Mayor Yepsen has forwarded to me a copy of the letter her attorneys from the Harris Beach Law Firm submitted to the Ethics Board in her defense. Apparently she chose to have her attorneys submit this document rather than meet with the Ethics Board. Harris Beach Law Firm has represented the city in the past.
At Tuesday night’s council meeting, Mayor Yepsen told the Council that she planned to submit the invoice from Harris Beach for the city to pay. Commissioner Madigan responded by asserting that bills of this nature must be approved prior to the provision of service.
The Ethics Board members are appointed by the Mayor. In their opinion they noted that prior to making their decision they had reviewed this document.
June 10, 2016
HAND DELIVERY
Board of Ethics
City of Saratoga Springs
Board of Ethics
474 Broadway – Room 9
Saratoga Springs, NY 12866-2296
Attention: Chairman Justin Hogan
Re: Joanne Yepsen – Reconsideration of Board’s March 24, 2016 Findings Contained in Inquiry Opinion #6-2016
PERSONAL AND CONFIDENTIAL
Dear Chairman Hogan:
Thank you for your correspondence dated May 26, 2016 allowing us the opportunity to provide a written submission in-lieu of a hearing by the close of business on June 10, 2016.
BACKGROUND
As the Board of Ethics (“Board”) is aware, Ms. Yepsen contacted the Board on January 14, 2016 requesting an advisory opinion as to whether she, as part-time Mayor of the City of Saratoga Springs (“City”), would have to recuse herself from voting on an application for a zoning change submitted to the City Council by Saratoga Hospital (“Hospital”) dated August 20, 2015. Ms. Yepsen sought the advisory opinion due to the fact that she had been communicating with an entity related to the Hospital regarding a potential engagement for grant writing services with her consulting firm, Critical Needs Now. Specifically, on October 14, 2015 Ms. Yepsen had a conversation over lunch with Amy Raimo, the Executive Director of the Saratoga Hospital Foundation (“Foundation”), followed by email correspondence with Ms. Raimo through January 16, 2016.
On January 19, 2016 the Board issued Ms. Yepsen Advisory Opinion 2-2016 determining that (i) the Foundation was an inseparable part of the Hospital, (ii) the Hospital was “doing business with the City” by submitting a zoning amendment to various boards and officials of the City, including the City Council and (iii) voting on the zoning amendment at a City Council meeting would be contrary to Section 13-3 (I) of the City’s Code of Ethics (“Code”).
At the January 19, 2016 City Council meeting, Ms. Yepsen, following the advice of the Board, announced she was recusing herself from the items on the agenda relating to the Hospital’s zoning amendment and stated her reasons for doing so.
On March 24, 2016 the Board issued Inquiry Opinion #6-2016 to Ms. Yepsen responding to a letter of inquiry dated February 1, 2016 submitted by Michele Madigan, Commissioner of Finance. Commissioner Madigan’s inquiry requested an opinion as to whether Ms. Yepsen’s discussions with the Foundation, in and of themselves, constituted a violation of the City’s Code of Ethics. The Board determined that any efforts to solicit or negotiate for outside employment with one who does business with the City (within the meaning of §13-3 (I) of the Code of Ethics) constitutes a violation of such section, including Ms. Yepsen’s discussions with the Foundation. The Board reasoned that §13-3 (I) of the Code does not allow either for the consideration of intent or for any quantitative analysis, that there is neither a threshold for the amount of the contract or the extent to which the negotiations have progressed. The Board further stated that this section becomes relevant even upon minimal efforts to solicit or negotiate for work under the stated circumstances. Lastly, the Board reiterated its determinations from Advisory Opinion 2-2016 that (i) a zoning amendment application to various boards and officials, including the City Council was “doing business with the City” and (ii) that the Foundation would be considered the Saratoga Hospital because the Foundation was an inseparable part of the Hospital.
CODE §13-3(I)
Section 13-3(I) provides that:
No officer or employee shall:
- engage in work for an outside employer or business who does business with the City;
- solicit work for an outside employer or business who does business with the City;
- negotiate for work for an outside employer or business who does business with the City;
- promise to accept work for an outside employer or business who does business with the City.
which,
- creates an implied conflict; or
- impairs the proper discharge of his official duties; or
- results in personal gain.
