| Does an
agreement to "cooperate" solve the problems of accountability, ethics
and fiscal responsibility? |
The unelected urban renewal authority, the Louisville Revitalization Commission (LRC), entered into a "cooperation agreement" with the City of Louisville. The opponents of Ballot Issue 2A claim this agreement solves all problems with an unelected urban renewal authority with a budget of up to $77 million over 25 years. In fact, the opponents have said that because of the existence of this agreement to cooperate, under which they claim the Council has "veto power" over the LRC, 2A is "redundant." This is one of those occasions when one side's argument proves too much. If in fact the agreement to cooperate effectively places the Council in charge of urban renewal and the $77 million, why on earth are the opponents fighting 2A so ardently? If the City Council under the cooperation agreement already is in control, then is there any reason not to vote "Yes" on 2A? Why on earth would developers contribute thousands of dollars to fight transfer of urban renewal powers (and the $77 million) to our elected City Council? The 2A opponents aren't saying, but silence is an answer, too. It turns out that the agreement falls far short of the kind of Council control that the 2A opponents are publicly claiming. As the Daily Camera pointed out, the agreement to cooperate is certainly an improvement over nothing, but it hardly answers the pressing concerns about an unelected quasi-public corporation in charge of $77 million. Unenforceability of the agreement to "cooperate." There is significant doubt about whether the cooperation agreement, which contains no termination provision, is even enforceable (prepare for legal citations). See, e.g., Dunbar Fraternal Order of Police v. City of Dunbar, 624 S.E.2d 586, 591 (W. Va. 2005) (“The City, however, complains that the [plaintiff’s] interpretation of the renegotiation clause results in the perpetual enforcement of the [collective bargaining agreement]. We are sympathetic to the City’s concern. . . . Because to read the [agreement] to create a perpetual contract from which the City can never extricate itself is absurd, we interpret [it] to terminate after a reasonable period of time regardless of whether a successor agreement is reached.”); Noah v. L. Daitch & Co., 192 N.Y.S.2d 380, 385 (Super. Ct. 1959) (“I[f] we assume, as the complaint now strictly reads, that there was no termination clause in the agreement, the rule to be applied would be that where there is no provision in a distributorship or supplier-agency contract as to termination, the supplier is nevertheless allowed to terminate but only after giving reasonable notice . . . .”) (citing A.S. Rampell, Inc. v. Hyster Co., 144 N.E.2d 371, 382 (N.Y. 1957)); see generally 10A McQuillen on Municipal Corporations § 29.100 (3d ed. 2007) (“If no definite term is fixed by the contract, either party may terminate it upon reasonable notice.”) (footnote omitted; emphasis supplied). But for this discussion let's assume it is enforceable—there are enough problems even then. Accountability. First, some background facts. The urban renewal district includes our commercial downtown. As noted, the LRC will have up to $77 million over 25 years. Never in the 125-year history of our city have we put policymaking power, let alone $77 million, in the hands of an unelected body. The LRC members have five-year terms (longer than a Council member's terms) and there are no term limits. No LRC member ever has to face election. As a result, even when such an appointed body is responsible for massive accounting problems and improper use of tax dollars, it cannot be held accountable by voters. It is crucial to remember that, as the cooperation agreement reminds us, the LRC is a "public body corporate and politic" with powers and responsibilities separate from and independent of the elected City Council. None of these facts are changed by the "cooperation agreement." The LRC and City Council can agree to cooperate as much as they want, but it does not change the fact that the LRC is unelected and the Council is. Paragraph 5.d. of the cooperation agreement gives the Council the right to approve or reject any redevelopment contract or other development contract described in the urban renewal plan. At first glance, that would appear to be an effective "check," since such contracts could contain significant cash or in-kind financial incentives to developers. But in the end it has significant problems. As Mayor Sisk has said, "Council is the one vested with the responsibility of making decisions based on the best interests of the citizens who elect it." The cooperation agreement leaves to the LRC the responsibility of deciding how to structure agreements with developers—how much in financial incentives, where buildings should go, whether developments need the use of private land available only through condemnation, and so on. It then gives the power to the Council to approve or veto the agreement reached between developer and LRC, but it leaves the Council with no power to structure the agreement itself or direct the independent-corporate LRC to proceed in a certain manner. That is as unsatisfactory as allowing one's child to propose how to spend her earnings but having no power to guide and direct those proposals. Is there a single compelling