Loading...
Minutes - Regular Meeting - 5/6/1997 May 6,1997 The Ethics Review Commission of the City of Round Rock, Texas met on Tuesday, May 6, 1997 at 7:00 p.m. in the City Council Chamber, 221 East Main Street. ROLL CALL: Those members present were Commissioners Dennis Graffious, G. Frederick Ort, Dr. J. R. Rogers, Gene Glaeser, and Donald Sanders. Larry Terrell was absent. Also present were Assistant City Manager/City Secretary Joanne Land and Special Counsel for the Ethics Review Commission Barney Knight. ADMINISTER OATH OF OFFICE: Each Commission member read and signed the appropriate Statement of Appointment and Oath of Office documents. ELECTION OF CHAIR: Commissioner Glaeser opened the floor for f.. nominations. Gene Glaeser as Chairman was nominated. MOTION: Commissioner Sanders moved that nomination cease and to appoint Gene Glaeser by acclamation. Commissioner Rogers seconded the motion. VOTE: Ayes: Commissioner Graffious Commissioner Ort Commissioner Rogers Commissioner Sanders Commissioner Glaeser Noes: None Absent: Commissioner Terrell ACTION: The motion carried unanimously. 1 ELECTION OF VICE-CHAIR: Chairman Glaeser opened the floor for nominations. Dr. J. R. Rogers was nominated. MOTION: Commissioner Sanders moved that nomination cease and to appoint Dr. J. R. Rogers as Vice-Chairman by acclamation. Commissioner Ort seconded the motion. VOTE: Ayes: Commissioner Graffious Commissioner Ort Commissioner Rogers Commissioner Sanders Commissioner Glaeser Noes: None i Absent: Commissioner Terrell ACTION: The motion carried unanimously APPROVAL OF MINUTES: April 17, 1995 Commissioner Graffious asked how many of the current Commissioners were present at the meeting. Commissioner Glaeser responded that Commissioners Rogers, Sanders and himself were present at that meeting. MOTION: Commissioner Rogers moved to approve the minutes as submitted. Commissioner Graffious seconded the motion. VOTE: Ayes: Commissioner Graffious Commissioner Ort r 2 Commissioner Rogers Commissioner Sanders Commissioner Glaeser Noes: None Absent: Commissioner Terrell ACTION: The motion carried unanimously. CONSIDER PRELIMINARY HEARING TO DETERMINE WHETHER OR NOT REASONABLE GROUNDS EXIST FOR THE COMMISSION TO HOLD A FINAL HEARING ON THE COMPLAINT FILED BY CLIFFORD L. HODGINS AGAINST ROD MORGAN. Chairman Glaeser went over the process to be followed. The Commission received a letter and a sworn complaint submitted in.the proper manner thus requiring a preliminary hearing of the Commission. Chairman Glaeser asked Clifford Hodgins, the individual who filed the complaint,to step forward and be sworn in by Joanne Land. Joanne Land: "Do you solemnly swear or affirm to tell the truth, the whole truth, and nothing but the truth, so help you God." Mr. Hodgins: "Yes, I do." Chairman Glaeser: "The Commission has the sworn complaint dated April 22, 1997 and the letter you attached. The letter says, 'The aforementioned ordinance states that no City official or employee shall intentionally or knowingly represent directly or indirectly any private person, group, or interest other than himself or family member before any department, agency, commission, or board of the City for pay or profit.' You 3 alleged here that, 'Councilman Rod Morgan clearly violated the above provision on C March 19, 1997 when he testified at a public hearing in the City of Round Rock Planning and Zoning Commission on behalf of a client, Barbara Forsythe, who he is representing and acting as a paid agent in the purchase, subdivision, construction and management of rental housing in the City of Round Rock. This conduct was contrary to the ordinance and contrary to the desires of many residents of Round Rock who expressed opposition to the application Councilman Morgan was paid to support rather than paying attention to the wishes of the constituents he supposedly represents! You went on to say, 'The plaintiff has video tape evidence and oral testimony he would share with the Ethics Commission in this matter.' I will allow you at this time to present what evidence or testimony that you would like to present to document what this letter states." Mr. Hodgins: "Thank you for taking the time to hear my complaint. Before I speak I was wondering if there was a possibility that we could view the video tape of the meeting or at least a portion where Mr. Morgan appears before the Planning and Zoning Commission. If the City does not have a copy,I have a copy of it here." Mr. Knight: "The Commission has that option if they need to in the process. The procedure for this first preliminary hearing is primarily for the Commission to hear a general narrative from you of what evidence you would present at a final hearing, if they have one. They dori t really decide the facts tonight. They decide if there is simply, based on your narrative and based on the Councilmembers narrative, if there is enough 4 information for'them to think there is reasonable grounds to believe a violation r occurred." Mr. Hodgins: "Right, okay I understand that,I just wanted to -" Mr. Knight: "If at the end of what they get through, if they decide they'd like to hear more they have that discretion." Mr. Hodgins: "Okay, it's just that most of my remarks reference the tape so it's kind of hard to visualize the tape if they haven t actually seen it but hopefully they will be able to have a look at it later on. I hope you don't mind if I refer to my notes as I speak, I am not a professional speaker or lawyer or anything. First off to make some clarifications, I am sure you are all faithful readers of the local paper here and there were more comments in there probably about the situation that we are going to hear tonight. First just for clarification, I do own the property next door that we were talking about at that meeting, I dont just live there. Mr. Morgan did state publicly in the newspaper that he claims the only reason I initiated this process was to embarrass him because I was opposed to the development of the lot next door." Chairman