ADVISORY OPINION #2-2016
With respect to the Board’s determination in Advisory Opinion 2-2016, we agree that voting on the Hospital’s August 20, 2015 application for a zoning amendment could reasonably give rise to the perception that Ms. Yepsen confronted some form of divided loyalty given (i) the close relationship between the Hospital and the Foundation and (ii) her discussions with the Foundation regarding the possible engagement of Critical Needs Now. We also agree that it is the intent of §13-3(I) of the Code to prevent conflicts of interest whether actual or perceived. Therefore, we recognize that an official act by Ms. Yepsen on the amendment would be contrary to §13-3(I) of the Code in that it would create an appearance of a conflict. Thus, we do not disagree with the Board’s determination that Ms. Yepsen should recuse herself, which she did, from voting on the Hospital’s zoning amendment. It is a well settled ethical principal that disclosure, recusal and abstention is the appropriate course of action to cure any actual or perceived conflicts of interest because it removes the governmental employee from the official action, which may have been influenced by personal interests[1].
INQUIRY OPINION #6-2016
- The Board’s Interpretation of Code §13-3(I) is Misplaced as a Matter of Law and Equity
With respect to Inquiry Opinion #6-2016, we disagree with the Board’s interpretation of §13-3(I) of the Code as it relates to whether Ms. Yepsen’s discussions with the Foundation while the Hospital had a zoning amendment pending resulted in a per se Code violation. We believe the Board’s interpretation of §13-3 (I) is misplaced under these circumstances and is not aligned with the general ethical standards established under Article 18 of the General Municipal Law (“GML”).
As set forth in its Inquiry Opinion #6-2016, in contrast to the treatment afforded under the GML as well as the Public Officers Law (“POL”), the Board took a very literal reading of this section thereby establishing a strict liability standard with no minimum thresholds. Such an interpretation creates an absolute prohibition that results in a per se violation of the Code as opposed to creation of an ethical standard that would trigger disclosure, recusal and abstention. Given the Code’s definition of “officers and employee”[2] and the provision of §13-3 (I) as interpreted by the Board, any part-time employee or volunteer board member would either have to resign or incur a Code violation if their outside employer or client sought a permit, variance, zoning amendment or other item from the board or body on which such officer or employee serves. For example, a volunteer planning board member that is engaged in work for XYZ Corporation as either an employee of XYZ Corporation or has XYZ Corporation as a client would automatically be in violation of the Code upon XYZ Corporation’s submission for a subdivision, special use permit, or other action by the planning board. In order for such planning board member not to incur a Code violation, the member would be forced to resign prior to XYZ Corporation’s submission of its application or XYZ Corporation would have to forego seeking a subdivision, special use permit or other action by the planning board. This result is unreasonable and certainly cannot be the intent of §13-3 (I) given the City’s need for civic minded individuals to volunteer or work part-time on numerous boards and commissions of the City. Without the ability to cure an actual or perceived conflict of interest through disclosure, recusal and abstention, it would effectively make all but a handful of citizens ineligible to sit on boards of the City.
Applying the Board’s same standard of interpretation to Section 13-3(P)(1) of the Code would make the City’s Code more stringent than Article 18 of the GML by prohibiting “any financial interest in a business relationship, financial instrument, contract with the City, or an interest in a bank or trust company, that is prohibited by §801 of the General Municipal Law of the State of New York,” without providing for the exceptions allowed in GML §802. Regarding this prohibited interest, the Code does not state that the City officers and employees must adhere to the provisions of Article 18 of the GML, rather a literal reading of paragraph (P)(1) creates an absolute prohibition to any financial interest in a business relationship prohibited by §801 as opposed to a disclosable interest defined in (P)(2). This creates a very strict standard without any exceptions. Again, this result is unreasonable and cannot be the intent of the City. Such an interpretation by the Board of these paragraphs (I) and (P)(1) would lead to many unintended violations of the Code that could not be cured, which would make any action in which there was a violation null and void, and subject the City officer or employee to penalties pursuant to (P)(3) that incorporates by reference §805 of the GML.
