in Houston, Texas

Sports authority ties could get sticky for Houston mayoral candidate Gene Locke

Friday, Oct 02, 2009, 02:36PM CST
By Jennifer Peebles & Steve Miller

Houston mayoral candidate Gene Locke's law firm has made more than a half-million dollars in the past three years from a government agency that is looking at a $4 million bailout from county taxpayers -- and his election to the city's top post could present a conflict of interest for him.

Locke's firm, Andrews Kurth, serves as legal counsel for the Harris County-Houston Sports Authority, the agency that manages the venues for Houston's three most prominent pro sports teams. The sports authority may need an extra few million bucks from taxpayers because of a stadium bond deal that went bad -- a bond deal that was supposed to cost Harris County residents nothing.

Locke

And if issues involving the sports authority came before a City Council headed by Locke, he could find himself with a conflict of interest, as any number of possible actions by the sports authority could generate more billable hours for the firm and generate more money for it. A bailout from the county taxpayers would not require City Council approval, but other issues might -- and Texas' attorney general opined more than a decade ago that the Houston city government has as much of a stake in the sports authority as does Harris County.

A former Houston city attorney, Locke stepped down as general counsel for the sports authority, giving up the $640-an-hour fees that went with the job, when he announced his candidacy for mayor in April, authority Executive Director Janice Janis Schmees said.

His resignation was not submitted in writing but verbally, Schmees said.

Schmees

But Locke remains a partner with the firm, and his replacement as general counsel, fellow Andrews Kurth attorney Mark Arnold, began attending sports authority board meetings in his place.

The authority runs various sports venues and stadiums including those that are homes for the Astros of Major League Baseball, the Texans of the National Football League and the Rockets of the National Basketball Association. It recently said it may have to take $4 million from Harris County taxpayers after a firm that issued insured stadium bonds, MBIA, ran into financial problems in last year's economic downturn.

As Houston's KTRK ABC-13 first pointed out, Locke noted his work with the sports authority on his campaign Web site: "First as city attorney, then in private practice, he led the negotiations and development of Minute Maid Park, Reliant Stadium and the Toyota Center."

His six-figure ties to the sports authority suggest a candidate, who, if elected, would have to choose between the best interests of the people and the financial realities of his firm.

Texas Watchdog sent the Locke campaign a list of questions about Locke's relationship with the sports authority. The campaign declined to answer any of them, saying it would respond only in a one-paragraph statement via e-mail.

“When I am mayor every decision I make will be based solely on what is best for Houstonians," Locke wrote. "... When I am elected my only debt will be to the people of Houston.”

Locke's work

The appearance of impropriety in such a case is common although not always deserved, said Mark Rosentraub, a University of Michigan professor who has authored several books on public and private sports enterprises.

"People change jobs all the time," Rosentraub said. "But what has to be done is to look at the ethics laws, see just how he will divest himself from his law firm, and then monitor that person's behavior. He would most likely have to recuse himself if that sports authority has business before the city council."

Andrews Kurth has billed the sports authority $574,000 since 2007, according to sports authority records Texas Watchdog reviewed under the state Public Information Act.

Locke's work for the authority included everything from attending board meetings --  one board meeting was billed to the tune of $1,408 -- to meeting with the authority chairman and Schmees. That came in at a cool $832.

Locke handled many of the agenda items while Arnold worked, at a rate of $525 an hour, on analysis and memos. Kathleen Bethune, a senior paralegal at Andrews Kurth, worked on drafts and meeting preparations, billing $210 an hour.

Locke continued to sign invoices for Kurth after announcing his candidacy; in a letter accompanying an invoice dated April 23, he advised his client to call him with “any questions or concerns.”

"He signs documents because he is the billing lawyer (for) that account," Locke campaign policy director Jesse Dickerman said in an e-mail. "He has been CC’ed on communication as a courtesy."

Dickerman added that Locke last attended a sports authority board meeting in the capacity of board lawyer in February, two months before announcing his candidacy.

Locke also remained involved in communications between Kurth and the authority. He was copied on a collections letter from Kurth's receivables department to the authority dated June 12, and on e-mails involving a perceived discrepancy in pay from the authority in July. Correspondence to the authority from Arnold, Locke's replacement, was written on Locke's Kurth letterhead as late as July.

Schmees said she was not aware of Locke's connection to any authority business after his verbal announcement that he was removing himself as general counsel.

"To my knowledge Gene was not involved, and HCHSA staff had no work-related communication with him after his decision to run for office," she said in an e-mail.

UPDATE and CORRECTION, 3:38 p.m. Oct. 2, 2009: We've updated this story to reflect that we originally misspelled Sports Authority Executive Director Janis Schmees' first name and that MBIA was the insurer of the stadium bonds.

Contact Steve Miller at stevemiller@texaswatchdog.org or 713-980-9777.

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Comments
Janis Schmees
Friday, 10/02/2009 - 03:15PM

If you're going to post something, it would be most helpful to the public if you ensure the facts are straight first. Your post is full of inaccuracies.

