Greensboro Councilman Zack Matheny Gets A Ruling from School of Government on Conflicts of Interest

In the past we have seen Greensboro Councilman Zack Matheny recuse himself from issues like the White Street Landfill because of a Conflict of Interest with his employer at the time was Bell Partners.

Now in 2012 and the councilman not with Bell Partners anymore,  we come to find out that Zack Matheny is a consultant with a solid waste company in the area. Below you will see some e mail exchanges in regards to this issue because of future solid waste operations for Greensboro.

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Subject: FW: Potential Conflict of Interest with City Council Member on Solid Waste Operations Contract

Councilmember Matheny,

Please find below an email I received from Norma Reid Houston, Adjunct Professor of Law and Lecturer in Public Law and Government at the UNC-CH School of Government, opining that the allegations against you presented by Attorney Tom Terrell do not constitute a conflict of interest pursuant to applicable state law and city policy. Thus, none of these allegations would prohibit you from voting on the Municipal Solid Waste Operations contract. Her opinion is based on the email that I sent to her which is also included below. If you have any questions, please do not hesitate to contact me.

Sincerely,

James A. Dickens, Associate General Counsel

Office of the City Attorney

City of Greensboro

Phone: 336-373-2320; Fax: 336-373-2078

P.O. Box 3136, Greensboro, North Carolina 27402-3136

www.greensboro-nc.gov

From: Houston, Norma Reid [mailto:nhouston@sog.unc.edu]
Sent: Friday, July 06, 2012 11:21 AM
To: Dickens, James
Cc: Leonard, Brian; Peterson-Buie, Becky; Houston, Norma Reid
Subject: RE: Potential Conflict of Interest with City Council Member on Solid Waste Operations Contract

Good morning James:

Thank you for your time this morning in clarifying the facts of the situation described below. As we discussed, in my opinion, this scenario does not give rise to a conflict of interest under G.S. 14-234, G.S. 14-234.1, or the City’s conflict of interest policy, nor does it constitute a “financial interest” for which Councilmember Matheny may seek to be excused from voting under G.S. 160A-75.

My conclusion stems from the fact that Councilmember Matheny’s employer, Green Day, is not a direct respondent or a listed subcontractor for any of the respondents to the City’s solid waste RFP, and therefore, the Councilmember has no financial interest in the award of the contract (and, for purposes of G.S. 14-234, I assume his spouse, if he has one, does not have a financial interest either).

G.S. 14-234 prohibits a public official or employee from being involved in making or administering a contract on behalf of the unit of government he or she serves if the official or the official’s spouse derives a direct benefit under that contract (a direct benefit being one of the following: having more than 10% ownership interest in the contracting entity, receiving income or commission directly under the contract, or acquiring property under the contract). In the present scenario, Councilmember Matheny does not derive a prohibited direct benefit under any of the potential contracts the City would award in response to the solid waste RFP. Thus, there is no conflict of interest under G.S. 14-234.

G.S. 14-234.1 prohibits a public official or employee from using non-public (confidential) information made known to him in his official capacity to acquire a pecuniary benefit for himself or anyone else. In the present scenario, there is no evidence that Councilmember Matheny is using non-public information in this manner (and, in fact, the public RFP process works against such an allegation), nor is Councilmember Matheny in a position to acquire a pecuniary benefit. Thus, there is no conflict of interest under G.S. 14-234.1

G.S. 160A‑75 requires city governing board members to vote on matters coming before the board unless the member has been excused from voting, and the member may only be excused from voting on a matter involving the member’s own financial interest or official conduct, or for which voting is statutorily prohibited under G.S. 14‑234, 160A‑381(d), or 160A‑388(e1). Since the award of the solid waste contract does not involve Councilmember Matheny’s own financial interest, I see no legal basis upon which Councilmember Matheny may be excused from voting on the contract award or other matters related to the City’s solid waste RFP.

