HomeMy WebLinkAbout01-23-84 Board of Ethics Minutes BOARD OF ETHICS
JANUARY 23, 1984
The Board of Ethics met in regular session on Monday, January 23, 1984 at 2:00 P.M. in the
ity Council Conference Room - 10th floor - City Hall.
Present: Don Cook, Margaret Groves, Steve Sawyer, City Attorney, Rita M. Bauman, City Clerk
Absent: John Mertz
The meeting was called to order by Don Cook and a roll call vote was taken at which time
5 members were present and 1 member absent.
Motion by Margaret Groves that the minutes of the November 28, 1983 meeting be approved
as printed - seconded by Don Cook - motion carried.
John Mertz arrived at the meeting at 2:15 P.M.
John Mertz handed to each member of the Board a copy of Advisory Opinion #2 dealing with
the matter of conflict of interest and voting rights on certain matters that come before
the City Council. Each member of the Board took time to read the opinion. Discussion was
held and recommendations for some minor changes were made. Mr. Mertz took the opinion back
along with changes to be made for correction and re-submission.
Attorney Steve Sawyer stated that he would work out some guidelines and he would put them
together and submit them to each board member.
There being no further business Mr. Mertz made a motion that the next meeting be held on
February 6, 1984 at 2:00 P.M. for final submission of the corrected opinion. Seconded by
Steve Sawyer Motion carried.
Motion by Mr. Cook that the meeting stand adjourned seconded by Mrs Groves - motion carried.
Meeting adjourned at 2:40 P.M.
Resp ctful`lf�ysub�m',ted:
Rita M.Bauman
Secretary.
BOARD OF ETHICS
MONDAY- January 23, 1984
2:00 P.M.- City Council Conference Room
A G E N D A
a) Call to Order
b) Roll Call
c) Excused absence
d) Approval of Minutes for November 28, 1983.
e) Old Business- Adado/Worthington.
f) Reports of Officers
q) New Business
h) Adjournment
LANSING BOARD OF ETHICS
ADVISORY OPINION NO. 2
Members of the Lansing City Council have requested an advisory opinion of the Board
of Ethics determining whether correct procedure was followed when members abstained from
voting on an issue in which a conflict of interest allegedly existed and whether and under what
circumstances members of the Council may vote on matters which affect a business with which
a member has connections or an employer of a member.
The Board of Ethics respectfully declines to pass on the propriety of the actions taken
in the voting cited. The issue is moot. The affected members did not vote by permission of
the remainder of the City Council.
However, the board notes the confusion which seems to regularly occur when conflict
of interest questions are raised and offers the following in an attempt to clarify the situation.
Section 3-205.2 of the Lansing City Charter provides that:
"Each member of the Council shall vote on each question before the Council
for a determination, unless excused therefrom by the affirmative note of 2/3
of the members serving, except that no member shall vote on any question
upon which that member has a conflict of interest or a financial interest
other than as a citizen of the city.
If a conflict of interest is raised under this section at any council meeting,
such question shall be determined by a majority of those Council members
present and qualified to vote before the main question shall be voted on, but
the Council member affected shall not vote on such determination."
Section 5-505 of the Charter provides that
1. An officer or employee who intends to have business dealings with the City,
either directly or indirectly, or who may derive any income or benefits either
directly or indirectly in addition to official remuneration as a result of Council
action or a contract with the City shall file an affidavit with the City Clerk setting
forth the details at least 10 days prior to the action. Notice of such filings shall
be included in the Council agenda.
2. An officer or employee who has any other conflict between a personal interest
and the public interest as defined by State law, this Charter, or ordinance shall
fully disclose to the City Attorney the nature of the conflict.
3. Except as provided bylaw, no elective officer, appointee or employee of
the City may participate in, vote upon or act upon any matter if a conflict exists. if
Section 2-132(B) and 2-132(C) of the Code of Ordinances provide that:
"(B) Except as otherwise prohibited by law, a member of the city council may
make or participate in making a decision which may place him or her in a potential
conflict of interest if the member first delivers a statement to the president
of the city council disclosing the potential conflict of interest and explaining why,
despite the potential conflict, the member of the city council is able to vote
and otherwise participate fairly, objectively, and in the public interest. The
1
Advisory Opinion No. 2
statement shall be entered in full in the minutes or other official record
of the legislative body.
