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III. Favoritism And Self-Enrichment


Conflict of interest policies are intended to prevent public officials and staff from taking public actions that may bring them—or appear to bring them—a personal benefit, particularly a financial one.

CTRMA has conflict of interest policies and procedures governing its employees and board, but the review team found these policies are not always followed. Its policies state:

Section 2.1. A member of the Board of Directors or an employee or agent of the Authority shall not:
(a)contract with the Authority or, without disclosure and recusal, be directly or indirectly interested in a contract with the Authority or the sale of property to the Authority;
(b)accept or solicit any gift, favor, or service that might reasonably tend to influence that Board member, employee or agent in the making of procurement decisions or that the Board member, employee or agent knows or should have known is being offered with the intent to influence the Board member’s, employee’s or agent’s making of procurement decisions; or
(c)accept other compensation that could reasonably be expected to impair the Board member’s, employee’s or agent’s independence of judgment in the making of procurement decisions.
Section 2.2. A bidder shall not be eligible to contract with the Authority if a Board member, employee or agent is related to the bidder within the second degree of consanguinity or affinity, as determined under Chapter 573, Government Code. A bidder shall be required to complete a conflict of interest disclosure statement disclosing any business or familial relationships with Board members, employees or agents of the Authority, which may disqualify the bidder from consideration.[63]

Potential Conflicts

No state law requires RMAs to comply with the Local Government Code’s Chapter 171, which concerns conflicts of interest. That chapter requires local public officials to file affidavits stating their involvement in businesses of which they own or control more than 10 percent, and individuals to whom they are closely related, when either is involved in an issue before the local government. The officials must not participate in any governmental decision involving the business or person described in their affidavits.

According to CTRMA, the authority attempts to comply with Chapter 171 even though it is not legally required to do so.[64]

In February 2003, CTRMA first adopted written policies on conflicts of interest for its board members and staff, as well as separate policies for consultants and financial advisors. These policies are consistent with the Local Government Code. For example, CTRMA’s bylaws prohibit board members from accepting gifts, favors, services or other compensation that could influence or impair their conduct or independent judgment, a provision common to several state boards.[65]

As evidence of compliance, CTRMA advised the review team that one board member recused himself from a November 2003 vote authorizing HNTB to perform work because he had been hired by an HNTB subcontractor to work on an unrelated job for the City of Austin. Another instance concerned a previous CTRMA board member who removed himself from consideration during the search for an executive director because he desired to seek election to a Williamson County commissioner’s seat.[66]

Executive Director’s Hiring

Mike Heiligenstein was a member of the Williamson County Commissioners Court until December 2003, and in that capacity voted for the formation of CTRMA and for the appointments of four of its board members. According to CTRMA’s Web site, he also “initiated the drive for transportation improvements that led to the passage of a $350 million dollar bond package” in Williamson County.

In 2004, however, the Texas Ethics Commission cited Heiligenstein and three other Williamson County commissioners for an ethics violation related to the promotion of that same bond package. The Ethics Commission found that the commissioners used public funds for political advertising in connection with the Williamson County Road Bonds Program. Each commissioner received and paid a $400 civil penalty for the violation. Several future CTRMA contractors also worked on this bond program.

CTRMA’s board offered Heiligenstein the executive director job on November 5, 2003. He continued to serve on the Williamson County Commissioners Court, voting at its December 2, 2003 hearing, and was formally selected for the CTRMA job on December 9.

Thus one of the persons responsible for creating CTRMA found himself in the authority’s top position.

Chairman’s Land Ownership

In November 2002, the Williamson County Commissioner’s Court named Robert “Bob” Tesch as one of its three members for the CTRMA board of directors. On January 22, 2003, Governor Perry appointed Tesch to chair the CTRMA.

The CTRMA Web site states that Tesch has owned and operated a real estate investment and development business in central Texas since 1984.[67] During a spirited CTRMA meeting in November 2004, a member of the Austin Toll Party accused Chairman Tesch of a conflict of interest and asked if he owned land in the vicinity of the proposed US 183-A toll road. Tesch responded that he did, but that it was not affected by the project.

