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HomeMy WebLinkAbout13-02 Formal Ethics Opinion for Deputy Mayor Krauss re Story Mansion ROZ� Greg Sullivan, City Attorney V� 9x City of Bozeman Tin Cooper,Assistant City Attorney J. Cory Allen, Chief Prosecutor . * City Attorney's Office Kyla Murray, Prosecutor v e Ryan McCarty, Prosecutor 7le� 8 ,Se Anna Saverud, Prosecutor Formal Ethics Opinion 2013-02 TO: Jeff Krauss, Deputy Mayor DATE: November 19, 2013 RE: Conflict of Interest re: Story Mansion QUESTION Earlier today, you referred me to a letter written to the editor of the Bozeman Daily Chronicle dated today, November 19'', by Michael P. Moore and asked whether the statements in Mr. Moore's letter regarding your employment and the Story Mansion are sufficient to rise to a conflict of interest that would require recusal from your participation in future actions on the Story Mansion. ANSWER Any indirect or direct interest or benefit that would arise to you by way of interest or benefits to the Museum of the Rockies (the Museum), a partner with your employer, the Montana State University (MSU), in the operation of the Museum should the Story Mansion be sold is speculative and sufficiently attenuated that it does not create a conflict of interest under the Bozeman Code of Ethics or Montana law. As such, based on the facts within my knowledge, your recusal from further Commission actions regarding the Story Mansion is not required. DISCUSSION You provided me the following facts regarding your inquiry: 1. You are employed as the Museum's Director of Finance and Administration. You are an employee of MSU. You stated your salary is paid, in part, by money transferred from the Museum to MSU. These funds are raised by the Museum through direct fundraising activities, and earned income of the Museum such as admissions fees and sales at the Museum store. 2. The Museum is both a college-level division of MSU and an independent 501(c)(3) nonprofit institution. 3. The Story Mansion is owned by the City of Bozeman. You are currently the Deputy Mayor and as of the first meeting in January, 2014 will be the Mayor. 4. The City of Bozeman is currently reviewing several responses to its request for proposals for a possible conveyance of the Story Mansion to a private entity. Street Address: 121 North Rouse Page 1 of 5 Phone: (406)582-2309 Mailing Address:P.O. Box 1230 Fax: (406)582-2302 Bozeman, Montana 59771-1230 TDD: (406)582-2301 You asked me to specifically review Mr. Moore's statement that "the lion's share of[your] day jobs salary is paid by the same people who might otherwise channel their dollars in to helping keep the Story [Mansion] a publicly owned asset for the enjoyment of all Bozeman residents." You asked whether the allegations in this statement create a conflict of interest. As you know, Section 7(a) of the Bozeman City Charter prohibits the use of public office for private gain. The Charter requires that the Bozeman City Commission implement this restriction through the adoption of ordinances. The Commission has done so through the City's Code of Ethics. Chapter 2, Article 3, Division 4, BMC. Likewise, Article XIII, Section 4 of the Montana Constitution requires the Montana Legislature "provide a code of ethics prohibiting conflict between public duty and private interest for(...) all (...) local officers (...)."The Montana Legislature has adopted Title 2, Chpt. 2, Part 1, MCA. Generally, "public confidence requires that municipal officials avoid conflicting interests that convey the perception that a personal rather than the public interest might affect decision-making on matters of concern. Officials must be free of even the potential for entangling interests that will erode public trust in government actions. Thus, it is the potential for conflict, rather than proof of an actual conflict or of actual dishonesty, that commands a public official to disqualify himself from acting on a matter of public interest." McQuillan Law of Municipal Corporations § 12:173.22. Conflicts of interest(2012) (emphasis added). In addition, "the general rule is that there should be strict enforcement of conflict of interest statutes so as to provide a strong disincentive for officers who might be tempted to take personal advantage of their public offices. The test for disqualification is fact-sensitive and depends on whether, under the circumstances, a particular interest had the likely capacity to tempt the official to depart from his sworn public duty."Id. The City's Code of Ethics addresses conflicts of interest and generally requires that "no official (...) shall engage in any employment (...) which conflicts with the proper discharge of such official['s] duties." 2.03.520.A, BMC. In addition, the Code of Ethics specifically prohibits an official from having a financial or personal interest in any transaction) with the city as to which such official or employee has the power to take or influence official action. 2.03.520.B, BMC.2 2.03.470.A.12,BMC defines"Transaction"as"the offer of,or the sale,purchase,or furnishing of,any real or personal property or services,by or to any person or entity directly or indirectly,as vendor or vendee,prime contractor,subcontractor,or otherwise,for the use and benefit of the city or of such other person or entity for a valuable consideration" 2 See.2.03.520,BMC.