The complaint alleged several violations of the city’s code of ethics in regards to a business deal he signed onto with two opponents of a zoning case in his district.
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,” according to the complaint. This created unwarranted expense for the city and an appearance of a conflict of interest that reflects imprudence and poor judgment, the complaint claimed.
But on Tuesday, the advisory commission determined there were no violations because Garcia acted against his own interests with a vote of approval for the zoning case, and that there was no proof that his actions benefited the people he was in business with.
“When I saw that this complaint had been filed, it really disturbed me,” Garcia said.
The zoning case involved 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. People involved have taken to calling this the Endeavor case. They bought the property, adjacent to the State Thomas Historic District, in 2019.
The complaint alleged that 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 change's strongest opponents.
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. 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 selling price, Garcia stood to make $195,000 on the sale.
While he couldn’t discuss the specifics of the Nemecs deal, Garcia said it was greatly exaggerated in the complaint.
The complaint says Garcia focused “excessive attention” on the zoning case compared with other active cases in District 14. 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.
The zoning case was held over multiple times until Garcia and the rest of the City Plan Commission voted to approve the change March 4.
When the Ethics Advisory Commission first met April 6 to consider the complaint against Garcia, he argued that while he was in business with opponents of a zoning case in his district, it was outside the project’s notification zone. State law puts that notification zone 200 feet out from where the zoning change is being applied for. The city expands that to 500 feet. The Nemecs property was more than 800 feet outside of that notification zone.
Chair of the Ethics Advisory Commission, Tim Powers, dismissed this defense at the April 6 preliminary hearing. Following a vote, he decided to take it to the full commission.
“I believe it’s a red herring because I don’t believe it matters where the property’s located." – Tim Powers, Ethics Advisory Commission
Powers wanted to focus more on the potential economic benefits Garcia stood to gain from the deal with the Nemecs and how that may have swayed his decision on the zoning case. “I believe it’s a red herring because I don’t believe it matters where the property’s located,” Powers said at the April 6 hearing.
The argument over the notification zone, however, dominated the discussion at the full hearing on April 20. The hearing involved testimony from the applicant, several city plan commissioners and residents from around the site. The only witnesses were called by Garcia’s legal representation. The city auditor did not have any questions for any of the witnesses.
Longtime City Plan Commissioners Tony Shedid and Michael Jung both testified that they often use the notification zone to determine if there is a conflict of interest. Many of the plan commissioners have economic interests throughout the city.
Shedid is the chair of the commission and represents City Council’s District 5. He works in land development and has economic interests in North Dallas, East Dallas, Southeast Dallas and elsewhere.
He said he and other commissioners have used the notification zone as a guideline for when to recuse themselves. From his perspective, there should be a black-and-white line and removing it would make the job of a plan commissioner nearly impossible.
Some members of the ethics advisory commission took issue with the fact that Garcia did not run this potential conflict of interest by the city attorney.
Garcia testified that in the past he raised the issue of a possible conflict of interest with the city attorney’s office. He said he was told that if the economic interest lies outside of the notification zone, he didn’t need to recuse himself.
Grant Schmidt, one of the ethics advisory commissioners, asked Garcia if he thought to consult the city attorney’s office once he heard his clients, the Nemecs, opposed a zoning case in his district. Garcia said no, citing what the city attorney’s office had told him before regarding the notification zone.
Garcia’s representatives said if the ethics advisory commission has a problem with the notification zone rule, the commission should change the rules. The notification zone guidance as it pertains to conflicts of interest isn’t a formal, written rule but has been followed by most commissioners for some time.
As for the delays on the case, both city plan commissioners testified that it is normal to hold cases over for advisement, particularly in contentious cases.
Tommy Mann, the person representing the applicant in the zoning case, even said that the delays were normal, especially considering the pandemic. He added that Garcia helped facilitate discussions between those for and against the project. Because of this, Mann said, they ended up with a better development plan.