Ethics issue resurfaces as city agrees to release loan funds
A Recap and Analysis
That was when council first authorized construction to begin on a combined residential and commercial center that would incorporate facades of several historic buildings on “The Block,” the traditional business and cultural hub of Asheville’s black community. Smith’s “yes” vote – or the fact that he voted at all – raised eyebrows in some quarters because the designated overall project director was his brother-in-law, Chris Bauer, who works for WeaverCooke, the go-to construction company for many local developers.
At the time of the original vote, Smith asked whether his participation would constitute a conflict of interest, given his brother-in-law’s connection to the project. Interim city attorney Martha McGlohon assured him it would not and Smith voted accordingly.
(McGlohon is the widow of atty. Howard McGlohon, who was the law partner of former city councilor Gene Ellison. In a 2011 variance review by the Asheville Planning and Zoning Commission. Ellison, McGlohon’s estate and Eagle Market Street Development Company were listed as owners of the property on which Eagle Market Place is being built.)
In October of 2014 work on the building came to an abrupt halt when massive cracks appeared in recently poured concrete floors. The project, which was supposed to include 62 affordable housing units, languished for a full year while Mountain Housing Opportunities, the nonprofit that put together its financing, tried to collect damages from the subcontractors directly responsible for the faulty construction. One defendant, Raleigh-based engineering firm Designsynergy, has already settled out of court for $470,000, the amount of its project insurance policy. However, MHO has still not been able to collect from other responsible parties.
MHO said the only way it could manage to pay for the project’s completion, was to ask the city for an early payout of the loan moneys it had set aside. Otherwise, MHO said, the only course would be to ask the city outright for bailout money. Thus the city agreed at its November 10 meeting to pay a second construction company, D.H. Griffin Co., to demolish all the previous work at a cost of $584,000. The total repair cost has been set at $4 million and is projected to be completed in January.
And to help offset the additional repair costs, 32 of the 62 planned housing units have been taken out of the “deeply affordable” category and redesignated “workforce housing.” This move enraged affordable housing advocates and black community and business leaders, who consider it a betrayal of the city’s pledge to prioritize affordable housing.
Smith sits on the city’s Affordable Housing Commission. His vote in favor of the financing plan with its rider reducing the number of affordable units, besides drawing fire, refocused attention on his family connection with WeaverCooke.
“Is it illegal? No. Is it cronyism? Yes,” said Asheville resident and council watchdog Linda Brown on Facebook.
Under North Carolina General Statute 2.26.020, a conflict of interest only exists if a city councilor has “a substantial financial interest in an official action.” Thus, Smith seems not to have violated state law by voting for his brother-in-law’s appointment as superintendent of the Eagle Market Street construction. His critics maintain, however, that Smith had a moral, if not legal, obligation to recuse himself, and that such an obligation is even addressed in the city’s Code of Ethics for Mayors and Council Members.
That document defines “interest” as “direct or indirect pecuniary or material benefit … as the result of a contract or transaction which is or may be the subject of an official act or action by or with the City.” In that connection, the policy says, a councilor is deemed to have an interest in “Any person in his or her immediate household, including family members.”
The code is mute on the matter of extended family members. And it further states that, at any rate, “The fact that an interest … exists with respect to a particular matter does not necessarily mean that a conflict exists or that a Council member may not participate or vote in consideration of that matter.”
Smith’s asking the city attorney for a ruling on his eligibility to vote in 2013 conforms to the Code’s requirement that “a Council member shall be mindful of when he or she has an interest in a matter that may affect his or her ability to vote or participate in the consideration of the matter before the Council.”
The Code is not as specific as to matters of propriety, although it does enjoin members to “act with integrity and independence from improper influence … “ It also reads, “ … this Council will consider impropriety in terms of whether a reasonable person who is aware of all of the relevant facts and circumstances surrounding the Council member’s action would conclude that the action was inappropriate.”