-Conflict of interest. A. No official or employee shall engage in any employment or business which conflicts with the proper discharge of such official or employee's official dudes. B. No official or employee shall have a financial or personal interest,tangibly or intangibly,in any transaction with the city as to which such official or employee has the power to take or influence official action unless full public disclosure is made.If an official or employee has any tangible or intangible financial or personal interest in the outcome of any matter coming before the agency of which the official or employee is a member or by which the official or employee is employed,such official or employee shall publicly disclose on the record of the agency,or to a superior or other appropriate authority,the existence of such financial or personal interest.An official or employee having such a financial or personal interest shall not engage in deliberations concerning the matter,shall disqualify himself/herself fiom acting on the matter,and shall not communicate about such matter with any person who will participate in the action to be taken on such matter. Page 2 of 5 Section 2.03.470.A.10, BMC, defines personal interest as: any interest in the matter which would affect the action of the official or employee other than a financial interest,and other than an interest because of membership in, or affiliation with,but not employment by a social, fraternal, charitable, service, educational, religious, governmental, health service, philanthropic, cultural,or similar nonprofit institution or organization. Section 2.03.470.A.6, BMC, defines financial interest as: any ownership interest, contractual relationship,business relationship,or other interest which will result in a monetary or other material benefit to an official or employee, either tangibly or intangibly, which has a value of more than$15.00,other than the official or employee's duly authorized salary or compensation for the official or employee's services to the city, and which interest is not common to the interest of all other citizens of the city. The following financial interest shall be imputed to be those of an official or an employee of the city: that of a spouse or child of an official or employee; that of any prime contractor or subcontractor of the city, in which the official or employee or any member of the official or employee's immediate family has any direct or indirect interest as the proprietor,by ownership of stock or partnership interest. I determine that at this time you have neither a personal or financial interest in decisions related to the Story Mansion that would create the potential for a conflict of interest under the City's Code of Ethics. First, as for a personal interest, I note that you are employed by MSU - not the Museum. I also note the Story Mansion is owned by the City of Bozeman and there is currently no formal proposal regarding the Story Mansion by MSU or the Museum. While a portion of the funding for your position comes from the Museum, I find your employment by MSU and the partial indirect funding of your position by the Museum does not rise to the level of an interest in the Story Mansion that would affect your decision making; that is, it is highly unlikely under this circumstance that your employment and the relationship between the Museum and the funding of your salary is sufficient to tempt you to depart from your sworn public duty. As such, I do not believe your employment by MSU and the involvement of the Museum in contributing to your salary is sufficient interest to qualify as a personal interest under the City's Code of Ethics. As for financial interest, the fact that the Museum contributes money it collects from various fundraising activities to support a portion of your salary as paid through MSU is important in terms of a conflict of interest analysis in so far as actions you may take as Deputy Mayor affect MSU and the Museum. The mere possibility that the Museum, as a non-profit entity, may benefit from your decisions on the Story Mansion as one commissioner by affecting a reduction in the "same finite pools of donors" if the Story Mansion is sold is, in my opinion, simply too speculative and attenuated to rise to the level of a financial interest. Should the allegation be true that a reduction in non-profits vying for limited donor funds would occur should the City sell the Story Mansion such a benefit would be common to the interest of many other non-profits in Bozeman and throughout the region. As such, this mere possibility does not rise to the level of a financial interest. To require recusal from participation by a public official on a matter where that public official's participation is required by law (see Sect. 2.03, Bozeman City Charter) a conflict of interest must be at a minimum a reasonable probability and must be more than merely Page 3 of 5 speculative. Section 1-3-221, MCA (That which does not appear to exist is to be regarded as if it did not exist). As for Montana law, it has long been recognized that a public office is "created in the interest and for the benefit of the public." State ex rel. Bell v. McCullough, 85 Mont. 435, 438, 279 P. 246 (1929). Based on the concept that "[t]he holding of public office or employment is a public trust," 2-2-103(1), MCA, the Montana code of ethics recognizes "that some actions are conflicts per se between public duty and private interest while other actions may or may not pose such conflicts depending upon the surrounding circumstances," 2-2-101, MCA (emphasis added). Thus, "it is necessary to look at each particular transaction or relationship in conjunction with the surrounding circumstances before a determination can be made as to whether or not a breach has occurred." 45 Mont. Op. Atty. Gen. No. 10 (Mont.A.G.) (1993) (citing 37 Op. Att'y Gen. No. 104 at 431, 434 (1978)). Pursuant to Sect. 2-2-121(2)(e), MCA, a state officer or employee may not "perform an official act directly and substantially affecting to its economic benefit a business or other undertaking in which he either has a substantial financial interest or is engaged as counsel, consultant, representative, or agent." I believe your participation in decisions regarding the Story Mansion does not present a circumstance where you will directly and substantially benefit from participation as "[t]he circumstances described in your inquiry do not present a situation in which you, as a public official, are at risk of advancing your own interests at the expense of the public welfare." 