The New York State Legislature recognized that conflicts of interest of municipal officers and employees are not uncommon due to the multitude of interactions between governmental entities and the private sector. A goal of the enactment of Article 18 of the GML was to establish “a formula of conduct which is not only clear but reasonable, one which will permit governmental employees to share the normal benefits of the democratic society and economy they serve. If government is to attract and hold competent administrators, public service must not require a complete divesting of all proprietary interest. Real conflict must be rooted out, without condemning the inconsequential.”[3] Article 18 prohibits a municipal officer or employee from having a direct or indirect financial interest in a contract with a municipality where such municipal officer or employee has the power to negotiate, prepare, authorize or approve such contract.[4] A “Contract” is defined as any claim, account or demand against or agreement with a municipality, express or implied.[5] Thus, almost any business relationship with a municipality will result in a contract.[6] However, by recognizing that conflicts of interest of municipal officers and employees are not uncommon due to the multitude of interactions between governmental entities and the private sector, the Legislature provided exceptions to the prohibition.[7] Conflicts that fall within an exception are still conflicts of interest, but they are not prohibited conflicts and they can be cured by disclosure[8]. Therefore, just because you have an interest in a municipal contract does not necessarily mean that your interest is prohibited.
In the instant case, applications for and the granting of building permits, licenses, zoning changes, variances or site plan approvals have consistently been determined to not constitute a “contract” with the municipality[9]. Therefore, it is clear that Ms. Yepsen does not have a conflict of interest under Article 18 since the Hospital’s zoning application is not even considered a contract (i.e., business relationship with the City). Secondly, even if such zoning application were to be considered a contract with the City, Ms. Yepsen would still not have the required direct or indirect financial interest in the amendment. Additionally, even assuming for argument sake that Ms. Yepsen had a financial interest in the zoning amendment before the City due to being a direct employee of the Hospital, provided (i) Ms. Yepsen’s remuneration for such employment with the Hospital was not directly affected as a result of the zoning amendment and (ii) her duties at the Hospital did not directly involve the preparation or performance of the zoning amendment, Ms. Yepsen would still not have a conflict of interest that is prohibited under Article 18. Under those circumstances, Ms. Yepsen would have a conflict of interest that could be cured by disclosure pursuant to GML §803. Common law requires recusal in addition to the statutorily mandated disclosure under §803 of the GML.[10]
A similar statutory provision involving the POL is interpreted and treated in a similar fashion as the provisions under Article 18 of the GML. Section 74 of the POL establishes a rule with respect to conflicts in subdivision (2) and then sets forth eight standards of conduct in subdivision (3). The rule in subdivision (2) states “[N]o officer or employee should have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest” Paragraph (f) of subdivision (3) established a standard of conduct that states “[n]o officer or employee of a state agency….should not by his conduct give reasonable basis for the impression that any person can improperly influence him or unduly enjoy his favor in the performance of his official duties, or that he is affected by kinship, rank, position or influence of any party or person.” State personnel who had been faced with substantial conflicts between their personal interests and their public duties were not deemed to be in violation of §74 of the POL where disclosure, recusal and abstentions were made. Similarly, in instances where State personnel were involved in personal matters that could reasonably be perceived as creating an undue influence on their official duties contrary to the standard of conduct contained in POL §74(3)(f), disclosure, recusal and abstention was the cure. The occurrence of the circumstances that gave rise to the perception of an undue influence on the individual’s official duties did not, in of itself, result in a violation of the State’s Code of Ethics.[11]
Applying the Board’s literal interpretation to §13-3(I) as well as §13-3(P)(1) creates unreasonably strict prohibitions that fail to recognize the goal and intent of Article 18 of the GML; the enabling legislation by which the City’s Code was enacted, which requires such Code be consistent with its provisions[12]. The Board, when revising the Code, recognized that its provisions must be implemented in accordance with the “NYS General Municipal Law”[13] and within the context of the “NYS Public Officers Law and the NYS Ethics legislation”[14]. The Code explicitly provides in §13-1 that the Code was enacted pursuant to §806 of the GML and that the “rules shall serve as a guide for official conduct of officers and employees of the City of Saratoga Springs”. Moreover, the Code explicitly states that it “…shall not conflict with [ ] any prohibition of Article 18 of the General Municipal Law.”[15] The Board’s strict interpretation of §13-3(I) as an absolute prohibition opposed to a standard of conduct conflicts with the standard ethical principles established under Article 18 of the GML as well as §74 of the POL. Conflicts under analogous provisions of the POL have not been interpreted by the courts or the New York State Joint Commission on Public Ethics (“JCOPE”) as per se violations of the State’s Code of Ethics where the individuals disclosed, recused and abstained.[16] Lastly, the wording of the Code, taken in its entirety, establishes that §13-3(I) is a standard of conduct that can be cured rather than a strict prohibition. To illustrate, §13-3 is entitled Standards of Conduct, which contains sixteen standards of conduct enumerated in paragraphs (A) through (P) of which paragraph (P)(1) explicitly addresses prohibited interests. Under the same §13-3 entitled Standards of Conduct, paragraph Q explicitly provides for recusal. Therefore, it is reasonable to conclude the Code requires recusal whenever a City officer or employee runs afoul to the Standards of Conduct, which is consistent with the GML, POL and common law.
