The Nederland Downtown Development Authority (NDDA) met on Wednesday, August 9, 2023, at 6 p.m. to discuss the potential of board members being permitted to vote by proxy on action items, or discussion-turned-action items, when they are absent from meetings.

NDDA Chair Ron Mitchell presented the only action item on the agenda concerning the prospect of the board meeting twice monthly, on the second and fourth Tuesdays of the month.

Mitchell moved to increase the frequency of meetings to the second and fourth Tuesdays before board members discussed the item and before any attending public were allowed to comment. Board members did not second the motion and opted for further discussion.

Board member Barbara Hardt stated her belief that a second meeting was not necessary and noted that items during scheduled “work sessions” can only be discussed, not voted on. A majority of NDDA board members agreed with Hardt and added that the organization’s subcommittees could be more focused in their initiatives and reports in order for regular meetings to run more efficiently.

Treasurer Steve Rowntree recommended scheduling a meeting as a placeholder, in the event that the NDDA require a special meeting to continue a discussion or vote on a more urgent issue. Many board members agreed with Rowntree’s suggestion, though Board Member Scott Papich expressed his concern that the placeholder meeting would eventually lead to the board always meeting twice a month.

Ultimately the board decided that, since they have rarely experienced a situation where a special meeting was required and could not be easily scheduled and attended, their scheduling process for regular meetings was left unchanged.

Town Administrator Dr. Miranda Fisher led a discussion about any questions or recommendations that the NDDA may have concerning the Board of Trustees (BOT) Strategic Plan for 2023 and 2024. The document is aimed at prioritizing a timeline for a “year of stabilization” during which projects can be completed, studies can be conducted, plans can be drafted, and new revenue sources can be identified.

Vice Chair Andrew Dewart noted that he would like to see more in the Strategic Plan about providing benefits for Nederland’s municipal employees.

Other than Dewart, board members had few suggestions for additions to the goal-oriented document and stated a belief that the document could serve as a useful tool to assist the NDDA in achieving goals that mutually align with those of the Town.

Mitchell led the NDDA in a discussion in which he proposed amending the board’s bylaws to allow absent board members the ability to vote on action items by proxy. Mitchell explained that the proxy vote could be conducted by board members either granting general proxy to any other board member to vote for them, or by “a specific proxy for an affirmative or negative vote on any issue for a vote given by the board member to the proxy holder.”

Board members each provided their opinion on the prospect that discussion on an item can potentially influence an individual board member’s vote.

Mitchell stated his belief that members should know how they are going to vote ahead of any additional discussion on an action item on the agenda. Most other board members felt that the discussion of an action item was necessary to making an informed decision and that the concept of a proxy vote was unnecessary considering board members take an oath of responsibility to attend meetings and maintain quorum.

The next discussion item involved a proposal by NDDA Chair Mitchell to use the organization’s $500,000 established line of credit to pay its bills and, according to the agenda information memorandum (AIM) prepared by Mitchell, develop the board’s status as an “independent agency.” The proposal also specified that the NDDA borrow from its own line of credit for major projects rather than be “dependent upon Town.”

Some board members agreed that credit takes time to establish and that the NDDA should not wait until they need the credit to use it, while those opposed felt a specific project or plan was required before the board should decide whether to use its established credit.

There was also confusion about the AIM including two different prospects under one discussion item, referring to the prospect of using the credit to pay the organization’s monthly bills and using the credit to “further the goals and projects of the NDDA.”

Papich expressed that he felt the proposal of leveraging credit for the benefit of the NDDA, in combination with the NDDA potentially becoming a money lender to local businesses, would result in a conflict of interest for Chair Mitchell.

“When we’re talking about borrowing money and lending money at the same time to businesses with you being the biggest property owner in town, and also being the chairman of this team, I think it creates the appearance of a significant conflict of interest. If it’s not for a specific purpose I am unable to support this,” Papich said.

After the discussion Mitchell addressed Papich’s comment, stating his belief that a conflict of interest is more than its definition and is only a true conflict when its use is exploited for the benefit of a sole person or entity.

“Everyone in the NDDA has a conflict of interest,” Mitchell said. “The use of a conflict of interest is what counts.

“I’ve been studying this propensively, including Supreme Court cases, where the conflict of interest arises and what the consequences are is that if somebody abuses a conflict of interest, or creates far more benefit to themselves by doing so, then there’s a problem. I’m very conscious of that.

“I don’t think I have any conflict of interest in working on parking problems throughout the rest of the town even though much of my property borders where there are parking problems.

“I would recommend that every board member file a statement with the Secretary of State that you have a conflict of interest. And everyone should do it because everybody either lives in town, lives in the district, has a business in town, or qualifies under the statute to be on this board.

Mitchell, after proclaiming that those board members opposed to his initiative to use NDDA’s established line of credit were misunderstanding the methods he was suggesting, stated that a special meeting had been scheduled during which Mitchell would provide a banker to attend and better explain to board members his AIM.

Board members expressed not knowing about the special meeting. NDDA Executive Director Kate Masingale stated that the official notice of the special meeting would be posted on Thursday, August 10, 2023, with Mitchell’s special meeting being scheduled for Friday, August 11, 2023, at 2 p.m.

During the one hour informational meeting on August 11, Mitchell, Dewart, and Rowntree had the opportunity to hear from Troy Bernberg, Managing Director for an investment bank based out of Minneapolis, and ask him questions pertaining to the organization’s line of credit. Bernberg has worked in public finance for 20 years and has specialized in working with urban renewable organizations and downtown development authorities, including in Englewood and Eagle.

Bernberg discussed how the NDDA could become more of a lender by instituting loan services for special event organizers, and how a line of credit could potentially be used as contributions towards certain projects.

However, because the NDDA has a mill levy and because a provision in their statute dictates that any amount the organization borrows is subject to a debt limit set by the Taxpayer’s Bill of Rights (TABOR), the NDDA are slightly restricted in what type of projects they can fully fund by using its $500,000 line of credit.

Bernberg agreed with Mitchell’s assertion that a line of credit could be used to pay for the board’s monthly bills, considering it would be classified as an operational expense.

But the NDDA is prohibited from independently using a line of credit for expensive and long-term capital improvement plans, or for projects that specifically create revenue for the NDDA, such as a hypothetical sanitation district or parking system proposed by Mitchell, without Town approval and without the contribution being but a portion of the full funds required for a collaborative project with the Town.

Mitchell was advised that the nature of the project is what is important when considering when to use a line of credit. Bernberg added that a line of credit can be used to advance public benefit related to a specific project as long as that financial contribution is an immediate need to get said project over the finish line.

Bernberg concluded by suggesting that the NDDA engage the developer community by championing projects that interest them, using Englewood’s workforce housing initiative as an example, and advised that the organization focus on contributing the final phase of funding on projects that have already been initiated by partnered entities, such as the Town of Nederland.

The Nederland Downtown Development Authority meets the second Wednesday of every month. Their next meeting is scheduled for Wednesday, September 13, 2023, and will be held online as well as in person at the Nederland Community Center.

For more information go to: https:// townofnederland.colorado. gov/downtown-development-authority