making local government more ethical
You be the judge. According to an article in the Atlanta Journal-Constitution, a board member of a Georgia-based insurance company set up ten PACs in Alabama that together gave $120,000 — ten times the legal limit — to a candidate for Georgia insurance commissioner. A complaint was filed with the state ethics commission (not only is there a contribution size issue, but the contributions came from a company regulated by the candidate's office). The CEO of the insurance company is a friend of the candidate, and was appointed by the candidate to head a commission.

As serious as the appearance of impropriety that arises from the council member's family firm seeking TIF money and a tax abatement from the city is the fact that any developer or member of a developer's family sitting on a city council faces not just the occasional ethical controversy, as has been the case in this situation. Such an individual faces an ongoing series of possible conflicts, most of which do not lead to complaints, requests for advisory opinions, or controversies.

The family firm's $100 million development takes this matter beyond ordinary conflicts, due to state and local laws on officials entering into public contracts with their city. What makes this issue far more serious than an ordinary conflict, which can be dealt with responsibly through recusal, is that both state and local law require the official to choose between his government position and an interest in a public contract. It is this far more drastic remedy that has recently escalated emotions surrounding the council member's situation.

In determining whether a conflict or preferential treatment might exist, another aspect of benefits, in addition to how definite or direct they are, is their proportionality. Stated in the form of a question, Is the benefit at issue just one of many equivalent benefits to a sizeable group, such as senior citizens or property owners, or is it especially large?

The council member took the position that he and his family firm benefited no more than others who owned or had development rights in properties along the proposed streetcar route. In his letter to the editor, he quotes an unrelated state EC advisory opinion that states that there is no conflict if a benefit is not "selective, differential, or in disproportion to the benefit provided to other property in the political subdivision, or the portion thereof receiving the improvements." He insists that his family firm is not being treated or benefited any differently than others. There is no preferential treatment, he concludes.

Indefinite benefits, like indirect benefits, are often not dealt with by ethics codes, and this means that they can cause confusion and controversy. This is one reason I tend to speak in terms of "possible conflicts," because possible conflicts based on indefinite benefits can be just as injurious to the public trust as certain conflicts based on certain benefits.

In the current situation in Cincinnati, it is not certain whether the streetcar project will benefit the council member's family firm, nor is it even certain that the streetcar route will run by or near the family firm's property, as the council member pointed out in his letter to the editor. However, the great likelihood, based on other such projects and the intent of this project, is that it will benefit all nearby properties and businesses.

A government official's relationships -- to family, employer, business -- are very important to determining whether conflicts exist. Both the type and the directness of each relationship are also important.

Here again are the basic facts of the situation in Cincinnati that I will be using to touch on a variety of issues (see the previous blog post for a list of the issues). A council member works for a development company owned by his father and his uncle, but has no ownership interest in the firm. The firm owns or has development rights to nine properties within three blocks of a proposed streetcar line, which has come before the council on a few occasions, and will have to be finally approved by the council. The firm has also proposed a $100 million development project, which would involve tax increment financing (TIF) money and a tax abatement from the city. The development would, it appears, be built near the proposed streetcar route.