(C) A governmental body shall establish procedures to enable an officer
or employee to avoid or be exempt from making or participating in the
making of a governmental decision which the officer or employee knows
will provide the officer or employee, a member of the officer's or employee's
immediate family, or a business with which the officer or employee is
associated with a financial benefit of more than a de minimus nature which
is distinguishable from the benefits to the person as a member of the public
or as a member of a broad segment of the public. "
Section 2-129(L) of the Code of Ordinances defines Council Members as officers. Sections
2-129(B) and 2-129(C) define "business with which an officer or employee is associated" to mean
one where the individual or a member of the individual's immediate family is an owner, partner,
director, officer, or employee. Section 2-129(I) defines "immediate family" to include a child,
spouce or other claimed dependent, parents, parents-in-law, brothers, sisters, sisters-in-law,
brothers-in-law, step-parents, step-brothers, and step-sisters. Section 2-129(A) defines "business"
to include all forms of association for commercial or profit purposes.
Generally, the Charter and related ordinances rely upon an individual to recognize situations
involving a personal financial benefit of more than a de minimus nature as distinguished from
a benefit to the person as a member of the public or as a member of a broad segment of the
public. However, such an issue may be raised by anyone. There is no way to prevent such issues
from arising repeatedly or to accurately define in a general sense when a council member should
or should not vote if such an issue does arise. The Board of Ethics must leave the determination
of such instances to those individuals involved in or affected by a potential conflict of interest
situation. Each instance must then'be decided on its own merits considering the facts and
circumstances as they then exist. If the issue is presentedin a timely fashion, prior to a vote
or decision, the Board can issue an advisory opinion as it is empowered to do by Charter and
ordinance.
Elected officials were presumably selected for their ability to exercise discretion and
judgment in the best interests of the"public as a whole: They may not avoid their,,-responsibilities
an thus;th 'ir account �bility to those�ho elected the y hidin behind.a sm•'kescreen of
gene��lized advisory opin ns issued by an appointed Board, not otherwise accountable to the
electorate.
THE LANSING BOARD OF ETHICS
Dated: January 23, 1984
JOHN F. MERTZ, Chairman
DONALD COOK, Vice-Chairman
Advisory Opinion No. 2 THE LANSING BOARD OF ETHICS
RITA BAUMANN, Secretary
MARGARET GROVES, Public Member
STEPHEN SAWYER, City Attorney
T
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�MLOalciu� City O Y ■ 7 A/ I ■ �/
I N T E R 0 F F I C E C 0 M M U N I C A T I O N
TO: Rita Bauman, Ethics Board Member
FP,OM: Terry J. McKane, Mayor DATE: 10-12-83
SUBJECT: Conflict of Interest - Lansing City Councilmembers
Attached is a correspondence from Councilmembers Adado and
Worthington regarding a "possible" conflict of interest relative
to a vote on an issue that will impact Oldsmobile. Both Council-
members do not feel that their vote on this matter presents a
conflict of interest, but have refrained from voting.
They are requesting that the Ethics Board review this matter
and render an advisory opinion as to whether and under what
circumstances members of City Council, may vote on such matters.
It would be appreciated if you would convey this desire to
the Ethic Board and hold whatever meetings are necessary to
resolve this matter.
Thank you.
Attachment
TJM/smm
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C D
C.a.7
October 10, 1983
MADAM PRESIDENT do CITY COUNCILMEMBERS:
AS YOU KNOW, IT HAS BEEN IMPLIED THAT WE CAN NOT VOTE ON THE MATTER OF GIVING
GRAND TRUNK WESTERN RAILROAD A TEMPORARY EASEMENT FOR THEIR TRACKS
BECAUSE THE TRACKS WOULD BE USED TO SERVE OUR EMPLOYER, THE OLDSMOBILE.
DIVISION AND THE FISHER BODY DIVISION OF GENERAL MOTORS, CAUSING A CONFLICT
OF INTEREST. IT IS CLAIMED THIS DESPITE THE FACT THAT OUR VOTE ON THIS MATTER
HAS NO EFFECT ON OUR EMPLOYMENT . IT ALSO HAS NO EFFECT ON OUR BENEFITS
AND OUR VOTE WOULD ONLY.SERVE TO ALLOW TEMPORARY USE OF AN INACCESSIBLE
PIECE OF PROPERTY WHILE THIS MATTER IS SUBMITTED TO THE VOTERS FOR A FINAL
DECISION.