reason not to have our Council in control of these contracts? If there is, we haven't heard it. Ethics. The agreement to cooperate includes nothing about ethics. In fact, as the Camera noted, citizens are powerless to enforce the Louisville Code of Ethics against an LRC member. One 2A opponent during the CCTV 54 debate over 2A suggested that the unenforceability of the ethics code against LRC members was at most a theoretical problem for overly cynical citizens. Were that the truth. As was reported in the Camera, in April 2004, the month after he was appointed to the LRC, Michael Reis—with two business partners—purchased property in the Hwy 42 Revitalization Plan study area. Mr. Reis then voted in 2005 to expand the boundaries of the blight study and the urban renewal district such that his and his business partners' property was included. The LRC's own document says it is financially advantageous to own land inside the urban renewal district. Here is the LRC's Question-and-Answer document given to the public: Q. Does being in an urban renewal area affect my property values? A. It can affect your property values, and more often than not, in a positive way. Frequently, when an urban renewal area is designated, property values increase. This happens because many times private individuals begin to purchase land in anticipation of both future development and increased property values. It also happens because properties located within an urban renewal area are often perceived by the development community as valuable because of the availability of financial incentives which are not available outside the area. Whenever land and tens of millions of dollars are involved, citizens should demand an enforceable ethics code. This is what the second paragraph of the ordinance proposed by 2A does. Fiscal Responsibility. The agreement to cooperate contains three main provisions addressing money on which the 2A opponents rely. Paragraph 3 says the Council must review and approve the LRC's budget. Paragraph 5.a. says the Council must review and approve any proposed expenditure not previously approved in the budget. Paragraph 5.b. says that the LRC may not issue bonds or undertake "financial obligations" unless the Council has adopted a resolution determining that the city's interests "in connection with such bonds or other obligations are adequately protected." Budgetary approval of expenditures is a power that is only as meaningful as the budget being proposed. Judging from the last budget the LRC submitted for approval, the power over the expenditure of tax dollars can be illusory or non-existent. That budget contains two items totaling $40,000: $10,000 for "Legal Services"; $30,000 for "Professional Services—Contract Serv." WIth that kind of "specificity," it's no wonder the Camera was unimpressed with this supposed "check" on the LRC. Approval of non-budgeted expenditures is surely a wise check on the LRC. But it too can be meaningless. Suppose the LRC enters into an unbudgeted contract with a consultant on February 1 and payments are due on March 1 and June 1. When the LRC submits the non-budgeted bill from March 1 and June 1, does the Council have a choice—realistically—to disapprove payment of the bill? The question is not whether it's "cynical" to believe this might happen. The question is whether the requirement of Council approval of non-budgeted expenditures is, in fact, a real "check" on the LRC's expenditures. After all, it is not we who are claiming the cooperation agreement contains adequate checks; it is the 2A opponents who are making that claim. And it is the LRC and Council that decided to include these checks, and when they did so, no one claimed they were being "cynical" to impose these checks on the LRC. The question we pose is simply whether the checks imposed are actually effective. The requirement that the Council pass a resolution concluding that the city's interests "are adequately protected" is no more meaningful than if it passed a resolution concluding that the LRC is an independent quasi-public corporation. The reason? State law specifically provides that URA bonds “shall not constitute an indebtedness of the state . . ., county, municipality, or public body . . . other than the [URA] issuing such bonds.” § 31-25-109(6). Accordingly, it would be difficult to imagine a circumstance under which the municipality’s “interests in connection with such bonds”—whatever those interests might be—would not be adequately protected. See also the cooperation agreement's Paragraph 12, which underscores the statutory separation of the LRC and the City, and the insulation of the latter from the former’s financing activities. Sales tax revenues are the lifeblood of Colorado municipalities. They pay for services like the library, recreation center and police. Section 1.f. of the ordinance proposed by 2A requires two kinds of analysis before such revenues can be diverted for use in the urban renewal district. Nothing in the cooperation agreement or current law requires such an analysis before the diversion of sales tax revenues for use in the urban renewal district. At the end of the day, an agreement to cooperate falls far short of the assurances of accountability, ethics and fiscal responsibility citizens demand and that we can secure by voting "Yes" on 2A. |
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