Why are some legislators paying rent to spouses?

AUSTIN -- It's illegal for Texas lawmakers to use campaign funds to buy real estate or enrich themselves, but several legislators have used a loophole to maintain second homes in Austin while continuing to receive $139 a day for living expenses when called to duty in the state capital.

One of them, state Sen. Jane Nelson, R-Lewisville, has paid rent of more than $140,000 since 2000 for a condo registered in her husband's name.

The Star-Telegram reviewed the Austin lodging arrangements of all 181 Texas legislators and Lt. Gov. David Dewhurst, focusing in particular on housing payments.

The controversial practice contributed to the defeat of two senior House Republicans last year, including former state Rep. Toby Goodman of Arlington. State Rep. Vicki Truitt, R-Keller, also announced last week that she would, at least temporarily, quit paying rent to her husband for an Austin condo listed in his name.

Nelson and state Sen. Kim Brimer, R-Fort Worth, now appear to be the only two legislators continuing to make such payments. The details of Brimer's housing arrangement are no secret in Austin. He helped pioneer the practice, and other lawmakers have cited the Ethics Commission decision in his case.

But the discreet nature of Nelson's transactions, and the absence of any Travis County real estate on financial disclosure reports provided by the Texas Ethics Commission, have kept them from public view.

Records show Nelson has paid $147,500 since 2000 to lease a condominium registered in her husband's name in the exclusive Westgate Building, which several Austin lobbyists and power brokers, including Lt. Gov. David Dewhurst, call home.

Nelson declined several requests for an interview about the lease, but she issued a statement saying the payments are both legal and ethical.

Critics say making rent payments to a spouse, who can then use the money to defray the costs of buying the home, runs counter to the ban on using campaign contributions for personal use or to buy real estate.

"This practice, whether it's legal or not, is undermining the purpose of the law, which is not allowing people to profit off their campaign contributions and not to be able to buy a permanent residence -- a home," said Fred Lewis, an Austin-based ethics reform advocate.

Incumbent legislators often build up large, year-round campaign war chests. Brimer, who was not on the ballot in 2006, had $1,036,014.07 in campaign funds at the end of the year. The Nelson campaign began 2007 with $979,595.77 in the bank, while Truitt's campaign had $213,531.20, cash-on-hand figures show. Nelson and Truitt cruised to re-election last year.

In 1991, the Legislature banned lawmakers from buying real estate with campaign funds after it was disclosed that state Sen. John Montford, D-Lubbock, was making payments to buy a house with money donated by lobbyists and wealthy contributors.

But Brimer, at the time a House member, found a loophole in 1996: "separate" spousal property.

Records show Brimer rents a condo his spouse owns at the Westgate Building. He has paid her at least $169,455.95 since 2000, when electronic records became available.

Other legislators have used the "separate" property argument to justify spousal rent payments. But their lodging arrangements have not always been identical to Brimer's, nor free of controversy.

For example, Goodman, the veteran Arlington lawmaker, lost a close election after rent payments made to his wife became a campaign issue last year.

It is that same Brimer loophole, contained in Ethics Opinion 319, that Nelson cites in justifying her condo deal.

It says lawmakers who don't live near the capital can pay rent to a husband or wife, but only if the spouse's Austin-area property is "separate," which is different from shared or community property that a couple owns jointly.

"This expenditure has been vetted by attorneys and follows to the letter guidelines set forth by Ethics Opinion No. 319," Nelson's campaign said in a statement sent by e-mail to the Star-Telegram. "Senator Nelson goes above and beyond to ensure that every dime she spends meets not only legal guidelines but ethical ones."

Ethics reform advocates say any argument over legal technicalities obscures the larger picture because family members still receive a benefit, even if the property is truly separate.

"We need to take the next step," said former state Rep. Steve Wolens, D-Dallas, who helped craft the real estate ban and wrote much of the ethics law on the books today. "Generally, it should be prohibited to spouses, siblings and parents."

