making local government more ethical
The Privatization of Economic Development
A fascinating report has just been published by Good Jobs First, entitled "Creating Scandals Instead of Jobs: The Failures of Privatized State Economic Development Agencies." Good Jobs First describes itself as "a national policy resource center for grassroots groups and public officials, promoting corporate and government accountability in economic development and smart growth for working families."

The report's executive summary concludes that, "These experiments in privatization have, by and large, become costly failures. Privatized development corporations have issued grossly exaggerated job-creation claims. They have created 'pay to play' appearances of insider dealing and conflict of interest. They have paid executives larger salaries than governors. They have resisted basic oversight."

A colleague asked me recently about the argument that withdrawal from participation by a legislator, who cannot delegate to someone else, "disenfranchises" that legislator's constituents. Since disenfranchisement is a terrible thing, the argument goes, legislators cannot be asked to withdraw from participation, but only to disclose their conflicts.

I have not sufficiently countered this argument here in my blog or in my book Local Government Ethics Programs. In this blog post, I will point out many problems with the disqualification argument. But first, here is a lightly edited version of what it says in my book about "duty to vote" laws, which block laws that require officials to withdraw when they have conflicts and are often based on the disqualification argument:
It's exciting to read a column on a local government ethics matter that shows as deep understanding and as clear explanation as the column by Ottawa Citizen editorial board member Mohammed Adam that appeared yesterday. The column focuses on the problems that arise when a city planner is a small property developer on the side. Both the chair of the city's planning committee and the city’s general manager of planning said that the city planner's side business was fine because she made sure that everyone who needed to know about it was told. In other words, disclosure is a sufficient cure for this conflict situation.

Adam shows in his column how insufficient this cure is. He provides an example of a serious problem arising from such a conflict that officials often ignore. The planner was assigned to evaluate a rezoning application for a proposed condo building that happened to be close to her own redevelopment project. The community association that had filed the application said the planner's involvement raised fears that, if they opposed the planner's project, it might be held against them in the future. In other words, when a planning official is doing business in her own field, it can undermine the public interest of open debate about land use projects. And simply by wearing two hats, without having to say a word, she can give herself an advantage over other developers. The more she discloses her conflict, the more people will know not to speak out about her projects. Disclosure does absolutely nothing to cure this consequence of her conflict.

Conflicts of interest are not always positive, any more than relationships are always positive. And conflicts are based on relationships.

We tend to think of an official using his position to help a family member or business associate. But sometimes officials use their position to harm someone with whom they have a negative relationship, anyone from a former in-law (the bum who dumped my sister) or current in-law (that woman who's driving my brother crazy) to a former business partner or a major business competitor.

These negative situations do not crop up in the news very often. That is why it is worth noting a situation that occurred with respect to Colorado's Public School Capital Construction Assistance Fund. According to an article today in the Daily Caller, an auditors report recommended better conflicts of interest rules for the Fund's board.

As an example of a problematic conflict situation, it gave the handling an application for a grant from a school district that had previously rejected bids from two Assistance Fund Board members’ construction companies. Minutes show that both members spoke negatively about the school district's project. The auditors were surprised they were allowed to participate in the matter.

In my book Local Government Ethics Programs, I have argued for the language of "benefit" instead of the language of "interest." (for some of the reasons why, click here and search for "terminology"). When a colleague asked me for a list of the jurisdictions that do, in fact, use the language of "benefit," I did some eye-opening research. Here are the results, based on the ethics codes in my computer's database (in other words, the information is not complete, but it gives a good picture of language use in local and state ethics codes).

When I refer to the language of "benefit," I am referring to the use of the word "benefit" or an equivalent term in basic conflict of interest provisions, like the City Ethics Model Code's:
An official or employee may not use his or her official position or office, or take or fail to take any action, or influence others to take or fail to take any action, in a manner which he or she knows, or has reason to believe, may result in a personal or financial benefit, not shared with a substantial segment of the city's population, for any of the following persons or entities . . .
Yesterday's blog post discussed the law giving California's Fair Political Practices Commission (FPPC) authority over §1090 of the state code, which deals with contract-related conflicts of interest and applies to both local and state officials. Knowing little about this section, which stands outside the state's ethics code (known as the Political Reform Act), I did a little research into it. It's an interesting provision that has received some interesting interpretations. Here is §1090:
Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity.
No Contract Where There's a Conflict
The language that stands out is "by any body or board of which they are members." This refers to the making of contracts. But one wonders how this language is applied. According to the relevant section of an ethics training course on the Attorney General's website, "If a member of a multi-member body with contracting power has a financial interest in a contract, section 1090 generally provides that the contract cannot be made even if the member has disqualified himself or herself from actually participating in the contract."