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Resource extraction debate surfaces conflict-of-interest issues for officials


February 28, 2019

For the second time in three months, planning commission members examined if their voting powers were compromised by a commissioner’s potential conflict of interest.

According to borough code, conflict of interest is defined as “substantial financial gain or personal interest.” It defines the former as interest that would result in a gain or loss exceeding $1,000 in a single transaction, or more than $5,000 in an aggregate in 12 consecutive months.

Borough clerk Alekka Fullerton said that conflict of interest isn’t limited to monetary investment, but can be substantial personal interest in a subject, such as a relationship with an employer.

Personal interest is defined as “material advantage in the form of a promise, service, privilege, exemption, patronage or advancement.” A borough official’s conflict of interest will be recognized “if the official owes a fiduciary duty” to a person, business or organization.

During the Dec. 13 planning commission meeting, former chair Rob Goldberg asked commissioner Zack Ferrin whether his job at and Department of Transportation (DOT) would constitute a conflict of interest in voting to approve a portion of the highway project.

Commissioners and Goldberg determined that Ferrin would not have to recuse himself from the vote because he would have a job at DOT regardless of the highway project’s approval.

“I didn’t stand to gain anything financially over what I already would by voting on the job,” Ferrin said in an interview last week.

Borough planner Holly Smith said, while Ferrin might not have direct financial gain from the vote, his vote could be perceived to benefit him personally.

“If the highway project did go through, for example, it might mean that he could work in Haines rather than travel to Kake,” she said in an interview last week.

Fullerton said the purpose of conflict of interest code is to raise and discuss issues.

“We can deal with things that we know about, what we’re worried about is when people have an interest in something that nobody knows about that is influencing their decision one way or another,” she said. “The perception of a conflict is just as bad as a conflict itself.”

Since consolidation in 2002, the Haines Borough has updated its conflict of interest code once, in Oct. 2017, The change classifies...classifies three exemptions where a public official would not have to recuse themselves from a vote: if the necessary number of people to pass a vote is not met (per Haines code, four affirmative votes are required for passage), when no other body of the borough has jurisdiction to take over, or if the official action can’t be postponed.

“We put in the realization that we’re a small town and that there are going to be these issues,” Fullterton said.

According to Kenai Peninsula borough attorney Colette Thompson, the rule of necessity clause is a measure to prohibit elected officials from shirking voting duties on a controversial subject.

“It’s not okay to declare a conflict and not vote on something because it makes them uncomfortable,” Thompson said.

At the Feb. 26 planning commission meeting, commissioners voted 4-1 to allow conditional use permitting for property owners seeking to move more than 30,000 board feet of timber or 1,500 cubic yards of gravel on a three-acre lot over a three-year period. The allowance is less for smaller lot sizes.

Commissioner Sylvia Heinz recused herself from voting, citing her Mud Bay gravel pit.

In a discussion before the vote, commissioner Lee Heinmiller said he shares 40 acres of undeveloped property with his sister in Mud Bay that strict code could inhibit him from developing.

“If I wanted to pull 1,500 yards of gravel off of my (land) in order to build my driveway, because I don’t live there I can’t do it,” he said, referencing a current requirement for landowners to be residents in order to develop. “But with conditional use, at least I could come in and make my case.”

Assembly member liaison Heather Lende asked Heinmiller if a gravel resource on his land constituted a conflict of interest.

“Is it appropriate for a seated commissioner who just said he has gravel resources and 40 acres there to vote on a motion to allow him to conduct business there?” Lende asked.

Heinmiller said he doesn’t have a gravel pit, and that he doesn’t intend to develop his property.

Commission chair Don Turner III said that recusing commissioners based on land ownership is too limiting, and allowed Heinmiller to vote.

Borough code requires four affirmative votes to pass any motion; if Heinmiller had recused himself, the motion would have failed.

Fullerton said that code does not equate land ownership to substantial interest. “Just because you own land, it does not necessarily create a substantial financial interest,” she said.

The assembly held a public hearing to discuss the ordinance amendment at the Feb. 26 assembly meeting.

Assembly members Heather Lende, Stephanie Scott and Tom Morphet own land in Mud Bay Zoning District. Mayor Hill, who has voting power in the event of a tie, also owns several acres that she said she’s been unable to develop because of stringent laws. Borough manager Debra Schnabel, who brought the resource extraction draft ordinance question back to the planning commission for clarification, also owns 20 acres in the residential zone.

Holly Wells, the City of Homer’s attorney, said that mitigating conflict of interest in a small town is best navigated with a code of ethics, or more comprehensive ethical governance structure.

“One of the most important things is a code of ethics,” she said. “They eliminate a lot of the uncertainty around issues of conflict of even the appearance of impropriety.”

Local code mirrors the City of Homer’s code of standards and prohibited acts which discourages undue influence, use of office for personal gain, disclosing confidential information and non-borough sanctioned political campaigning, among others.


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