When lawmakers outlawed the purchase of real estate with campaign funds in the early 1990s, they authorized taxpayer-funded "per diem" payments to defray living costs, such as lodging and meals, incurred during sessions.

Over time, lawmakers have used money they get from campaign contributors to pay for lodging while the $139 per-diem payments -- which this year adds up to $19,460 for each legislator -- often just increases their take-home pay. Legislators are paid a $7,200 annual salary.

Suzy Woodford, spokeswoman for Common Cause of Texas, fought for the per-diem payments years ago as a way to reduce special interest influence and to ensure lawmakers can "afford to be in Austin and pay their rent and feed themselves without having to depend on the lobbyists."

Using campaign dollars either to buy or finance real estate, or using the funds for "personal use" are considered Class A misdemeanors, punishable by a fine of up to $4,000 and one year in jail. Civil penalties could also apply.

In the eyes of the law, however, the circumstances of each individual housing arrangement matter tremendously.

Brimer appears to be in a unique situation: He made special property separation arrangements in a pre-nuptial agreement with his wife, Janna Brimer. They publicly disclosed a 1996 "partition" agreement making the Westgate condo and any future proceeds from it her exclusive property.

Brimer's lawyer, Ed Shack, acknowledged that there is nothing to block politicians who leave office from benefiting from what was once separate property. But he noted in a letter to Brimer last week that the law gives legislators special legal protection when they use Ethics Commission opinions as guidance in transactions.

Sen. Nelson's Austin lease money is paid to "Twin Star," at P.O. Box 603 in Lewisville. That's the address of Mayday Manufacturing, the Nelson family's aerospace tool company. The Star-Telegram could find no official business relationship between the company and any entity called Twin Star. But deed records in Mike Nelson's name call the Austin condo a "second home."

Unlike Brimer and Truitt, Nelson did not disclose in recent filings at the Ethics Commission the ownership, or spousal ownership, of any property in Travis County. Nor did she or her husband report any lease agreements or income related to the transaction. Nelson and her husband declined to be interviewed or provide additional detail beyond saying the arrangements were legal.

State Rep. Rob Eissler, R-The Woodlands, is the only current legislator vowing to refund rent payments paid to a spouse for family-owned real estate. Records show he made more than $20,000 in rent payments to his wife and $2,000 or so more in condo fees. Records show Eissler, not his wife, as the owner of the condo. He did not list the property in recent personal financial statements. Eissler said he plans to refund his campaign account for the rent payments, which an opponent has already complained about.

"I stopped as soon as they pointed out that that might not be the right thing to do," Eissler said. "I wasn't trying to buy my condo with campaign money." Eissler said he halted the payments late last summer.

Rep. Truitt has paid $92,247 in rent to her husband, James Truitt, since 2001, records show. Some of the payments went for use of a recreational vehicle that James Truitt owned, aides said. Truitt consultant Bryan Eppstein said the money to buy both the RV and the house came from James Truitt's own funds and constitute separate property. He said the arrangement is perfectly legal; Truitt declined to provide any additional records.

Eppstein said Truitt has ceased making rent payments to her husband to "wait and see" whether the Legislature changes the law. In the meantime, she has no plans to refund any of the money because that is not required, Eppstein said.

State Rep. Fred Brown, R-College Station, used more than $43,000 in campaign money to reimburse himself for payments made to buy an RV, a 40-foot Country Coach motor home. He spent nearly $7,000 more in RV lot rent, utilities, fuel and maintenance costs since 2003, records show. Brown said he didn't profit from the expenditures because he bought the RV for $245,000 and sold it recently for $154,000.

Brown acknowledged that he did not disclose the RV loan on his personal financial statement.

In the fall elections, Democrats made the issue of campaign-paid housing a partisan political issue.

The Star-Telegram's own review of housing payments, conducted over the last few weeks, did not turn up any current Democratic officeholders who are paying rent for Austin lodging owned by family members. However, the review found that both Democrats and Republicans are failing to report numerous real estate holdings on their personal financial disclosure statements.

