Audit: Economic official granted arts, music funding against city code

The former director of the Economic Development Department authorized a handful of grant awards that violated city code restrictions, according to a new investigative report from the Office of the City Auditor. The report concludes that Sylnovia Holt-Rabb, who retired in December, allowed four arts organizations to receive Live Music Fund grants for projects that had already received funding from the city’s Cultural Arts Fund despite a clear provision in city code prohibiting such dual funding.

According to the investigation, Holt-Rabb initially instructed staff to enforce the code provision barring overlap between the two grant programs, which are both funded by the city’s share of Hotel Occupancy Tax revenue. Staff reached out to awardees to inform them they would have to choose between the larger Cultural Arts Fund grants, which ranged from $25,000 to $100,000, or the smaller Live Music Fund grants, each worth $5,000 to $10,000. Three recipients were told to decline the LMF funds in favor of the more substantial Cultural Arts awards.

Following a meeting with a fourth awardee and concerns from staff that the group might be vocal in its objection, Holt-Rabb reversed course. She ultimately granted all four awardees a special exemption from the funding restriction, allowing them to keep both awards. The report notes that staff expressed discomfort with the decision, with one employee suggesting it was made to placate an upset grantee.

The projects in question included a six-day summer festival, a classical music showcase, a holiday concert for children, and a fall cultural celebration centered around a cemetery event. Each project received both an LMF grant and a Cultural Arts Fund grant, from either the Thrive or Elevate programs.

In all cases, the applications described funding different components of the same overall event. The overlapping awards were in large part a result of the application windows for the programs being close together, which allowed groups to use essentially the same application materials to increase their chances. The report did not name the four recipient groups, identifying them only as Awardees A, B, C, and D.

Staff had previously consulted with the Law Department to verify the code’s intent and spent significant time reviewing applications to avoid overlapping awards. Despite this effort, the decision to allow the grants to stand was made by Holt-Rabb directly, who informed the awardees via email that they would be permitted to retain both sources of funding.

The report notes that the city’s custom-built grant application system was problematic, making it difficult for staff to accurately cross-reference applications and enforce code compliance. These technical issues created confusion for applicants and reviewers alike.

In her formal response to the auditor’s findings, Holt-Rabb defended her actions, stating that she acted in good faith based on the information and recommendations provided by staff. She described the ordinance language as poorly constructed and subject to multiple interpretations and said her decision reflected an effort to support equitable funding outcomes under complex circumstances. Holt-Rabb emphasized that she regularly consulted the city’s legal department and derived no personal benefit from the decision. She also suggested the complaint that triggered the investigation may have been retaliatory in nature, pointing to her leadership of diversity, equity, and inclusion initiatives during her tenure.

“As a long-serving public official, I have always prioritized fairness, transparency, and the advancement of community benefit. I regularly consulted with our assigned city attorneys and program staff when making policy decisions, and any judgment I made regarding this matter was rooted in the staff’s advice and recommendations based on their expertise,” she wrote in part.

The Office of the City Auditor rejected Holt-Rabb’s interpretation of the grant restriction and stood by its finding that the exemptions violated City Code. Investigators stated that both Economic Development staff and legal advisors had previously agreed on how the code should be applied and that the director’s actions resulted in an improper use of public funds.

In addition to the auditor’s findings, staff from the Office of Arts, Culture, Music and Entertainment recently reported that 60 LMF recipients have so far failed to complete paperwork needed to close their award process and receive their final portion of funding. The delay has put more than $500,000 in city funding in limbo.

In response to the audit, an EDD spokesperson emailed Austin Monitor: “We respect and support the Auditor’s work and take the findings seriously. EDD will always strive to ensure understanding, compliance, and consistency with City policy and code. In this context, we are communicating with our entire staff on the importance of a standard of conduct that operates at the highest level.
Our commitment remains clear: to serve Austin with integrity, equity, and public trust. We will continue working closely with City leadership and the Law Department to explore any necessary improvements that can strengthen our capacity.”

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