Given the intertwined nature of road development and the real estate industry, the review team set out to establish the facts.

Tesch acknowledges that he has interests in several properties in Williamson County, including two large holdings of about 86 acres and 146 acres, both acquired in 2000. In a November 12, 2004 letter to the Comptroller’s office, he stated:

All property that I own was acquired well in advance of either of these appointments, with no knowledge of the existence of the CTRMA, or any contemplation of ever serving on its board. I have acquired no interest in any real estate since either appointment and CTRMA has taken no action which would have a special economic effect on any property I own.[68]

Yet despite Tesch’s affidavit to Williamson County, it seems almost certain that the construction of US 183-A will enhance the value of any holdings near the road. Land near a proposed right of way often appreciates in value as the road is built. For instance, public records show that the property valuation (less any improvements) of an 18-acre tract Tesch owns, which lies about 2,000 feet east of future US 183-A right of way, has already increased by 612 percent since the time of his appointment to the CTRMA board.[69] And, as indicated below, landowners are already touting proximity to US 183-A in their land offerings.

Currently, Tesch has a substantial interest in more than 254 acres of real estate within two miles of the proposed US 183-A right of way. The most recent appraised value of this land, less any improvements, is about $8 million. This total includes his two-acre residential property located 800 to 1,000 feet to the east of the right of way.

Exhibit 11 provides a timeline of Tesch’s real estate investments along with critical milestones in the development of US 183-A; Exhibit 12 summarizes Tesch’s real estate interests. As Exhibit 11 shows, Tesch began making substantial land acquisitions in the vicinity of US 183-A less than one month after CAMPO adopted plans for US 183-A. Exhibit 13 shows the locations of Tesch’s landholdings in the vicinity of US 183-A.

Williamson County did not specifically require disclosures of land ownership outside of the US 183-A right of way as part of its board member application form. As required by the Williamson County commissioners, however, Tesch signed an affidavit stating that he owned no land in the right of way itself.

His affidavit also indicated that he had “no personal investments that could reasonably be expected to create a substantial conflict of interest between private interests and the interests of the RMA.”[70] In the affidavit, Tesch did not identify the 254 acres in which he had a substantial interest at the time of his appointment.[71]

Likewise, the Governor’s Office appointment application did not request any land ownership information, and did not offer Tesch an opportunity to disclose this type of commercial interest.[72]

Another way to determine if CTRMA’s first project will materially benefit landowners in the vicinity of US 183-A is to review how developers advertise these tracts of land. Cedar Park, like many other Texas cities, has an Economic Development Corporation that uses local tax revenue to aid the community with business development. Tesch’s 2002 CTRMA governor appointment application lists Tesch as a board member of the Cedar Park Economic Development Corporation, having served since September 2002.

Among the tracts of land advertised for development on the corporation’s Web site are many located along FM 1431 in the vicinity of US 183-A, including one of Tesch’s properties (site 2 on Exhibits 12 and 13). The developers of several of these tracts cite their properties’ proximity to the proposed 183-A project as an enticement to purchase or invest. One of these is the Carssow family partnership, which owns land along the US 183-A right of way with an appraised value higher than any entity other than the state of Texas and which recommended Tesch for appointment to the CTRMA board. Tesch’s property is located directly across FM 1431 from the Carssow property.

Each time Tesch votes on matters relating to US 183-A, he has the potential to increase the value of property in the vicinity of the new toll road. Accepting appointment to chair the board of CTRMA, a political subdivision of the state whose identified first project would materially benefit his real estate holdings, strongly suggests the potential for conflicts of interest.

Given the nature of CTRMA’s mission in road building and the explosive growth in the vicinity of CTRMA’s first project, the Governor’s Office and both county commissioners courts should have required prospective board members to disclose all real estate interests, not simply those within the initial project’s right of way.

