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An Interesting Agency Independence from Ethics Enforcement Issue in Broward County
Monday, July 9th, 2012
Robert Wechsler
I've written about the issue of ethics
commission jurisdiction over independent agencies and
authorities, which arose in recent years in such places as
Jacksonville, Louisville, and Palm Beach and Broward counties in
Florida. The issue has arisen again in Broward County, in a
different and interesting context.
According to a Broward Bulldog article this week, both the Hallandale Beach city attorney and the Hallandale Beach Community Redevelopment Agency (CRA) attorney have taken the position that "the CRA is 'a separate legal entity' and not subject to the authority of the [county Inspector General] under county and state laws." They have taken this position because the IG is investigating the city and the CRA with respect to allegations of self-dealing and financial mismanagement.
The CRA is not your typical independent agency. One, its board members are the city commissioners. Two, although the CRA was created in 1996, it was not made an independent agency until March 2012, the month, coincidentally, that independent auditors said that the city failed to provide them with $20 million in vendor contracts for review, limiting the scope of their audit report, according to a Bulldog article from June. Three, all 59 properties purchased with CRA funds are in the city's name, not the CRA's.
So, this is the least independent an agency could possibly be. If this agency was determined to be outside the IG's jurisdiction (and, equally, the ethics commission's), any agency would be. And yet all attorneys involved or asked about the issue insist that the IG's jurisdiction will have to be decided by the courts, which would make a purely legal determination of the issue. I disagree.
The Hats Are the Same
Let's start with a statement of the CRA attorney: "[T]he individual Hallandale Beach CRA board members and the city commissioners are each one and the same person. However, in these separate capacities they wear separate hats and are guided by separate legal requirements."
This simply is not true. Commissioners on the CRA are acting solely as city commissioners. They were not elected or appointed to the CRA. They appointed themselves and they themselves declared the CRA an independent agency. Such an appointment and declaration does not in any way change their role, their obligations, or their legal or representative status. They continue to sit on the CRA solely as commissioners, and are guided by the very same legal and ethical requirements they have always been guided by. And they are subject to the same authorities.
When a commissioner sits on a regional authority, she sits on it solely as a commissioner. She does not don another hat. Why should it be any different on a city authority, especially one she herself created?
Not All Legal Fictions Are the Same
The CRA is a legal fiction, but not a legal fiction like a corporation. It lacks a corporation's legitimacy. The corporation was created as a legal fiction to deal with such issues as individual liability. There is no issue of liability with respect to the fiction known as the CRA. In fact, no individuals, as such, are involved. Elected officials do not sit on an agency board as individuals with potential personal liability. They sit on an agency board as representatives of the community, they have special obligations to the public that individuals who incorporate never had, and they are individually protected by the legislative immunty defense, at least to the extent they do not violate ethics provisions. There is no distinction with respect to obligations (that is, no ethics distinction) between the members of a city commission and a redevelopment agency.
Legal fictions are not all alike. This legal fiction appears to have been created solely to prevent county and state investigation of possible individual misconduct. Even if there were other reasons, the commissioners' obligations remain the same, and no declaration they make should in any way protect them from being subject to IG or ethics investigation in their role as government officials.
This Is Not Really a Legal Issue
Until March, the CRA was inarguably subject to the IG's authority. All of the transactions being investigated occurred before March. The commissioners, who are being investigated, knew this when they chose to make the CRA independent. Therefore, they acted in their self-interest to protect themselves from a public investigation. Even after having done this, they had, and still have, the choice to make the CRA, or themselves individually, subject to the IG with respect to the CRA. In fact, some present and former commissioners have done just that. Nothing any lawyer could say can change this.
In other words, a commissioner's obligations trump the law, however it is interpreted. If an official feels he should be subject to public investigation, he can choose to be, as can the entire CRA or board of commissioners. In the alternative, one or more can ask for an independent legal and/or ethical opinion on the matter. They do not have to depend on attorneys who are under their control and, therefore, placed in a conflicted position if they believe the CRA should be subject to the IG's jurisdiction, but know that they are being asked to say otherwise (and that this can be done if the ethics of the situation is totally ignored).
The city and CRA attorneys should not have been put in this position, but when they were, they could have suggested an independent legal and/or ethical opinion. They did not have to tell the commissioners what some of them apparently wanted to hear.
I said that they could have sought a legal and/or ethical opinion, but I don't really feel that a legal opinion is appropriate, because I don't see this as a legal issue at all. The only reason anyone is calling it a legal issue is that the commissioners, after there were allegations of self-dealing and an audit showed irregularities, chose to act in a way that protected themselves from investigation. This conduct, although a change in legal status, was an act of self-protection at the public's expense. In other words, ethical misconduct. The change of legal status should not, therefore, be used as a legal excuse not to recognize this as an ethical issue, to remove the conduct from ethics investigation, and to change the commissioners' ethical obligations to their community.
Legal and Ethics Independence
Even if the legal status had been changed ten years ago, and only two of the five commissioners sat on the CRA board with three other individuals, I believe that the agency should still be subject to the IG's jurisdiction. Independence should be recognized only when city funds, land, facilities, and personnel are not used by the agency. Legal independence is irrelevant to ethics independence.
