Borough working to avoid conflicts

Posted: Tuesday, October 21, 2003

Avoiding even the appearance of a conflict of interest has always been an important objective of the borough code when it comes to defining inappropriate actions of borough officials.

But what happens when borough officials serve as unpaid board members of nonprofit organizations, which may then come into contractual relationships with the borough?

An ordinance introduced Oct. 16 and set for a public hearing next month is an attempt to address confusing language regarding conflict issues, said assembly President Pete Sprague.

"In the past, there has been some discussion and confusion about what constitutes conflict of interest when assembly members and borough employees serve on nonprofit and advisory boards," Sprague said in a memo to the full assembly.

Ordinance 2003-39 is an attempt to clarify the borough code to eliminate any appearance of a conflict or impropriety.

Borough officials often serve on the boards of nonprofit corporations providing public services within the borough, Sprague said, sometimes filling seats specifically set aside for borough representatives. Current borough code prohibits contractual relationships between the borough and any of its officers, employees or assembly members if that person has a substantial interest in the contract.

The code, however, also provides that a borough official acting as an unpaid director of a nonprofit corporation is not necessarily deemed to have an interest in its affairs solely because of the directorship. The ordinance would change that by eliminating the "not necessarily" phraseology.

Ordinance 2003-39 would amend the code to automatically assume any person serving on nonprofit boards of directors to have a substantial interest as a result of a transaction with the borough by the corporation. However, it also would exempt persons "appointed by the borough to serve on the board of directors." Thus, borough officials assigned to a borough-designated seat on a nonprofit board would not be deemed to have a substantial interest.

A "substantial interest" is defined as receiving money or other benefit as a result of a private, business or professional transaction within the borough or service area.

"It happens infrequently, but it does come up," borough attorney Colette Thompson said of the conflict issue.

It occurred most recently in September when the borough adopted Ordinance 2003-19-08, which appropriated $192,000 in state money to the Cook Inlet Salmon Branding project. Assem-bly member Chris Moss of Homer is a member of the salmon project's board of directors and, declaring a conflict, recused himself from participation in the debate. The measure barely passed, Thompson said, with five in favor (the bare minimum), two opposed, one absent and Moss abstaining.

Moss was not assigned to his board position by the assembly, and thus, even had Ordinance 2003-39 been in effect, he likely would have declared a conflict in any case, Thompson said.

As president, Sprague had to make two rulings on conflict questions at the Sept. 2 meeting, one having to do with the salmon branding project appropriation, the other whether assembly member Gary Superman of Nikiski was eligible to participate in discussion of a resolution supporting legislative measures aimed at expanding state gaming rules to allow electronic games. Superman owns a bar that conceivably might one day have such machines. Sprague ruled that Superman did not have a conflict.

"I thought the connection was far too tenuous," he said.

The need for the two rulings, however, helped reveal the weakness of the current code language, Sprague said.

Adding to his decision to introduce Ordinance 2003-39, he added, was his association with the Tsalteshi Trails Association, a group whose board he chaired for three years. Because the association could be involved in future decisions on skiing facilities for the Arctic Winter Games, Sprague resigned his membership on the trails association board to avoid any conflict issues.

Sprague said he proposed the amendments to the code "to take out the gray area created by the 'not necessarily' clause and make it more black and white whether there is or is not a conflict."

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