Preliminary hearing on Garza complaint dismissed after commission declines to find reasonable grounds

The Ethics Review Commission on June 25, 2025 held a preliminary hearing on a complaint filed by Brian Malloy (City Auditor’s Office) alleging that then‑interim City Manager Jesus Garza used his official position to secure special privileges for two consultants (Joe Canales and Laura Huffman) by arranging subcontract agreements through a City contractor, PFM Financial Advisors.

Complainant counsel Ross Fisher and investigator Travis Kasner summarized the audit‑team inquiry and said the pass‑through subcontract approach circumvented the city manager’s $76,000 signature authority and avoided city council approval for higher‑value appointments. The auditor’s materials presented a timeline: Garza’s appointment as interim city manager in February 2023, a March 2023 letter agreement proposing subcontracting through PFM, and subsequent invoices paid through the PFM contract. Malloy’s presentation listed roughly $268,375 paid to Canales and $285,800 to Huffman for the period cited; the complainant argued those roles and pay were comparable to assistant city manager duties and therefore required different procedures.

Respondent Jesus Garza and counsel Mike Shaughnessy argued the hires were emergency‑style, temporary “rentals” brought in to stabilize city operations after a severe winter storm and other service failures. Garza told the commission he selected experienced problem‑solvers to “hit the ground running” and that the PFM contract expressly permits subcontractors in urgent situations; he said the hires were transparent in that staff and council were informed and the work began immediately to address critical operational failures.

Garza’s counsel and the respondent raised a procedural objection: the complaint relies on a statutory term — “special privilege” — that the defense contended is undefined in the city code and in state law, raising concerns about notice and substantive due process. Counsel also argued the auditor’s investigators did not provide Garza an adequate opportunity to respond before the material circulated publicly.

The commission first considered a motion that would have found no violation; that motion did not carry. Commissioners then considered a motion to find reasonable grounds to proceed to a final hearing (the standard at a preliminary stage). The motion to proceed did not receive the required six affirmative votes and therefore failed.

Because the commission did not find reasonable grounds to proceed, the preliminary complaint was dismissed and no final hearing will be scheduled. Commissioners noted unresolved policy and process questions — including whether subcontracting under a long‑standing contract was an appropriate management choice and whether clearer procurement or disclosure rules are needed — but declined to convert those policy questions into an ethics finding in this case.

Outcome: preliminary hearing dismissed for lack of reasonable grounds to proceed to a final hearing; no ethics determination made.