An hour before the Haines Borough Assembly was set to discuss a manager contract for Debra Schnabel, the assembly received a memo from its attorney saying that contractor Roger Schnabel, Debra’s brother, would be prohibited from contracting with the borough if she holds the position.

Roger Schnabel’s Southeast Roadbuilders is one of the largest contracting firms in town and regularly works for the borough. The assembly met in executive session to discuss the contract and memo, extending the meeting until noon Thursday.

Borough attorney Brooks Chandler wrote in his memo that while no provision of borough code would prohibit Debra Schnabel from making decisions about land use permits involving her brother, “Ms. Schnabel’s brother is prohibited from contracting with the Borough.”

He recommended that Debra Schnabel complete a financial interest disclosure form specific to her ownership share of companies in which her brother also holds an ownership share, as well as any income she has received from those companies in the past year.

Haines Borough code regulates conflict of interest issues related to public officers such as the borough manager. Code prohibits the borough manager from making decisions on matters which they or “immediate family members” have financial interest.

“Financial interest is defined as ‘any interest…held by an officer or an immediate family member, including involvement or ownership of an interest in a business, property, or a professional or private relationship, from which the person has received or expects to receive compensation,’” the attorney’s memo said.

The code prohibitions include competitive bids.

They don’t include manager decisions on land-use and development issues such as recommending conditional use permits, approving or disapproving land-use use permits and civil enforcement lawsuits, meaning Debra Schnabel would be free to act on those matters involving her brother.

But the attorney recommended that Schnabel, as manager, should delegate, in writing, land-use duties on matters involving property Roger Schnabel owns.

Chandler wrote that if the assembly doesn’t believe Roger Schnabel should be prohibited from contracting with the borough, the assembly could change borough code and redefine “immediate family member” to include only spouses, parents and children.

Other possibilities the attorney suggested would be to allow immediate family members to contract with the borough only when such a contract is competitively solicited, or to allow immediate family members to contract with the borough in all situations.

“When considering these code changes, the assembly should not just focus on the current situation but on similar situations that could arise in the future,” the memo said.

“The current limitations on borough contracting in the ethics code may not be practical for a community the size of the borough. Alternatively, the current limitations could be considered essential to overall public confidence in the borough’s contract award process.”

Roger Schnabel is president of Southeast Roadbuilders and is listed as a shareholder, director, officer, or manager in other business entities including Skookum Holdings and Highlands Estates.

Debra Schnabel is involved with four of those other businesses. She and Roger are each 50 percent shareholders in two corporations: Kiana Corporation, a land development company which owns 38 acres of land near Chilkat Lake, and Lynn Canal Corporation, an office-rental business.

Debra Schnabel owns 62 percent of the real estate company St. James Place; Roger owns the remaining 38 percent.

Debra Schnabel and Roger Schnabel are listed as secretary and treasurer, respectively, of Hard Rock INC, a sand and gravel-mining business, which owns 528 acres of land along the Haines Highway near the airport.

Debra Schnabel said she receives no profits from Hard Rock and neither of the other two businesses have ever contracted with the borough.