Civic Accountability -- Honesty in Local Government II

[Mark Kindt]

As you review the attached letter to our city council members, you can see that I raised a multitude of serious ethical issues in February 2016.

The proposed Third Charter with the Article Eight ethics-in-government provisions went back to August 8, 2014.

I'm sure that I am not the only citizen that communicated these issues to our public servants.

Please read both documents. You will be surprised!

I will not tee-up anything that I cannot substantiate.

[Mark Kindt]

Now, I want to explore some deeply troubling issues related to ethics and governance related to the December 2015 vote by city council on the resolution for the Master Agreement.

Aside from the open meetings violations alleged in Skindell v. Madigan related to that same time period and vote, there are several other troubling ethics issues to review.

LHA board members served on city council. Therefore, LHA board members were voting on a resolution that had a direct financial benefit to LHA. Each LHA board member on city council had a clear duty to abstain or recuse themselves from that vote. They did not.

There are some serious aggravating factors here:

Council members themselves raised the issue of LHA conflicts-of-interest with the Ohio Ethics Commission. The city administration later obtained the OEC opinion letters related to the LHA conflicts-of-interests. So, both council and the city administration knew that LHA ex officio board members had very high potential for conflicts risks. They were clearly on notice. They, themselves, had originally sought the OEC advice.

AND, the proposed Third Amended Charter (2014) also provided clear guidance to council.

Article 8(c)(1)

“In the interest of preserving the public trust, these officials [council members]
shall avoid any perceived conflict of interest or any action likely to give the
appearance of impropriety in the execution of their public duties.”

Article *8(c)(3)

“No city official or employee, through any improper use of that person’s
official position with the city, may affect the […] letting of
any contract or any other action by the city that may result in that official or
employee […] securing anything of value.”

Clearly, LHA board members voting on city council were letting a contract that secured value for Lakewood Hospital Association. The problem speaks for itself.

[Mark Kindt]

The situation is even worse than that I described above.

While I am not going to review campaign finance law, I do want to explain how improper political contributions create serious ethical risks for public servants.

In the 2015 local election cycle and before the December 21st vote on the Master Agreement, some council members received political contributions from LHA board members and/or CCF-related individuals.

Those council members (who had received such contributions) had a clear ethical duty to abstain or recuse themselves from voting on the Master Agreement because, pending before them in their official capacity, was a major contract that would benefit LHA and CCF.

Again, there are some serious aggravating factors here:

Council members themselves raised the issue of LHA conflicts-of-interest with the Ohio Ethics Commission. The city administration later obtained the OEC opinion letters related to the LHA conflicts-of-interests. So, both council and the city administration knew that there was a high potential for conflicts risks.

The political contribution risk was, of course, obvious.

The proposed Third Amended Charter (2014) also provided clear guidance to council.

Article 8(c)(1)

“In the interest of preserving the public trust, these officials [council members] shall avoid any perceived conflict of interest or any action likely to give the appearance of impropriety in the execution of their public duties.”

Article 8(c)(3)

“No city official or employee, through any improper use of that person’s official position with the city, may affect the […] letting of any contract or any other action by the city that may result in that official or employee […] securing anything of value.”

Here council members have received political contributions (“securing value”) from parties with a valuable contractual matter before council (“letting a contract’).

So, with respect to the December 21, 2015 vote on the Master Agreement, council members had serious conflicts-of-interests from multiple directions. Further, they ignored those conflicts.

[Mark Kindt]

Now we can see that there is a fundamental governance problem here too. This is not merely about ethics.

On December 21, 2015, most members of city council we so deeply ridden with conflicts of interest that, if they had actually have met their ethical obligations, they would not have been able to even pass the December 21st ordinance adopting the Master Agreement.

Given this analysis, at least four council members (Madigan, Bullock, Nowlin, O'Leary) had an obvious ethical duty to recuse themselves from voting on the Master Agreement.

It has been suggested that the proposed Third Amended Charter was tabled to prevent it from impeding the deal to close the hospital. If this is true, then the pernicious effects of these conflicts of interest were both recognized, understood, and intentional.

Subsequent votes of council since January 2016 are still tainted, though to a lesser degree, because former LHA board members were/are still voting on issues related to the Master Agreement.

