certain disclosures and sources of income in his 2021 and 2022 financial statements.

The Austin Ethics Review Commission on Wednesday voted 6-2 in favor of a letter of admonition that says he violated city code by failing to disclose income while he was self-employed, but that the violations were minor or might have been unintentional.

The complaint centered on his involvement with the East Austin Conservancy, which focuses on housing affordability in East Austin. Velásquez had served on the conservancy's board, resigning in October 2021.

"I made a clerical error, which I acknowledge and accept full responsibility for as the error of a new candidate and officeholder," Velasquez said in a statement. "When notified of the error, I immediately made the proper adjustments to the paperwork."

Daniel Llanes, the chair of the Govalle/Johnston Neighborhood Plan Contact Team and a community activist, filed the complaint after learning of Velásquez's involvement with the conservancy when he recused himself on the Borden Tract Project city council vote in June. The project could bring a large mixed-use development in East Austin at the site of the Borden Dairy plant, next to the Colorado River and a wildlife preserve, and has been protested by several community groups.

"We had no idea that he had had a relationship with the East Austin Conservancy until afterwards," Llanes said during the hearing. "When I talked to the EAC, that's when they told us that actually he was not on the board for the previous year, but he had been hired as a consultant."

In addition to the sanction, the hearing raised new questions about the Texas "Death Star" bill and its place in local government.

Beginning Sept. 1, the bill will remove local governments' ability to implement ordinances or regulations on issues addressed by the state in its eight codes of law: Agriculture, Business and Commerce, Finance, Insurance, Labor, Natural Resources, Occupations and Property.

Velásquez's attorney, Ross Fischer, used the bill as a part of his defense against the allegation, telling the commission during the hearing that "any enforcement action that anyone tries to undertake after September 1 would be subject to challenge and to a lawsuit which is authorized by the new legislation."

Velásquez declined to comment on his attorney's decision to cite the "Death Star" legislation.

Texas law does not require disclosing specific client information in these kinds of financial statements, just the source of income, Fischer said. But Austin takes it a step further.

If self-employed, city code in Austin requires that names and addresses of clients or customers be listed on financial statements if compensation is at least 10% of an individual's gross income, or $5,000.

Fischer noted that Velásquez would be considered as self-employed during Wednesday's hearing.

"My client's filings were compliant with the state law, disclosed everything that he was obligated to disclose under state law," Fischer said. "Omissions, to the extent that they exist, were completely inadvertent."

Wednesday's hearing was initially scheduled to be a preliminary hearing. Depending on what the commission decided, a final hearing could have occurred and would have taken place after Sept. 1. Fischer made no efforts to push for a second hearing after Sept. 1.

Bill Aleshire, the attorney representing complainant Daniel Llanes, didn't agree with Fischer's assessment, but he acknowledged the confusion raised by the bill.

"I don't think he's right, but he's raised an important question and that is whether or not the section under which we comply is still going to be valid law as of Sept. 1 when the so-called Death Star state statute takes effect," Aleshire said at the hearing Wednesday.

Cities like Houston and San Antonio have filed lawsuits against the state calling the new legislation unconstitutional, and city leaders in Austin have said the city will be defending ordinances in what many feel are impending lawsuits against the city.

The bill was proposed by Republican members of the Legislature in response to the Austin City Council's previous attempt to institute a paid sick leave ordinance in 2018, according to one of the bill's original sponsors.

This article originally appeared on Austin American-Statesman: Austin City Council member uses Texas 'Death Star' bill in ethics case