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HomeMy WebLinkAbout2004 11 09.minutes.Board of Ethics ETHICS BOARD NOVEMBER 9, 2004 NOTES PRESENT: Nole, Claiborne, Folkers, Frybort, Jones (absent at roll call, arrived 5:45 P.M.) Merchant, ABSENT: Amen Hetep, Sullivan OTHERS: Miner, Roberts, Griffin, Topping, Rhode, Boone SECRETARY’S REPORT APPROVAL OF AGENDA; Motion by Members Fokers to approve the agenda as submitted. MOTION CARRIED 5/0 APPROVAL OF MINUTES: Motion by Chairman Nole to correct the minutes of October 12, 2004 by replacing the words “President Nole” with Chairman Nole throughout. MOTION CARRIED 5/0 Motion by Member Merchant to correct the minutes by striking the third sentence in the first paragraph under Old Business on page 4. MOTION CARRIED 5/0 Motion by Member Merchant to accept a request from Attorney Roberts to correct the minutes on page 2 under Affidavit of Disclosure by Susan M. Topping by inserting “(Roberts)” following the word “he” at the end of line 6 and by revising the 7th paragraph on page 5 to read as follows; “Deputy Attorney Roberts said the trouble with having that type of guide here is that every time there is a change it would not be reflected. He said you are better off requesting the job describtions on a case by case basis, so that the most recent description will be available. “ MOTION CARRIED 5/0 Motion by Member Fokers to approve the minutes of October 12, 2004 as corrected MOTION CARRIED 5/0 COMMUNICATIONS AND PETITIONS: 1. Letter to Brian Simon, Pump Operator at the Board of Water & Light Eckert Station RECEIVED AND PLACED ON FILE 2. Letter to Dorothy Boone, Development Manager in the City of Lansing Planning and Neighborhood Development Department requesting that she attend the November 9, 2004 meeting of the Board of Ethics City Clerk Miner noted that a copy of Mrs. Boone’s job description was included in the Board Packet for review. Dorothy Boone stated that she filed the Affidavit because of concerns regarding funding that the Black Child and Family Institute gets from the City. Her Husband is the executive Director of BCFI which receives funding from 3 primary sources, the United Way, Family Independence Agency and grants from the City that are program specific. Upon her employment by the City and given the fact that the non-profit agency that her husband directs is contemplating application for grant funding through the HOME and CDBG programs which she directs, she filed the affidavit. She proposes that to avoid any conflict issues that she would not administer any funds or applications that BCFI may submit while her husband is executive director. Jim Ruff, the Director of the Planning and Neighborhood Development Department has agreed to handle those grant applications and funding. Presently the grants that BCFI receives are handled through the Human Relations and Community Services Department. An alternative solution may be to put the CDBG and HOME grant funds through the HRCS Department as well to provide an extra barrier between her and the funding. Chairman Nole asked Mrs. Boone if it is her statement that the agency run by her husband currently receives City funding, but it is not handled by her department. Mrs. Boone answered affirmatively. Member Merchant asked Mrs. Boone what HOME funds are and if the BCFI programs would be ones she would look at when writing grants. Mrs. Boone answered that there are programs that the BCFI could undertake that could be funded by CDBG funds. Member Merchant asked Mrs. Boone how long the BCFI has been in existence. Mrs. Boone responded that they have been there since 1987. Member Merchant asked Mrs. Boone if they had ever applied for this type of funding before. Mrs. Boone said that as a new employee, she does not know if they have applied in the past. Member Merchant asked if Mrs. Boone’s proposal is that her boss review and manage these grants, thereby taking her out of the process. Mrs. Boone responded in the affirmative. Chairman Nole asked Mrs. Boone if the grants are awarded through a closed bid process. Mrs. Boone answered, no. Member Merchant asked Mrs. Boone to verify that the grants are task specific and that she could remove herself from the process. Member Frybort asked Mrs. Boone if it is one of her job responsibilities to oversee the block grant program. Mrs. Boone answered, yes. Member Frybort asked Mrs. Boone if her remedy involves structuring the supervision of the grant in such a way that her supervisor would oversee and evaluate it’s success and that all of these functions would be taken out of her job. Mrs. Boone said that the reporting aspects would probably not be taken out of her job. Member Frybort asked Mrs. Boone if she is out of the loop, does that impact the flow of information that would give someone an unfair advantage, or, would she be in a position to give someone else an unfair advantage after she removes herself? Attorney Roberts asked Mrs. Boone how long her husband has been the Director at the BCFI. Mrs. Boone said he has been director for 4 years. Attorney Roberts asked Mrs. Boone if, to the best of her knowledge she is aware of any conflict with the current job that predates that 4 year time period. Mrs. Boone said that she learned that the United Way and Closing the Digital Gap gets funding from the City, and her husband is a board member