Aren't we going to have the exact same problem, if and when, council members are appointed to the board of the new foundation? Both the City and the new foundation need to adopt robust conflict-of-interest policies.

Why wouldn't a court have authority to invalidate the ordinance that resulted from this ethically tainted vote?

[Mark Kindt]

For completeness, here is a copy of the correspondence to/from the Ohio Ethics Commission related to ethical issues about Lakewood Hospital Association. You be the judge.

[Mark Kindt]

Here are the rest.

[Mark Kindt]

And, one more.

[Jim O'Bryan]

The fact that this Charter has not been officially adopted is a pretty pitiful excuse for ignoring general and well understood ethical requirements for public servants.

To the extent that professional ethical problems are being ignored (see Disclosure Problem No. 4 in "Honesty In Government I"), the situation has been demonstrated and has been aggravated by the failure to address the problem.

None of this is difficult. See for yourself. Please read the attached copy of Article Eight of the proposed Third Charter for the City of Lakewood.

Mark

Talking with members of the Charter Review, we were sure the "Ethics" part would be cut, so we prepared this headline for December 2014.



We never through they would just put the whole charter in the dead letter office and continue their folly.

.

[Brian Essi]

It has been suggested that the proposed Third Amended Charter was tabled to prevent it from impeding the deal to close the hospital. If this is true, then the pernicious effects of these conflicts of interest were both recognized, understood, and intentional.

Mr. Kindt,

At a Council meeting in 2015, I recall Charter Commission member Stephen Davis pleading with City Council to put the Third Amended Charter on the ballot for November of 2015. I think he asked a question like "How long do we have to wait for Good Government?" or words to that effect.

According to the 2017 Comprehensive Budget Document dated November 15, 2016, its appears that the Law Department is thinking about getting around to it in 2017 or "beyond":

See page numbered 46 of Comprehensive Budget Document (page 54 of the pdf)
http://www.onelakewood.com/wp-content/u ... Budget.pdf
which provides in part:

"2017 & Beyond Strategic Plan
Sound Governance
With the appropriate approvals in place, work with Council, the administration, the former Charter Review Commission and other interested stakeholders in presenting a draft Third Amended Charter of the city to the public for consideration and a vote."

The Comprehensive Budget Document also states:

"Requests for public records increased dramatically, largely as a result of the city’s healthcare negotiations and the passage of Ord. 49-15 in December 2015."

Note that the document does not state that there has been a corresponding increase in responses to public records requests.

So it would seem that that there is no urgency for "Sound Governance" or responses to public records requests in Lakewood.

[Larry Keller]

Mark and Others have raised not only interesting but critical questions about ethics. As an academic who teaches public administration and city management as well as staffed two Lakewood Charter Review Commissions and served on a third these are important provisions for a charter. A charter should indeed contain an ethics provision as well as a structure for enforcing the ethics. The revised charter pending in city council devotes an Article to ethics and training which Mark shared. For the Charter Review Commission this was an important topic and so they crafted a new Article devoted to ethics and training. The Article empowers Council to both add ethical provisions and penalties for their violations.
However, I also like the Ethics provision of the Model City Charter. The Model City Charter, now in its eighth edition, is promulgated by the National Civic League, formerly the National Municipal League, headquartered in Denver. The Model City Charter is available from the League. Their publications are noted on their website, http://www.nationalcivicleague.org. Each state has a municipal league chapter. The Ohio Municipal League can be found at http://www.omlohio.org.
Another excellent website for charter and other good government publications is that of the International City/County Management Association, http://www.icma.org. ICMA is the professional organization of city managers and was founded in Ohio in 1913. City managers are appointed urban chief executives in the Council-Manager system of government.
I will attach the ethics provisions of the Model City Charter to this post. I do hope we can get an improved charter on the ballot in the future. Charters are not panaceas but they are a necessary if not sufficient condition for improving governance, that is, how we as a community make decisions.
download/file.php?mode=view&id=3930

[Mark Kindt]

There is a very strong consensus among all that the City of Lakewood needs a robust government-in-ethics program along with a solid training program. Now, if only our public officials could move toward some actual level of compliance.

The conflicts-of-interest and ethical problems I described above are no different than if an executive for GM was voting in a Detroit city council meeting on a public contract that benefited GM. Just because LHA was a non-profit doesn't make a difference--a conflict is still a conflict.

