In the wake of the Bishop City Council’s recent decision to disallow its members to serve on the Board of Directors of non-profit organizations, Mammoth’s Town Council took up a similar issue during its Wednesday meeting.
At issue is whether recent state concerns over possible conflicts of interest between elected officials and the boards on which they sit are in fact valid, or simply an overreaction.
Town Manager Marianna Marysheva-Martinez recently resigned from Mammoth Lakes Housing’s Board of Directors over just such concerns. Councilmember Rick Wood, however, isn’t as worried about the state’s apprehensions, and is still on the Board.
The concerns stem from a letter to the Town from the state’s Community Development Block Grant (CDBG) division suggesting what it called an “apparent” conflict. According to the letter, “Given the Town Manager and Town Council representative are in a position to participate in a decision-making process or gain inside information with regard to CDBG activities, and have an interest or benefit from the activity, this organizational structure creates the appearance of a conflict of interest.”
During its regular meeting Tuesday evening, MLH’s Board discussed the situation. According to MLH’s Jennifer Halferty, there is nothing in the state’s Department of Housing and Community Development code about elected officials being on such boards.
The issue is being looked at from the state’s CDBG and Community Housing Development Organization (CHDO) perspectives as to whether elected officials have any influence on “financial benefit,” since aside from their board duties, they also vote on major sources of funding for non-profits.
MLH’s legal counsel is reportedly hoping for a legal opinion from state attorneys sometime next week. Meanwhile, outgoing MLH Executive Director Pam Hennarty, who has been with MLH since 2004, pointed out that Council appointed the Town Manager and a Council representative to the Board, and the bylaws were originally adopted with those seats in place.
Hennarty said she thinks the concerns could stem from the fact that CDBG has more explicit rules regarding its money. At the federal level, she indicated that the Department of Housing and Urban Development’s position seems to be saying elected officials on boards is a good thing, since it provides a certain amount of oversight.
According to the Federal Register, HUD regulations provide little definition of what type of “benefit” or “interest” would be prohibited. If, for example, a Council member votes on providing funds to a nonprofit organization while also serving on the group’s board, and is not receiving a salary or other compensation, the official’s interest is deemed “personal” at best. Under CDBG regulations, conflicts of a “personal” nature do not create prohibited conflicts of interest.
What could be affected in any case might be the number of elected officials on MLH’s board, based on what Hennarty noted is an internal HUD conflict between language saying that public officials are free to serve on housing boards, and other language in the CHDO specs limiting the number of officials.
Currently, not only does Wood sit on the Board, but so does Mono County Supervisor Larry Johnston. MLH is considering augmenting its status to become a CHDO, the bylaws of which specify that no more than one-third of its Board of Directors are allowed to be elected officials.
As to the Town Manager’s resignation, Hennarty opined that MMM likely preferred to deal with MLH on more of a peer relationship basis, and said she’d be fine with Council eliminating the Town Manager’s position on the Board.
Wood agreed, suggesting that perhaps MMM sees things perhaps “more subjectively, since the Town provides funds to this organization.” He went on to insist, however, that if Council decides to uphold state concerns about conflicts on such boards, the same situation should apply to Mammoth Lakes Tourism and Eastern Sierra Transit Authority, both of which also have elected officials on their own boards.
“They’re exactly the same,” he assessed. “I’m sure [fellow Council member and Mayor] Matthew Lehman would have a cow if he had to get off the Tourism board. This isn’t over yet.”
And indeed it’s not. Council opted to eliminate participation by the Town Manager on the MLH Board, but deferred any action on Wood’s seat for another month, pending more legal feedback on the matter.
Surplus socked away
The Town of Mammoth Lakes released the results of a mid-year financial review for the current fiscal year, which will end on June 30.
The Town’s analysis shows an anticipated General Fund surplus of nearly $1 million by year-end. Most of it is to be banked, some by the Police Department, the rest squirreled away into the woefully underfunded Reserve for Economic Uncertainty.
Based on the Town Council-approved amended budget for Fiscal Year 2012-2013 on December 5, 2012, in the context of a five-year financial plan, The Town anticipates a General Fund surplus of nearly $1 million by year-end, all attributed to unexpected, one-time events.
According to a presentation by Town Manager Marianna Marysheva-Martinez and Finance Manager Cyndi Myrold, the first $700,000 comes from General Fund expenditures, which came in well below the amended budget projections. This is mainly due to the return of (hope you’re sitting down) $350,000 in MLLA-related legal retainers, and higher revenue and lower spending in the Gas Tax Fund.
The $700,000 would bring the REU to $1.8 million, which might seem like a lot, but would be cleaned out quickly in case of a budget emergency. Representing only about 10% of the overall budget, MMM suggested it could help the Town’s credit rating, though there is still room for improvement. Credit agencies, she explained, would like to see 20%-25% when considering an upgrade.
Adding to that is $300,000 in Mammoth Lakes Police Department savings, which are recommended to be retained to enhance staffing with an entry-level officer. MLPD Chief Dan Watson said he feels “a little bit better” and called the news a “first step on the road to recovery.’”
Additional mid-year highlights include: Transient Occupancy Tax (TOT), the Town’s single largest revenue source, is projected to meet the December 2012 budgeted expectation. MMM indicated that this winter has actually been drier overall than last year. She added that spring and summer are “setting up nicely” and expected to exceed last year’s totals, bringing the overall TOT revenue to the budgeted level of $11.2 million.
Included in the above TOT year-end estimate is $500,000 in enforcement revenue. As of December 31, 2012, $264,224 has been received. TOT collection staff, MMM and Myrold indicated, are confident that the $500,000 projected target would be met.
Business and Sales taxes are currently expected to come in below the December 2012 budgeted estimates, but not by significant amounts.
Still missing in the budget landscape, receipt of $1.3 million in three past due payments from Mammoth Hospital from its land purchase option. Additional annual payments, two at $456,964 each, are programmed in the next two fiscal years’ baseline budgets.
In the FY 13-14 budget, the Assistant Town Manager position will be eliminated, as previously reported, in favor of a Budget and Management Analyst, full funding of the Town’s Information Technology needs, a second TOT enforcement position, a Senior Accounting position and hiring of an Economic Development Director. Myrold stated that these items are all paid for with existing budgeted dollars, including several vacancies that will not be filled.
Staff was given the go ahead to begin recruiting the Budget Analyst and Accounting positions now, in anticipation of a July 1 start date.
About $65,000 from a one-time payback from the Airport of $96,000 is slated for closing a budget gap to hire a full-time Permit Technician for the Planning Department.
Myrold said that one item still not addressed in the FY 13-14 budget is the Whitmore Pool and Park facilities, though the staff report said some of the savings in the REU “could be used to fund the Town’s share of the cost.”
Single-family study on hold
Council also voted unanimously to delay staff’s work on the single-family transient rental program until a later date, pending discussions during the FY 13-14 budget process. In January, Council approved going forward with the program in a 3-2 vote. Given the amount of staff time already committed to other projects, hiring a consultant to do a study was deemed potentially the best way to go.
Cost estimates for the study, however, ranged from $20,000-$50,000, all of which were balked at by Council members, some of which favor the fact-finding study, but none of which want to spend that kind of money at this point.
Mayor Matthew Lehman even went so far as to say he isn’t in favor of spending one thin dime on a study, and that if one is to be funded, both sides of the argument should pony up and pay for having it done.