Glaeser: "Mr. Hodgins, if I could asked you, if we could just isolate our comments specifically to the meeting in question and your testimony about misbehavior or alleged misbehavior at that meeting." Mr. Hodgins: "Okay, at the meeting Mr. Morgan represented Mrs. Forsythe. He's claiming that engineer Steve Kallman did; however, Mr. Kallman did not speak at that meeting. Mr. Morgan did speak for a total of 9 minutes and 21 seconds actually, 50% longer than I did to talk to oppose the subject. Now if we go down about--the 5 section states that'no City official shall intentionally or knowingly represent directly or indirectly' and you have gone through that however it's quite clear and he admits that he did speak at the meeting. Now if we go to the City Code here and we refer to B. Definitions, I don't know if you have the applicable City Code before you, my contention is that he appeared not for himself but for pay or profit. Now the City Code does not specify what pay or profit is. I'm not alleging that someone gave him money outside the meeting, but if we look to the definitions in the City Code there are three that would be applicable here. This is Ordinance No. 2469 paragraph B. Definitions, subparagraph 3. Business Dealings: Any activity involving the exchange of economic benefits, subparagraph 6. Compensation: Any economic benefit received in return for labor, services, property, or investment, and subsection 7. Economic Benefit: Any money, real or personal property, purchase, sale, lease, contract, option, credit, loan, discount, service, or other tangible or intangible thing of value, whether similar or dissimilar to those enumerated. Now the developer did compensate Mr. Morgan for the brokering purchasing of the lot. He is also assisting in the ongoing construction process. His brother actually, I believe his brother, is the developer of the lot. But since I live next door, I've certainly seen his involvement in it and I've talked to him about it as well. Especially one weekend morning when they started a few hours before the Code allows. So my contention is that he's not, I don't want to say an innocent party, he's not a bystander to the process. He's integral to the purchase of the lot, having it subdivided, building the building, and although I dorft have any knowledge I suspect he will be providing 6 management services as well because its for rental units and that's part of his business. He provides management services to the rentals adjacent to that on the other side. So I believe there is an economic interest in there and that there is a business relationship at which is against the Code and that's my allegation." Chairman Glaeser: "I would like to ask a couple of points of clarification. What exactly is the property in question?" Mr. Hodgins: "It's a--I dor t know if you know the area around Double Creek Day Ranch, off—" Chairman Glaeser: "Is there an address?" Mr. Hodgins: "It was an empty lot, there's addresses, I think it's 1408 and 1410 Double Creek Drive. I believe those are going to be the addresses. One building is being built now, the other one hash t started construction so there is no numbers on the houses or anything like that." Chairman Glaeser: "You are at 1310 A Ray Berglund Boulevard?" Mr. Hodgins: "Yes,it's a corner lot on the corner of Double Creek Drive." Chairman Glaeser: "This property was being excavated, being prepared to be built upon?" Mr. Hodgins: "Well, now they are building. At the time of the meeting there was no building because the lot was not recorded. I believe that was the legal problem as to why they had to have that meeting. They had to actually--well plus to subdivide it before they could legally record it. Although Mr. Morgan could probably give you a _ better legal definition on what actually went on." 7 Chairman Glaeser: "The meeting before the Planning and Zoning Commission was to straighten out the record for this particular—" Mr. Hodgins: "It was an application for a subdivision and vote on the plat of the land." Chairman Glaeser: "If I heard you correctly you participated in that meeting." Mr. Hodgins: "Yes, I did." Chairman Glaeser: "What was the jest of your comment." Mr. Hodgins: "Oh, well myself and most of the surrounding property owners, resident property owners anyway, were opposed to the subdivision of the lot because in that area it's all--it's large lot residential but single family homes from 1 to 7 acres and 5 duplexes, four on 1/2 acres and one on 9/10 of an acre. This was a 1/z acre lot that they wanted to subdivide into two making quarter acre lots and we just felt it wasn't--a- -it asrit--a- -it didn't match up with the rest of the neighborhood. They evidently--according to the City Attorney, that it didri t really matter. They met all the Codes and they were legally entitled to subdivide that lot. Which I am now not disputing although we certainly weren't happy about it." Chairman Glaeser: "What did you view as Mr. Morgans participation in that meeting. Why would he speak before the Planning and Zoning Commission?" Mr. Hodgins: "Well, he alleges that we were not getting the facts straight, so he wanted to get the facts straight. And--a--he clearly--I mean he was not speaking, you know, as a representative of the public, he clearly said, 'My name is Rod Morgan from i 8 Landmark Realty.' Which is his company or who he works for, one or the other and he was there quote'representing Mrs. Forsythe'." Chairman Glaeser: "He said that during—" Mr. Hodgins: "I do have the quote here that's why I wanted the Commission to watch the video tape." Chairman Glaeser: "Would you like to read the quote?" Mr. Hodgins: "I'll try to find it--I though I had it." Chairman Glaeser: "Take your time." Mr. Hodgins: "I don't believe I actually wrote it as quoted, I'm sorry, I thought I had it, but it is on the tape. I watched it about 1/z an hour before I came to the meeting again. So—" Commissioner Graffious: "If I may ask that--paraphrasing back--what I heard you say that according