Should we really expect our local government to operate this way? In an ethical void? Probably not.

I'm sure these public officials are reasonably well-meaning people. But their ignorance is just as "dangerous" to themselves as it is to us.

This is "dangerous" to them because some of the problems are addressed by criminal law. (This is clear from the OEC opinion letters.)

One of my earliest cases related to criminal violations of state campaign finance laws. This is a very understood area of the law by both prosecutors and defense attorneys. Public officials that doubt this should have a close conversation with their private legal counsel.

That's why, if I was a public official, I would want to meet my duties in accord with a robust and written ethics policy (and, obviously, in accordance with the law.)

I address the following comment directly to the members of city council. Your own proposed ethics rules told you that your conduct was wrong. Each month a parade of your best citizens told you that you were wrong in council meeting after council meeting. You ignored both. This is how elected officials soon become former elected officials.

[Mark Kindt]

I do want to make it perfectly clear that these are my opinions about matters of public policy and public officials. Nothing that I write here is intended as legal advice to any reader. My posts are made under my rights guaranteed by both the Ohio and United States constitutions.

Any government ethics policy adopted by the City must also address the participation of public officials in other institutions. These ethical policies would be addressed to those instances where a public official (or relatives) would be serving on corporate boards or non-profit boards that do business with the City or who might benefit from decisions made by its public officials. In fact, such policies might need a broader scope.

Imagine that the mayor of Detroit has a son or daughter who is an executive of GM and that mayor is negotiating tax abatement or tax deferral policies that would benefit GM. These are the kinds of secondary ethical challenges that must be addressed.

Such policies are needed to avoid the exact kinds of problems we have all witnessed with the Lakewood Hospital Association.

We should be very concerned that none of this is actually in place here in our City.

[Mark Kindt]

Now, let's look at an actual example of this problem, not in Detroit, but here in Lakewood.

Cast your mind back to the creation of the Letter of Intent between LHA, LHF and the City that occurred in 2014 and was publicly announced in January of 2015.

When did our city council authorize the mayor to negotiate with CCF, LHA and LHF about a tax-revenue sharing agreement with Avon Lake as reflected in the Letter of Intent? What business did CCF, LHA or LHF have in the intercity tax policies of Lakewood and Avon Lake? Is there any resolution, ordinance or other document that would reflect this authorization?

You can see the problem. It's pretty apparent.

Another example. Did city council authorize the mayor to participate in the rejection of the original proposal from Metro Health System? Is there any resolution, ordinance or other document that would reflect this authorization? Should city council have had the opportunity to, at least, even consider the original $100M - 10 year Metro proposal? Obviously, yes!

Is there any resolution, ordinance or other document that would reflect the authorization of the mayor to participate in the "bogus" solicitation process conducted by the now-vanished Subsidium consulting firm?

And, now recall that during the entire period of time that the Letter of Intent was under development, the mayor was in the conflict-of-interest described by the Ohio Ethics Commission.

There is something drastically wrong about all of this.

[Mark Kindt]

If anyone has seen city documents that authorize and/or provide guidance or instruction to the public officials serving as ex officio board members on the Lakewood Hospital Association, please post copies of them here.

At page nine of the mayor's deposition in the taxpayer lawsuit, he testifies that he was operating in the absence of such instruction(s).

Based on this, I will continue to operate on the assumption that the other ex officio board members did not have guidance or instruction.

If I am wrong, please correct me.

[Mark Kindt]

So, at this point in this series, the ethical deficiencies are pretty stark, aren't they? Our city is still in the "dark ages" on this kind of everyday compliance stuff.

But what's really interesting is the governance problem this all illuminates.

Through a process that is still largely hidden from the public, a small committee at a not-for-profit (Lakewood Hospital Association) made a variety of decisions for our local city, instead of its elected city council.

1. It drafted an illusory proposal for tax revenue-sharing between Lakewood and Avon Lake;

2. It rejected the one offer from a major health care provider (Metro Health System) that would have maintained the hospital as an active going-concern;

3. Thus, eliminating the existing hospital employee income tax revenues for the city;

4. Thus, eliminating the existing and future lease revenue streams for the city forever; and

5. Thus, eliminating the existing charity-care provided to our local community by our hospital as an active going-concern.

Who is actually governing the City of Lakewood? Is the new foundation going to operate in the same manner?