Sen. Rodney Ellis
Over the past 26 years, state Sen. Rodney Ellis, D-Houston, has voted to confirm gubernatorial appointments to the Lower Colorado River Authority, a powerful electric utility in Central Texas. During the same time, financial firms he either owned, worked for, or owned stock in have profited handsomely by helping underwrite $3.7 billion in bonds sold by the authority.
Ellis, who is seeking the Democratic Party’s endorsement for a seat on the Harris County Commissioners Court, has an impressive legislative record well-known to voters – 676 bills he has authored or served as the lead Senate sponsor have become law, including major reforms to Texas’ criminal justice system, schools and community colleges.
But because of Texas’ lax ethics law, much less is known about Ellis’ equally impressive career in the lucrative government bond business, which repeatedly has placed him in a position to exercise authority over local governments and public agencies whose bond proceeds were being used to pay Ellis’ firms. His dual role as lawmaker and bond underwriter has left him straddling the line between politics, municipal finance and public policy, raising questions about potential or actual conflicts of interest, or the appearance of conflicts.
Since first being elected to the Texas Senate in 1990, Ellis has been involved directly or indirectly in municipal bond deals totaling at least $50 billion in Texas, an analysis by the Houston Chronicle has found. Nearly all of those deals have involved several firms doing “underwriting” – when firms are chosen or bid to buy bonds from a government agency and then sell them to investors.
The cost of issuing government bonds is about 1 percent of the bond’s principal amount, or $1 million for every $100 million in bonds sold. About half that issuance cost, or $500,000, would go to underwriters’ fees, according to Public Sector Credit Solutions, a California-based research firm that has examined 800 bond deals nationwide since 2012.
Ellis, in recent interviews via email, said he has not violated any ethics laws and has not done anything unethical in his votes as a legislator.
“There is no connection between my votes in the Senate and any bond underwriting,” he said. “I’m a businessman, lawyer, and African-American involved in public finance. I’m proud of the fact that I’m one of the first to combine those four experiences and also have a successful legislative career at the same time.”
Asked how his involvement with firms underwriting government debt would affect his work as a Harris County commissioner, Ellis told the Chronicle that if elected, he would “sever all ties with public finance companies.”
[…]
Tom “Smitty” Smith, director of the Texas office of Public Citizen, a nonprofit watchdog group, has watched Ellis in action from the start of his legislative career. During that time, Ellis has taken the lead on ethics issues, from requiring more disclosure to overhauling how judicial campaigns are financed, Smith said.
“There’s the good Rodney and the bad Rodney. The good Rodney knows what needs to be done, but he also has made a lot of money off of connections, knowing who to talk to, and selling bonds,” Smith said.
There’s a lot more, so read the whole thing. There’s no allegation of any wrongdoing – indeed, as Smith notes, Sen. Ellis has been a leader on ethical issues. He’s also made money off the system as it exists, playing within the rules while also having a hand in writing those rules. How you feel about this is up to you. I’m of a mind that we imperfect human beings to office, and human beings by their nature seek to do well for themselves. What I want from my political leaders is a commitment to making things better for everyone. On that score, Sen. Ellis has a lot of accomplishments. You tell me what the rest of it means to you.