to, at the meeting, your understanding is, that Mr. Morgan addressed the Commission as a representative of Landmark Realty." Mr. Hodgins: "For Mrs. Forsythe, his client, yes. I didn't know that --about these applicable--sections of the City Code at the time otherwise I would have said something then. I was researching another matter later because there was an insufficient notice given to the other neighbors about that meeting. I was checking that out when I came across this. I didn't know about it at the time of the meeting or I would have said something then." Chairman Glaeser: "Is there any other information at this point in time you would like to give to us." 9 ' Mr. Hodgins: "I don't believe so, other than the video." Chairman Glaeser: "Thank you. Any other questions?" The Commission had no questions but asked Mr. Hodgins to remain in case any questions arose. Chairman Glaeser asked Joanne Land to swear in Rod Morgan. Joanne Land: "Mr. Morgan, do you solemnly swear or affirm to tell the truth the whole truth, and nothing but the truth, so help you God." Councilman Morgan: "I do. Good evening Commissioners. I too appreciate you taking valuable time out of your schedules to come to this hearing. I would like to pass out some things that are very relevant to this hearing and totally dispel these false and frivolous accusations. What I have given you is relevant to this hearing. It is a copy of a contract whereby I assisted Mrs. Forsythe in purchasing the subject lot which was closed a couple of months before the hearing before the Planning and Zoning and a copy of the closing statement. On the contract it states very specifically that I represented the seller of the property, Mr. Watson. I was assisting--that is my business real estate, I've sold real estate in Round Rock for 21 years and that is what I do. That is how I make my living. The closing statement also specifically states that the brokerage fee of $600 was paid to me by the seller of the property,not by Mrs. Forsythe. There is also an e-mail from Mr. Hodgins that was sent to the seller of that property several months earlier and not, to my knowledge, until this complaint came up. I learned later that he had made a formal offer to the owner of that property and it 10 has quite a bit of non-factual information in there. He represents that he did research on the lot and he puts in his findings there. He was offering a price that was probably half of what the market value was and it was substantiated by totally false information. So he had tried to purchase this property himself. I was not aware of this. Also there is a copy of a fax that he sent to me the day after the P&Z hearing that I am not classifying as more harassment. It was to me from him with absolutely nothing on it. I appeared at the P&Z hearing because I learned that there was going to be some opposition to the mear subdivision of this lot and I didn't originally plan on coming. I have not been paid a penny by Mrs. Forsythe to represent her. It is true that Mr. Kallman s engineering firm represented Mrs. Forsythe. They were paid a fee to do that and Wayne Harter was there to represent her in the subdivision application and the formal platting of the lot because it was an unrecorded lot as that whole subdivision has been for 20 some odd years. So I--we learned that there was going to be some opposition and Mrs. Forsythe asked if I was going to go and I said well I'll be happy to attend that. I thought it was going to be pretty much a formality of the subdivision. It complied 100% with all subdivision rules and regulations and so I attended, and if you see the tape as Mr. Hodgins would like you to see and I would like you to see too, it's very revealing. I spoke after everyone had spoken and I had no intent to speak. If I was representing Mrs. Forsythe, I would have been one of the first people up to speak. I did speak longer than Mr. Hodgins because I was rebutting what 5 people said against the subdivision not just Mr. Hodgins and he is an immediate neighbor to the property. I did speak and 11 I will give you the exact quote because I have it. This is what he is basing his complaint l' on. I said that I was a broker representing Mrs. Forsythe. That is the normal terminology that I use in my business. The proper thing for me to have said was I was speaking on her behalf. Again, I have not been paid a fee to represent Mrs. Forsythe. What I was paid for, the sell of the lot, was done a couple of months before the hearing. Mrs. Forsythe selected my brother, Larry Morgan, as the builder because she had looked at a lot of builders for a couple to three months and after seeing his construction decided that that's who she wanted to build her duplex. She was subdividing the property because she didn't want to maintain a half acre. She wanted a quarter acre and that thought prompted the subdivision because she wouldn't mind having her daughter live next door to her as she presently does and that would be a good arrangement for the family. So that is why I spoke and again I'll reemphasize that I haven't been paid anything by Mrs. Forsythe. There is no--the construction that was to take place of the duplex was going to take place no matter what whether the lot was subdivided into two or whether she built on the 1/2 acre. It was going to happen anyway. So it had no bearings on any profit that I would receive. These false accusations about me managing the property and all that. That has never even been a discussion that has occurred with myself and Mrs. Forsythe. As a matter of fact in the paper Mr. Hodgins alleges that—" Chairman Glaeser: "Mr. Morgan if we would--let's keep—" Councilman Morgan: "Okay, I'll try to keep it to--I'm just trying to get to why there is so many inconsistency's here. " 12 Chairman Glaeser: "The paper is not a standard of authority for us." Councilman Morgan: "I agree with that--let's see--so again that is why I spoke at the hearing. There were quite a bit of things thrown out as fact. They