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He Zones, She Sells, and It's Legal (in Chicago)
Monday, July 20th, 2009
Robert Wechsler
No one does unethics like Chicago. It's been four months since I've
written about the city, so it's long overdue.
According to a recent article in the Chicago Sun-Times, Alderman Patrick O'Connor is the favorite for appointment to the chair of the board's second most powerful committee, the Zoning Committee. His wife is a realtor. According to an article a year ago in the Chicago Tribune, her husband pushed for zoning changes that allowed her to sell $22 million worth of homes and condos in her husband's ward in the year before the article ran. Assume a commission of 2.5%, and that means the household received $550,000, less what the real estate firm kept, for those sales alone.
In addition, according to another Chicago Tribune article, O'Connor helped a developer with a senior housing project in his ward, getting the developer city support as follows: $20 million in tax-exempt bonds, $6 million in loans and $9.7 million in tax credits. Thereafter, O'Connor's wife handled $11.5 million in sales for the developer. It's true that she had had a relationship with the developer for years ("My wife was his realtor long before he became a senior housing developer in our community," O'Connor said in his defense), but does the age of a relationship affect whether that relationship creates a conflict? After all, there's a conflict when your mother is involved, and your relationship with your mother is the oldest one you have!
If his wife already had a business relationship with the developer, O'Connor should have recused himself from any matter involving the developer. But O'Connor said,
"There is no legal conflict in terms of this project. I had no economic interest. My wife had no economic interest." As far as he went, he was right. Neither had an economic interest in the project. But conflicts don't involve projects, they involve relationships. This is why O'Connor didn't say "There is no legal conflict in terms of this developer. My wife had no economic relationship with this developer."
Yet another Tribune article looks at another situation, where more of the relationship occurred after O'Connor's intervention. This project involved rezoning the parking lots of a closed medical center for a housing development. The developer for this project had less of a relationship with O'Connor's wife, but it made her its exclusive listing agent on the development, and gave her other listings as well. It's true that she wasn't chosen until long after the vote, but does this make a difference? The conflict was not as great at the time of the vote, but the appearance of impropriety when she was given the exclusive listing is just as great: alderman pushes through project, project developer hires alderman's wife. To the public, it's the same story. The vote might have seemed okay at the time, but if it looks like the vote was tied to a promise to hire one's wife, it's no cleaner than if the hiring occurred first. It's only more difficult to write laws that cover this sort of situation, which is more akin to revolving door situations (I should try my hand at such a provision in the City Ethics Model Code).
As it turns out, Chicago's ethics laws do not consider an official to have an economic interest when it is his or her spouse that gets the financial benefit (hence the title of one Tribune article, which I borrowed: He zones. She sells. And it's legal.). This is a serious weakness. It allows officials to say, as O'Connor has said, "The rule is not for me to track down every client [my wife has]. ... I have a job and I do it. My wife has a job and she does it. It's not my job to prevent her from earning a living."
But isn't it his job not to increase the appearance of impropriety? If they already look bad in his ward, where at least he can be seen by his constituents as benefiting them as well, his wife's benefits will look really horrible when he chairs the city's zoning committee and affects decision throughout the city. Whatever the law says, such an appearance of impropriety is damaging to the city's government, even in Chicago. Hopefully, Mayor Daley will recognize this, and appoint someone else as chair.
It's not as if zoning in Chicago doesn't already have a reputation for corruption. According to the Sun-Times, in the last year alone, one zoning committee member was indicted for $40,000 in gifts from developers in exchange for zoning changes, and another pleaded guilty to accepting bribes and extorting developers seeking zoning preferences. Chicago deserves a zoning chair that at least looks clean.
Robert Wechsler
Director of Research-Retired, City Ethics
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According to a recent article in the Chicago Sun-Times, Alderman Patrick O'Connor is the favorite for appointment to the chair of the board's second most powerful committee, the Zoning Committee. His wife is a realtor. According to an article a year ago in the Chicago Tribune, her husband pushed for zoning changes that allowed her to sell $22 million worth of homes and condos in her husband's ward in the year before the article ran. Assume a commission of 2.5%, and that means the household received $550,000, less what the real estate firm kept, for those sales alone.
In addition, according to another Chicago Tribune article, O'Connor helped a developer with a senior housing project in his ward, getting the developer city support as follows: $20 million in tax-exempt bonds, $6 million in loans and $9.7 million in tax credits. Thereafter, O'Connor's wife handled $11.5 million in sales for the developer. It's true that she had had a relationship with the developer for years ("My wife was his realtor long before he became a senior housing developer in our community," O'Connor said in his defense), but does the age of a relationship affect whether that relationship creates a conflict? After all, there's a conflict when your mother is involved, and your relationship with your mother is the oldest one you have!
If his wife already had a business relationship with the developer, O'Connor should have recused himself from any matter involving the developer. But O'Connor said,
"There is no legal conflict in terms of this project. I had no economic interest. My wife had no economic interest." As far as he went, he was right. Neither had an economic interest in the project. But conflicts don't involve projects, they involve relationships. This is why O'Connor didn't say "There is no legal conflict in terms of this developer. My wife had no economic relationship with this developer."
Yet another Tribune article looks at another situation, where more of the relationship occurred after O'Connor's intervention. This project involved rezoning the parking lots of a closed medical center for a housing development. The developer for this project had less of a relationship with O'Connor's wife, but it made her its exclusive listing agent on the development, and gave her other listings as well. It's true that she wasn't chosen until long after the vote, but does this make a difference? The conflict was not as great at the time of the vote, but the appearance of impropriety when she was given the exclusive listing is just as great: alderman pushes through project, project developer hires alderman's wife. To the public, it's the same story. The vote might have seemed okay at the time, but if it looks like the vote was tied to a promise to hire one's wife, it's no cleaner than if the hiring occurred first. It's only more difficult to write laws that cover this sort of situation, which is more akin to revolving door situations (I should try my hand at such a provision in the City Ethics Model Code).
As it turns out, Chicago's ethics laws do not consider an official to have an economic interest when it is his or her spouse that gets the financial benefit (hence the title of one Tribune article, which I borrowed: He zones. She sells. And it's legal.). This is a serious weakness. It allows officials to say, as O'Connor has said, "The rule is not for me to track down every client [my wife has]. ... I have a job and I do it. My wife has a job and she does it. It's not my job to prevent her from earning a living."
But isn't it his job not to increase the appearance of impropriety? If they already look bad in his ward, where at least he can be seen by his constituents as benefiting them as well, his wife's benefits will look really horrible when he chairs the city's zoning committee and affects decision throughout the city. Whatever the law says, such an appearance of impropriety is damaging to the city's government, even in Chicago. Hopefully, Mayor Daley will recognize this, and appoint someone else as chair.
It's not as if zoning in Chicago doesn't already have a reputation for corruption. According to the Sun-Times, in the last year alone, one zoning committee member was indicted for $40,000 in gifts from developers in exchange for zoning changes, and another pleaded guilty to accepting bribes and extorting developers seeking zoning preferences. Chicago deserves a zoning chair that at least looks clean.
Robert Wechsler
Director of Research-Retired, City Ethics
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