WE DON'T AGREE THAT WE ARE OR SHOULD BE UNABLE TO VOTE ON THIS MATTER
FOR THE BENEFIT OF THE PUBLIC. HOWEVER, BECAUSE OF THIS IMPLICATION AND
BECAUSE IN OUR OPINION IT IS IMPORTANT THE BUSINESS OF THIS COUNCIL AND THIS
CITY BE BEYOND REPROACH, IN APPEARANCE AS WELL AS IN FACT. WE, THEREFORE,
ARE ASKING THE CITY COUNCIL TO EXCUSE US FROM VOTING ON THIS ISSUE. ALSO,
TO PREVENT ANY FUTURE RECURRENCE OF THIS SORT OF PROBLEM, WE ARE ASKING
THE CITY'S BOARD OF ETHICS FOR AN ADVISORY OPINION AS TO WHETHER AND UNDER
WHAT CIRCUMSTANCES MEMBERS OF CITY COUNCIL MAY VOTE ON SUCH MATTERS.
THANK YOU!
COUNCILMAN LOUIS F. ADADO
ac
COUNCILMAN SIDNEY P. WORTHINGTON
City of L A N S I N G �. .,,
1 -7- I N T E R 0 F F I CE C 0 M M U N I CAT I ON
I
Tn: Councilman James Blair
FPOtl: Stephen R. Sawyer, City Attorney DATE: 11-1-82
SUBJECT: Conflict of Interest
You. have requested of this office as to whether or not
Councilman Adado should abstain from voting on the issuance
of a tax exemption certificate for the Lansing Oldsmobile
Division of General Motors Corporation and an amendment of
the already issued Fisher Body tax exemption certificate
due to a possible conflict of interest.
r
Fisher Body ' s tax exemption certificate No. 81-344 was approved
on October 12, 1981 and Fisher Body is requesting the City
Council to amend the certificate to increase the face amount
of the certificate by $75,000 , 000 along with a request for an
extension of time. Lansing Oldsmobile Division is requesting
City Council to grant Oldsmobile Division a tax exemption
certificate in an approximate amount of $75, 000 ,000 . The
industrial development district for Lansing Oldsmobile Division
was approved back on January 12, 1981. The new equipment will
be utilized in the development of front wheel drive vehicles
which are more fuel efficient. A public hearing on the matter
has been set for November 15 , 1982.
Councilman Adado has advised this office that he is a stock-
holder of General Motors Corporation with his General Motors
shares possessing at the time of this opinion a total market
value of less than $10 ,000 . In addition, Councilman Adado is
a salaried employee of the Oldsmobile Division of General Motors
and is employed in a non-managerial capacity .
This office has previously issued Opinion 75-85 , 77-41 , 77-107, 77-103,
and 77-135 regarding the possible conflict of interest which
may exist because of City Council members ' ownership of General
Motors stock and/or employment with Oldsmobile when matters
affecting Oldsmobile Division or Fisher Body have appeared on
the City Council agenda. Copies of these opinions are attached
for your. information.
As noted in the earlier opinions there currently exist three
possible legal barriers to Councilman Adado ' s vote on matters
involving General Motors Corporation: 1) 1968 PA 317 (MCLA
15. 321 et seq; MSA 4 . 1700 (51) et seq. ) prohibiting a council-
member from being a party, directly or indirectly, to a contract
with the City of Lansing or from soliciting a contract between
I' Councilman James Blair
November 1, 1982
Page 2
the City of Lansing and a corporation in which councilmember
owns over to or $25 , 000 worth of stock unless the councilmember
has disclosed his interest in the contract, abstained from voting
on the matter, and the matter has been approved by a two-thirds
vote of City Council; (2) Section 3-205. 2 of the 1978 Lansing
City Charter provides that:
"No member shall vote on any question upon which
that member has a conflict of interest or a financial
interest other than as a citizen of the city. "
This language was adopted in the previous Section 5 . 5 (i) of the
1955 Lansing City Charter. In addition Section 5-505 .1 of the
Lansing City Charter provides that a councilmember "who may
derive any income or benefits either directly or indirectly in
addition to official remuneration as a 'result of council action
or a contract with the city shall file an affidavit with the
city clerk at least ten days prior to the action" . Section 5-505 . 3
of the 1978 Lansing City Charter provides that no elective officer
may participate in, vote upon or act upon any matter if a conflict
exists ; (3) Michigan common law as developed by the Michigan courts
which restrict any interest by public officials in activities or
contracts which involve the public body of which they are an
official and a business organization in which they have an interest.
