Learning and Forming a Local Government's Unethical Environment

I chose to specialize in local government ethics because this is where it all starts. This is where the individuals who become our representatives experience their first unethical environment, become team players, learn the rules of the game, and begin to feel a special entitlement.

One good thing about election time is that we sometimes get the back stories of individuals running for higher office. We get to see how they started. One such individual is Carl Paladino, a candidate for governor of New York State.

A Local Developer Regulating Local Development
According to an editorial in today's New York Times, although Paladino "was an owner of several downtown parking lots [in Buffalo], he won a seat on the city’s parking board, resigning in 1994 amid charges of conflicts of interest. He still serves on the board of the nonprofit corporation [Buffalo Civic Auto Ramps, Inc. (BCAR)]  that manages parking lots for the city."

According to an article this week in the Rochester Democrat and Chronicle, parking lots are more important a part of urban development than most of us realize. The article quotes Aaron Siegel, the head of a Buffalo investment firm and member of the city Parking Board, talking about Paladino:

"This guy is the biggest conflict of interest on the planet. As the biggest landlord in the city he controls BCAR. And if you control parking, you control development."

Paladino's response is pretty weak: "Don't you think that if there was some reality to (the accusations) that the people of Buffalo would have done something about it?"

According to the article, "public scrutiny over his parking concerns grew so intense in the mid-1990s that the city of Buffalo ethics panel launched an investigation and Paladino resigned from the Parking Board after a decade of service." This sounds like Buffalo did do something about Paladino's conflict, but only about his governmental involvement with it. I doubt that the ethics commission has jurisdiction over the nonprofit, which is a government contractor.

By the way, the names of the individual members of the BCAR board do not appear on the BCAR website, but there is a list of the "major Building owners and banks" who have representatives on the board. It's telling that a company that runs city parking lots is run by those who have commercial interests in development.

Paladino also said in his defense "that Buffalo's municipal parking prices are below market rates to attract business, and said that he has been forced to lower rates at several downtown parking lots he owns to stay competitive."

But according to the Democrat and Chronicle article, "a Buffalo News columnist ... singled out Paladino as [the BCAR's] biggest beneficiary, speculating that by effectively controlling cheap, city-owned parking he can use the spaces to entice tenants to his downtown office building, muscle out his competitors, and gouge users of several street parking lots that he owns.

"'That's where the conflict is,' said Pat Hotung, owner of Main Place Mall and a former member of BCAR. 'When I was on the board, and I'd say even now, Carl is by far and away the most influential player. Who is he looking out for, Carl Paladino, the city or BCAR? In his case, I'd say he's looking out first and foremost for Carl Paladino.'"

BCAR's executive director says this isn't true, that BCAR doesn't even set parking prices, and there are 15 other individuals on the board. That seems reasonable. But powerful individuals, especially those who make large campaign contributions and threaten (and take) action when opposed, find ways to make their influence felt out of proportion to their vote on a board.

For example, "when Buffalo was preparing six years ago to bid out management of the city's lots for the first time since BCAR was formed 50 years earlier, Paladino pressured then-Mayor Anthony Masiello to yank the proposal before it went public. A modified version was eventually released and BCAR won the contract."

Sowing Campaign Contributions
Speaking of Paladino's influence, according to an article in the Times, Paladino, the largest landowner in Buffalo, "lavished campaign contributions on city and county leaders, and reaped handsome benefits: appointments to the city parking board and a financial planning commission; and repeated extensions of development deadlines. When he fenced off a city street to use as a parking lot, officials looked the other way. When an out-of-town company was chosen to redevelop a defunct department store, Mr. Paladino somehow wrested the assignment away. And dozens of local, county, state and federal government agencies filled huge spaces in his office buildings, vastly enhancing the value of his portfolio."

Unethical Environments Spawn Unethical Fish Who Swim Upstream
Although I have focused on Paladino, he's the spawn of Buffalo's ethical environment at least as much as its creator. He acted in an ethical environment that allowed a major developer, even an owner of parking lots, to sit on a parking board and on a nonprofit that manages parking lots for the city that compete with his own and serve his tenants. He acted in an ethical environment that allows government officials to place government offices in the buildings of a developer who gives them large campaign contributions. He acted in an ethical environment that would allow officials to talk with, and be influenced by, the most powerful member of the board of a city contractor about a contract his company would be bidding on, and to change the bid so that his company would win it.

Paladino likely helped to form Buffalo's unethical environment, but it helped to form his conduct, as well. And if he wins the election, even as he castigates the corruption in Albany, he will likely continue to put his personal interests, and his bullying style, ahead of the public interest, tainting any improvements he might actually make.

When government officials, worried about having a powerful developer support their opponents, give in to that developer, they create and continue a pattern of unethical conduct that is very difficult to stop. It takes moral courage to create an ethical environment. Without moral courage, Paladinos are created and they use their power to further their personal interests. No one can do this without the acquiescence and support of dozens (in cities and large counties, hundreds) of government officials. And it all starts at the local government level, the level where, if the spawn are not stopped, they will usually swim upstream to the state and federal levels.

Robert Wechsler
Director of Research-Retired, City Ethics

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