Based upon the foregoing, we are seeking the Board’s reconsideration of its interpretation of §13-3(I) of the Code in light of the provisions of Article 18 of the GML and the interpretations of such as provided by the courts, Attorney General and the Comptroller, as well as the interpretations of §74 of the POL by the courts and JCOPE. An interpretation of §13-3(I) by the Board consistent with the interpretations given under Article 18 of the GML and §74 of the POL will help eliminate unintended consequences and protect innocent public officers from unwarranted assaults on their integrity, while still protecting the public from municipal contracts influenced by avaricious officers.[17]
- No Violation of §13-3(I) By Ms. Yepsen as a Matter of Law
In the event the Board maintains its current interpretation of §13-3(I) of the Code as a strict liability provision, Ms. Yepsen did not violate such section by engaging in discussions with the Foundation. In order for such discussions to result in a violation of §13-3(I), the Foundation would have to be “doing business” with the City. Although we do not disagree with the Board’s determination that the Foundation was doing business with the City for purposes of its opinion with respect to the need to recuse, we do, however, disagree with the Board’s determination when it comes to determining a violation under a strict liability provision such as the way the Board interprets §13-3(I). First, the Foundation, as a separate legal entity, was not the applicant for the zoning amendment. Secondly, even if the Foundation was the applicant, the Board’s determination that submitting a zoning application is “doing business” with the City is misplaced given common law, which provides that approvals of zoning, licenses, permits etc. are not contracts (i.e. business relationships) as opposed to the purchase and sales of goods, services and real estate, leases, construction contracts, vouchers as well as designations of bank accounts and official newspapers for publication[18]. Lastly, in order for there to be a violation of §13-3(I), assuming the Foundation was determined to be “doing business” with the City, such discussions would have to either (i) create an implied conflict, (ii) impair the proper discharge of Ms. Yepsen’s duties as Mayor, or (iii) result in personal gain. First, since the engagement between the Foundation and Critical Needs Now was never consummated, there was never any personal gain realized by Ms. Yepsen. Secondly, as addressed above, common law clearly regards disclosure and recusal as a cure to any appearance of or actual conflict of interest[19], which Ms. Yepsen did do in this case. Any potential for a conflict was eliminated when Ms. Yepsen recused herself from taking official action on the zoning application. Third, Ms. Yepsen’s official duties as Mayor of the City were not impaired solely by recusing herself from taking action on the Hospital’s zoning application.[20] It would be unreasonable to interpret this clause as applying to a single duty on a single matter given that recusal is the appropriate course of action for all public officials when faced with a potential for conflicting interest. The Mayor has numerous public duties and matters she is charged with undertaking as a public official, all of which have not been impaired by recusing herself in this instance. Furthermore, it was not Ms. Yepsen’s recusal from voting on the Saratoga Hospital expansion that caused the inability of the City Council to vote. The City Council could not vote to approve the necessary zoning amendment because neighbors near Morgan Street sent a petition asking the Hospital not to build on the parcel at issue. This petition resulted in the Council needing a supermajority to vote, which it lacked due to the recusals of Ms. Yepsen and John Franck, Commissioner of Accounts.
Lastly, the Board’s interpretation of §13-3(I) assumes Ms. Yepsen “solicited work” or “negotiated for” work from the Foundation. The terms “solicit” and “negotiate” are not defined in the Code, the City Code, GML §800 or the General Construction Law. Based upon a reasonable interpretation of these terms, however, Ms. Yepsen’s single lunch meeting with Ms. Raimo and her few, sporadic, subsequent e-mail correspondence do not amount to “soliciting for” or “negotiating for” work from the Foundation[21], especially when interpreting such terms within the context of a strict liability provision as created by the Board in its interpretation of Section 13-3(I). Although the email correspondence indicates an exploration of the services provided by Critical Needs Now and the potential needs of the Foundation, such correspondence clearly demonstrates that there was never a negotiation over any terms or conditions for employment nor did Ms. Yepsen ask the Foundation for work.