Full disclosure of all real estate holdings would allow the appointing officials to make more fully informed decisions. Prohibiting appointments of individuals who stand to benefit from projects they approve is fundamental good government.

Chairman Tesch's Significant Real Estate
Interests in the Vicinity of US 183-A
May 8, 1995 Tesch acquires 18-acre real estate (future site of his business office space) approximately 2,000 feet east of future US 183-A right of way.
June 12, 2000 CAMPO adopts plans for US 183-A Toll Road.
July 10, 2000 Tesch acquires 39 percent interest in a 146-acre development site approximately 1 mile east of US 183-A right of way with intent to develop site.
September 1, 2000 Tesch acquires 88-acre site along CR 268, approximately two miles east of US 183-A right of way.
March 2001 Tesch begins construction improvements on 18-acre land tract. Builds two-story office building adjacent to his real estate business building, Tesch and Associates Inc.
May 25, 2001 Tesch acquires personal residence approximately 800 to 1,000 feet east of the proposed US 183-A right of way.
September 2002 Tesch becomes a board member of the Cedar Park Economic Development Corporation.
October 31, 2002 TxDOT approves creation of CTRMA, with first project identified as US 183-A.
November 2002 Williamson County Commissioners' Court appoints Bob Tesch to CTRMA Board of Directors. Tesch signs affidavit stating that he has "no personal investments that could reasonably be expected to create a substantial conflict between private interests and the interests of the RMA." At the time of affidavit, Tesch has significant interest in approximately 254 acres of land within two miles of US 183-A right of way.
January 2003 Governor appoints Tesch to Chairman of the CTRMA Board.
March 10, 2003 CAMPO appoints a Technical Advisory Committee to "make recommendations to the Transportation Policy Board on the CAMPO Long-Range Plan and the Transportation Improvement Plan." Tesch represents CTRMA on the committee from April-October 2003, then passes off duty to board member Johanna Zmud.
June 26, 2003 Bob Tesch receives 5.35-acre site adjacent to an 88-acre site as part of compensation package from Williamson County. In lieu of condemnation, Tesch sold an 8-acre strip of his property to provide right of way for the Williamson County Parmer Lane road project.
July 12, 2004 CAMPO adopts amendments to FY 2004-08 Transportation Improvement Plan, which includes US 183-A.
January 2005 Summary of significant property interests in the vicinity of US 183-A. Total acreage: 254.245 (two acres of which is homestead property). Total appraised value of acreage: $7,995,136 (not including improvements).
February 2005 Tesch-owned land in the vicinity of US 183-A is advertised for sale on the Cedar Park Economic Development Corporation Web site.
Sources: Bob Tesch; Williamson County Appraisal District and CAMPO.