Several legislators from Tarrant County alone, for example, did not disclose their own homes as required by state law.

State Rep. Anna Mowery, R-Fort Worth, left that and another piece of property off her financial statement and is now preparing to submit a corrected report. State Rep. Marc Veasey, D-Fort Worth, also plans to amend his report to add his Fort Worth house.

* Initial home value for Truitt from 2004; Truitt rent includes earlier payments for RV

The Texas Election Code allows state lawmakers who live outside the Austin area to use campaign money to pay "rent, utility, and other reasonable housing or household expenses" to maintain a residence in Travis County.

The law bans the conversion of campaign dollars into "personal use" and prohibits expenditures "to purchase real property or to pay the interest on or principal of a note for the purchase of real property." A violation is a Class A misdemeanor.

A 1996 opinion issued by the Texas Ethics Commission says a legislator can pay rent, at fair market rates, to a spouse for the use "of her separate property."

The Star-Telegram reviewed the disclosure records on lodging for every member of the Texas Legislature. Here is how:

The newspaper reviewed online campaign expenditure records from 2000-06 of every member of the Legislature and Lt. Gov. David Dewhurst to identify any Austin-area rent or lease transactions involving themselves, a spouse or a questionable entity.

Any questionable expenditures were compared against personal financial statements on file with the Texas Ethics Commission and, in some cases, property records maintained by the Travis Central Appraisal District.

Rep. Vicki Truitt, R-Keller, rents a condo inside 1704 West Ave. in Austin. She has paid $92,247 in rent to her husband, James Truitt, since 2001, records show.

"Why are some legislators paying rent to spouses?"

Because ENRON is no more and they have to buy their own booze and women. Times are tough here in Texas.

3 posted on 02/22/2007 4:24:15 AM PST by hadaclueonce (shoot low, they are riding Shetlands.....)

Well, if a rep is not from Austin but has to live in Austin when the legislature is in session, the $139/day may be a tad low. This article is full of perjoratives. I'm sure there are swindlers out there, but this article seems much ado about nothing. Just close the loophole THEN let the accusations begin.

I also bet there are plenty of reps getting living expenses from lobbyists who have their "loophole" well-protected.

I've been paying my wife rent for 20 years. It's called my "paycheck."

Is anyone surprised?. Honesty and integrity are just for the poor folks. The elected public servants are above all that nonsense. After all, they deserve special treatment.

Frankly, it's very hard to believe that they could only find potentially corrupt Republicans in the entire state of Texas.

The question: Arm's length transaction, fair market value. Looks suspicious to me.

"Why are some legislators paying rent to spouses?"

Because legislators make the rules?

"Because legislators make the rules?"

Nope, it is because Rick Perry has a big enough family that his kids are getting all the plumbs from UBS.

UBS who wants to buy the Lotto hired his kid. Same UBS that has Uncle Phil Graham on the payroll.

You remember Uncle Phil's wife Wendy was on the BOD of ENRON. That uncle Phil.

In New York and Chicago the call it Mafia, heck here in Texas it is "just good ol' boys doing politics."

10 posted on 02/22/2007 5:18:31 AM PST by hadaclueonce (shoot low, they are riding Shetlands.....)

But, but Governor GoodHair is a Republican, so it's okay, right?

Frankly, it's very hard to believe that they could only find potentially corrupt Republicans in the entire state of Texas.

Just smarter than Dims......

12 posted on 02/22/2007 5:52:39 AM PST by showme_the_Glory (No more rhyming, and I mean it! ..Anybody want a peanut.....)

4170 dollars a month is plenty for living expenses in Texas unless a person is really living high on the hog. I spend far less than that in Houston.

They got caught. Isn't that dumber than Dims?

14 posted on 02/22/2007 9:59:11 AM PST by B4Ranch (You're in America now. Here we speak English.)

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.