As I've already put in writing to you (so there could be no room for misinterpretation): The PARKING REVENUES from Reliant Stadium were pledged as back-up to any shortfall that could occur as it relates to a portion of bonds issued for the construction of Reliant Stadium. Pledging parking revenues (up to $4 million) should never have been translated by you as a "$4 million bailout from county taxpayers."

Secondly, you verbally asked me when Gene Locke resigned as legal counsel for HCHSA. I stated that it was definitely in advance of his public announcement to run for Mayor, but I honestly couldn't remember the date. You quoted me as saying it was in April when he announced his candidacy for Mayor.

Next, you make the claim that taxpayers will have to pay "after a firm that issued stadium bonds, MBIA, ran into financial problems in last year's economic downturn." Wrong again. MBIA never issued any stadium bonds. They were and still are the bond insurance company that guarantees payment if for any reason revenues are insufficient.

Lastly, when quoting someone in the future, you really should double check the spelling of their name. As small of a detail as that seems, it's definitely worth looking into... because if you spell their name incorrectly, it may cause people to wonder how many other details you may have gotten wrong.

Best regards,

Janis Schmees

Lee Ann O'Neal
Friday, 10/02/2009 - 05:08PM

Dear Ms. Schmees, I'm sorry to hear of your disappointment with the story, but we welcome all comments from readers, and we're glad you posted your thoughts.

We have updated the story to reflect the correct spelling of your first name and to clarify that MBIA was the insurer of the bonds. We regret the errors.

However, on your other points I'm afraid we will have to agree to disagree.

Public money may be needed to cover the possible $4 million shortfall. In our minds, public money is taxpayer money, whether it comes in the form of property taxes, parking fees or library fines, and using public money to cover the difference would constitute a taxpayer bailout.

More reporting on this may be found at the Houston Chronicle and KTRK ABC-13 Web sites, and we link to them in the story. For example, the Chronicle reported on Sept. 13: "Harris County may be forced to pay $4 million or more to the Harris County-Houston Sports Authority due to a cascading series of challenges initiated when $117 million in stadium bonds soured at the peak of the financial crisis last year. The payments indirectly could upend a promise to taxpayers that public money would not be spent on professional sports stadiums."

You also raise a concern about the date Gene Locke resigned as legal counsel for the sports authority. Our reporter, Steve Miller, recalls that when he asked you about this on Tuesday, you said that Mr. Locke resigned in April at the time he announced his candidacy for mayor. This is reflected in Steve's notes from the conversation.

Thank you again for reading and writing in.

Best regards,

Lee Ann O'Neal, deputy editor

leeann@texaswatchdog.org

AR
Friday, 10/02/2009 - 06:06PM

Nice glamour shot of Ms. Schmees. LOL!!! Somehow it doesn’t quite project a “carefully watching the taxpayer dollar” message.

John Cobarruvias
Friday, 10/02/2009 - 09:44PM

$650/Hour?!?!?!? And we wonder why parking at Reliant was $20 for Westlemania?

Janis Schmees
Sunday, 10/04/2009 - 12:03PM

So, from your viewpoint, if someone chooses to park in one of the stadium lots and pays for that parking... you consider those parking revenues to be public/taxpayer money? If they buy a hotdog from the concession stand inside the stadium is that also considered public/taxpayer money in your eyes? If so, then I better understand your original post and postion on the issue... and I guess you are correct - we'll just have to agree to disagree. I truly thank you for allowing me to express my thoughts.

Slampo
Tuesday, 10/06/2009 - 09:52AM

"So, from your viewpoint, if someone chooses to park in one of the stadium lots and pays for that parking... you consider those parking revenues to be public/taxpayer money? If they buy a hotdog from the concession stand inside the stadium is that also considered public/taxpayer money in your eyes?"

Which gives rise to the question ... how much is Ms. Schmees paid per annum?

Revenue from a parking fee imposed at a public (taxpayer-financed) facility is damn straight "public money," and unlike the hotel-motel tax it falls mostly on locals like Mr. Cobarruvias who attend events at the complex and have no choice but to pay the ridiculously high fee ... unless they walk or take the train. (Yeah, $650 an hour for assembling legal boilerplate and initially documents--that's good work if you can get it, astoundingly good work.). The buyer of a hot dog inside the stadium presumably made his or hr purchase from the monopoly franchised authorized hot-dog dealer, thus the charge for most of the hot dog, all but that last bite with no meat--after taxes and whatever pittance the franchisee pays for the franchise--goes to the private vendor.

BTW and for a little context, Ms. Schmees' Facebook page lists her as a fan of Mr. Locke and links to his own mayoral campaign Facebook thingee.

tired dog
Wednesday, 10/07/2009 - 02:51PM

Just wondering about the toll road money that found its way to the sports authority's bank account, and the fact that SA's bonds are basically junk...just wondering...now about that cockeyed deal to hang a jail on the soccer pork TIRZ...

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