Robert Wechsler
Director of Research-Retired, City Ethics
203-859-1959
According to a Broward Bulldog article this week, both the Hallandale Beach city attorney and the Hallandale Beach Community Redevelopment Agency (CRA) attorney have taken the position that "the CRA is 'a separate legal entity' and not subject to the authority of the [county Inspector General] under county and state laws." They have taken this position because the IG is investigating the city and the CRA with respect to allegations of self-dealing and financial mismanagement.
The CRA is not your typical independent agency. One, its board members are the city commissioners. Two, although the CRA was created in 1996, it was not made an independent agency until March 2012, the month, coincidentally, that independent auditors said that the city failed to provide them with $20 million in vendor contracts for review, limiting the scope of their audit report, according to a Bulldog article from June. Three, all 59 properties purchased with CRA funds are in the city's name, not the CRA's.
So, this is the least independent an agency could possibly be. If this agency was determined to be outside the IG's jurisdiction (and, equally, the ethics commission's), any agency would be. And yet all attorneys involved or asked about the issue insist that the IG's jurisdiction will have to be decided by the courts, which would make a purely legal determination of the issue. I disagree.
The Hats Are the Same
Let's start with a statement of the CRA attorney: "[T]he individual Hallandale Beach CRA board members and the city commissioners are each one and the same person. However, in these separate capacities they wear separate hats and are guided by separate legal requirements."
This simply is not true. Commissioners on the CRA are acting solely as city commissioners. They were not elected or appointed to the CRA. They appointed themselves and they themselves declared the CRA an independent agency. Such an appointment and declaration does not in any way change their role, their obligations, or their legal or representative status. They continue to sit on the CRA solely as commissioners, and are guided by the very same legal and ethical requirements they have always been guided by. And they are subject to the same authorities.
When a commissioner sits on a regional authority, she sits on it solely as a commissioner. She does not don another hat. Why should it be any different on a city authority, especially one she herself created?
Not All Legal Fictions Are the Same
The CRA is a legal fiction, but not a legal fiction like a corporation. It lacks a corporation's legitimacy. The corporation was created as a legal fiction to deal with such issues as individual liability. There is no issue of liability with respect to the fiction known as the CRA. In fact, no individuals, as such, are involved. Elected officials do not sit on an agency board as individuals with potential personal liability. They sit on an agency board as representatives of the community, they have special obligations to the public that individuals who incorporate never had, and they are individually protected by the legislative immunty defense, at least to the extent they do not violate ethics provisions. There is no distinction with respect to obligations (that is, no ethics distinction) between the members of a city commission and a redevelopment agency.
Legal fictions are not all alike. This legal fiction appears to have been created solely to prevent county and state investigation of possible individual misconduct. Even if there were other reasons, the commissioners' obligations remain the same, and no declaration they make should in any way protect them from being subject to IG or ethics investigation in their role as government officials.
This Is Not Really a Legal Issue
Until March, the CRA was inarguably subject to the IG's authority. All of the transactions being investigated occurred before March. The commissioners, who are being investigated, knew this when they chose to make the CRA independent. Therefore, they acted in their self-interest to protect themselves from a public investigation. Even after having done this, they had, and still have, the choice to make the CRA, or themselves individually, subject to the IG with respect to the CRA. In fact, some present and former commissioners have done just that. Nothing any lawyer could say can change this.
In other words, a commissioner's obligations trump the law, however it is interpreted. If an official feels he should be subject to public investigation, he can choose to be, as can the entire CRA or board of commissioners. In the alternative, one or more can ask for an independent legal and/or ethical opinion on the matter. They do not have to depend on attorneys who are under their control and, therefore, placed in a conflicted position if they believe the CRA should be subject to the IG's jurisdiction, but know that they are being asked to say otherwise (and that this can be done if the ethics of the situation is totally ignored).
The city and CRA attorneys should not have been put in this position, but when they were, they could have suggested an independent legal and/or ethical opinion. They did not have to tell the commissioners what some of them apparently wanted to hear.
I said that they could have sought a legal and/or ethical opinion, but I don't really feel that a legal opinion is appropriate, because I don't see this as a legal issue at all. The only reason anyone is calling it a legal issue is that the commissioners, after there were allegations of self-dealing and an audit showed irregularities, chose to act in a way that protected themselves from investigation. This conduct, although a change in legal status, was an act of self-protection at the public's expense. In other words, ethical misconduct. The change of legal status should not, therefore, be used as a legal excuse not to recognize this as an ethical issue, to remove the conduct from ethics investigation, and to change the commissioners' ethical obligations to their community.
Legal and Ethics Independence
Even if the legal status had been changed ten years ago, and only two of the five commissioners sat on the CRA board with three other individuals, I believe that the agency should still be subject to the IG's jurisdiction. Independence should be recognized only when city funds, land, facilities, and personnel are not used by the agency. Legal independence is irrelevant to ethics independence.
Robert Wechsler
Director of Research-Retired, City Ethics
203-859-1959
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