Ethics policies in city governments: It's complicated

Paulette Bauman was in her first month on the Woodinville City Council when it took up downtown zoning regulations.

She raised her hand and stated that her parents and other family members owned land in the heart of downtown.

A few weeks earlier, freshman Bellevue City Councilman Kevin Wallace made his own disclosure: That his parents owned properties near two potential Sound Transit light-rail stations.

Wallace at the time was promoting the "Vision Line," a light-rail route that would plop a station a block away from one of his parents' holdings, headquarters of the commercial-property businesses he runs.

Bauman and Wallace did what a council member is expected to do in the face of a possible conflict of interest: Disclose the facts and ask the city attorney if he or she should refrain from voting.

When conflicts of interest pop up in some cities and towns, a number of issues come into play and answers aren't always easy to find, because many municipalities don't have ethics standards for elected officials.

City codes vary widely. Bellevue, Bothell, Kirkland and Redmond, for example, don't have local ethics rules.

In the Bellevue and Woodinville cases, lawyers for each city concluded that neither council member's situation constituted a conflict under city or state law, and cleared each to vote.

That wasn't the end of the matter. Since those January 2010 legal opinions, Bauman has been accused by critics of a conflict for her vote on downtown zoning, Wallace for his undisclosed business deal with a short-line railroad. Two other Bellevue council members also have been attacked for alleged conflicts.

Both city councils are weighing whether their ethics policies need revamping.

Bellevue has hired an investigator to look into possible conflicts of interest.

"A witch hunt"

Woodinville's ethics policy requires council members to disclose any financial interest. But Bauman apparently didn't have an interest in her parents' properties, City Attorney Greg Rubstello said.

"Until she inherits it somewhere down the line, she won't even have any financial interest in it," the attorney explained. She followed his general advice, "It never hurts to disclose. It's a good precaution."

Bauman voted for an ordinance that allowed taller buildings downtown while imposing new design restrictions and limits on square footage.

After the vote, some citizens and council members criticized her for voting and suggested the city ethics code be revised to prohibit members from voting on matters in which they or their relatives have a financial stake.

To Bauman and her allies, the critics were just sore losers.

"I disclosed it. I was honest, open, upfront. I did everything by the letter of the law that I was supposed to do. To be honest with you, I feel this is a witch hunt. It's politically motivated by people who apparently didn't like the vote," Bauman said.

Councilwoman Susan Boundy-Sanders gives Bauman credit for disclosing her parents' property interests, but doesn't think she should have voted.

"I think that the standard that people in democracies hold their elected officials to is that if there is a family financial interest, those elected officials should recuse themselves from that vote," Boundy-Sanders said at a council meeting.

Light-rail complications

In Bellevue, three council members were accused last year of conflicts related to Sound Transit's light-rail route. Those claims were prompted by Wallace's parents' land holdings, Claudia Balducci's position as a Sound Transit board member, and Grant Degginger's law firm's representation of Sound Transit in cases outside Bellevue.

All three council members asked for legal advice, and City Attorney Lori Riordan told them they had no conflicts that would prevent them from voting on light-rail routes.

Then came a political bombshell. GNP Railway, whose long-term business plan calls for running freight trains on part of the old BNSF rail corridor, revealed in a bankruptcy case that it had signed a business agreement with Wallace while he was promoting use of the same corridor for light rail.

Under the agreement, filed by the railway in bankruptcy court, Wallace Properties Development agreed to invest $500,000 in GNP, prepare a $30 million private stock offering, and manage land acquisition and development of passenger stations. The deal was contingent on Wallace obtaining a legal opinion that it wouldn't conflict with his duties as a City Council member.

GNP's immediate expansion plans focused on Redmond, and no evidence has shown that Wallace would have benefited from putting light-rail trains on the Bellevue portion of the rail corridor, now owned by the Port of Seattle. But Wallace's political foes said he should have disclosed his deal with GNP and suggested his requests for staff research on the rail corridor could have benefited the railway.

Wallace and his father, Bob, backed away from the deal in January, after GNP's president fired the chief financial officer, who had accused the president of misusing funds.

Wallace denied a conflict and pledged to cooperate with the investigation. He declined to be interviewed for this story.

"Leading to confusion"

Now council members on both sides of Bellevue's political divide want the council to consider beefing up an ethics code that merely references state standards. A key section of state law prohibits a council member from using his or her position "to secure special privileges or exemptions" — but offers no specifics.

Councilwoman Jennifer Robertson said Bellevue's lack of "a very specific procedure" for dealing with ethical complaints is "leading to confusion, it's leading to a lot of festering."

Woodinville requires council members to disclose financial conflicts, but doesn't prevent them from voting when they have one.

"If you're a councilman and you live in town, sometime you're going to have to vote on something that's in your neighborhood or benefits your kids or where you go to church. That happens in small cities and it's legal and it's permissible" under most circumstances, said City Manager Rich Leahy.

Monroe forbids council members from voting on matters in which they or an immediate family member has a financial interest.

Seattle's tough code prohibits a council member from voting on legislation if "a reasonable person" could conclude his or her "judgment is impaired" by financial interest. A financial interest isn't considered a problem, though, if it "is shared with a substantial segment of the City's population."

The Seattle Ethics and Elections Commission, which advises officials on possible conflicts and has the authority to fine them for violations, grappled last year with what constitutes a "substantial segment" of the population. The panel advised Councilmember Mike O'Brien he wasn't precluded from voting on zoning of low-rise multifamily areas, where he lives, because 29 percent of city residents also live there.

But O'Brien and Tom Rasmussen, as rental-property owners, were advised not to vote on rental licensing and inspection rules because fewer than 5 percent of residents own rental property.

In Bellevue, Councilman John Chelminiak said, "We've always had strong ethical behavior, great integrity," he said. "But the law is only as good as the people it applies to."

Keith Ervin: 206-464-2105 or kervin@seattletimes.com