As Nederland’s local government begins discussing issues of major impact to the electorate, it becomes all the more important for the rules of due process to be clarified. In recent months the Board of Trustees (BOT), Downtown Development Authority (NDDA), and Planning Commission (PC) have encountered concerns over the concept of “Conflict of Interest,” but the context of what the legal term means to Trustees and Commissioners is rather complex.

Conflict of Interest for local government officers is defined in three areas of the Colorado Revised Statutes. CRS 24-18-104-(1)(a) refers to the use of confidential information for personal benefit, stating that a local government official or employee shall not “disclose or use confidential information acquired in the course of his official duties in order to further substantially his personal financial interest.”

The statute defines financial interest as an ownership or loan interest in a business, a creditor interest in an insolvent business, an ownership interest in real or personal property, or an employment opportunity “for which negotiations have begun.”

Other statutes cover matters of government officials being restricted from accepting gifts, and from committing financial transactions with someone they directly supervise or inspect.

CRS 24-18-109-(2)(b) states that a local government official shall not “perform an official act directly and substantially affecting to its economic benefit a business or other undertaking in which he either has a substantial financial interest or is engaged as counsel, consultant, representative or agent.”

An “official act” is defined as being a vote, decision, recommendation, approval, disapproval, or any action or inaction that involves the use of discretionary authority, referring to the government official’s power to use their own discretion and judgment to make decisions impacting the implementation of existing laws.

CRS 31-4-404(2) states “any member of the governing body of any city or town who has a personal or private interest in any matter proposed or pending before the governing body shall disclose such interest to the governing body and shall not vote thereon, and shall refrain from attempting to influence the decisions of the other members of the governing body in voting on the matter.”

However, CRS 31-4-404(3) dictates that a member of the governing body could vote if their participation, in attendance and in action, was necessary to obtain a quorum.

Also, CRS 24-18-110 provides Trustees and Commissioners a defense against any civil or criminal action or any other sanction by them complying with voluntary disclosure provisions, which includes a written statement submitted to the Secretary of State that details the official’s amount of financial interest, their purpose for services rendered, as well as compensation to be received, and any other information “necessary to describe” the interest.

By following this statute, Trustees and Commissioners with a submitted conflict of interest can, at meetings when confronted by action on their conflict, state to the board their conflict and can choose whether to abstain from voting.

Additionally, CRS 18-8-308 of Colorado Criminal Code dictates that a public official who does not provide written notice of their conflict of interest to the Secretary of State within 72 hours of taking action (defined as “any substantial discretionary function in connection with a government contract or other pecuniary transaction”) on said conflict would be guilty of a Class II misdemeanor.

Town Attorney Rod McGowan of Fraser, Colorado, in a 2020 letter to Fraser Trustees interpreted “personal or private interest” as stated in CRS 31-4-404(2) to pertain to “personal financial interest” as defined in CRS 24-18-104-(1)(a). McGowan noted that “the mere fact that an official may be affected in some indirect, on-financial manner does not give rise to a conflict of interest.”

In the last two years in Nederland’s government, there have been three situations where officials abstained from voting due to a conflict of interest.

On May 17, 2022, then-Mayor Julian Taylor recused himself from a hearing involving a Special Review Use application from The Caribou Room, requesting use of their parking lot as an outdoor concert space. Taylor’s residence was located within the zone to be affected by noise from the outdoor concerts.

According to CRS, Taylor’s case did not represent a true conflict of interest. However, officials can abstain from voting if they believe they are unable to vote objectively on a matter that personally affects them.

On May 10, 2023, then-NDDA Chair Barbara Hardt abstained from voting on a request from The Caribou Village Shopping Center for $1,000 to promote their 4th Friday Art Walk event. Hardt and her husband own Brightwood Music in the shopping center.

Other members of the NDDA did not believe that Hardt’s case constituted a true conflict of interest. Trustee Tania Corvalan, BOT liaison to the NDDA, stated her belief that, as an independent vendor featured at the Nederland Farmers Market, she does not have a conflict of interest voting on matters involving the market because she holds no stake in the success of the market itself.

According to CRS, Hardt’s case is nearly a true conflict of interest, as Brightwood Music could have benefited from the advertising of the event at the shopping center. However, a benefit to Brightwood Music was not guaranteed and may not have been direct or substantial enough to be labeled a conflict of interest.

On September 27, 2023, Commissioner Christopher Rivera abstained from voting on a six-month moratorium on new Short Term Rental (STR) license applications. Rivera stated that the moratorium would affect him personally, considering that he may be thinking about applying for a license as a result of unforeseen circumstances in his private life.

