City’s loans shouldn’t be for its employees, officials

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A proposal was introduced at the April 14 Minneapolis City Council meeting that would change the city’s Ethics in Government ordinance to allow elected officials to borrow money using city and Neighborhood Revitalization Program (NRP) loan programs. With a few exceptions, the Ethics in Government ordinance prohibits city employees and officials from borrowing money from anyone who does business with the city or who proposes to do business with the city. The ordinance has a section that says “appointed officials” won’t be barred from certain city and NRP loan programs. The recent proposal would remove the word “appointed” from that part of the ordinance.

The proposal should get a quick thumbs-down at its first stop, the council’s Ways and Means/Budget Committee, and the council should go further, to explicitly bar city employees, elected officials and appointed officials from borrowing money through these programs.

As one council member pointed out, there are “definitely two schools of thought on this issue.” At first glance, it seems harsh to bar city employees and officials from using these programs. After all, they’re setting a good example by owning a home in the city. Even at top salary levels, few city employees are in danger of becoming wealthy. Many elected and appointed officials are virtually volunteers (a point we’ll concede even for those who receive “per diem” or by-the-meeting payments). Why shouldn’t they be able to apply for the city loan programs, just as any other city resident would?

The answer is simple, if a bit harsh. There’s no way a city employee or official applying for a city loan program can avoid the appearance of a conflict of interest. City and NRP loan programs generally aren’t limitless, and some sort of selection process is usually employed. If the city employee or official prevails over someone who doesn’t have those connections, it gives rise to speculation that it was an “inside job,” a charge that’s virtually impossible to disprove. If the city employee or official is part of a council, board or commission that might someday take an action for or against the group that’s handing out the loans, the appearance of conflict is even stronger. An observer might conclude that the people giving the loans would favor the city official as an “insurance policy” for a later time when they might be courting his or her favor.

The only way to avoid the appearance of conflict is to keep city employees and officials out of city and NRP loan programs’ applicant pools. It’s a small sacrifice made by a few people, and it eliminates the possibility of many kinds of mischief. It might seem a bit unfair, but it’s important for any city employee or official to be able to say, “These programs are for the non-government people who live in the city, not for the people who work for or run the city.”

For city council members in particular, whose everyday work often has an impact on the people who administer those loan programs, it’s important to not only acknowledge the potential conflict of interest but to acknowledge that Minneapolis tax payers pay them well, and that the city and NRP loan programs should be for people whose incomes might not allow them to comfortably choose that kind of expense (usually home improvement) without some help from the city.

It’s simple, it’s straightforward. It doesn’t require balancing interests. And while it might annoy a few of the last people the city should want to annoy, that’s a small price to pay for the integrity—actual and perceived—that such a ban will bring to the system. We urge the City Council to quickly clarify the rules and ensure that city and NRP loan programs benefit only the non-government city residents.

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