Is City Council above the law?

Mayor and Boulder City Council

At a City Council meeting a couple weeks back, Boulder Mayor Matt Appelbaum spent a fair amount of time suggesting that Boulder’s elected leaders need to do a better job of filling out their legally required disclosure forms, which were, of course, designed to shine light on potential conflicts of interest. The mayor’s right.


To say Boulder’s disclosure process isn’t accomplishing its intent is an understatement. If shining light is the goal, then Boulder’s process has dead batteries and a burned-out bulb.

While I applaud the mayor for his recent efforts at what sounds like disclosure reform, I must confess that I am skeptical that it will accomplish anything. At the end of the day, what good is a law if no one is willing to enforce it? It becomes just another conflict of interest.

It seems that Appelbaum’s new focus on the importance of council members providing the basic information that the law requires of them starts with his belief that the current wording of the disclosure requirements isn’t quite clear. So he has asked City Attorney Tom Carr to look into what would be required to rewrite the wording on the disclosure form and even the wording of the city charter that lays out the legal disclosure requirements. This is where I respectfully disagree with the mayor.

First of all, the current requirements for disclosure as set out in Boulder’s city charter and on the forms designed to reflect those requirements are both clear and comprehensive. That being the case, it is unclear how they will be strengthened by Appelbaum’s suggestion that they be rewritten for clarity. It is more likely that any tinkering with the wording would only serve to weaken disclosure.

But you decide. Here’s the exact language from the city charter and disclosure forms describing what candidates and elected officials must disclose regarding their business interests. It’s these requirements that the mayor and certain city council members seem to be having all kinds of trouble comprehending and/or abiding by these days. See if you find these requirements in any way puzzling or confusing, because they seem awfully straightforward and simple to me, and I’m not all that bright.

The city charter requires the disclosure of:

b) The name, location, and nature of activity of any business entities or enterprises for profit, with holdings of real or personal property or with business dealings in the area encompassed by the Boulder Valley Comprehensive Plan, in which the candidate has any financial interest or is actively engaged as an officer, director, or partner, and the nature of the candidate’s interest or activity; c) The location of any real property within Boulder County in which the candidate has an interest or, if the candidate has a controlling interest in an entity or enterprise disclosed pursuant to subsection (b) of this section, in which the controlled entity or enterprise has any interest and the nature of such interest;

Here’s the exact wording from the relevant section on the disclosure form council members must fill out:

“State the name, location, and nature of activity of any business entities or enterprises for profit, with holdings of real or personal property or with business dealings in the area encompassed by the Boulder Valley Comprehensive Plan (BVCP), in which you may have any financial interest, or in which you are actively engaged as an officer, director, or partner. For each, state the nature of your interest or activity therewith, and state whether you have controlling interest in the entity. Business entity means any type of business: sole proprietorship, joint venture, partnership, corporation, trust holding, or investment company, professional corporation, etc. It is immaterial whether the business is making money.”

So there it is. If you own it in any way shape or form, disclose it. Why? Because the folks who wrote our city charter understood that if our elected leaders were able to conceal their business relationships from public view, it could allow those officials to use their political clout inappropriately for their own gain, or for the gain of persons with whom they have business relationships. And even if such power isn’t abused, the writers of the charter understood that even the appearance of impropriety is extremely disruptive to good government, so they required that all business interests must be disclosed, no matter how large or insignificant they may be. At the end of the day, disclosure makes sure that members of council properly recuse themselves from votes in which they have, or could be perceived to have, a conflict of interest due to their business relationships or property ownership.

It’s not that complicated. If you don’t want your personal business dealings made public, then don’t run for elected office. It’s your choice. It’s not like we handcuff people off the street, drive them downtown and force them to put their names on the ballot. If you’re on city council it’s because for whatever reason, you chose to run for the office and, in doing so, agreed to abide by all the rules, including following the disclosure laws. We have to assume that if you’re smart enough to run a city, you’re smart enough to comprehend the form and, more importantly, fully grasp its intent. That’s why recent disclosure problems on council are an important story.

