A Slippery Slope?

5.11 A Slippery Slope?

Cases: 3.6 It is common practice for developers to seek neighborhood support for rezoning

property. Developers often agree to make improvements in the neighborhood or provide for mitigation when a project is potentially threatening to a neighborhood’s esthetics, traffic flow, or natural environment. Typically this is done through a public hearing process and mitigation is financially handled by an appropriate local government agency.

But what happens when neighborhood associations (NA) decide to “encourage” developers to provide them with cash considerations? Can developers become the “victims?” Possibly, maybe even absolutely.

Here’s what one developer, who is building nearly 100 homes in West Tampa, has to say about cash deals: “It’s kind of a standard practice. Where do you cross the line here? I don’t know. It puts everyone in a very difficult position and it’s hard to tell where legitimacy ends and impropriety begins.”

Another adds: “This happened because small groups of people are basically try- ing to use their influence to shake down builders. It’s wrong.” Is there a slippery slope here? Perhaps, but in my neighborhood?

168 ◾ Ethics Moments in Government: Cases and Controversies

Discussion Questions

1. Is there anything wrong with getting developers to improve one’s neighbor- hood? Does the improvement have to be related to the potential harm caused by the development?

2. What happens when a developer doesn’t go along to get along? Will the neighborhood association work hard to ensure that the developer doesn’t get his way?

3. Do city ethics codes deal with this situation? Do any ethics codes deal with this situation?

Commentary

Regina Williams, City Manager, Norfolk, Virginia:

Neighborhood associations, or civic leagues as we refer to them in Norfolk, Virginia, are an “uncharted” part of the democratic gover- nance model. As city manager, I have experienced the good that they can provide in terms of participatory democracy and their evilness, especially if they become a political pawn for elected officials. However, in the situation of development or redevelopment and land use decision making, I have not experienced neighborhood associations being in a position to “extort” developers. If that is the case, I think the local gov- ernment has failed in the establishment of a system that would permit legitimate citizen/resident involvement, but safeguard against inappro- priate behavior. Such a system would provide for impact fees, infra- structure and service level investments from the developer to be paid to the city, not an individual civic league.

However, that said, I do believe there is a broader issue around the potential unethical behavior of individual citizens within such a group and/or the use of such groups by elected officials for political or per- sonal gain. While some would say that is just the relationship of stake- holders and politics, manipulation of true public opinion to garner the appearance of public support for a certain position or stand on an issue is wrong—and that is what I have experienced as the problematic use of neighborhood associations.

Pamela Gibson, Assistant Professor, Department of Urban Studies and Public Administration, Old Dominion University, Virginia:

Th ere are tremendous financial, political, legal, and ethical issues sur- rounding these quasi-governmental entities that have received much

Building Organizations of Integrity ◾ 169

(Nevada) to very little (Virginia) public attention. Conflict of interest concerns (a national private organization, Community Association Institute, with legal liaisons advising in the formulation of state laws related to “private powers” of associations); legal liability questions (governments currently treat these associations as businesses and not communities in which dispute resolution is found only in the courts through counterproductive lawsuits); and ultimately questions of fidu- ciary responsibilities as these neighborhood associations, including the developers and governing boards, have very little, if any, oversight— little transparency in their transition of ownership and operations, no open bidding for service provision contracts, (some have argued) arbitrary increases in assessments and strong-armed tactics for “com-

pliance” with “approved” mailboxes, house colors, and landscaping designs! As these neighborhoods age and membership lacks insurance and reserve funds for upkeep or recovery from natural disasters, they will look for governmental support. As one local housing official told me while I was researching associations, “I don’t know where we’re to get the money to maintain the roads, swimming pools and entrance signs for these neighborhoods. But, we’ll be expected to find it.”

Karl Thoennes III, Judicial Circuit Administrator, Unified Judicial System, State of South Dakota:

Is there anything wrong with getting developers to improve one’s neighborhood? Certainly not, and requiring developers to mitigate or balance damage is good public policy. However, in the West Tampa scenario we’re talking about a payoff in cold hard cash to a constituency group who would otherwise hold its support hostage. Still, I’m not sure why the scenario should cause any great ethical indignation. The pri- vate sector buys public support and goodwill with cash all the time, so

I don’t think the developer should be embarrassed. On the other hand, if the local prosecutor is looking for a statute violation, perhaps the neighborhood association should worry about a prostitution charge. To me, the neighborhood association’s behavior is not much different than, say, a vocal opponent of a new Wal-Mart store accepting a briefcase of cash to go home and be quiet.

At least in the present scenario the payoff went from a private developer to an essentially private constituency group. I can ethi- cally swallow that sort of exchange far more easily than when public agencies do the same thing. The government sells development and profit opportunities for cash all the time. The FCC auctions off por- tions of the broadcast spectrum, for example. The Park Service grants exclusive access to concessionaires in exchange for some cut of the

170 ◾ Ethics Moments in Government: Cases and Controversies

action. I happen to be a trial court administrator, so I’m most familiar with situations like photo red light systems where local government gets a cut of the ticket revenue. Some court systems receive a share of online access fees from the software companies who (re)sell public court records (I know, I know, they’re allegedly selling the retrieval convenience, not the records themselves). I could even swallow the frequently offered rationale that this is all creative, innovative pub-

lic revenue generation if the nontax revenue actually supplanted tax money that would otherwise be raised, but I’m fairly confident that the little research done in this area indicates otherwise. (I know, I know, taxes may not go down, but the alternative revenue allegedly reduces the amount of the tax increase that would have otherwise been necessary.)

Author’s Note: Case based on stories in St. Petersburg Times, June 23, 2007 and the Tampa Tribune, June 23, 2007.