Former Austin City Council member’s new job raises questions about group operating city-owned Hilton hotel

Investigations

AUSTIN (KXAN) — Several Austin City Council members say they want to know more about about a quasi-government corporation that operates the city-owned Hilton hotel downtown — in addition to one of its new hires.

Austin Convention Enterprises, Inc., describes itself as a “public facilities corporation created by the City of Austin to own, finance and operate the Hilton Austin Hotel.” Its president is former council member Jimmy Flannigan, who was hired to the position after losing in a runoff to now-District 6 Council Member Mackenzie Kelly.

“ACE” is loosely connected to the city.

It has some autonomy, like being able to execute contracts. It is authorized to issue bonds with council approval, which don’t affect the City of Austin’s credit, according to city attorneys. The city has control in other ways, like the ability to amend the organization’s bylaws.

Austin City Council also appoints the volunteer board members. There are five seats: two are currently vacant.

Questions about ACE’s finances came up when the organization sought Council’s permission Thursday to apply for a federal Paycheck Protection Program loan. The money would go to frontline Hilton hotel staff.

Leslie Pool of District 7 says she wants the council’s Audit and Finance Committee to start receiving financial updates from ACE.

“The point of getting the PPP loan for the employees is really important,” she said at Thursday’s meeting. “My concern about that is it speaks to the financial situation of the hotel.”

ACE board chairperson Phillip Schmandt told KXAN Friday the hotel had been a solid performer in recent years but lost money at significant rates due to the pandemic.

The three-person board hired Flannigan as its first president and only employee. When KXAN Investigator Kevin Clark asked Flannigan about his job description, he said it involves everything from high-level strategy to scheduling board meetings.

“There is a lot of work around building maintenance and negotiating who pays for what,” Flannigan said.

Flannigan’s contract shows he makes $140,000 for a part-time, 20-hour per week job. But Schmandt said no one would take the job months leading up to Flannigan’s runoff loss and subsequent hire.

“What better a candidate than a City of Austin council member that was involved in overseeing the Convention Center and the hotel?” said Schmandt.

Some of Flannigan’s former colleagues aren’t as sure. More than one council member called Flannigan’s hire and its timing “awkward” and “uncomfortable.”

Another one of Flannigan’s roles is to be a liaison between the ACE board and council members. Council appoints the ACE board members, who hired Flannigan. He was on the council when those members were appointed.

“I’m also interested in hearing from the board about their hiring of a president because it is something that is being talked about in the public,” said Kathie Tovo of District 9. “It is an unusual thing for the board of an [organization] that is like a local government corporation to extend an offer of employment to a council member while that person is still a member of council.”

Austin City Code § 2-7-67 only says a former city official shall not, within 12 months after leaving that position, represent a person or entity that pays them before the city “concerning a case, project or matter over which the person exercised discretionary authority” as a city official.

It’s not clear whether that applies to council members, but a city spokesperson tells KXAN Council has asked the law department for clarity.

Schmandt vehemently defended Flannigan’s hire.

“We had our counsel investigate where there is a revolving door ordinance or any similar prohibition against reaching out to Jimmy and hiring, and the conclusion was no,” he said.

Schmandt added: “Having Jimmy become available when he lost his election was actually a Godsend to the corporation.”

KXAN asked Flannigan about the optics.

“Optics are what you make of them,” he said. “I am the right guy for this job.”

Council member Pool said she expects the issue of ACE’s finances to be discussed at the next Audit and Finance Committee meeting. Flannigan said he welcomes the opportunity for more transparency, saying: “The council and ACE are on the same team.”

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