were totally not fact, they were totally false and I just couldn't sit back there and have all these untruth's laying on the table and not rebut them. Time was of the essence with Mrs. Forsythe because she has a 1031 exchange she was doing and she stands to pay a tremendous amount of money in taxes if there is any delay so certainly we didn't want any delay. Is there any questions of-" Chairman Glaeser: "Yes, I have a few to reiterate. You are a real estate broker?" Councilman Morgan: "Yes, sir." Chairman Glaeser: "Do you have your own firm?" Councilman Morgan: "Yes, I own Landmark Properties." Chairman Glaeser: "Is your brother part of that company? Or is he—" Councilman Morgan: "No, none whatsoever. He has his own business and runs his own business." Chairman Glaeser: "What is the name of his company?" Councilman Morgan: "It's Larry Morgan Custom Builder and he is out of Georgetown and I would say pretty much all of his building activity is in that area except this custom duplex for Mrs. Forsythe." Chairman Glaeser: "So it's unusual for him to be building in the Round Rock area." 13 Councilman Morgan: "His market is Georgetown and he's certainly willing to do this for Mrs. Forsythe." Chairman Glaeser: "Have you ever brokered a property from Mrs. Forsythe?" Councilman Morgan: "No,never have." Chairman Glaeser: "Represented her in any other real estate?" Councilman Morgan: "None whatsoever. She has not paid me a dime for any services whatsoever." Chairman Glaeser: "Help me to understand the issue before the Planning and Zoning Commission. The issue was does this lot stay at a 1/2 acre or be subdivided into quarter acres. Is that correct?" Councilman Morgan: "Correct, that was the total issue. It was already zoned duplex." Chairman Glaeser: "So if it would have stayed at a 1/i acre tract it would have been one duplex?" Councilman Morgan: "Correct." Chairman Glaeser: "If it went to two tracts, it would be two duplexes?" Councilman Morgan: "Two duplexes." Chairman Glaeser: "What would be the amount of money that a builder would charge? What would be the difference between say building one duplex on a 1/z acre and building two duplexes on quarter acres?" Councilman Morgan: "As far as savings or-" 14 Chairman Glaeser: "What would be the construction cost versus the other?" Councilman Morgan: "Well, the cost of construction would be the same. I mean the amount of materials---the two by fours that you put in one is the same price that you put in the other." Chairman Glaeser: "But there would be two, right? There are two duplexes being built instead of one?" Councilman Morgan: "No, there is only one being built. There is only one duplex being built. The other lot is vacant and Mrs. Forsythe owns the other lot." Chairman Glaeser: "She owns a quarter acre. So she sold a half of the half acre?" Councilman Morgan: "No she owns both lots." Chairman Glaeser: "She owns both lots because she bought them from your client?" Councilman Morgan: "Yes, this was to be subdivided into two lots which far exceeded all requirements. The size of the lots far exceeded a typical duplex lot. As a matter of fact, it probably would have been cheaper to build on one lot as far as the construction or the development cost because there were several thousand dollars involved in the subdividing and platting process. Again, the desire to subdivide was that she could possibly build a duplex for her daughter. It's not that she would or will or--but that was the motivation." Chairman Glaeser: "It's late in the day,I don't catch all the facts." 15 Councilman Morgan: "I understand. I hope I'm clear in my statements." Chairman Glaeser: "I'm more clear on that—" Commissioner Rogers: "I'm getting there." Councilman Morgan: "Also, there are five duplexes that surround this one lot so it's completely--on three sides has duplexes. I would like to state, for the record, that two out of the five duplexes are owner occupied not the majority of them are owner occupied resident owners. That is not true." Commissioner Rogers: "Well, I think the direction that the Commission should take is the single accusation of--that you represented other than a family member for pay or profit. My question is--okay the land was sold prior to this P&Z meeting is that correct?" Councilman Morgan: "Yes,sir,that is correct." Commissioner Rogers: "And then--so there was no problem up to this point. Is that correct? All City codes have been met and it was sold?" Councilman Morgan: "It was a usual and typical real estate transaction and I was representing the seller and paid by the seller not Mrs. Forsythe." Commissioner Rogers: "Okay, and Mrs. Forsythe bought this property—" Councilman Morgan: "She--I assisted her in the purchase of the property. Yes, sir." Commissioner Rogers: "Went to the P&Z to request that this lot be subdivided. Is that correct?" 16 Councilman Morgan: "Yes, sir." Commissioner Rogers: "Then you said that you spoke at the latter part of the meeting." Councilman Morgan: "Yes." Commissioner Rogers: "Okay, and what were your comments? I mean who were you there to represent when you started to speak? That's my question?" Councilman Morgan: "Well, I was speaking on Mrs. Forsythe's behalf because of the statements that were similar to what you just heard earlier. About what was going on around it. They said that it was going to create drainage problems that was not true. Actually the builder is correcting some drainage problems." Commissioner Rogers: "But the point is--excuse me for interrupting--the point is you did speak on behalf of the Mrs. Forsythe, did you not?" Councilman Morgan: "Absolutely, I spoke on her behalf. I wasn't a paid agent for Mrs. Forsythe." Commissioner Rogers: "Okay, so my question to you, have you received any pay or profit or enumeration for set actions?" Councilman Morgan: "Absolutely have not." Commissioner Rogers: "Thank you." Mr. Knight: "Excuse me Mr. Morgan your--How long have you known Mrs. Forsythe?" Councilman Morgan: "We met probably a year and a half ago at