Council's FTTH-related conflicts of interest
Original post made by Jeff Hoel, Midtown, on Mar 8, 2007
At City Council's March 5th meeting, before Council considered a matter pertaining to citywide municipal FTTH, here's what happened:
Council Member Kleinberg chose to recuse herself, as usual, in spite of the fact that she doesn't legally have to recuse, to avoid even the appearance of a conflict. She owns Google stock, which she thinks is somehow relevant, and she works for JVSV, which is peddling wireless, which she thinks is relevant.
Council Member Mossar said she had recently been advised by the City Attorney that she didn't really have a conflict of interest, but since over the years she had recused herself re muni FTTH because she thought she did have a conflict, she didn't know anything about the issue, so she wanted to recuse for that reason. (Is that a good reason? When the FTTH-related issue next returns to Council, will it still be a good reason?)
Council Member Morton did not immediately recuse himself. Rather, he sat through staff's presentation, but then said that although the City Attorney had advised him that he didn't have to recuse, he was getting the feeling that maybe recusing would be a good idea, because he did own stock in the telecom incumbents, and surely the telecom incumbents would become relevant to the FTTH project sooner or later. (Normally, if you recuse, you leave the room before Council starts to hear the item.)
The trouble with recusing when you don't really have to recuse is that whenever Council needs 5 votes regardless of how many recusals there are (e.g., whenever the vote is about a resolution or an ordinance or a contract, etc.) EACH RECUSAL COUNTS AS IF IT WERE A NO VOTE. (Worse, whenever Council needs 6 votes regardless of how many recusals there are, e.g., whenever the vote is about a budget amendment ordinance, each recusal counts as if it were a no vote.)
In other words, if you accept that the telecom incumbents oppose citywide muni FTTH, Council members who recuse because they own stock in the telecom incumbents are actually VOTING IN THEIR FINANCIAL INTEREST -- the very thing that recusing is supposed to prevent.
I think this is outrageous. What do others think?
I have tried to address this issue privately, with no success. Council Member Mossar did not reply to my email message. (Publicly, she has stated that her conflict stems from a relative's trust fund, over which she has no control; but she hasn't said she had made her divestiture wishes known to the trustee and/or relative.) During the 2005 Council campaign, Council Member Morton said he'd think about divesting his telecom stocks, but he hasn't yet divested. Council Member Kleinberg confirmed that she thinks she's doing the right thing.
There is a state law to the effect that a person who works for a company that does substantial business with a municipality can't serve on that municipality's City Council, unless the company is a non-profit. In fact, that law was changed in 2004 to allow LaDoris Cordell to serve on the Palo Alto City Council in spite of the fact that she worked for Stanford, which did substantial business with the city and was technically not a non-profit. The change in effect said Stanford was close enough to being a non-profit.
There ought to be a law to the effect that a person who has a significant financial interest in a first-mile telecom company can't serve on a City Council. Such an interest might affect a Council member's ability to serve, not only with respect to the FTTH issue, but also issues like the Utility Users Tax (UUT) and the "100-year" electric/phone/cable undergrounding program.
Failing that, there ought to be a community consensus that it just isn't done.
From now on, I plan to oppose and not vote for any and all candidates for City Council who have significant financial interests in first-mile telecom companies. Of course, that won't prevent a Council member, once elected, from acquiring such an interest.