Summary of Chairman Tesch's Substantial Land Interests in Williamson County
Continuous Acreage Site Description Location Tract ID Number Listed Owner Chairman Tesch's Percentage Interest When Purchased Appraised Land Value in 2002 (land only)1 Appraised Land Value in 2004 (land only) Percentage Increase in Land value since Appointment in 2002
2 1 2 acres
REDACTED R037879 Robert E Tesch 100% May-01 $217,800 $348,480 60%
18.21 2 8.20-acre
development site
1490 E Whitestone Blvd, Cedar Park North End R031914 Cedar Park Properties LLC 100% May-95 $178,596 $892,980 400%
development site
1490 E Whitestone Blvd Cedar, Park South End R031916 Cedar Park Properties LLC 100% May-95 $100,100 $1,090,090 989%
146.11 3 133.35 acres Due east of Site 2 R392194 Creekside Park LTD et al 39% Jul-00 $2,667,000 $4,000,500 50%
11.7672 acres Due east of Site 2 R031930 Creekside Park LTD et al2 39% Jul-00 $235,344 $353,016 50%
development site
Due east of Site 2 R031929 Creekside Park LTD et al2 39% Jul-00 $35,000 $35,000 0%
2.26 4 1.15-acre
real estate site
Connects 146 acre site to FM 1431 R413087 Creekside Park LTD3 39% Jan-01 $175,329 $225,423 29%
0.13-acre real estate site Connects 146 acre site to FM 1431 R413088 Creekside Park LTD3 39% Jan-01 $48,243 $25,484 -47%
1.01-acre real estate site Connects 146 acre site to FM 1431 R413090 Creekside Park LTD3 39% Jan-01 $149,412 $197,982 33%
85.635 5a 80.29-acre
development site4
CR 268 at its intersection with South San Gabriel River R022218 Robert E Tesch 100% Sep-00 $464,200 $815,560 76%
5b 5.345 acres
flood plain
Attached to southern end of site 5a R032202 Robert E Tesch 100% Jun-035 $10,530 $10,621 1%
1Year of Tesch's appointment to the board of CTRMA.
2Williamson County Appraisal District (WCAD) lists owner as Alkire LLP. This is outdated; Alkire LLP was the previous owner.
3WCAD lists Creekside Park as owner. This is outdated. Official records show that these three contiguous tracts of land were conveyed to Cedar Park on October 9, 2003 for use as roadway connecting FM 1431 to the 146-acre site (R02218). Creekside Partners LTD is listed as the dedicatory owner, while the accepting entity, Cedar Park, will improve the property with a public road, known as Arterial A.
4WCAD lists this tract of land as 88.09 acres. Official deeds show that this is outdated and that Tesch sold 7.8 acres to Williamson County in lieu of condemnation to provide right of way for future extension of Parmer Lane in June, 2003.
5Date land transferred to Tesch as part of a settlement for selling 7.8 acres of tract 5a (R022218) to Williamson County in lieu of condemnation to provide right of way for future extension of Parmer Lane.
Summary of Current Land Interests within 2 miles of US 183-A right of way
Total Acreage 254.215
Total 2004 Appraised Land Value $7,995,136
Sources: Williamson County Appraisal District (WCAD) and CTRMA Chairman Robert Tesch.
  2002 Land Value 2004 Land Value Percentage Increase
Site 2 $278,696 $1,983,070 612%

Board Member Contracts with TxDOT

June 2004 e-mails between CTRMA, its general counsel and TxDOT legal staff provided to the review team discuss a potential conflict of interest concerning CTRMA Board Member Johanna Zmud, whose business, NuStats, performs transportation-related origin and destination surveys for travel demand forecast models. According to the e-mails, Zmud is a partner in NuStats and owns more than 10 percent of this business.

In a February 4, 2005 e-mail to the review team, CTRMA said that Zmud’s company had not served as a “primary contractor” to TxDOT during her tenure on the CTRMA board. CTRMA did say, however, that NuStats is a subcontractor on two teams under contract to TxDOT, but that the work was “ancillary” and “not structured as such to avoid the RMA issues.”

This appears to be a violation of TxDOT’s rule §26.51(b)(1)(A), which states:

(b)Eligibility of directors and chief administrative officer.
(1)A person is not eligible to serve as a director or chief administrative officer of an RMA if the person or the person’s spouse:
(A) is employed by or participates in the management of a business entity or other organization, other than a political subdivision, that is regulated by or receives funds from the department, the RMA, or a member county;
(B) directly or indirectly owns or controls more than a 10% interest in a business or other organization that is regulated by or receives funds from the department, the RMA, or a member county;
(C) uses or receives a substantial amount of tangible goods, services, or funds from the department, the RMA, or a member county; or
(D) is required to register as a lobbyist under Government Code, Chapter 305, because of the person’s activities for compensation on behalf of a profession related to the operation of the department, the RMA, or a member county.[73]

Gifts, Favors and Services

Section 370.252(a)(1)(A) of the Transportation Code prohibits the acceptance or solicitation of any gift, favor or service that might reasonably influence a director or employee. In addition, section 370.252(a)(1)(B) prohibits the acceptance or solicitation of any gift, favor or service that a director or employee knows or should know is being offered with the intent to influence the director’s or employee’s official conduct. Section 370.252(a)(4) prohibits a director or employee from making personal investments that could reasonably be expected to create a substantial conflict between the director’s or employee’s private interest and the interest of the CTRMA. Finally, section 370.252(a)(6) prohibits a director or employee from having a personal interest in an agreement executed by the CTRMA. CTRMA has participated in numerous activities that appear to violate these provisions.