However an examination of the previous opinions which have been
issued by this office, examination of the minutes of the 1978
Lansing City Charter Commission and review of case law, both
Michigan and elsewhere, leads this office to the conclusion that
none of them prohibit Councilman Adado 's vote on the matter for
the following reasons :
1. Applicability of 1968 PA 317. In a previous opinion
issued by this office, 77-135 , this office concluded
that since the 1968 PA 317 applies only to contractual
relations the approval of an exemption certificate or
its amendment does not create any legal obligation by
General Motors and thus the vote will not create any
contractual relationship. Subsequently, a December 14 ,
1978 Michigan Attorney General ' s Opinion concluded
that th.e 1968 PA 317 was not applicable in situations
involving a private corporation seeking tax relief
from a local municipality since there is no contract
between the public entity and the corporation.
Therefore, based upon previous opinion and a sub-
sequent Attorney General 's Opinion, it is the opinion
of this office that 1968 PA 317 is not applicable and
therefore does not prohibit Councilman Adado 's vote
on the matters involving corporations seeking tax
relief as authorized by statute.
~' 2. Applicability of Sections 3-205 . 2 and Section 5-505
of the 1978 Lansing City Charter. As noted previously,
Councilman James Blair
1November 1, 1982
gage 3
the 1978 Lansing City Charter Commission adopted
Section 3-205.2 almost verbatim from the 1955
Lansing City Charter ' s Section 5 . 5 (i) . In previous
opinions , specifically City Attorney Opinions 77-103,
77-41 and 77-135 , this office examined judicial
decisions which refused to place restrictions on
the voting power of various public officials when
the interest of the official involved is insub-
stantial, indefinite and indirect as opposed to
substantial, definite and direct. See Thompson v
School District No. 1, 252 Mich 629 ; 233 NW2d 349
(1930) ; People of the State of Illinois v Simpkins ,
359 NW2d 828 (1977) . Examination of recent case
law does not reveal any new cases either in Michigan
or elsewhere which are exceptions to the above
mentioned rule. In this particular case it is
noteworthy that Councilman Adado ' s total financial
interest in General Motors Corporation is less than
$10 , 000 . In addition, while it is clear that any *•
financial benefit which may occur to Oldsmobile Division
or to Fisher Body as a result of the issuance of the
exemption certificates or their amendment would be sub-
stantial, any possible income or benefit to Councilman
Adado would be insubstantial , if any.
3. Applicability of Michigan common law. As stated above ,
Councilman Adado is not an officer, director or sub-
stantial shareholder of General Motors Corporation. In
City Attorney Opinion 77-103 and Opinion 77-135 , this
office concluded that Michigan common law does not appear
to prohibit Councilman Adado 's vote on the issuance of tax
exemption certificates to the Fisher Body and Oldsmobile
Division of General Motors Corporation. Subsequently, in a
December 14 , 1978 Attorney General 's Opinion, the Michigan
Attorney General interpreted Michigan common law to require
that a public official have fiduciary duties to both is
private employer and to his city council before a conflict
of interest under Michigan common law can occur. Exam-
ination of Michigan case law and corporation horn book law
reveals that only officers , directors and controlling share
holders of Michigan corporations have fiduciary obligations
in regards to the corporation 's dealings . As stated on
page 721 of the December 14 , 1978 Michigan Attorney
General 's Opinion:
"Thus , if in addition to the duties owed to
the public , the public official ' s responsibilities
to his private employer are such that a dual
agency arises , the individual must avoid the
dilemma of determining which of the two masters
with adverse interests should be given priority
by requiring total abstention from making the
ch.oice. "
'Councilman James Blair
November 1, 1982
Page 4
L Therefore, it is my opinion that when a council
person owes a fiduciary duty to a private employer,
as well as to the public, he or she must abstain
from voting on matters which would require choosing
between the duties owed both. "
Conclusion
Thus , it is the opinion of this office that Michigan common
law, the 1978 Lansing Charter or PA 317 do not prohibit
Councilman Adado from voting in the above referenced matter.
Nevertheless, this office must again as it has in previous
opinions emphasize that although Councilman Adado 's vote is
not legally prohibited by the 1978 City Charter, Michigan
common law or 1968 PA 317 , if Councilman Adado feels that he
can not render an objective or unbiased decision then
Councilman Adado can request City Council' s permission to
abstain from voting. Obviously, this would be a decision
which only Councilman Adado could make. Ift addition, this T,
office must point out that despite the Michigan Attorney
General's opinion, case law in Michigan remains unclear and
therefore a definitive answer is still impossible. Further,
since the propriety of one's vote is one of personal opinion
it can still be questioned by others.
If you have any other or further questions regarding this matter,
please feel free to contact this office.
Respectfully submitted,
Stephen R. Sawyer
City Attorney