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Ethics Complaint: City Plan Commissioner Had Conflict of Interest in Uptown Zoning Case

After Wayne Garcia signed a contract with Edward and Paula Nemec, he personally provided them with real estate brokerage services while they opposed a zoning change being taken up in his district, according to an ethics complaint.EXPAND
After Wayne Garcia signed a contract with Edward and Paula Nemec, he personally provided them with real estate brokerage services while they opposed a zoning change being taken up in his district, according to an ethics complaint.
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City Plan Commissioner Wayne Garcia allegedly violated the city’s code of ethics when he got into business with two opponents of a zoning case for the chance of pocketing $195,000, according to an anonymous ethics complaint obtained by the Observer. The complaint is being taken up by the Ethics Advisory Commission in a hearing April 6.

The complaint alleges Garcia failed to evaluate a zoning change application in a timely manner and support or deny such development “following consistent standards fairly and uniformly applied to all applicants in District 14.”

This creates unwarranted expense for the city and an appearance of a conflict of interest that reflects imprudence and poor judgment, according to the complaint.

Contacted by the Observer, Garcia said he wasn’t allowed to talk about it. City Council member David Blewett, who appointed Garcia, told the Observer he wasn't able to comment.

The zoning case involves a high-end 397,500-square-foot mixed-use development at the northeast corner of McKinney Avenue and Boll Street. The application for the zoning change was made by Jamil Alam with the Austin-based developer Endeavor Real Estate. They bought the property, adjacent to the State Thomas Historic District, in 2019.

Upon completion, the development would be valued at over $175 million and would generate an estimated $4 million in property tax revenue, as well as sales tax revenue and economic activity for the city.

Between the time the zoning change application was filed on Jan. 27, 2020, and September, Garcia spoke with Edward and Paula Nemec, longtime residents of the area, about a business opportunity. The complaint names the Nemecs, husband and wife, as among the zoning case’s strongest opponents. They’ve repeatedly spoken against the development at informal community meetings organized by Garcia. The two have a property located 850 feet away from the site, and they wanted to retain Garcia and his real estate company, Garcia Hubach, to sell it.

The Nemecs did not respond to requests for comment.

Garcia was appointed as the Nemecs’ exclusive real estate agent. The property was listed at $3.25 million. With an estimated broker’s commission of 6% of the sales price, Garcia stood to make $195,000 on the sale.

After Garcia signed the contract, he personally provided the Nemecs with real estate brokerage services.

The Nemecs' property is a five-unit apartment building, and Garcia doesn’t appear to have any prior experience selling apartment buildings or anything with a sales price over $1 million, the complaint notes. The property is valued at five-and-a-half times the highest value listing previously reported by Garcia or his company.

According to his company’s website, they have three listings for sale with an aggregate price of $4,048,000  That means the Nemec property makes up more than 80% of the company’s advertised current inventory of for-sale listings. One of those properties was removed from MLS, a real estate advertising service company, bringing the aggregate price to $3,459,000. This means the Nemec property makes up closer to 94% of the company’s advertised current inventory of for-sale listings.

This gives Garcia a financial interest in the zoning case, which is in conflict with his duties in the public interest.

All he had to do was disclose this conflict of interest and recuse himself from the zoning case, but he didn’t.

Instead, he focused “excessive attention” on the zoning case compared with other active cases in District 14, the complaint claims. He became more involved making demands and “unclear requests” of the applicant that weren’t asked of others, which allegedly prolonged the process to nearly 11 months.

Throughout the case processing period, the Nemecs were vocal opponents, saying if the case was approved, it would harm their economic interests.

Residents of the State Thomas Historical District are protective of their community. The area used to be a rural freedman’s town. A recent Dallas Morning News article took a dive into the history of State Thomas. Formed in the 1860s, railroads eventually caused a huge surge in the population and an economic boom in the area.

“It was the heart and soul of Black Dallas for a while,” Marsha Prior, a historic preservation planner for the city told the News. “We blinked and it became Uptown.”

In the 1940s, the railways that had made State Thomas a thriving community were ripped out and replaced with U.S. Highway 75. This kept some regular customers from shopping at businesses in the area. Other businesses were destroyed in the process. The neighborhood eventually obtained a historic designation in 1986, but there were few historic properties left by then.

Today's property owners in the district are cautious of overdevelopment, though during City Plan Commission meetings, residents in the area said they're open to progress as long as it's done right.

Some thought the proposed development was already being done right. When the zoning case was presented during a Dec. 17 CPC meeting, it had a recommendation of approval from staff and support from the Oak Lawn Committee, a community group formed to deal with quality of life issues in the area.

Garcia voted to hold the case over until Jan. 21. “We have significant changes coming, so just wanted to let everybody know,” he said.

When that meeting came up, he voted to hold the case over until Feb. 4. When that meeting came up, he voted to hold the case over for yet another month to get more community comment. The Nemecs spoke in opposition to the case this meeting.

“I just wanted to let everybody know, we’ve held this off a little bit, but we are really working with the neighbors in the State Thomas District and also with the applicant, and it looks like we’re making some good headway,” Garcia said. “So, I’m resistant to present anything. I’m resistant to brief it, and I’m resistant to have speakers in opposition or support of it at this point because I’m hoping we have some major, drastic changes, positive changes. So, if you can be patient with me, I thank you for indulging me on this one-month wait again, and I appreciate it. Thank you.”

Other commissioners had their own questions about the development but ultimately supported it, saying they appreciated Garcia’s work on the case. With several changes to the proposed development, Garcia and a majority of the commission voted in favor of the zoning change on March 4.

The Nemecs spoke in opposition then, too. Edward Nemec said the Endeavor Real Estate Group was taking advantage of the Uptown area.

"This developer wants to change the rules — changes that benefit them only and prove to be destructive to the State Thomas Historic District,” Edward Nemec said.

Paula Nemec said, “I realize times change and we all must be aware of the progress of the city and the Uptown area. But progress and encroaching on current property owners who have respected the plan are not the same.”

The Nemecs and other opponents said they are worried about increased traffic, density and overdevelopment in the area.

However, Tommy Mann, the person representing the applicant in the zoning case, said their plans called for a “smaller building, less traffic and a more neighborhood-centric design.” He said the opponents’ feedback is littered throughout the request for a zoning change. There were 15 iterations of the planned development and multiple community meetings, but the opponents didn’t budge.

Mann didn't respond to a request for comment.

The ethics complaint says Garcia appears to have failed to carefully consider the public perception and the negative effect his action could have on the city’s reputation.

The commissioner had only been on the job for two to three months at the time the zoning case came up. Not long after being appointed by City Council member David Blewett, on Jan. 9, 2020, Garcia posted on his Facebook: "I have to say … this appointment was a big surprise to me, and do not have any experience in something of this magnitude. But I am running straight into this challenge with no fear and only the passion I have for architecture, fascination of how cities work and everything I learned at Texas A&M University as my compass for being right here, right now."

Upon receiving the complaint, the city auditor sent it to the City Secretary for direct review by an Ethics Advisory Commission preliminary panel.

The ethics hearing on April 6 will seek to determine what, if anything, Garcia and his company stood to gain from repeatedly holding the zoning case over. It will also seek to determine whether the Nemecs would suffer any financial losses as a result of the zoning application being approved.

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