making local government more ethical

A Council Member Who's a Realtor, and Matters Affecting Property Values

Does a council member who is a realtor have a conflict with respect to any council matter that affects real estate, including a matter that affects property values ? That appears to be the view of NJ Superior Court Judge Grasso in a decision this week, according to an article in Thursday's Asbury Park Press.

The particular matter involved overnight parking restrictions for non-residents in the beach community of Point Pleasant. Surely, property values could be affected by people spending the night at a town beach. But property values can be affected by numerous things, as the council member pointed out in his letter of resignation from the council, which can be found in a Point Pleasant Patch article from Thursday.

Three things about this case really bother me. One is that a judge made the decision, rather than an ethics commission.

Two is that it appears to have been an important consideration that, without the council member's vote, the parking restrictions would have been voted down. First of all, this puts all the emphasis on the vote, when in fact a council member with a conflict should not participate in any way, including speaking privately or publicly on the matter, trying to sway votes, make deals, etc.

Second, participating with a conflict is wrong no matter what the vote is. When a matter arises, there is no telling what the vote will be. An official cannot decide how to handle a conflict situation based on what he thinks the vote may eventually be. The decision has to be made at the very start. Also, the final vote may reflect the official's participation, if the vote is all that is considered important. Had the council member not participated, the vote might have been different.

Three is that this conflict issue was raised by lawyers opposed to the overnight parking restrictions. One such lawyer, named Jackson, brought the suit, but according to the Asbury Park Press article, another lawyer who opposed the plan "was pleased with the judge’s decision. He credited [the lawyer who brought the suit] for raising the conflict issue because, while Jackson opposed the plan for other reasons, it was that argument that ultimately invalidated the ordinance they opposed."

In other words, an attorney approached a government ethics case solely from an ends-based approach, that is, that the ends justify the means. Of course, the most important consequence of this decision, if it is not overturned on appeal, will be that anyone involved in the realty business in New Jersey will not be able to participate in matters that might affect property values, something that any property owner cares about, not only realtors. This is a classic case of what is known as the class exception," whereby there is no conflict if a large group of people are in the same position (property owners, senior citizens, parents, etc.).

This decision is seriously damaging to local governments in New Jersey, with respect to the participation in local government of the large numbers of professionals who deal with real estate. Does the victory relating to overnight parking really offset this loss? I think it is terrible that an attorney would take this position.

Robert Wechsler
Director of Research, City Ethics