45 Mont. Op. Atty. Gen. No. 10 (1993). Conflict of interest laws are designed "to prevent honest government agents from succumbing to temptation by making it illegal for them to enter into relationships which are fraught with temptation." Id. citing United States v. Mississippi Valley Generating Co.,364 U.S. 520, 549(1961). As discussed above, that is not the case here. Given the facts as presented it is my opinion you do not have a legal conflict of interest under Montana law. In addition, 2-2-121, MCA, lists additional acts that are breaches of public duty. Your situation does not involve any of these delineated acts. As such, I find no violation of the relevant statutory guidelines found in Title 2, chapter 2, part 1, MCA, pertaining to the state standards of conduct. Likewise, I found no violations of 7-5-4109(l), MCA'. '7-54109,MCA.Control of conflict of Interest.(1)The mayor,any member of the council,any city or town officer,or any relative or employee of an enumerated officer may not be directly or indirectly interested in the profits of any contract entered into by the council while the officer is or was in office. (2)The governing body of a city or town may waive the application of the prohibition contained in subsection(1)for a city or town officer or employee,or to the relative of an officer or employee,if in an official capacity the officer or employee does not influence the decisionmaking process or supervise a function regarding the contract in question.A governing body may grant a waiver under this subsection only after publicly disclosing the nature of the conflict at an advertised public hearing held for that purpose.In determining whether to grant a waiver,the governing body shall consider the following factors,where applicable: (a)whether the waiver would provide to a program or project a significant benefit or an essential skill or expertise that would otherwise not be available; (b)whether an opportunity was provided for open competitive bidding or negotiation; (c)whether the person affected is a member of a clearly identified group of persons that is the intended beneficiary of the program or project involved in the contract;and (d)whether the hardship imposed on the affected person or the governmental entity by prohibiting the conflict will outweigh the public interest served by avoiding the conflict. Page 4 of 5 This opinion is provided pursuant to my authority under 2.03.630, BMC.4 Pursuant to 2.03.6303 you may rely upon this opinion in regards to the specific transaction or activity to which this opinion pertains. In addition, pursuant to 2.03.630.C, if you act in good faith in accordance with the provisions and findings herein, you may not be subject to prosecution or administrative action under the City's Code of Ethics. However, I am unable to provide you immunity from prosecution under state law. This opinion is issued in my capacity as the City Attorney for the City of Bozeman and done so on behalf of the City of Bozeman (2.03.630.D, BMC) and is based on facts as they were represented by you and exist today. If facts change my opinion may change. I hope you found this helpful. If you have any questions about this matter,please contact me. =MANCITY RNEY'S OFFICE Greg Sullivan City Attorney 4 Sec.2.03.630,BMC.-City attorney opinions. A. At the request of a person,the city attorney may render an informal or formal advisory opinion with respect to the prospective conduct of such person.An informal advisory opinion need not be written,and may be provided directly to the requestor of such opinion.A request for a formal advisory opinion must be in writing and include all the information and documents related to the request.The request for either an informal or formal advisory opinion must state all the material facts so the city attorney may render a complete and correct opinion.The city attomey's formal advisory opinion must be in writing.Nothing in this division shall be construed to prohibit a request for an opinion by any public servant from the city attorney regarding a potential conflict of interest.Neither a request for an infonnal or formal advisory opinion,nor the making of a statement concerning a potential conflict of interest made by a member of the city commission in the course of abstaining from voting or making a motion of self-recusal,shall create a presumption or inference that a public servant actually has a personal interest in the matter about which the opinion was requested;if the city attorney elects to render an opinion,the city attorney shall,within a reasonable time, submit a written summary of the opinion to the ethics board for the board's information;if the city attorney declines to render an opinion,nothing shall preclude the person requesting the opinion from requesting the ethics board for an opinion. B. Any fonnal advisory opinion issued pursuant to this section may be relied upon by the person directly involved in the specific transaction or activity to which such advisory opinion has been issued,and any person directly involved in any specific transaction or activity which is indistinguishable in all its material aspects from the transaction or activity with respect to which such advisory opinion was rendered. C. Any person who relies upon a formal advisory opinion pursuant to this section,and who acts in good faith in accordance with the provisions and findings of such opinion,shall not,as a result to such act,be subject to prosecution under this division or,in the case where the opinion is exculpatory,be subject to any administrative adverse action or civil action based upon legal authority cited in that opinion. D. The city attor ey's client is the City of Bozeman and not the individual requesting the opinion.No request for an opinion from the city attorney shall constitute the establishment of an attomey-client relationship with the individual requesting the opinion. Page 5 of 5