You may recall from Boulder Weekly’s recent reporting (“Unzipped,” May 17) that councilmember George Karakehian didn’t disclose that he had a vested interest in at least two limited liability corporations (LLCs) that own more than $6 million in prime Boulder real estate in partnership with one of Boulder’s largest developers, Stephen Tebo, and other real estate movers and shakers as well. Karakehian said that he didn’t know that he was supposed to disclose the LLCs on the form because they were sort of his retirement investment and owned in the name of his business.

This is the point where I encourage you to reread the above disclosure language from the form and city charter and attempt to find the part that says that an interest in $6 million in real estate LLCs need not be disclosed as long as it is sort of for retirement purposes. Not to mention that the person not reporting them could “retire” and cash them in tomorrow or the day after he leaves council. It’s not like the term “retirement” in this instance should be viewed as something decades away, and even if that was the case, it makes no difference. These are exactly the types of business interests that the disclosure requirements are intended to bring to light to avoid any appearance of impropriety.

But both Mayor Appelbaum and City Attorney Tom Carr apparently believe Karakehian is simply the victim of unclear wording on the form. Both, in recent days, have said that they don’t believe that Karakehian did anything wrong by leaving the LLCs off of his disclosure form.

But this isn’t about picking on George Karakehian. This is about an overall atmosphere of turning a blind eye to disclosure issues and an unwillingness to enforce the requirements. To look at the disclosure forms that get filed by council members and candidates you could get the impression that half of them have been cryogenically frozen for the last few decades: no income, no jobs, no stocks, no home, no nothing. Possible? Yes. Probable? Not so much.

And omission of business interests and real estate holdings isn’t the only problem when it comes to disclosure. Providing incorrect information on the form makes business connections just as invisible for voters.

For instance, Councilman Ken Wilson did disclose that he is, or at least was at the time, a limited partner in a real estate trust that owned an apartment complex in Longmont, but he incorrectly listed the owning organization’s name as “Crabapple Court,” an entity that I couldn’t find anything about at the secretary of state’s office.

That’s because Crabapple Court is the name of the complex, not the company that owns it. The actual name of the entity that owns the nearly $700,000 property in Longmont is “520 Emory Street LLC.” That entity, which wasn’t disclosed, I could find. And I found it pretty interesting.

It shows that Councilman Wilson’s investment partners are David Eisenstein and Stephen Walsh. Eisenstein is a Boulder attorney whose bio says his practice “emphasizes land use, zoning and planning, real estate, business and commercial law.” Walsh is principal of New Hill Company, which acts as something like a consultant to developers looking to makeover the University Hill area. Walsh’s company produced the influential Hill Commercial Context Study that was presented to the Boulder Planning Board at one time in hopes that city council would support the push for serious redevelopment of the Hill Commercial District.

I’m honestly not suggesting that any of these folks have done anything in the world wrong. I’m simply trying to point out that these are exactly the types of business connections that Boulder voters and even fellow councilmembers ought to be made aware of, and that such public awareness is only possible if correct information is provided on the disclosure forms. That’s why they call it disclosure, which, by the way, is defined as “the action of making new or secret information known.”

I don’t think these problems are happening because our leaders are incapable of understanding the requirements and intent of the disclosure laws — that would be a sad thought. I think they are happening because up until recently nobody has been paying attention to disclosure information and, even when they do, nobody is willing to enforce the law. And that makes for sloppy government at best. So who is going to stand up and enforce the disclosure laws for the voters and taxpayers?

It certainly isn’t the mayor.

Consider that concerning the Karakehian disclosure issue, he was quoted in the Camera as saying, “Anyone reading the current rules and current forms had no way to know whether that had to be disclosed or not.” The “that” in the mayor’s statement refers to the two LLCs holding more than $6 million in Boulder real estate that were not mentioned on Karakehian’s disclosure form. Obviously the mayor is a fine apologist, but he lacks something as an enforcer, assuming that his friends make mistakes while the rest of us break the law.

It’s human nature.

So how about the city attorney, Tom Carr? But wait, can a guy who was hired by the city council and who answers to the city council and who can be fired by the city council really be expected to enforce rules on those who hold his future in their hands?

Not likely and, frankly, I think the jury is already in on Carr’s willingness to confront his bosses on council about disclosure issues. But just to be clear, let’s take a quick trip down memory lane and reexamine how Carr handled the Karakehian disclosure situation when it was brought to his attention by political activist and council irritant Seth Brigham, who was, subsequent to his bringing up disclosure problems on council, hit with a restraining order by the city, through Carr’s office.