on those boards. Attorney Roberts said that he believes Mrs. Boone has come before the Board by way of caution and perhaps excess caution, because she anticipates circumstances that have not actually happened, but that could happen. This funding is not something that she has any functional duty or control over as far as she knows. This is in the control of a different department of the City than the one in which she is employed and she does not interface with that department for the purpose of administering funds that are under her control. Mrs. Boone answered in the affirmative. Attorney Roberts further stated that if BCFI were to make application in the area of CDBG or HOME funds, or whatever given funding the City receives from the Federal Government and administers, she would not be able to administer that without the problem of being in conflict with the ethics ordinance. Mrs. Boon answered, yes. Attorney Roberts said there is the possibility of an actual conflict and that is whether or not Mrs. Boone could do the job as it is described in her job description. That could be a difficulty for the Board because in past opinions the Board has generally ruled that if the outside function would be inconsistent with the persons ability to do the job as described, there is a conflict, but in terms of current circumstances, over the last 4 years she does not have knowledge of a conflict situation arising. Maybe the Board should indicate that there may be a conflict in the future and that before that conflict arises that Mrs. Boone should bring it to the board for determination at that time. Member Frybort asked how often CDBG Grants are let. Mrs. Boone answered, annually. Member Merchant asked Mrs. Boone if she is part of the reviewing process for compliance with grant requirements. Mrs. Boone responded in the affirmative. Chairman Nole asked Mrs. Boone if she is part of the decision process as to renewal of the grant or changing of contract terms. Member Merchant added, If someone is in non- compliance with federal contract requirements you would have to report them. Mrs. Boone answered yes. Chairman Nole asked Mrs. Boon the amount of an average grant. Mrs. Boone said that they vary a lot depending on the activity. The City gives the BCFI around $30,000 per year. Under the CDBG program they have activity specific grants that are generally larger than that. Chairman Nole clarified, the BCFI is a non-profit association and the City is one source of revenue that keeps that facility open and working. Attorney Roberts said that the Federal Government has stringent conflict of interest guidelines. He asked Mrs. Boone if she has reviewed those guidelines and taken her issue to HUD? It may be that the Federal guidelines are strict enough that the proposed activity will be restricted. He asked Mrs. Boone if she has any difficulty with the Board only acting upon the part of the City grant that is currently received at this point in time, with the understanding that if BCFI thanks they will make application for CDBG funds, that Mrs. Boone would bring that back to the Board at that time. Mrs. Boone said that she would have no problem with that. She would prefer to be dealing with an actual situation rather than a hypothetical one. Attorney Roberts said Mrs. Boone is not aware that BCFI has tried to apply for any of the program funds that she administers. This presents a problem for the Board without a real probability. Maybe the better course is not to deal with it until it becomes a probability. Mrs. Boone would have to bring it to the Board before any application is made. Member Fokers asked how important it is for Mrs. Boone to check the Federal guidelines. Attorney Roberts said that should be a realistic concern based on federal regulations from other programs he has looked at. Member Merchant said that the Federal Government appoints overseers of these grants. There is a mechanism for pre-empting resolution of this problem. Attorney Roberts said that the difficulty the Board has, if this becomes an issue, is wether or not the Board will sanction methods to avoid a conflict that would be inconsistent with the persons job description. The last case the Board looked at like this was a Fireman whose job description was directly in conflict with what he wanted to do. He was willing to build a wall, but the conflict still existed because he would not be able to do his job if he built that wall. The Board does not need to re-visit this issue unless it becomes a reality. Member Frybort asked Attorney Roberts, “if the Board looks at this again, would that be the appropriate time to look at a remedy?” Attorney Roberts answered, if there was a remedy, we would be back at square one to review the remedy. Chairman Nole said that either there is a conflict, or there is not. A remedy would alter the rules and regulations the Board is supposed to follow according to the Charter. Attorney Roberts said that if someone wants to come to the Board with a potential remedy already approved that is their function. It is not for the Board to fashion a remedy. He suggested that the Board needs to acknowledge that the potential conflict of interest that Mrs. Boone has presented to the Board for consideration is a little different than the conflict that is written in her affidavit. That potential conflict