Finally, the City’s Conflict of Interest Policy (again, my compliments to you for the quality of the policy) tracks the federal Grants Management Common Rule conflict of interest requirements, including prohibiting actual and apparent conflicts of interest, which are generally interpreted to mean financial interests. Given that Councilmember Matheny stands to gain no financial benefit under the city’s solid waste RFP and resulting contract award, I see no violation of the City’s Conflict of Interest policy (and, even if there were one, the only legal sanction for a governing board member for violating a local conflict of interest policy is a motion of censure by the governing board; no other sanctions are legally authorized absent a concurrent violation of state or federal law).

In conclusion, it is my opinion that Councilmember Matheny does not have a conflict of interest under G.S. 14-234, G.S. 14-234.1, or the City’s Conflict of Interest policy, nor does Councilmember Matheny have a financial interest for which he could be excused from voting on this matter under G.S. 160A-75.

If I can provide further assistance or you would like to discuss this matter further, please don’t hesitate to contact me.

Best wishes,

Norma

From: Dickens, James [mailto:james.dickens@greensboro-nc.gov]
Sent: Thursday, July 05, 2012 11:18 AM
To: Houston, Norma Reid
Cc: Leonard, Brian; Peterson-Buie, Becky
Subject: Potential Conflict of Interest with City Council Member on Solid Waste Operations Contract

Ms. Houston,

Below is a list of facts we received from an attorney that represents one of the Solid Waste Contractors who submitted a proposal in response to the City of Greensboro’s Request for Proposals for Municipal Solid Waste Management Services. This attorney claims that one of our council members has a conflict of interest by virtue of his employment with a company named, “Green Day”, company who provides commercial and industrial waste hauling services in Greensboro. Green Day is not a company who submitted a proposal in response to the Solid Waste Management Services RFP, and to our knowledge, Green Day is not a subcontractor of either Republic Services or Waste Connections, the two companies currently being considered by the City Council to award the contract. Based on the facts below, do you believe that the councilmember who represents Green Day has a conflict of interest pursuant to N.C.G.S. 160A-75, N.C.G.S. 14-234 or the City of Greensboro’s conflict of interest policy which is attached hereto. Thank you very much for your assistance in this matter.

Sincerely,

James A. Dickens, Associate General Counsel

Office of the City Attorney

City of Greensboro

Phone: 336-373-2320; Fax: 336-373-2078

P.O. Box 3136, Greensboro, North Carolina 27402-3136

www.greensboro-nc.gov

1) Both A-1 and Green Day provide commercial and industrial waste hauling and recycling in the Greensboro market.

2) A-1 directly competes with Green Day for a limited number of customers in the market.

3) Among the companies whose business they compete for are Samet, Lomax, and KV Homes.

4) A-1 has recently won bids over Green Day with AC Corp, Matrix Furniture, the new UNC-G development that crossed Lee Street, the nano-science building, JSNN and numerous Lomax jobs. A-1 reasonably believes there is a high degree of frustration on Green Day's part because A-1's ownership of its own disposal site makes it difficult for Green Day to submit competitive bids. A recent contract Green Day did land over A-1's bid was the new apartment complex at the former North State Chevrolet site.

5) Green Day does not compete with Hilco or Republic.

6) Councilman Matheny's job is to land these contracts for Green Day, and to do so he goes head to head with A-1.

7) It is customary for sales teams in this industry to be paid at least in part on a commission basis.

8) If Councilman Matheny is paid on a commission basis (in whole or part), or if his sales performance affects his income on an annual basis, then A-1's competition directly affects his income.

9) By using his public position in public meetings to describe A-1 as a company that is not good enough or inadequate to handle its part of this contract, then he has reasonably harmed A-1's reputation among their mutual potential clients, which indirectly could work to his company's and his personal financial benefit.

10) There is a vehemence and emotional undertone in Councilman Matheny's public comments that suggest his decision to go with the high bidder in this matter has a personal and undisclosed basis (or at least lends credibility to that conclusion).