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Ethics panel nixes funding proposal

February 14, 2012

PAWTUCKET — The Rhode Island Ethics Commission has found that a proposal by the Grebien Administration to solicit private donations to fund the salary of the new economic development director would be against the Code of Ethics.
At its meeting on Tuesday, the Commission voted unanimously to back an advisory opinion that had been drafted by the Commission staff saying that Pawtucket city officials are prohibited by the Code of Ethics from soliciting donations to pay the salary of the economic development director from private businesses, foundations and individual philanthropists who are located within, or do business with, the city.
The ruling pertains to the position that was created by Mayor Donald Grebien last April and is currently being held by Richard Kazarian under the title of special economic projects coordinator. Kazarian was hired by the city under a temporary employment agreement and is being paid a salary of $1,000 per week.
Shortly after the creation of the position, Grebien announced his plan to implement a “public-private partnership” to fund the salary, which is currently being paid out of the city's Planning and Redevelopment Department budget.
The mayor has spoken often in public about the need for such a position to spur the city's economic development. Yet, the decision to create the position without obtaining the City Council's approval and the current funding of the job through the city's operating budget has drawn ongoing criticism from some members of the City Council.
The advisory opinion stated that the proposed solicitation of funds “does not comport with the Code of Ethics,” particularly Commission Regulations 36-14-5011 regarding “transactions with subordinates” and 36-14-5009 having to do with “gifts.”
Jason Gramitt, staff attorney for the Ethics Commission, said that the gist of the advisory opinion was that the fundraising plan, as proposed, would have essentially benefited one individual, rather than the city as a whole, and therefore, would have gone against the provisions of the state's Code of Ethics. There were additional concerns cited by the Commission about potential conflict of interest in several areas.
Grammit said, however, that Tuesday's ruling was specific to this particular proposal and does not prohibit city officials from coming up with another way of fundraising for the economic development director position that does not run afoul of the Ethics Code.
Grammit added that he and the Commission think Mayor Donald Grebien was being responsible in seeking an advisory opinion prior to any implementation of the fundraising plan.
In his petition for the advisory opinion, Grebien wrote that in order to fund the economic development director position, his director of administration would engage in a “broad-based solicitation” of potential contributors. These would be comprised primarily of private businesses, foundations and philanthropists located both inside and outside of the city, including some past, present and potentially future vendors.
The petitioner (Grebien) stated because of being cognizant that “it may appear at first blush that the monetary donations would affect or benefit one individual personally since the monies received by the city would ultimately be used to pay the salary of the position,” it was noted that the economic development director “would take no part in the solicitation process.”
In contrast, the petitioner contended that the funds would be solicited “for the public purpose of providing the city with a new public official whose work would ultimately benefit the city at large.” He added that in any situations where the economic development director was faced with having to advocate for or exercise discretion over an individual or entity that had been solicited or contributed support, the economic development director would seek an advisory opinion or could recuse from taking an official action and refer such decisions to the director of administration.
In the advisory opinion, the Commission wrote that it understood the city's difficult financial position and appreciated the petitioner's willingness to explore “alternative and non-traditional ways” to fund the economic development director position. Nevertheless, the Commission wrote that it felt compelled to conclude that the method of solicitation described in the petitioner's request for an advisory opinion “runs counter to both the spirit and letter of the Code of Ethics.”
Additionally, the Commission cited the regulation (Regulation 5009) relating to gifts which provides that no public official shall accept a gift valued at more than $25 from an “interested person,” which is defined as a person or representative of a person or business “that has a direct financial interest in a decision that the person subject to the Code of Ethics is authorized to make, or participate in the making of, as part of his or her official duties.”
The Commission noted that the petitioner proposes to solicit donations from businesses that could include potential vendors, and also that proposed contributors could include businesses that the economic development director may interact with as part of official duties. Such vendors and businesses would fall under the definition of “interested persons.” Therefore, the opinion was that Regulation 5009 prohibited the proposal because the person serving as the economic development director would receive a direct financial benefit, in the form of a salary, from the donations of “interested persons” under the Code of Ethics.
Additionally, the Commission noted that Regulation 5011 entitled “Transactions with Subordinates” generally prohibits persons subject to the Code of Ethics from engaging in financial transactions with persons or businesses under their supervision and authority. The term “subordinate” includes contractors and consultants, and the Commission concluded that any solicitation is prohibited by Regulation 5011 because it could include individuals and businesses that have to seek or do business with the city, or that are subject to the city's authority or supervision.
The Commission also expressed concern that the economic development director and any individual or business that responds to the solicitation of funds, would have a common interest of maintaining funding for the economic development director position in the city. Yet, the economic development director's duties would include evaluating projects and plans submitted by such benefactors, and acting as a point person for them to assist with planning, zoning and permitting. The Commission stated that, given the financial dependence on these donors, the person serving as economic development director would be required to recuse from any duties that involve or financially impact them.
Following Tuesday's ruling, Mayor Donald Grebien said in a statement that he appreciates the time that the staff of the Ethics Commission spent researching the advisory petition and respects their assessment. He added, “Our goal remains finding an appropriate long term way to fill and finance such a position in a city with limited financial resources where economic growth is a vital priority.”
The mayor said that last week, he and key members of his administration met with Keith Stokes, and other members of his staff at the Rhode Island Economic Development Corporation to begin exploring other options for this purpose, including ones based on models that have been successful in other Rhode Island communities.
“Those approaches may hold promise and we are now further examining if, how and in what way those initiatives may be applicable for Pawtucket,” Grebien said.

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