City created shell company to pay Houston First employees

HOUSTON (KTRK) -- Coming off a successful year hosting a Super Bowl and thousands of flood refugees, Houston's convention bureau Houston First has a new leader.

As she takes over, she faced tough questions about the secret way Houston First used millions of public dollars to pay its own employees.

Houston First Corporation is the 'quasi-governmental' agency created in 2011 to spin off the city's tourism department into a separate entity. While formed as a "corporation" it still serves a government function and is considered a public agency. At the time it was created, Houston First also created at least two other companies, the Houston First Foundation and Convention and Cultural Services, Inc.

The latter, CCSI, is still in existence and is the company that is charged with officially employing and paying employees of Houston First, but many council members said they had never heard of the company. Neither had ABC13 Investigates until we started doing some digging.

On Wednesday, Houston City Council approved the appointment by Mayor Sylvester Turner of Brenda Bazan after the former director Dawn Ullrich was ushered out last week.

In December, ABC13 requested pay information for Houston First employees, including overtime and bonus amounts for each employee. A representative responded and told ABC13 no information existed because the tourism company employed no one.

Upon further investigation, ABC13 uncovered CCSI and asked it for the same pay information. There is no mention of CCSI in Houston First budget documents this year or its annual outside audit.

The same representative from HoustonFirst, but this time on CCSI letterhead, told ABC13 that the information was not public and the company would appeal to the Attorney General to keep the pay information secret, claiming the employees did not work for the city of Houston. Those employees sit in government-owned chairs, at government-owned desks, doing government jobs, despite CCSI's claim they are not government employees.

Days before Bazan's approval by city council, at least three council members challenged Houston First, claiming they didn't know about CCSI.

CCSI is paid $20 million in tax money to pay the employees for Houston First.

The payroll information was released late last Tuesday night to council members.

CCSI employs 232 people. Sixty of them make more than $100,000 a year. Ten make more than $200,000.

The issue at hand is also the subject of two Texas Supreme Court cases the city is fighting to keep those employees off the city payroll. The Houston Municipal Employees Pension system made the determination twice that no matter whether employees worked for Houston First Foundation or CCSI, they were still considered city employees and HoustonFirst should be contributing to the pension system.

The city sued the pension system under the Annise Parker administration, saying the board overstepped its authority. The case went to the Texas Supreme Court, who sided with the pension board.

A second suit was filed arguing about what the first case did and did not settle and is set for oral arguments in front of the Texas Supreme Court in March.

The pension board claims the city refuses to abide by the Supreme Court's decision, while the city says the pension board is misunderstanding that decison in the first place.

"What was clearly a definitive rebuff of the City's position in [the first court case]-delivered by the unanimous voice of every district, appellate, and supreme court justice to consider the case-Petitioners misuse to continue disputing the City's obligations to HFC, HFF, and CCSI personnel," the board's lawyers wrote in a brief to the Supreme Court.

Bazan wouldn't talk about the case with ABC13, but insisted that transparency was the new way of HoustonFirst.

"When it comes to requests for information, it's my view and that of the current board chair, in transparency, that we will deliver that information," Bazan said.

Mayor Turner told reporters the set up of CCSI isn't easy to follow and may be unneeded altogether.

"Their structure is confusing," Turner said.

Bazan also wouldn't talk about why CCSI was formed in the first place.

"Today is the first day in the new HoustonFirst organization," said council member Dave Martin.

Have a tip for Ted Oberg? A problem to solve? Get in touch with us on our tip page, or send a tip below. (On mobile? You can open our form by tapping here.)