HomeMy WebLinkAbout1996-008-01/23/1996-BOB MCCLUSKEY CONFLICT OF INTEREST ETHICS REVIEW BOARD MANUFACTURING USE TAX REBATE OPINION NO. 96-1_ .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
RESOLUTION 96-8
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ACCEPTING THE ADVISORY OPINION AND RECOMMENDATION
NO. 96-1 OF THE ETHICS REVIEW BOARD
WHEREAS, the City Council has established an Ethics Review Bo, d ("the Board")
consisting of three members of the City Council; and
WHEREAS, the Board is empowered under Section 2-569 of e City Code to render
advisory opinions and recommendations regarding actual or h pothetical situations of
Councilmembers or board and commission members of the City; and
WHEREAS, the Board met on January 16, 1996, to consi r whether Councilmember Bob
McCluskey has a conflict of interest in participating in the City ouncil's discussions and decisions
regarding a proposed use tax rebate program for to manufac ring companies in the City; and
WHEREAS, the Board has issued Opinion No. 9 -1 with regard to the foregoing issue; and
WHEREAS, Section 2-569(e) of the City ode provides that all advisory opinions and
recommendations of the Board be placed on the a nda for the next special or regular City Council
meeting, at which time the City Council sh determine whether to adopt such opinions and
recommendations; and
WHEREAS, the City Council h, , reviewed the opinion and recommendation of the Board
and wishes to adopt the same.
NOW,THEREFORE, B IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS that Opinion No. r -I of the Ethics Review Board, a copy of which is attached hereto
and incorporated herein by ris reference as Exhibit "A," has been submitted to and reviewed by the
City Council, and the C ncil hereby adopts the opinion and recommendation contained therein.
Passed and , opted at an adjourned meeting of the Council of the City of Fort Collins held
this 23rd day of anuary, A.D. 1996.
Mayor
AT ST:
City Clerk
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EXHIBIT A
96-1
OPINION OF THE ETHICS REVIEW BOARD
OF THE CITY COUNCIL OF TIIE CITY OF FORT COLLINS
January 16, 1996
The Ethics Review Board ("the Board") met on the above-referenced date to address an inquiry
presented by COUncillnember Bob McCluskey. In attendance were Ethics Review Board members
Mayor Ann Azari, Mayor Pro'I'em Gina Janett and Councilmetber Will Smith; Councilmember
McCluskey; and Councilmember Kneeland, who had presented a separate inquiry to the Board.
The question presented by Councilmember McCluskey is whether his ownership interest in Poudre
Valley Creamery creates a conflict of interest for him in participating in discussions of the City
Council pertaining to a proposed use tax relief program that would apply to Poudre Valley
Creamery.
7u 1'ro o ed Ue Tar Relief grant
The City Manager has proposed an interim policy, pending further study of the matter, through
which manufacturers that have been in operation in Fort Collins for three years or more may be
relieved of some measure of the use tax burden upon their purchases of manufacturing equipment
from outside of the city. The recommended approach would provide an effective use tax
reduction for affected manufacturers from 3% to 1% on the first $5 million of the manufacturing
equipment purchased, and from 3% to 2% on the next $10 million of the manufacturing
equipment. Equipment purchases of beyond $15 million would be subject to the current rate of
3% up to a maximum total of$50 million worth of manufacturing equipment purchases that would
be subject to the use tax. Thus, the emphasis of the program would be the reduction of the tax
burden on smaller purchases of manufacturing equipment, with a cap on total use tax that would
benefit manufacturers making extremely large purchases of manufacturing equipment.
Legal Staudat
The Charter recognizes two kinds of interests which can give rise to a conflict of interest for a
Councilmember: a financial interest and a personal interest. A financial interest is defined as
"any interest equated with money or its equivalent." A financial interest is specifically not to
include:
The interest of an employee of a business, or a holder of an ownership interest in
such business, in a decision of any public body, when the decision financially
benefits or otherwise affects such business but entails no foreseeable measurable
.financial beueft to the employee or interest holder. . .(City Charter, Article IV,
Section 9., emphasis added.)
The Charter defines a personal interest as:
Ethics Opinion 96-1
January 16, 1996
Page 2
Any interest (other than a financial interest) arising from blood or marriage
relationships or from close business, political or personal associations or concerns
which would, in the judgment of a reasonably prudent person, tend to impair
independence of judgment or action in the performance of official discretionary
duties. (City Charter, Article IV, Section 9.)
Anal st is of the McCluskey Inquiw
Poudre Valley Creamery ("the Company") is one of approximately 41 manufacturing companies
that could be affected by the proposed tax relief program. Councilmember McCluskey is the
president of the Company; he is also one of the owners of the Company and, as such, he is a
major shareholder and his compensation is partially based upon the profitability of the Company.
However, Councilmember McCluskey has informed the Board that his plan of compensation is
not based upon any established mathematical formula. Consequently, minor fluctuations in the
profitability of the Company from year to year would not generally be reflected by any
corresponding change in the amount of Councilmember McCluskey's annual compensation.
Turning first to the financial interest standard, the question presented is whether the proposed
program would not only benefit the Company but whether it would, in turn, result in any
"foreseeable, measurable financial benefit" to Councilmember McCluskey as an employee or
interest holder in the Company. Based upon the information provided by Councilmember
McCluskey, the Board does not believe that the proposed use tax program would result in any
measurable financial benefit to Councilmember McCluskey. The Company has historically made
only very moderate purchases of manufacturing equipment. In fact, during the past five-year
period, Councilmember McCluskey has indicated that a use tax rebate of 2% (as proposed by the
City Manager) would have resulted in a savings to the Company of approximately_ $30 per month.
Given the nature of Councilmember McCloskey's financial arrangement with the Company, it
does not appear that that level of savings would have resulted in any foreseeable, measurable
financial benefit to Councilmember McCluskey as an owner of the Company. Therefore, no
financial conflict of interest exists.
The next question to be considered is whether a personal conflict of interest exists.
Councilmember McCluskey clearly has a close association with the Company, as president and
owner of the Company. Also, the decision in question is one that is more "focused" on the
Company than a decision that, for example, affects all of the City's taxpayers. However, the
Board believes that the overriding consideration in this case is the minimal financial impact that
the Council's decision would have on the Company. The Board does not believe that a reasonably
prudent person would consider that level of potential financial impact as a consideration that would
interfere with Councilmember McCloskey's independence of judgment in participating in the
Council's deliberations and decisions regarding this matter. On the contrary, Councilmeuhbers
Ethics Opinion 96-1
January 16, 1996
Page 3
are routinely called upon to make policy decisions that could have financial impacts of similar
magnitude on each of them, in either their personal or business capacities. Consequently, the
Board believes that Councilmember McCluskey does not have a conflict of interest in this matter.
This advisory opinion was reviewed and approved by Mayor Azari and Council member Smith,
regular members of the Ethics Review Board, with Mayor Pro Tern Janett dissenting from the
majority opinion of the Board. Pursuant to Section 2-569(e) of the City Code, this opinion and
recommendation is to be immediately filed with the City Clerk and made available for public
inspection. Additionally, this opinion shall be considered by the City Council at its meeting on
January 23, 1996.
14
Dated this day of January, 1996.
St phen J oy, City Attome
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