A bill to help attract and retain volunteers to serve on municipal economic development authorities is on its way to the governor.
Sponsored by Rep. Loren Solberg (DFL-Grand Rapids) and Sen. Tom Saxhaug (DFL-Grand Rapids), HF3295/SF2806* would further define actions to be considered a conflict of interest, and it establishes procedures to address such conflicts for authority members. The bill would make the rules similar to those for members of a housing and redevelopment authority. It was approved 66-0 by the Senate April 3 and 131-0 by the House April 14.
“If you’re a member of an HRA or a city council member, you declare the potential conflict of interest, you abstain from discussion and you abstain from voting. The issue is debated and you resume participation,” Ed Zabinski, president of the Grand Rapids EDA, told a House division last month.
A case in Grand Rapids spurred the bill, although Solberg said it could also be an issue in other communities.
“We discovered, last fall, that what we thought was standard operating procedure, frankly had the potential for resulting in a gross misdemeanor for several of our participants,” Zabinski said. “We were assembling a loan fund so we could expedite some economic development in downtown. In the due diligence process, our attorneys discovered that the way we had been operating conflicts of interest and managing conflicts of interest was in violation of state statute.”
Instead of being able to abstain from an action, a member who owns a store that sells and installs commercial windows resigned once he learned a conflict of interest may exist. Zabinski said current rules make it hard to fill EDA seats, even if many people in the local business community have the right skill-set and would like to participate.
“In this case, the guy could potentially sell a window to the business that has a loan through the EDA, and that became a potential conflict of interest, and he probably never even knew it,” Solberg said.