Revitalization Commission Agenda and Packet 2011 01 10

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Ethics hies are the foundation of good government. Louisville has adopted its own (ode of Ethics, which is found in the City Char- ter and which applies to elected offidals, public body members, and employees. The Louisville Code of Ethics applies in addition to any higher standards in state law. Louisville's position on ethics is perhaps best summarized in the following statement taken from the City Charter: 'Those entrusted with positions in the City govern- ment must commit to adhering to the letter and spirit of the Code of Ethics. Only when the people are confident that those in positions of public re- sponsibility are committed to high levels of ethical and moral conduct, will they have faith that their government is acting for the good of the public. This faith in the motives of officers, public body members, and employees is critical for a harmo- nious and trusting relationship between the City government and the people it serves." The City's Code of Ethics (Sections 5 -6 though 5 -17 of the Charter) is summarized in the following paragraphs. While the focus is to provide a general overview of the rules, it is important to note that all persons subject to the Code of Ethics must strive to follow both the letter and the spirit of the Code, so as to avoid not only actual violations, but public per- ceptions of violations. Indeed, perceptions of viola- tions can have the same negative impact on public trust as actual violations. Conflicts of Interest One of the most common ethical rules visited in the local government arena is the "conflict of inter- est rule "While some technical aspects of the rule are discussed below, the general rule under the Code of Ethics is that if a Council, Board, or Commission member has an "interest" that will be affected by his or her "official action;'then there is a conflict of inter- est and the member must: Disclose the conflict, on the record and with particularity; Not participate in the discussion; Leave the room; and Not attempt to influence others. An "interest" is a pecuniary, property, or commercial benefit, or any other benefit the primary significance of which is economic gain or the avoidance of eco- nomic loss. However, an "interest "does not include any matter conferring similar benefits on all property or persons similarly situated. (Therefore, a City Coun- cil member is not prohibited from voting on a sales tax increase or decrease if the member's only interest is that he or she, like other residents, will be subject to the higher or lower tax.) Additionally, an "interest" does not include a stock interest of less than one percent of the company's outstanding shares. The Code of Ethics extends the concept of prohib- ited interest to persons or entities with whom the member is associated. In particular, an interest of the following persons and entities is also an interest of the member: relatives (including persons related by blood or marriage to certain degrees, and others); a business in which the member is an officer, director, employee, partner, principal, member, or owner; and a business in which member owns more than one percent of outstanding shares. The concept of an interest in a business applies to profit and nonprofit corporations, and applies in situations in which the official action would affect a business competitor. Additionally, an interest is deemed to continue for one year after the interest has ceased. Finally, "official action" for purposes of the conflict of interest rule, includes not only legisla- tive actions, but also administrative actions and "quasi judicial" proceedings where the entity is acting like a judge in applying rules to the specific rights of individuals (such as a variance request or liquor license).Thus, the conflict rules apply essen- tially to all types of actions a member may take. Con tracts In addition to its purchasing policies and other rules intended to secure contracts that are in the best interest of the City, the Code of Ethics prohibits various actions regarding contracts. For example, no public body member who has decision making authority or influence over a City contract can have an interest in the contract, unless the member has complied with the disclosure and recusal rules. Fur- ther, members are not to appear before the City on behalf of other entities that hold a City contract, nor are they to solicit or accept employment from a con- tracting entity if it is related to the member's action on a contract with that entity. -6-