City attorney reviews conflicts on council

After the Wadena City Council received opinions from its city attorney about possible conflicts of interest among council members, it asked for a written policy and procedure for dealing with possible conflicts in the future.

City attorney Jeff Pederson addressed conflicts of interest questions among council members at the Dec. 11 council meeting.

"The whole conflict issue arises because the citizens have a right to understand and believe that the decisions being made here are being made in an unbiased basis for the right reasons," Pederson said.

These questions have come up, in part, because Wadena is a small town.

And because Wadena is a small town, "these kinds of things are going to come up," he said. "And you as a council have got to have figured out how you're going to deal with them."

On one hand, we need to recognize that council members may be and probably should be involved in things other than just city government, Pederson said. On the other hand, he added, the council needs to be responsive and recognize that it has an obligation to make sure that the citizens can count on fair and neutral decisions.

"You'll always have a personal interest in almost every decision," Pederson said. "A personal decision, a personal belief. If you didn't, something would be wrong. The question becomes, when does it become enough of a personal interest that the law prohibits it."

Pederson was asked to investigate three situations involving council members. He used information from a League of Minnesota Cities handbook on conflicts of interest and statute for his findings.

Two of the situations involve contracts and have to do with the city's health insurance. There isn't an outright ban of financial gain for matters dealing with group health insurance, Pederson said.

He outlined his findings for the two contractual situations.

The first situation involves Mayor Wayne Wolden being a part of the National Joint Powers Alliance board of directors. That is a paid position, although NJPA is a non-profit organization.

In looking at health insurance, the city council could look at NJPA and Wolden is technically an employee, Pederson said. But he doesn't have any ownership or bonuses based on what is produced or supervise anyone.

"Being an employee doesn't necessarily bar the city from entering into a contract with the NJPA," Pederson said.

But, it is advisable for Wolden to remove himself from discussions about health insurance at city council meetings, he said.

The second contractual situation involves councilman Toby Pierce being part of Toby Pierce and Associates, the firm that sells health insurance to the city of Wadena. This contract existed before Pierce became a councilman.

Pederson said as long as a contract was in place before and Pierce is not the agent in charge of the account, it is OK. Pederson pointed out that there is a financial interest that exists with commission, he said. There aren't any problems until the city is in the process of entering into or contracting in some way with Toby Pierce and Associates.

If and when that happens, there are controls in place for the situation. Pederson listed those controls.

Beyond Pierce abstaining from discussions about health insurance, the council must approve the contract by unanimous vote, the council must pass a resolution setting out the essential facts such as the nature of the officer's interests, items or services provided and a statement saying the price is as low or lower than could be found elsewhere, Pederson said. And then, before it's paid, he said, the officer must file an affidavit saying his name, itemizing services, stating his interest in the services and more.

"Right now this isn't an issue," Pederson said.

But, as the city goes forward with looking into health insurance premiums these steps will need to be followed, he said.

The third case Pederson looked at was councilwoman Kay Browne and her involvement with Partners for a Healthy Wadena Region and the Depot.

There is no contract involving Partners or the Depot, he said. In discussing the matter with Browne and others, Pederson said he is confident there is no financial interest.

It is well known that Browne is very involved with the Depot project, Pederson said, and she feels her interests are in the public's interests. He found this to be true.

"I cannot tell you that the role you are taking on with the Partners is inconsistent with your role as a council member to the extent that I would tell you that you're prohibited from participating in discussions or votes in matters having to do with the Depot," Pederson said.

However, Pederson quoted a statement from the League of Minnesota Cities manual: "It is important to remember that the appearance of impropriety or of a conflict of interest can also be damaging to a council member's image and the city's reputation even if the act is not specifically prohibited by law."

A lot of consideration has to be given to how this matter looks in public, he said.

Pederson outlined possible ways for the council to handle future conflicts.

If a council member wonders what to do with a possible conflict, he or she should tell Pederson and disclose it to the council, he said. Also, he said not to vote or take any official action on something. The person shouldn't influence others by discussing something and could even leave the room, he said.

"You just need to be alert, you need to be thinking about the possibility of these conflicts," he said.

If someone decides to go against advice and discuss and vote on something deemed a conflict, decisions and contracts could be voided, Pederson said.

The council told Pederson it would like him to go further and have a written policy and procedure for how to deal with conflicts of interest.