Civil suit tabled: Ordinance introduced to redo mishandled transaction

Posted: Wednesday, December 02, 2009

The Kenai Peninsula Borough assembly voted Tuesday to table a motion to file a civil suit against a mayor's aide while approving the introduction of an ordinance that would let him off the hook for violating a borough ordinance.

Mako Haggerty, of Homer, made a motion to advise the borough's legal department to take civil action against the mayor's Chief of Staff Hugh Chumley, for not filing a form stating his potential conflict of interest in an $18,000 transaction between Chumley's Inc. and the borough.

Chumley, who owns 50 percent of Sterling-based Chumley's Inc., would have been required to sign a Notice of Intent to do Business form 10 days prior to the Aug. 6 purchase, per borough ordinance.

The motion by Haggerty was tabled by Paul Fischer, of Kasilof, following a discussion on how to proceed with it.

The body later approved the introduction of an ordinance cosponsored by Gary Knopp, of Kalifornsky Beach, and Charlie Pierce, of Sterling, authorizing the sole source purchase of vehicle maintenance equipment for Central Emergency Services from Chumley's Inc., and waiving the requirement to file a Notice of Intent to do Business form with the borough.

The body is now set to hold a hearing on the ordinance at its Jan. 5 meeting.

Eight members of the public, including family members and former employees of Chumley, gave comment at the ordinance's introduction, indicating they felt the ordinance was appropriate.

Knopp said he had reservations about the ordinance prior to hearing testimony, but felt more confident afterward.

Only two assembly members voted against the introduction, Pete Sprague, of Soldotna, and Gary Superman, of Nikiski.

The assembly spent a good deal of its day looking at the August misstep in one form or another.

Haggerty's motion was one of four options presented to the assembly by borough attorney Collette Thompson, at the Policy and Procedure Committee meeting held prior to the assembly meeting.

The full assembly was in attendance for the committee meeting.

According to Thompson, the first option the assembly could have pursued was that which is listed in the ordinance.

According to borough ordinance 2.58.050, "the ability to contract upon disclosure of interest," the failure to file the Notice of Intent to do Business carries a maximum penalty of a $500 fine and or imprisonment for not more than 30 days.

Thompson explained that it would be considered a criminal punishment because there's the possibility of imprisonment.

She said there would be issues going down this route though.

She said that she had discussed this option with the district attorney in Kenai, who, she said, "Had numerous concerns about how this would work."

"(The district attorney) would not pursue this because they pursue state criminal code violations," she said, "so we would have to hire an outside attorney."

A second option she outlined was to pursue a civil action. This was the course Haggerty proposed the assembly consider.

Thompson explained that the assembly has the power to call on the borough to institute a civil action against an individual who has violated an ordinance.

Neither the assembly nor the administration would be the parties that make the decision that a violation was made. The borough would have to hire outside counsel to avoid any conflicts of interest.

For this to happen a motion would have to be made directing the administration to pursue a civil action against Chumley.

Thompson said a fine of no more than $1,000 could be issued for each violation.

The third option would be an administrative action.

This would follow the code outlined in the assembly manual to be used when an assembly member is believed to have acted inappropriately.

Thompson said that in speaking with her colleagues in other boroughs however, she had concerns about this.

"The question would be whether or not the assembly would have the authority to pursue an administrative procedure," she said.

In doing research, she said she'd found instances where administrative action could be taken if the party being charged voluntarily agreed to it.

In this case the executive and legislative bodies would need to agree to use administrative procedure.

In doing so, the assembly would assume a quasi-judicial role.

The fourth and final option Thompson offered was to do nothing.

Chumley and Mark Fowler, the borough's purchasing and contract officer, both attended the committee meeting to answer questions about the transaction, and how the misstep occurred.

Both told the body when asked, that they were remorseful for the mistake.

"I was of the understanding that no (Notice of) Intent to do Business was required," Fowler said to the committee.

He told them he was operating under the pretext that there was no conflict based on a decision the legal department had made when Chumley took his job.

Chumley later explained that when Mayor Dave Carey asked him to serve as his chief of staff, he began divesting himself of his business interests with the borough.

With approval from the borough's legal department, he retained the vehicle maintenance contract until it expired at the end of June of this year.

According to the borough's legal department, because the contract had been established before Chumley took his position, it did not require the filing of a Notice of Intent to do Business.

He told the body he wasn't aware of the form until the misstep came to light in November.

"The first time I heard of a conflict of interest statement was Monday evening late, before the last assembly meeting," he said.

Chumley said that when he learned of the mistake, he immediately called the company to tell them to write a check to reimburse the borough for the equipment.

When asked by Pierce, he told the body that he believed an honest mistake had been made.

Dante Petri can be reached at

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