the Board of Realtors, Williamson County Board of Realtors, here in Round Rock. She came in 17 requesting some information and I answered kind of some technical questions pertaining to a 1031 exchange. She was selling a duplex in Florida. She had moved from Florida and I gave her my card and said if you need any information or if you want me to refer you to someone who handles 1031 exchanges, I will be happy to and then she probably called me about a year later and said I appreciate your information I am selling my duplex in Florida and I'm going to need to reinvest that money to save about $30,000 in income tax. I said well I'll be most happy to. What do you want to do? She said well I'd like to look around and see if I can find a duplex to buy here. So we looked for several months and we didn't find exactly what she had in mind. We looked at another duplex that happens to be next door to this lot and the thought was maybe that owner might sell that duplex. Absentee owner, lives in San Francisco, and maybe he would want to sell it. He said he wouldn't want to sell it and she says well what about this lot next door. Do you think he would sell this lot? Maybe I will just build a duplex. I said well let me inquire and see. So I called him and he says well let me think about it. I will get back to you. Then he says what do you think the market value is? I said probably in it's present state $18-20,000. That's probably the market value. A lot of money still needs to be spent on making it a legal lot. Utilities were available but they weren't in front of the property. So he later said well I will go ahead and sell it for $20,000 and I said that's fine let me see if that is acceptable to Mrs. Forsythe. She said that's fine let's do it. Not a word has come up yet about subdividing this lot." 18 Mr. Knight: "You represented--no--you represented the---you had been representing Mrs. Forsythe in attempting to buy someplace and you represented--but you represented the seller of the lot to Mrs. Forsythe?" Councilman Morgan: "That's correct. I didn't have a choice because and this was fully disclosed and we--because I managed the duplex that he owned and I was his agent." Mr. Knight: "Is it your statement that you nor a company within--what your associated--has never had any business dealings with Mrs. Forsythe, except as what you've just described?" Councilman Morgan: "That's exactly right." Mr. Knight: "You, nor a company that you are associated with, has never received any fee, profit,nor enumeration from Mrs. Forsythe or any of her affiliates?" Councilman Morgan: "Not one dime." Mr. Knight: "Do you have any--have you been under any discussion or conversations with Mrs. Forsythe regarding prospects for business dealings in the future?" Councilman Morgan: "No,--now what do you mean by that?" Mr. Knight: "Well is--have you in the context of the last couple of months, as occurred allegedly some time back in March?" Councilman Morgan: "Oh,yes." 19 Mr. Knight: "Prior to this meeting that you were at and since, have you had any conversations with Mrs. Forsythe about her wanting to buy or invest in other properties or do development that would generate fees or profits for you." Councilman Morgan: "Well, we were running into major time problems and she had 180 days to reinvest this money or it becomes a taxable problem for her--tax problem --and so in dealing with the platting process with the City, dealing with the rainy weather that we've had she said we might have to go buy another property. I may have to go buy a house and rent or another duplex because she couldn't tolerate the tax yet. So yes we had discussions about another alternate -" Mr. Knight: "From your answer, do I understand it that if this project was successful she would have largely exhausted her funds for investment and she didn't anticipate building any or investing in any other projects?" Councilman Morgan: "That's exactly right because she would have to move all the funds into this property. She's already passed a time deadline where she could a-- you know her options were very limited." Mr. Knight: "Was there no--there was no tie in it and--I haven t had a chance in this brief time to read the Earnest Money Contract--was there no time between the Earnest Money Contract requiring the subdivision of the lot to be completed or had the Earnest Money Contract already closed? Did the purchase already close when you when spoke at the meeting?" Councilman Morgan: "Yes." 20 Mr. Knight: "One final question. Did you receive any fees, gratuities, funds, or whatever from your brother for putting her with Mrs. Forsythe to build a duplex?" Councilman Morgan: "I have not received any payment from my brother." Mr. Knight: "Do you anticipate any?" Councilman Morgan: "I anticipated, yes, but that was going to happen whether this lot was subdivided or not, the construction of the duplex." Mr. Knight: "I guess--let me--the issue here is you were going to get --you were going to be paid some type of fee, commission or whatever from your brother's company in relation to his building on this lot." Councilman Morgan: "Yes, sir" Mr. Knight: "One part of it or the other." Councilman Morgan: "Yes sir,for the 5 month process for custom building this duplex. Well, I shouldn't say five months. We hope like heck it's not five months. But that's typically what it would take." Mr. Knight: "So here you've got--the issue is you got the fee from the seller of the lot, honest as it may have been, and you are going to get a fee from your brother's company for the sale, the transaction, or whatever for the building and the selling of construction and so --but not from Mrs. Forsythe?" Councilman Morgan: "That's correct and Mrs. Forsythe is here if you wanted to ask her that question and the builder Larry Morgan is here too, if you want to ask that question." 