is that the non-profit corporation or business her husband is in charge of receives money from the City. That money is administered by a different department for which she has no control, direct contact or employment functions. This is the first thing the Board needs to look at. Also, the Board has her agreement that if the possible, more direct conflict that is described in her statement to the Board that she is requesting not be considered at this time, becomes a probability, she will bring it back to the Board for consideration before it is acted upon. Member Frybort stated for the record, that although he doesn’t work very closely with him, Mr. Boone is currently a member of the Capital Area Community Services Board. Chairman Nole stated for the record that the Black Child and Family Institute is involved with the School District and the district has helped with programs that have been operated by that facility. Attorney Roberts said that at the moment, the City is part of the funding sources for Mrs. Boone’s Husbands business entity, but that funding is administered by the Human Relations and Community Services Department of which she is not a part and has no administrative functions and which has no part in her job description. The Board would then deal with the other circumstance when it comes up, if it comes up, at a future time. Chairman Nole said that he does not believe that he has a conflict in this situation. He only refers students to that facility and is far removed from conflict status. Member Merchant said that if the Board sends Mrs. Boone a letter saying there is no current conflict of interest and Mrs. Boone comes back in 4 months saying her Husband has made application for funding that is administered by her Department and for which she has some responsibility, and the Board’s ultimate determination at that time is that one of them has to step down from their job, would any Board Member feel uncomfortable running into either party at a social function? Member Frybort said that Mr. Boone is on the Board of Directors for Capital Area Community Services by whom he is employed, and he would like to be recused from action on this matter because it could impact his job. Motion by Member Merchant that a letter be drafted stating that there is no conflict of interest involved in the funding that BCFI receives from the Human Relations and Community Services Department and that the Board appreciates her candor and preemptive action in filing the affidavit. Further that if the possible, or probable conflict of interest situation occurs, that she will bring the matter back to the Board before such action may be taken. Further that the Board suggests that she review Federal policy regarding the grants and programs that she administers regarding conflict of interest provisions. Motion by Member Folkers that Member Frybort be recused from the discussion and vote on this item CARRIED UNANIMOUSLY MEMBER MERCHANT’S MAIN MOTION CARRIED BY THE FOLLOWING VOTE: YEAS: 5 NAYS: 0 ABSTAIN: 1 ABSENT: 2 3. Letter to Susan M. Topping, Deputy Treasurer in the City of Lansing Treasurer’s Office requesting that she attend the November 9, 2004 meeting of the Board of Ethics Susan Topping said that she has been a CPA since 1982. They have their own code of ethics to which she is committed. She has been with the City of Lansing for 15 years. She filed the Affidavit of a Conflict of interest because of her tax practice. She is not sure what she does in her new job yet, she is still learning it. So far she knows that she is responsible for bank deposits and reconciliation of tax payments. In her private business she does tax returns for Federal, State and the City of Lansing as well as for other cities and states. She also does payroll and payroll tax recording for small companies. Jill Rhode, City Treasurer and Deputy Director of Finance said that the Treasurer’s Office administers the income tax ordinance. Ms. Topping’s actual involvement may be limited. She will supervise Ms. Topping’s activities. Ms. Topping has been helping the Treasurer’s Office with it’s responsibilities for some time with the understanding that she would not audit her own clients tax returns. Member Frybort asked Ms. Topping if, as cases are being assigned would one of her clients be involved in her decision making process, or would someone else do it. Ms. Topping said someone else would do it. Member Fokers noted that Ms. Topping’s affidavit states that she will not accept any new City of Lansing business clients. If there is no conflict of interest, why would that have any impact? Why did she make this statement? Ms. Topping stated that she followed the format set forth in Will Barykoumb’s affidavit of disclosure, which was submitted some time ago. Ms. Rhode said that the statement is meant to indicate that Ms. Topping would not use the Deputy Treasurer Title to market her services. Member Frybort asked Ms. Topping if there had ever been a time when she was aware that someone who was doing this work as a private person felt at a disadvantage because of her title. Ms. Topping answered no, the City Income Tax Return is pretty small potatoes. Member Merchant asked Ms. Topping if her private business dealings involved income tax returns for businesses, or are they personal. Ms. Topping said that they are personal