Team Texas: Team Texas is a nonprofit organization created to provide a forum for Texas toll authorities to discuss issues and share ideas relating to the tolling industry. All Texas tolling authorities are part of Team Texas, including CTRMA, the North Texas Tollway Authority, the Harris County Toll Road Authority and the Fort Bend County Toll Road Authority.

CTRMA does not pay a membership fee to belong to Team Texas. The organization is funded by private transportation-related businesses including Kellogg, Brown & Root; TransCore; Cobb Fendley & Associates and Winstead Sechrest & Minick and others.[74]

CTRMA’s executive director serves as the treasurer of the organization. In doing so, he appears to be in violation of Section 370.252(c) of the Transportation Code, which states that a person may not serve as an RMA director or chief administrative officer if he or she is an officer, employee or paid consultant of a Texas trade association in the field of road construction or maintenance or public transportation.

Section 370.252(d) of the Transportation Code defines “Texas trade association” to mean a nonprofit, cooperative, and voluntary joined association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interests. Team Texas appears to meet this definition of a trade association.

Team Texas holds quarterly meetings in different cities (Austin, San Antonio, Dallas and Houston) at resorts such as Barton Creek and the Westin La Cantera. Private firms such as HNTB, Locke Liddell & Sapp LLP, HDR Engineering and UBS Paine Webber, all of which are CTRMA contractors, sponsor events at the meetings.[75]

These sponsors often pay for receptions and activities. The Team Texas event in Plano on July 14, 2004 included a golf tournament at the Golf Club at Castle Hills paid for by PBS&J (a transportation engineering, planning and architecture firm) at an approximate cost of $7,500, including golf, meals and refreshments for 85 people.

Event at the Four Seasons in Austin: A CTRMA document entitled “CTRMA Stakeholder Meeting Notes” refers to a September 30, 2003 event held at the Four Seasons Hotel in Austin, at which “CTRMA recognized area legislators, TxDOT Director Behrens and Representative Mike Krusee for their hard work in passing H.B. 3588.”

When questioned about the event, CTRMA responded:

HNTB held a corporate officers meeting at the Four Seasons, and in conjunction therewith held an evening reception for local community leaders, business leaders, and legislators. As a courtesy HNTB included the CTRMA’s name as a co-host for the reception. HNTB paid for the event in its entirety–the CTRMA was not charged and did not spend any of its money for the event.[76]

The review team requested that CTRMA provide more details on the event, but was told that HNTB did not retain a list of invitees.

Hotel records show that the event was billed to HNTB at a cost of $7,306.79. The two-hour function featured a deluxe hosted bar, jumbo gulf shrimp and snow crab, as well as floral designs costing $811.88.[77]

Dinner at Sullivan’s: Richard Ridings of HNTB invited five CTRMA board members and the CTRMA executive director to dinner at Sullivan’s Steakhouse on June 23, 2004. The e-mail invitation stated:

Reservations at Sullivan’s—Cameron County Commissioners David Garza and Edna Tamayo, along with County Transportation Director Pete Sepulveda will be visiting on Wednesday to obtain information on how Travis and Williamson County developed the first Regional Mobility Authority, the CTRMA. We will be hosting a dinner at Sullivan’s @ 300 Colorado Wednesday night June 23rd at 8:00 PM to provide each of you an opportunity to share your thoughts with the commissioners....[78]

This meal should be considered a gift from HNTB, the CTRMA contractor (see Appendix 6 for the full text of the e-mail).

Though the Texas Ethics Commission does not enforce TxDOT rules, the review team sought the Commission’s advice because of its expertise in ethics matters. When asked by the review team, the Texas Ethics Commission indicated that it is inappropriate for HNTB to host events such as those described above. The Ethics Commission referred the review team to Chapter 370, Section 370.252 of the Transportation Code, the “no gift” provision cited above.