21 Chairman Glaeser: "Any other questions at this time?" Commissioner Graffious: "I need to clarify a couple of things Councilman Morgan. If I understand you right, your representation at the time you were speaking on behalf of Mrs. Forsythe, you were also representing your brother's interest maybe not at the meeting but involved in all of this. In other words, your company, when you closed out on this,who was going to pay your fees?" Councilman Morgan: "The builder." Commissioner Graffious: "Okay,was that going to be over $500?" Councilman Morgan: "Yes." Commissioner Graffious: "Thank you." Chairman Glaeser: "You may be seated, thank you." Mr. Knight: "Mr. Chairman and members of the Board, the issue that you should base your decision on, your threshold decision here, whether there is reasonable grounds to believe a violation occurred, is to look at Section 2. d., page 4 of the ordinance. The issue you have to look at is at the wording very carefully. Representation directly or indirectly of any private person, group, or interest other than himself or a family member and remember himself or a family member where described. As I recall, it does not include a brother. That's husband,wife, or children." Commissioner Rogers: "Immediate family?" Mr. Knight: "Right, so—" Chairman Glaeser: "We had a discussion about that several years ago and clarified that." 22 Mr. Knight: "Yes, so as you move down through this, the section directly or indirectly represent any private person, group, or interest other than himself or a family member before a department, agency, etc. for pay or profit is what you need to look at. The issue you are facing is if you find there is reasonable grounds to believe that may have happened not that it did happen. If you find there is no grounds to believe that or basically that there is not any grounds to believe that's reasonable or possible it happened, then its appropriate to dismiss this complaint or make a finding of no need to pursue it further. If you find there's reasonable grounds to believe that's it's possible it did happen, then we go to the--then you have to go to the final hearing." Commissioner Graffious: "I have one more question. I would like to ask at the meeting you represented Mrs. Forsythe?" Councilman Morgan: "Well, I spoke on her behalf." Commissioner Graffious: "I'm sorry, spoke on her behalf." Councilman Morgan: "I think I made a mistake when I said I was representing her at the meeting in reviewing the tape." Chairman Glaeser: "At the meeting though your quote was you were representing—" Councilman Morgan: "That is my exact quote. I said I was a broker my company is Landmark Properties representing Mrs. Forsythe. That's my standard terminology and—" Commissioner Graffious: "I need to try and understand a little about why Mrs. Forsythe would have asked you to represent her, excuse me, asked that you speak 23 concerning the matters. What do you feel was Mrs. Forsythe reasoning for that? Also, did I hear you say that Mrs. Forsythe was also here?" Councilman Morgan: "Yes, she is here and my answer to that question is she didn't ask me to speak. I spoke on my own initiative. I just couldn't tolerate anymore comments that were being made that were not factual." Commissioner Graffious: "Okay, so you were not asked to speak?" Councilman Morgan: "No." Commissioner Sanders: "Did you have a intermediary agreement in this situation or did—" Councilman Morgan: "No, I was not an intermediary. I strictly represented the seller of the lot and it states that in the contract." Chairman Glaeser: "I believe you stated earlier that Mrs. Forsythe asked you specifically if you were attending." Councilman Morgan: "She asked me if I was going to be coming and--there was not a whole lot of concern until I learned that there was a bunch of opposition to this and I didn't quite understand what the reasoning was for the opposition when everything was totally complied to in all City ordinance rules, subdivision rules, regulations, and the zoning was in place. It was not a zoning issue and the neighbors speaking against it live in duplexes adjoining the property and their duplexes are not any further apart than what the other duplexes are. What these are going to be they are very deep lots because they have septic tank fields in the back. That's why they are on half acre or acre lots but the frontage is together." 24 Chairman Glaeser: "Did Larry Morgan ask if you were going to be at the meeting or request your attendance?" Councilman Morgan: "No." Chairman Glaeser: "Were you planning on attending the meeting before Mrs. Forsythe spoke to you?" Councilman Morgan: "I wasn't planning on attending the meeting until I heard that there was opposition to it and it was very critical that the approval take place on this if she was going to do what she wanted to do. Her desire was to subdivide the property and--she had already invested several thousand dollars in doing that." Chairman Glaeser: "Were you planning on attending the meeting before she asked if you were?" Councilman Morgan: "I didn't see any need to. It was a normal and usual subdivision of a lot. It wasn't any major concern whatsoever." Chairman Glaeser: "Thank you. Has everybody had a chance to look at the closing statement, the closing document for the property. Are there any questions about the way the ordinance reads or questions about relationships? The question then before us is, do we feel from the evidence that has been presented thus far, do we feel like there is a need for a second meeting. Or what questions might you have that we would need to answer among ourselves to come to a conclusion. Chairman Glaeser: "I would like to ask a couple of questions. In the ordinance it talks about intangible things of value under B.7. Economic Benefit on page 2. I would 25 like Mr. Knight to comment on the definition of economic benefit and how it might apply to this situation." Mr. Knight : "It appears this definition was written in a manner to try to get the broadest possible economic benefit. The things we would think about in the nature of intangible is put in the vernacular. Could you score some points with somebody