and partnership returns. Member Merchant asked Ms. Topping if she has ever appeared for an audit where one of her clients was being audited. Ms. Topping answered, no. Member Frybort asked Ms. Topping how people find out about her services. Ms. Topping said through word of mouth. Member Frybort asked Ms. Topping if she has any printed material advertising her services. Ms. Topping said that her materials do not say “City of Lansing Income Tax Examiner.” Member Frybort asked Ms. Topping if she were limited to doing all tax returns, except City of Lansing returns, would that impact her business at all? Ms. Topping said it would create a unique situation that she would not like to be in, but she could understand if that is the Board’s requirement of her. Member Fokers asked Ms. Topping if there would be attrition in her client list if she were to adopt a position of not accepting new City of Lansing clients. Ms. Topping said probably there would, but she would still be accepting new Federal and State Clients and finding another person to do the City returns for her. Attorney Roberts asked how many of her clients have to pay City with holding taxes. Ms. Topping said two and both are non-profit. Ms. Rhode said that less than 40% of Ms. Toppings returns are City returns. The remaining 60% of her clients do not have City returns. Attorney Roberts asked Ms. Topping if she gets compensation from non-profit clients. Ms. Topping said yes, she bills those clients, but at a reduced rate. Attorney Roberts asked Ms. Topping what supervisory function she performs as a part of her job description that she would be unable to do because of this conflict. Ms. Topping answered, none. She completes approximately 150 returns for her clients versus the 200,000 returns of the City. Attorney Roberts asked what is Ms. Topping’s City function as it relates to those audits. Ms. Rhode said that the only time this would come into play is at crunch time when all hands are needed on deck to do the work. At that time, she may look at some of her own clients returns, but for a very limited time. Her exposure to their returns is minimal. Member Merchant asked who has responsibility for the initial review of returns. Ms. Rhode said that the City has two auditors who look at all the returns to see if there is a need to take a closer look for any reason. The way the system is set up currently it never would let her clients return get to her. Someone else would review it first and direct it to another auditor. Member Merchant restated; “potentially then, you would not know that one of your clients was being audited?” Ms. Topping responded in the affirmative. Attorney Roberts said that he sees a lack of contact with the form, but how would Ms. Topping handle the matter if it was audited then went back to one of her clients with something wrong? How would she avoid a circumstance of having to deal with someone who she prepared a return for? Ms. Topping said that the tax payer would talk to the auditor, not the tax preparer. She would send it back through the tax payer and with instructions as to what the tax payer needs to communicate to the City. Member Merchant asked Ms. Topping what would happen if there were a tax hearing for one of her clients. She could be across the table from a tax payer on a return that she prepared. Ms. Rhode said that these situations are handled through the mail, or through the Income Tax Board of Review. The City sends a letter asking for more information. Ms. Topping said that the City Tax Return does not have as many pitfalls as Federal and State returns have. Member Frybort asked Ms. Topping if she wanted more clients would she agree that the use of her City title would be a misuse of her office. Ms. Topping answered, yes. Member Frybort asked Ms. Topping if one of her co-workers saw a return she prepared for one of her clients would they apply less scrutiny to it. Ms. Topping said she doubts that would happen. Auditors have a very thorough process and would not come across her name until the end stage of examining the return. CITY ATTORNEY’S REPORT Mr. Roberts reported that when the new City Attorney, Paul Novak, read the Ethics Manual he determined that he is required to file a Statement of Financial Interest. He filed the statement today, and additionally he asked his (Roberts) opinion as to wether or not he was in violation of the provisions of the Ethics Ordinance such that he should be fined the $20.00 for a late filing fee. He (Roberts) interpreted the ordinance to say that the late filing fee pertains to someone who is late in filing their statement in the spring after being notified by the City Clerk, not to a newly appointed employee. It bears note that Mr. Novak was willing to make the payment. OLD BUSINESS Revised Affidavit of Disclosure including the statement “PLEASE INCLUDE AND SUBMIT A COPY OF YOUR CURRENT JOB DESCRIPTION.” Motion by Member Folkers To approve the revised Affidavit of Disclosure as submitted. MOTION CARRIED 6/0 BOARD ROUND TABLE DISCUSSION Member Frybort reported that Vice Chair Sullivan is absent from tonight’s meeting due to a medical procedure that her Husband underwent tonight as an outpatient. He asked his fellow Board Members to join in wishing him a speedy recovery. Motion by Member Frybort to adjourn MOTION CARRIED 6/0 Adjourned 7:30 P.M.