Transportation Summit: On August 10 and 11, 2004, the CTRMA chairman attended the Seventh Annual Texas Transportation Summit in Irving, Texas. CTRMA reimbursed him for $403.19, including $24.36 for meals; $13.53 for parking; $268.91 for a rental car; and $72.39 for long-distance calls. In addition, HNTB picked up another $260.55 of the chairman’s expenses, for his hotel room, long-distance calls and fax services. CTRMA should have paid for these latter expenses, since they could constitute a gift within the meaning of the Transportation Code.


CTRMA’s conflict of interest policy concerning consultants provides that “any individual or firm receiving more than $10,000 in compensation for goods and services rendered to CTRMA during the preceding 12 months” shall be listed in public records as “key personnel.” Any individual, firm, or team submitting a proposal to CTRMA must disclose to the authority’s general counsel any current or previous (within the past 12 months) business relationship with these key personnel. Failure to do so is grounds for rejection of the proposal and future disqualification from other work. The policy does not, however, specify whether it applies to subcontractors not initially identified as “key.”

Similarly, any key personnel who review proposals submitted to CTRMA; participate in the procurement of goods and services leading to a proposal; or supervise any work under a proposal must disclose their business relationship with any proposer. The Executive Committee of the CTRMA board must determine, in each case, if the relationship constitutes a conflict and what, if any, safeguards should be implemented to prevent improper communication.[79]

The policy for financial advisors is similar except that it lacks the dollar threshold defining key personnel. Investment banking firms are exempt from a provision prohibiting key financial personnel from being part of a team “proposing or competing to develop a transportation project through a comprehensive development agreement.” These firms, however, may not participate in any syndicate of firms financing a CTRMA project.[80]

CTRMA provided information on situations related to conflict of interest arising in 2004. For example, Cobb Fendley & Associates, a Houston civil engineering firm, provides services to HNTB. Under a separate contract, Cobb Fendley is also part of a team of contractors working on CTRMA’s CDA to construct US 183-A. Cobb Fendley, in a letter dated July 30, 2004, agreed to CTRMA’s request that it ensure that its personnel on each project are segregated from one other; obtain signed confidentiality agreements; establish separate accounting project numbers and files for each client; and take other managerial steps to prevent unlawful or unethical communication.

Grier-Bankett: One HNTB subcontract that has brought attention to CTRMA is a contract with Grier-Bankett of Austin for “public involvement services for US 183-A.” HNTB hired Stacy Dukes-Rhone, a principal of Grier-Bankett, to provide public information on tolls and US 183-A primarily to East Austin communities. As widely reported in news accounts, Dukes-Rhone’s sister is a state representative and member of the CAMPO board that approves toll-road projects, including US 183-A.

Grier-Bankett and HNTB signed the contract on July 7th and 13th, respectively. The contract, however, became effective February 1, 2004, more than five months earlier. CAMPO approved CTRMA’s plan to levy tolls on US 183-A on July 12th. The state representative voted with the 16-7 majority, but did not disclose any knowledge of her sister’s employment on the authority’s behalf.

News accounts raised questions of impropriety concerning this subcontract. The review team asked CTRMA’s staff and general counsel to explain the propriety of this contract and the delay in its signing, since the delay gives the appearance of retroactive approval of work in exchange for political favors. CTRMA admitted that the delay was neither good business practice nor good public relations. CTRMA said that, because Grier-Bankett was an HNTB subcontractor and not a CTRMA contractor, there was no conflict of interest.[81]

At best, the contract illustrates the interwoven relationships that are common among many of CTRMA’s contractors and subcontractors, as well as between CAMPO and CTRMA. It also illustrates the need for CTRMA to exercise oversight of its contractors to prevent the appearance of favoritism.

As a new entity that is outsourcing almost all of its functions to private companies, CTRMA and its contractors and subcontractors should assume that every action, every relationship and every expense will receive the highest public scrutiny because, as this report itself proves, they already have.

