One of the state's most powerful and connected lobbying firms has given thousands of dollars' worth of free office rent to the state Mexican American Legislative Caucus and its nonprofit foundation despite state laws that prohibit campaign contributions to lawmakers during the state legislative session.
These donations raise questions about a serious conflict of interest: Can lobbyists funnel money to a group of lawmakers during the few months when they are crafting and voting on bills that could benefit, or harm, those same lobbyists?
Bill Miller says the rent his firm, HillCo Partners, provided to the all-Democratic caucus -- and to the Mexican American Legislative Leadership Foundation that shares the office -- is legal under state ethics rules. State law bans legislative caucuses from accepting "direct or indirect transfer of money, goods, services, or any other thing of value" from nonmembers during the legislative session, but the state Ethics Commission may have created a narrow loophole in 1994 allowing for contributions of free office rent in some cases.
HillCo, whose client list this year includes AT&T, Blue Cross Blue Shield of Texas, Continental Airlines and Microsoft, leases space in the historic Goodman Building, a former grocery store at 202 W. 13th St. in Austin, within spitting distance of the state capitol's pink granite dome.
HillCo has given free rent to the caucus and its foundation for two years now; the foundation has valued the rent payments at about $5,000 a month, for an annual contribution of about $60,000.
“We took the lease on the building. It’s close to the capitol. They are a big caucus, and they thought, ‘Well, it’s very convenient,'" said Miller, a veteran campaign consultant with ties to Gov. Rick Perry, former House Speaker Tom Craddick, among other key players. In an interview, Miller said the free rent was an in-kind donation, although it was not noted as such on the foundation's campaign finance forms dating back to 2007.
He cited a 1994 opinion from the Texas Ethics Commission that said a "legislator-elect" may accept "a political contribution in the form of office space" for use as a district office if the use will continue during the legislative session.
When pressed about HillCo’s relationship with the caucus beyond the gratis rent deal – including questions concerning any benefits it may have reaped from the generous gift of free rent to the caucus -- Miller declined to answer further questions, including questions about how long-serving members of the caucus might be considered legislators-elect.
“As far as I’m concerned, there is nothing else to discuss on the subject,” Miller said in an e-mail.
Calls and e-mails to the caucus and the foundation were unanswered.
Caucus chairman Trey Martinez Fischer, a Democratic state House member from San Antonio, did not return two e-mails. A representative from his office made contact with Texas Watchdog but failed to follow up.
HillCo: Plugged in and powerful
There are a lot of lobbying firms in Austin, but HillCo is one of the most plugged-in and powerful. Founded by Miller with former Democratic state House member Neal "Buddy" Jones, the firm's client list this year also includes General Motors and the pension systems for both Houston police officers and non-police municipal employees, among other big names. Another of its major clients, Blue Cross Blue Shield of Texas, actually owns the Goodman Building, which is also home to the Cloak Room bar, the famed watering hole for legions of lawmakers and lobbyists (and the site where Sen. John Whitmire was alleged to have tried to get a bartender fired a few years ago for refusing to serve him when he was drunk).
Miller served on Craddick's transition team in 2002, and the PR firm he headed before launching HillCo included among its employees Anita Perry, wife of Gov. Rick Perry. The liberal watchdog group Texans for Public Justice has called HillCo's political action committee "a known pass-through for GOP super donor Bob Perry," naming the powerful homebuilder as one of the firm's most prominent clients.
For years, HillCo has also provided financial backing for Mexican American Legislative Caucus events and members. A recent example: In 2008 MALC caucus chair Fischer, received $12,950 in 2008 from HillCo related sources, including two donations of $2,500 from Neal Buddy Jones.
The caucus counts more than 40 members this year and constitutes more than a quarter of the Texas' legislature's 150-member lower chamber.
Along with corporate heavyweights including Anheuser-Busch, AT&T and Wal-Mart, HillCo is a sponsor of the caucus' foundation, which states its purpose as “fostering civic participation among Texas Latinos and educating the state's Hispanic communities on issues of particular consequence."
Do HillCo's payments violate the law?
Getting a definitive answer from the Ethics Commission about the legality of the HillCo rent donations to the caucus is difficult.