Following Boulder Weekly’s story on Karakehian’s disclosure issues (“Unzipped,” May 17), Carr made it clear that he didn’t see anything wrong with the two undisclosed LLCs not being reported on the disclosure form. At that time, Carr told Boulder Weekly that “if the language were clearer and it said it included retirement benefits, then maybe there would be a problem.” Really?

In other words, based on Carr’s apparent interpretation of the disclosure laws regarding LLCs and other business interests, any councilmember or candidate can legally not disclose any LLC or presumably other type of business entity, and the property they own, as long as the person filling out the disclosure form believes that the undisclosed assets owned by the undisclosed business entities are for a specific future purpose, like retirement.

But if that’s true, then it must be OK to not disclose a business interest that could someday have its profits used to pay for your kid’s future college tuition, or that maybe you might donate to a worthy cause someday. Those uses aren’t specifically mentioned on the disclosure form, either.

Or better yet, how about business profits you might want to spend someday to buy an elephant? The disclosure laws don’t specifically say anything about elephants. And yet there is a big one in the room when it comes to the lack of enforcement of the disclosure laws.

When Boulder Weekly inquired about the Karakehian disclosure issue to District Attorney Stan Garnett —who, like Carr, had also been provided with information from Brigham — we were told that an investigation was under way and that it would not be concluded for approximately two weeks. Ten minutes after getting this information from Garnett, BW informed Karakehian of the investigation by phone. He was surprised and said that Tom Carr had told him that Garnett was not investigating the matter. Karakehian then said he needed to hang up in order to call Carr. Approximately an hour later, DA Garnett telephoned BW to say that the Karakehian investigation had been closed. When questioned about the coincidental timing of the investigation’s rather sudden conclusion, Garnett told BW that he had not talked to Carr about the issue that day. We also asked Carr if he had spoken with Garnett during the hour when the investigation went from two weeks to concluded. Carr also said he had not spoken with Garnett during that timeframe.

Boulder Weekly then made official requests for the phone records of both Carr and Garnett for the time period in question. Both phone records reflected that Carr and Garnett had, despite their earlier denials, spoken with one another just before Garnett called BW to say the investigation was closed. Both men eventually admitted that the Karakehian disclosure issue had been discussed.

Is this really all we can expect when it comes to the enforcement of something as important as city council’s disclosure requirements? After all, these are the same people willing to create a police state to stop a 4/20 protester from speaking her mind on a public, taxpayer-funded college campus, but they can’t be bothered to enforce actual laws that pertain to themselves. Isn’t there a word for that?

And, as if we needed yet another potential conflict of interest between a city employee and her bosses on council, the folks who wrote our city charter seem to have anticipated the hesitation to enforce the disclosure laws, so they actually wrote in an initial process to handle such problems. It’s not the city attorney who has to deal with disclosure inaccuracies, at least not initially — it’s the city manager.

Sorry Jane Brautigam, it appears that the buck stops with you, at least for now. I know you’re really busy at the moment trying to push through that requirement that would severely curb the free speech rights of Boulder citizens by making them get a permit from the city before they can protest things they care about, but you are under some time constraints on this disclosure matter — not that anyone will likely enforce those time constraints should you choose to ignore them.

I could be wrong, not being an attorney and all, but the city charter seems to indicate that from the time it is pointed out to you that there is inaccurate or missing information on a disclosure form, you are supposed to get the member of council in question to correct their disclosure form within 72 hours.

So, for now, you can start the clock with Wilson and Karakehian, but you might as well go ahead and ask for a do-over from every member of council.

That might just be the best way to move forward on this issue. Instead of rewriting the clear and comprehensive laws we already have on the books, let’s just ask every member of council to try again, refile a new disclosure form listing the accurate name of every single business interest that they have any ownership in or control over whatsoever. That is, after all, the intent of the disclosure laws and what they

were supposed to do to start with. And after that, if we find still more LLCs and other things that have been left out yet again, or more wrong names of ownership organizations, we won’t have to wonder if it was an accident or intentional. We’ll know.

And that will go a long ways towards restoring public confidence in our elected leaders — that is, unless the disclosure forms are still wrong.



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