CTRMA has entrusted HNTB with the management of much of its daily operations, as well as oversight of its subcontractors. As with the Grier-Bankett contract noted above, HNTB has hired a number of subcontractors who have existing relationships with Travis and Williamson County officials responsible for regional transportation policies.

HNTB itself had an existing contract to work on a Williamson County Road Bonds Program. HNTB, in turn, has hired a number of subcontractors who have prior contracts for Williamson County projects. Some CTRMA board members and staff have previous ties to some of the subcontractors as well.

To some extent, the reliance on contractors who have previous experience in Williamson County road projects is understandable, given that CTRMA was being pressured by TxDOT officials to move quickly in obtaining approval of a new regional mobility plan and issuing toll revenue bonds for the construction of US 183-A.

The reliance on contractors with existing relationships to CTRMA decision-makers, however, creates an impression of “insider dealing” that is inappropriate for a governing body established to implement mobility projects for a multi-county region. Furthermore, some of the contracts, particularly those awarded by HNTB, do not appear to have been thoroughly vetted to ensure that the selection process used by CTRMA and its GEC remains above criticism.

Amos “Pete” Peters III: Amos “Pete” Peters III is a consultant contracting with HB Media, an HNTB subcontractor. Peters also has billed CTRMA directly for goods and services. Peters has a very long history of relationships with Williamson County officials and others involved in CTRMA, having worked on the political campaigns of many Williamson County office-holders, including Mike Heiligenstein, a former Williamson County Commissioner who is now the executive director of CTRMA.[82]

Peters’ resume, included in HNTB’s bid for the GEC contract, boasts that he has worked on more than 600 political campaigns. The HB Media Web site lists clients including HDR Engineering and Prime Strategies, both of which either have or have had contracts with CTRMA. Peters also created a “Roads Now” political action committee to promote the Williamson County Road Bonds Program approved by voters in 2000.

Peters has a 20-year criminal record, including charges for check fraud/swindling, fraud/illegal use of credit cards, larceny and DUI. From 1969 to 1989, he was convicted of three felonies and three misdemeanors.[83]

Interestingly, Peters was considered so close to Williamson County officials that the state Attorney General’s Office joined a recent investigation of him.[84] According to one report, “Peters has handled campaign work for almost every major office holder in the county.” The investigation focused on several meetings related to the Williamson County Road Bonds Program for which Williamson County paid Peters; some persons who were supposed to be at these meetings allege that they never took place.[85]

In contrast, the Comptroller’s office requires that each proposer or bidder for a contract with the agency sign a “No Criminal Conviction” certification. The Comptroller’s office will not contract with anyone who has a felony conviction.

CTRMA has paid Peters’ public relations firm, known as “The Communicators,” thousands of dollars for billings he submitted for activities in February 2004. These billings included a February 19, 2004 meeting held at the University of Texas Club for TxDOT executive director Mike Behrens’ “150 Group” at a cost of $1,727.19.

CTRMA was asked for details on this event. The authority’s general counsel provided the following response:

The 150 Group was [a] short-hand reference to an invited gathering of business and community leaders to hear a presentation by TxDOT executive director Mike Behrens and CTRMA executive director Mike Heiligenstein in February, 2004. The purpose of the event was to inform attendees of the transportation funding crisis the state was facing and the need for innovative proactive solutions to funding challenges. This was a one-time gathering, and there was no formal structure, operation or organization.[86]

Another Peters bill includes $202.32 for copies of a CAMPO presentation made for the Austin District manager for TxDOT, regarding community work. Peters also billed CTRMA several hundred dollars for newsletters issued from October 2003 to January 2004, but the bills were not presented for approval until March 2004.

HNTB also contracts with Peters separately through its subcontractor HB Media, which paid him an hourly rate of $145. From September 2003 to April 2004, his monthly billings through HB Media ranged from about $6,000 to $12,000 per month.