A 1997 opinion says it's illegal for a lawmaker to get free accounting services during session -- but it also suggests it's OK for a lawmaker to get free office rent, saying "a contribution of long-term use of real property" is different from receiving a service.
Tim Sorrells, the commission's deputy general counsel and spokesman, declined to specifically address the HillCo-MALC relationship -- the Ethics Commission staff says it is bound by state confidentiality laws that preclude it from speaking publicly about anything other than founded complaints. (In order for the Ethics Commission to actually take action on any issue, someone must first file a formal complaint.)
Texas Watchdog then posed a hypothetical question to Sorrells: If a lobbyist asked the commission whether it were legal to make a contribution of free rent to a legislative caucus, what would Sorrells tell them?
Sorrells said he would first refer the lobbyist to section 253.0341 of the state Election Code, which says that a legislative caucus may not knowingly accept contributions from nonmembers during the session-long moratorium period -- starting on the 30th day before regular session convenes and continuing through the last day.
Texas Watchdog spoke to seven prominent Texas lawyers and academics -- including in the group both Republicans and Democrats -- seeking comment on the propriety of both the actions of HillCo and the existing state law prohibiting campaign donations during legislative sessions. Six of them declined to speak on the record, citing policies at their respective organizations or a personal reservation.
The one who would speak on the record was Eric Opiela, a former general counsel for the state House of Representatives who recently stepped down as executive director of the Republican Party of Texas. "On its face, it appears a violation occurred," he said.
HillCo first shows up in public as paying rent for the foundation in August 2007.
That year, the foundation states on its IRS Form 990 tax filing that it paid $27,729 in rent. Campaign finance forms indicate that it paid that amount to HillCo, but HillCo reimbursed the money – via a contribution for the exact same amount, down to the penny.
On Feb. 6 of last year, the foundation sent a check for $5,041.66 to HillCo Partners for rent. Three days later, the foundation reported a contribution from HillCo Partners – for $5,041.66. The same thing happened each month from March through June, exact change passing in the mail, expenditure for rent duly noted, but the in-kind contribution box on the requisite finance reporting form was blank. The monthly contributions covered the duration of the legislature's regular session.
For reasons that were not immediately clear from the disclosure forms, for one month -- November 2007 -- the caucus, not the foundation, reported a payment of $5,041.66 to HillCo for rent, with no corresponding credit in the form of a contribution from HillCo. Instead, the exact same amount -- $5,041.66 -- was contributed to the foundation, which reported no rent payment for that month to HillCo.
In the two years that the foundation has reported the rent-for-donation exchange in its campaign finance forms, the box that denotes an in-kind contribution has never been marked.
Texas Watchdog Staff Writer Mark Lisheron contributed to this story.
Top donors to HillCo PAC, as of Jan. 1, 2010
A Texas Watchdog analysis of Texas Ethics Commission data
Bob Perry, prominent homebuilder and major GOP donor: $1.2 million
Stephen Jones, executive for the Dallas Cowboys and son of Cowboys owner Jerry Jones, $295,500
- Jerry Jones Jr., head of marketing for the Dallas Cowboys and son of Cowboys owner Jerry Jones, $131,585
Neal T. "Buddy" Jones, co-founder and partner in HillCo, $119,500
Good Government PAC, Corpus Christi-based PAC tied to major Democratic donor Mikal Watts, $100,000
James "Mattress Mac" McIngvale, owner of Houston's Gallery Furniture stores, $75,000
Charles Butt, scion of the HEB grocery store family, $68,500
Dan Pearson, lobbyist for HillCo, $65,130
Marc Samuels, HillCo partner, $56,500
(Tie) Jerry Jones, Dallas Cowboys owner, and Paul Foster, head of Western Refining, both $55,000
Bill Miller, HillCo co-founder and partner, $52,500
Contributions made by HillCo PAC, as of Jan. 1, 2010
A Texas Watchdog analysis of Texas Ethics Commission data
Contributions to HillCo PAC, as of Jan. 1, 2010
Data from a Texas Watchdog analysis of Texas Ethics Commission records
Photo of the Goodman Building by flickr user rhaaga, used via the Creative Commons license.