making local government more ethical
An interestting debate about lobbying and advisory groups can be found on the Austin Bulldog website. Late last week, the Bulldog published an article about an ethics complaint filed by the president of the Austin Neighborhoods Council (ANC) against an appointed member of the Land Development Code Advisory Group (CAG). The complaint alleges that the CAG member is an unregistered lobbyist for a real estate consulting company, and that the resolution establishing CAG says that lobbyists or employees of lobbyists, registered or not, may not be members. The CAG member insists she has never lobbied, nor has her consulting firm.

There are two important issues here:  the definition of lobbyist and the membership of advisory groups. I have dealt with the latter issue in three blog posts:  a Fort Worth situation, "Making Use of Expertise," and "Alternatives to Allowing Conflicted Individuals to Sit on Advisory Boards." So I won't go into this issue here, except to say that there is no reason in the world to limit the prohibition on membership to lobbyists without limiting it equally to anyone directly or indirectly seeking special benefits from the government. There has to be a balancing of expertise with conflict of interest, and conflicts of interest are not limited to lobbyists.

According to an article in the San Francisco Chronicle last week, Oakland's council approved an amendment to the city charter, to go before voters in November, that would increase the authority of the city's ethics commission and provide it with the funds it needs to do its job. Congratulations to the council for what is, in some ways, an excellent reform package.

This ethics reform process began with a June 2013 civil grand jury report, which called for giving the city's ethics commission more authority to enforce ethics laws, and more resources with which to do it. Then, in May 2014, a working group of individuals mostly from good government-oriented civic organizations filed a report that made numerous ethics reform recommendations (see my blog post on it). The council quickly got to work on a charter amendment that contains some of the working group's recommendations.

Is it appropriate for a mayor — especially a mayor in a city with strict gift rules and a public campaign financing program that has strict campaign contribution limits — to work with an organization that lobbies the state on behalf of his policies and sponsors ads and materials that support his views and, especially, celebrate his successes?

This is the situation in New York City, where Bill de Blasio, in his first year in office, is being celebrated by an entity called Campaign for One New York (CONY), which announced yesterday its expenditures and contributors (in keeping with de Blasio's support of transparency, it went well beyond the requirement of disclosing contributors of over $5,000).

A recent action by the Securities and Exchange Commission (SEC) against the city of Harvey, IL, a poor city of 30,000 just south of Chicago, deals with a different sort of fiduciary duty than the usual government ethics case. In a complaint dated June 24, 2014 (attached; see below), the SEC alleges that the city's comptroller acted as financial adviser in three bond issues for a hotel development, diverted some of the funds to himself, and also diverted funds to the city's general fund. The comptroller is acting as financial adviser for a 2014 bond offering, which the SEC is trying to prevent through a court restraining order.

The action is based on the city's fiduciary duty to disclose to investors how bond proceeds will be used, as well as the risks associated with investing in the city's bonds (but the term "fiduciary duty" is not actually used in the complaint). This is part of the SEC's promised crackdown on disclosure failures related to municipal bonds. Alternatively, the complaint alleges fraud and the making of false and misleading statements.

An investigative piece in yesterday's New York Times raises an interesting issue regarding complicity in ethical misconduct:  is there an obligation not to be complicit with misconduct at a different governmental level when, arguably, that misconduct financially benefits one's own government?

According to the article, when Bayonne, NJ was in deep financial trouble in 2010, with the state talking about bailing it out the way it had bailed out Camden in 2002, the Port Authority of New York and New Jersey purchased a piece of land from the city (1) that the port authority had no use for and (2) at a price substantially higher than it was worth (in fact, the year the purchase was made, the port authority wrote down the value of the property). This apparently fraudulent purchase meant that the city would be in solid financial shape, at least for the short run.

The apparent purpose of this purchase was not only to help the city of Bayonne, but to solve a dilemma for New Jersey's governor, who "was confronting a huge deficit in New Jersey’s budget, while trying to keep a campaign promise to not raise taxes." The purchase shifted the problem from the state to the port authority.

Good news and bad news about lobbying from New York City's new mayor. The good news, according to a recent article on the Capital New York website, is that the mayor has said that his administration will disclose "substantive" meetings that members of his administration conduct with lobbyists. This is, he says, a practice he followed when he was the city's public advocate (a sort of ombuds), before he was elected mayor.

Disclosure of such meetings by officials is an excellent check on disclosure by lobbyists, and provides an official-by-official view of the lobbying that is done. This could be required by ordinance or regulation, but when it is not, it is good to see high-level officials setting up a procedure in the meantime.

However, voluntary disclosure is not a replacement for making disclosure part of the lobbying or conflicts of interest program, because a voluntary procedure usually lacks detailed definitions and requirements, training, neutral advice, and independent enforcement. It is a valuable gesture, and can provide useful information, but it works best for a mayor – as opposed to an independent office like an ombuds — as a step toward the goal of institutionalizing the procedure.