When the review team asked CTRMA about instances in which contractors billed both CTRMA and its subcontractors, the authority stated that it was only aware of one instance, by Martin & Salinas, and that it was a simple billing error. CTRMA did not mention the Peters situation.

Locke Liddell & Sapp: Locke Liddell & Sapp has been intimately involved in the CTRMA project since its inception. The firm was a subcontractor to Prime Strategies, the consultant that served as an initial staff for the CTRMA board, and helped write the landmark H.B. 3588 legislation creating RMAs. The law firm and CTRMA even shared the costs of the governor’s June 2003 signing ceremony for the bill.

The firm’s attorney who acts as CTRMA’s general counsel is a registered lobbyist. According to the Texas Ethics Commission, he has registered as a lobbyist for CTRMA, with 2005 compensation estimated at between $10,000 and $24,999.99.

In sum, then, CTRMA’s law firm helped write the legislation that expanded CTRMA’s powers and authority, and subsequently received a contract to provide it with general counsel services. Furthermore, CTRMA is reimbursing the firm for both general counsel and lobbying services. Thus the firm could directly lobby for legislation on CTRMA’s behalf that could affect the value of its other services to the authority.

Informative Efforts: The principals of this public relations firm are Cathy Howell and Melinda Wheatley, who are subcontractors for Nancy Ledbetter Associates, which in turn contracts with HNTB. Their relationship with the transportation industry may represent a potential conflict of interest. Informative Efforts had a previous consulting arrangement with JP Morgan Securities Inc., a CTRMA contractor, and was paid a retainer fee of $7,000 per month plus expenses. The Austin office of JP Morgan Securities indicated that Informative Efforts performed lobbying work and that it was a short-term contract terminated around March 2004.

Melinda Wheatley was Informative Efforts’ primary contact with JP Morgan Securities. Wheatley was listed on the 2004 Texas Ethics Commission lobby list for only one client, TransCore, a sponsor of Team Texas. This company provides services and products that enable toll authorities to manage transactions using toll tags. As such, TransCore is a potential CTRMA contractor.


11. Prospective RMA board members should be required to disclose all real estate holdings, not simply those in the right of way of any planned mobility project.

State law should be amended to require that candidates for the RMA board positions fully disclose all known potential conflicts of interest.

12. CTRMA Chairman Tesch should resign from the board immediately, due to the potential for self-enrichment.

13. CTRMA board member Zmud should resign from the board immediately, as her membership on the CTRMA board violates provisions of the Transportation Code.

14. CTRMA and other RMAs should ensure that none of its board members or employees accepts gifts, favors or services that could be construed as being made to influence them.

The authority’s participation in Team Texas events lends itself to influence by the transportation industry and appears to violate the “no gifts” provision of Chapter 370, Section 370.252 of the Transportation Code.

15. CTRMA should immediately withdraw from Team Texas. Mike Heiligenstein should vacate his position as treasurer of Team Texas.

Mike Heiligenstein’s role in the Team Texas organization appears to violate state law, as Team Texas appears to fit the description of a trade association. He should no longer serve as the treasurer of this organization, or he should resign from CTRMA.

16. CTRMA and other RMAs should adopt contract procedures to ensure that its contractors and subcontractors receive contracts based entirely on published specifications, regardless of whether they contract directly with the RMA or its contractors.

As an additional protection, CTRMA should require each contractor to disclose any known or potential conflicts of interest among its subcontractors, regardless of whether the conflict is between the contractor and subcontractor or among subcontractors, and regardless of the dollar value of the contract or subcontract.

17. State law should be amended to require RMAs to use their Web sites to publish information documenting all contracts, including the name of the contractor, key personnel, the cost and term of the contract, a description of goods and services to be provided by the contractor and a justification for the necessity of the contract.

18. State law should be amended to require RMAs and their contractors to perform criminal background checks for contractors and subcontractors and RMAs should not hire or contract with anyone previously convicted of a felony.

19. RMAs should not allow employees, contractors or subcontractors to lobby on their behalf.