If Rivera did not submit his potential conflict of interest with the Secretary of State 72 hours prior to the vote on September 27, then his decision to abstain from the vote was sound, according to CRS, as statutes could dictate that Rivera had a conflict retroactively. However, Rivera made the preemptive decision to abstain before ever applying for an STR license, so the claim could be made that a conflict did not exist on September 27, when the vote was made.

In all the aforementioned cases the public officials were not asked to divulge whether they had a conflict of interest, nor were they required to by CRS, but instead made the decision to do so based on their own moral beliefs or by defined Bylaws.

Nederland’s government officials are required to attend an orientation when taking office; also, special training sessions are often held by the Town Attorney and a representative of the Denver Regional Council of Governments (DRCOG). Both the orientation and training sessions cover matters of ex parte communication and conflicts of interest and how they pertain to the democratic process.

The Planning Commission engaged in such a training session on April 26, 2023, and the BOT, along with the Chairs and Vice Chairs of other organizations, were led through a session on August 29, 2023. Such sessions are to assure that a municipality’s officials are aware of how to assess whether they have a conflict, and how to act if they find themselves to be in conflict.

Attorney McGowan provided Fraser Trustees and Commissioners general guidelines to follow when navigating the “complicated” language involved with conflict of interest. He suggested that officials should “always disclose an actual or potential conflict of interest at the earliest possible time, preferably in writing to both the Secretary of State and the local governing body in accordance with CRS 24-18-110 and CRS 18-8-308,” and that officials should “not vote or take other action on a matter in which [one has] a conflict of interest, and do not attempt to influence other officials regarding such a matter.”

Mayor Pro-Tem Tom Mahowald told The Mountain-Ear that, having attended DRCOG Civic Academy, he felt it was important for all public officials to assess agenda items and decide whether they personally would benefit improperly from voting either on the item. They should also ask themselves if voting on the item would “pass the smell test,” referring to one’s own ethics as well as the social ethics of the community.

Despite Trustees and Commissioners being trained to understand the nuances involved in matters of conflict of interest, as impactful projects and proposals are being discussed and the attention of the public is drawn to them, these officials are being tasked with adhering to the checks and balances system of voicing their conflicts, and even abstaining from voting, much more often.

On September 5, 2023, during public comment on non-agenda items, Nederland resident Teresa Robertson accused Trustees of not adhering to CRS and not properly disclosing whether they have a conflict during action on items where Robertson believed conflict existed.

“I have a curiosity and concern about what the reference definition this BOT is using for the term conflict of interest, and more specifically what constitutes not having a conflict,” Robertson began.

“Over the past six months several BOT members stated that they did not have a conflict in the matter being discussed; each time I was surprised to hear that someone stated that they did not have a conflict. My surprise was because that member has a financial and/or business connection to that topic.

“I’m curious if BOT members are confusing the concept of neutrality with the concept of conflict of interest; that they are aspiring to remain neutral in the face of conflict of interest,” Robertson said.

Robertson quoted CRS, then continued to explain her interpretation. “To me, owning a business that would be affected by a BOT decision equals a conflict. Having a business arrangement or an alliance with someone who is bringing a matter for decision to the BOT is a conflict.”

“Given the importance of the work of the BOT, I think there should be a working formal definition of conflict of interest and that more BOT members should be recusing themselves from voting on matters in which they have a conflict.”

To properly file complaints of misconduct by public officials and violations of the code of ethics, a formal complaint can be filed with the Independent Ethics Commission (IEC) within 12 months of the alleged violation. Complaints must be submitted in writing to an IEC office in person, and are required to include specification of the violation, identification of the violated statute, name, address, job title, and email of the violator, and a signed statement by the complainant that the provided information is, to the best to their knowledge, true.

For more information go to: https://iec.colorado.gov/faq-filing-a-complaint

On August 15 and October 3, 2023, before the BOT discussed matters of STR regulations and a six-month moratorium on STR license applications, Mayor Billy Giblin asked Trustees to state whether they believed they had a conflict of interest, and whether they would choose to abstain from voting or recuse themselves from the discussion.

“It’s on each of us to decide whether or not we have a conflict of interest and whether or not we can vote fairly on an item, and that is an important thing for all of us to realize,” Giblin said on October 3.

“It seems like conflict of interest has been weaponized at times around town, online, and at these meetings. The reality is some of us are business owners in town,” Giblin continued, referring to some perceived “conflicts” as being beneficial for a representative government. “It’s unreasonable to expect them to recuse themselves for every decision because they were voted to be part of this board and make decisions.”