that would turn into gold later? In short, good public relations issues are going to turn into business of doing things. It's going to make money for successful people. It's not always dollars and cents, or something you can put your hands on. It's very broadly written. The issue here in getting this down to the tightest thing that you can look at. It's probably based on what we have heard regardless of the statement of "represent Mrs. Forsythe" if we take, I don't think it's unreasonable to take Councilman Morgan as the fact that he misstated it and he wasn't in fact legally representing her at that immediate point in time, but if you look at the circumstance and determine from that paragraph, determine that specifically, was Councilman Morgan representing any interest other than his own personal interest, wife or child for pay or profit? That doesn t have to be Mrs. Forsythe interest or any interest other than his own personal homestead interest for pay or profit. I think that is about as broad as that section goes, short of this transaction was he was going to attain some economic benefit?" Commissioner Rogers: "That means at the time of the P&Z meeting through future. Is that correct?" Mr. Knight: "Yes, from that appearance. That either closing or making sure the deal is closed, stays closed or something in the testimony that would not undo 26 anything but from that point forward. Was he making sure this was a done deal and going to be okay. Was there going to be any possibility of economic gain, pay, or benefit out of representation at that meeting?" Commissioner Rogers: "Correct me if I'm wrong but on that the land was sold prior to that meeting? Was that - it was a closed deal, was it not? Mrs. Forsythe properly, legally owned the property at that time. The only question was about the subdivision of the said lot into two sections. And so, the question arises did Councilman Morgan represent someone else for pay or profit? Am I correct? Now earlier you asked him point blank if he received pay or profit from it and he said no. You then asked some other questions and I got a glint that he was going to be--receive some monetary gain from whom now? I missed that it was from the builder." Mr. Knight: "The brother's company." Commissioner Rogers: "Okay, and he said that was going to happen anyway or something well, I dont understand that part. So there was going to be a house built on this thing whether they subdivided it or not. Is that correct?" Mr. Knight: "I think the testimony was potentially if the lot was not subdivided they are going to build a one duplex and right now if the lot was subdivided into two lots they were still going to build one duplex just have a lot left in the future. Chairman Glaeser: "However, there was one contingency from my understanding, that if the approval for the subdividing, the approval for the lot, didn't go through that there would possibly have to be an investment in something else. So it 27 was very critical at this meeting, that everything went through so that Larry Morgan could build a duplex and for Mrs. Forsythe to invest her money in that if not then she would have to invest her money in another property for tax advantages and perhaps have not used Councilman Morgans services---Larry Morgan. Is that correct?" Mr. Knight: "You have that possibility." Commissioner Sanders: "We have a condition here in the contract that the sale was contingent on zoning, city services, building permit, yet they went ahead and closed in February and didri t have the hearing until March. So being a realtor he had sort of an obligation to appear and try to pursue that but contractually it's already a dead issue. Because the contract was based on that contingency, which we all put in our contracts, but yet Mrs. Forsythe closed because I assume she had to to get a permit application and had to own the property." Commissioner Rogers: "That's what I'm saying, it was a done deal, closed, sealed and delivered." Commissioner Sanders: "It was really a done deal except for the continuance of—" Commissioner Rogers: "Even in the Earnest Money Contract when you close on a piece of property you're closed. That's done you can't go back and say wait a minute in the earnest money contract I wanted this but when you close you've already settled all these problems and it's a final and done deal." Commissioner Sanders: "You waived your right, when you closed. Also, I do not see another broker's name or anything on this contract, Earnest Money offer, 28 therefore, I think Councilman Morgan represented both parties, that's why I asked the question about intermediary because we have real problems with that." Chairman Glaeser: "What my understanding was, without knowing that much about real estate, was that she had contacted him and he was searching for property on her behalf." Commissioner Sanders: "This is an ideal situation when you can get the parties together. It's quite common." Chairman Glaeser: "That is proven out and shown consistently with this document." Commissioner Rogers: "Does any Commissioner see where Councilman Morgan wouldri t receive pay or profit out of this? Maybe I'm missing something. Anybody picked out that he has received pay or profit or going to from this." Chairman Glaeser: "I think there certainly some intangible benefits from this transaction in just—" Commissioner Ort: "From the transactions or from the attendance at the meeting?" Chairman Glaeser: "From the transaction, from the relationship, and from the attendance at the meeting I see—" Commissioner Ort: "Attendance at the meeting he issued—" Chairman Glaeser: '.'I see the word intangible, as Mr. Knight also was defining it for us, seems to state that building a business relationship with the person. Growing business often times are dealing with people, doing things for people knowing that later 29 on there may be some benefit from that. It would seem that we have a broker who was representing two people, a buyer and a seller, and putting those two