CONCLUSION
Based upon the foregoing, we are hereby requesting that the Board reconsider its interpretation of §13-3 (I) of the Code to be consistent with the GML, POL and common law in that such section does not create a strict liability prohibition without exceptions. In the alternative, if the Board determines that the correct and appropriate interpretation of §13-3(I) is a strict prohibition without any exceptions as a matter of law, then the Board’s determinations thereunder should be applied in the same strict technical fashion. For example, as a matter of law, the Foundation was not technically the applicant of the zoning amendment. Therefore, the Foundation cannot be determined as doing business with the City with respect to such zoning amendment by the Hospital. Secondly, as a matter of law the zoning application by the Hospital is not considered a contract with the City. Therefore, since the application is not a contract as defined by GML §800, the Hospital cannot have a business relationship with the City as a result of such application. Without a business relationship, it is unreasonable for the Board to determine that the application for zoning is “doing business” with the City, especially since the Code does not define “doing business”.
A reasonable interpretation of §13-3(I) in light of the body of authoritative guidance cited herein, clearly establishes Ms. Yepsen did not violate the City’s Code of Ethics solely by engaging in a dialogue with the Foundation over potential work unrelated to the Hospital’s application for zoning, especially given the fact she recused herself from taking any action on the Hospital’s application to avoid even the appearance of a conflict.
I also respectfully request the opportunity to meet with the Board’s counsel to discuss this submission prior to the next scheduled Board meeting. Thank you for your time and attention to this matter. If you have any questions or would like to discuss further, please contact me.
Sincerely,
Robert J. Ryan
RJR:hr
cc: Ms. Joanne Yepsen (via E-mail)
Tony Izzo, Assistant City Attorney (via hand delivery)
[1] Lexjac, LLC v. Beckerman (2d Dept. 2010) 72 AD3d 748.
[2] Section 13-2 of the City’s Code of Ethics defines “Officer” or “Employee” of the City as “[A]n officer or employee…..whether paid or unpaid, including without limitation,…..volunteers, interns and members of any advisory and/or decision-making board, body, council, commission, agency, departments, districts, administration, bureau or committee of the City of Saratoga Springs.”
[3] L.1964, C.946 §1.
[4] GML §800 and 801
[5] GML §800
[6] 1996 Ops St Comp No. 96-14; 1984 Ops St Comp No. 84-12: 1989 Ops St. Comp No. 89-32; 1988 Ops St. Comp No. 88-23; 1988 Ops St. Comp No. 88-44; 1998 Ops St. Comp No. 98-5
[7] GML §802
[8] GML§§801, 802 and 803.
[9] Friedhaber v Town Bd. Of Town of Sheldon, 851 NYS 2d 58 (citing NY Op. Attorney General No. 74-106, NYS Comptroller Opinion No. 83-114); NYS Comptroller Opinion Nos. 91-48, 97-12, 88-68, 85-60 and 01-14.
[10] Zagoreos v. Conklin, 109 AD2d 281. Tuxedo V. Town Bd. Of Town of Tuxedo, 69 AD2d 320. NYS Comptroller Opinion Nos. 97-9; 82-200 and 92-31.
[11] NYS Ethics Commission Op. 95-29 (1995).
[12] GML §806. NYS Comptroller Opinion Nos. 82-189 and 80-234.
[13] Board of Ethics Minutes May 5, 2014
[14] Board of Ethics Minutes July 10, 2014
[15] City of Saratoga Springs Code § 13-1 [setting forth the purpose of the Code of Ethics]
[16] NYS Ethics Commission Op. 95-29 (1995).
[17] L.1964 C.946 – the trinity of purposes.
[18] 1996 Ops St Comp No. 96-14; 1984 Ops St Comp No. 84-12: 1989 Ops St. Comp No. 89-32; 1988 Ops St. Comp No. 88-23; 1988 Ops St. Comp No. 88-44; 1998 Ops St. Comp No. 98-5. Friedhaber v Town Bd. Of Town of Sheldon, 851 NYS 2d 58 (citing NY Op. Attorney General No. 74-106, NYS Comptroller Opinion No. 83-114); NYS Comptroller Opinion Nos. 91-48, 97-12, 88-68, 85-60 and 01-14.
[19] Stettine v Suffolk County, 105 AD2d 109 [2nd Dep’t 1984]
[20] NYS Ethics Commission Op. 95-29 (1995).
[21] Black’s Law Dictionary (10th ed. 2014) [Solicitation is defined as the “act or an instance of requesting or seeking to obtain something”. The term “negotiate” is described as “to bring about by discussion or bargaining.”]
Saratoga Springs Politics 