Owning and operating a business within Nederland while serving on a government board does not necessarily constitute a conflict of interest, even when pertaining to agenda items that directly involve the nature of a Trustee’s or Commissioner’s business, as long as the said business adheres to a Request for Proposal bidding process and is not chosen automatically as a result of government action.

“I’m not asking these questions of the board to put anyone on the spot, I’m doing this for the opposite reason, for being more transparent as a board and letting folks know where we stand personally with what we think we can do,” Giblin concluded.

Trustee Jesse Seavers specified that, though his wife owns an STR in Nederland, he felt that he did not have a conflict of interest. With the STR being in his wife’s name, Seavers’ claim that he has no conflict is in line with CRS, though it could be considered a gray area as his decision to continue to attend discussions is based on his own belief that he can vote objectively on matters that impact his wife’s, and therefore his household’s, finances.

On October 3 Seavers voted in favor of the six-month moratorium on STR license applications. Seavers and the BOT have yet to vote on new STR regulations, which are currently being drafted.

At the same meeting Mahowald voiced his approval for the proposal from TEENS, Inc. to lease town property at 750 West 5th Street for a new 6,000 square-foot, two-floor childcare facility. Mahowald lives in the impacted neighborhood and, despite his neighbors’ and wife’s objections to the plan, felt the Town’s needs for childcare outweighed these personal oppositions.

Despite Mahowald’s loose personal connection with the proposal, due to there being no direct or significant personal or financial gain for a vote either way, there is no conflict of interest according to CRS, hence no legal reason for Mahowald to state before the discussion that he lives in the impacted neighborhood, unless he personally felt compelled to do so.

In addition to public scrutiny, there have been recent incidents of public officials accusing one another of having a conflict of interest.

On August 9, 2023, the NDDA discussed using the organization’s $500,000 established line of credit to pay its bills and further their goals and projects. Board Member Scott Papich felt that such a proposal, in combination with the proposal that the NDDA lend money to businesses as an alternative to granting money, would result in a conflict of interest for current NDDA Chair Ron Mitchell, due to his owning many properties that are rented to businesses within the Central Business District (CBD), the organization’s jurisdiction.

Mitchell addressed Papich’s comment and stated that the exploitation of such proposals to grossly benefit a sole person or entity is what defines a true conflict. Mitchell added that, due to the nature of the NDDA and to its board members being involved either directly or indirectly with the CBD, every board member has a potential conflict and should submit that conflict to the Secretary of State.

On September 13, 2023, while discussing draft project evaluation criteria to be used for future proposals developed by Papich, Mitchell took issue with language within one of the suggested questions to be raised with applicants, which read: “we should objectively and proactively identify conflicts of interest; any proposed project that entails clear conflicts of interest, or even the appearance of such…”

Mitchell reiterated that the appearance of a conflict of interest was not any board member’s concern, nor for any one board member to judge. Though some government organizations have bylaws which allow for board members to call for other members to recuse themselves on the basis of a proven conflict of interest, none of Nederland’s boards or commissions have such bylaws.

According to CRS, and to NDDA Bylaws, Mitchell is correct that board members should not focus on the appearance of another member’s conflict, but should focus on assessing their own potential conflict when reviewing items on the agenda.

On the matter of Mitchell’s statement that every NDDA board member has a conflict because of the nature of the organization’s mission, NDDA Bylaws state the purpose of the authority as: “to halt and prevent deterioration of property values within its district and to assist in the development and redevelopment of its district and to use its power to promote the general welfare of the district by the use of its direct and supplemental powers.”

With many members of the NDDA board owning property or operating businesses within the CBD, and being voted onto the board as part of representative government and therefore having interests or relative experience in the CBD, the potential for conflict of interest arising within the authority is greater.

Because of this, officials should be more aware when assessing agenda items and should take preventive measures for avoidance of conflicts, such as submitting their conflict with the Secretary of State, so as to continue serving the organization’s best interests.

The NDDA Bylaws also specify that members should, if personally having determined that they have a conflict, “immediately inform those charged with approving the transaction on behalf of the Authority of their interest or position, aid the persons charged with making the decision by disclosing any material facts within their knowledge that bear on the advisability of such transaction from the standpoint of the Authority, and not be entitled to vote on the decision to enter into such transaction.”

Additionally, NDDA board members are expected to complete and submit a conflict of interest statement annually, which declares their potential conflicts of interest in regard to the organization’s mission.

As Trustees and Commissioners face bigger issues on their agendas and the community continues to participate and make their voices heard, the chances of “Conflict of Interest” being mentioned again are high. When a town’s officials and electorate understand the rules in play it assures that the machinery of local government runs justly and that the system of checks and balances is not abused.