people together did receive a profit but not from Mrs. Forsythe. We do have testimony from Councilman Morgan that there was discussion about the buying of other property again. The payment would not be from Mrs. Forsythe. The payment would be from the seller, however, because of the relationship that was forming a business relationship, there was going to be economic benefit along the way and possibly economic also in coming, and representing before the Planning and Zoning Commission. Councilman Morgan more or less told us that he saw a need to attend the meeting and speak. Again, there being a relationship there, a business relationship, a property in which he was involved, a property in which a brother of his was involved in building, which he was going to receive monetary gain of that transaction. There seems to be a lot of business sense for him to have attended that meeting and to represent her." Mr. Knight: "I think I may--we need to--several years ago it appeared this one section regarding this pay or profit thing was stuck on as an after thought at the end. And that does not mean it's not a section, piece of this, and a firm piece of that. In pay or profit, as the complainant testified to start off with, stated his opinion looking at it as it is not defined. We cant--we should not necessarily consider the pay or profit as saying the same thing as economic benefit. If you use defined terms, use the defined terms. If you use another term, it may mean something else. We have to put our own definition on it. We all know what pay or profit is out there in the big world. It's either you are going to make some kind of profit, decide if that money is profit only, or for 30 pay something we all work for at one time or another. I guess the point is -- this does not have to be--I dor t think you can necessarily attach economic benefit. That definition puts a broader meaning on this paragraph. The issue is you go in--and I think the clearest, hardest look your going take as you go in and represent somebody in a transaction and your getting a benefit, getting a small fee, the sale of the deal. Your getting a fee from the builder that's going to build the transaction on it and the question is would you have been at this meeting for friendship or would you have been at this meeting because this was a truly needy constituent that needed somebody to come down and help them through the process?" Commissioner Rogers: "And was the business transaction finished?" Mr. Knight: "And that is the ultimate issue. Was he there--was it in the course of business and where were these funds coming from regardless because part of that paragraph says representing on an interest. It doesn't have to be Mrs. Forsythe, it doesn't have to be the brother,it's an interest for pay or profit or profit motive gain." Commissioner Rogers: "Private person, group, or interest other than himself or immediate family member." Mr. Knight: "And I think that's about as broad as you are going to get to go with this paragraph. Pay or profit from representation of an interest." MOTION: Chairman Glaeser said, "Sensing the conversation and the reticence of the Commission I would like to move that we have a second hearing on this matter." Commissioner Graffious seconded the motion. 31 VOTE: Ayes: Commissioner Graffious Commissioner Ort Commissioner Rogers Commissioner Sanders Commissioner Glaeser Noes: None Absent: Commissioner Terrell ACTION: The motion carried unanimously. Chairman Glaeser emphasized that the Commission could not discuss this in any form or fashion between this meeting and the final meeting to be scheduled. The Commission was mandated under the ordinance to set the final hearing within thirty days and to hold that hearing within the thirty days. MOTION: Commissioner Graffious moved to have the final hearing on Monday June 2, 1997 at 7:00 p.m. in the Council Chamber. Commissioner Rogers seconded the motion. VOTE: Ayes: Commissioner Graffious Commissioner Ort Commissioner Rogers Commissioner Sanders Commissioner Glaeser Noes: None 32 Absent: Commissioner Terrell ACTION: The motion carried unanimously. The Commission received as part of the record, an Earnest Money Contract for unimproved property between Mike Watson and Barbara Forsythe. The broker on record is. Landmark Properties. The contract itself, the closing statement dated February 4, 1997 for that property signed by Barbara Forsythe and a fax cover sheet to Rod Morgan from Clifford Hodgins. The Commission asked Mr. Knight to continue to pursue information that would help them on what seem to be some of the key issues. Any evidence or statements that would help to understand if Councilman Morgan intentionally or knowingly represented Barbara Forsythe directly or indirectly; if there is a distinction between representation and the recital of facts as known and understood by who ever is making the mistake; and some definition perhaps, in writing, of definition number. 7. Economic Benefit. The Commission asked both parties involved to make themselves readily accessible to Mr. Knight as a representative of the Commission. Both parties agreed. Mr. Knight then made the following statement. "Commissioners I deal with the Chair occasionally talk to him about procedures, stuff like that, but again, I will not turn any of this information in or forward it to anyone until the meeting starts. You will have it available so that we dont have the appearance of anybody tempted to it and I suggest to you if anybody tends to, not that they will, but at times people call on you, citizens will call, and try to get you to hang them high kind of theory in this business. 33 You should immediately report it to Mrs. Land if you are contacted by anyone trying to influence you in anyway on this issue." Chairman Glaeser asked that a review of the Ethics Ordinance be placed on the June 2nd agenda. There being no further business, the meeting adjourned at 8:20p.m. Respectfully submitted, Christine Martinez Assistant City Secretary i 34