Is Our Legislative Body Performing Its Fiduciary Duty?
Posted 05 May 2011 - 10:34 PM
Are members of the legislative body, the Board of Directors for Orangevale Recreation and Park District, a special independent district performing their fiduciary duty to the residents of Orangevale? As a 42 year Orangevale resident, i'm offering the 33,000 plus residents of Orangevale an opportunity to think about the ethical obligations of these public servants and to act or be apathetic!
In a representative democracy, when the voters of Orangevale elect a "director" residents are putting their "trust" and their "confidence" in that person (directors must be residents of Orangevale) to act in the resident's best interests. Always putting resident's interest first is the essence of public service ethics. As publicly elected officials, directors make important decisions on behalf of the residents of the district and are legally accountable for how they spend monies of the district, of the public agency.
A FIDUCIARY; is a resident of the district who decided (to be elected and to serve residents) to act for and on behalf of another person (resident) in a particular matter in circumstances which give rise to a relationship of trust. A fiduciary is expected to be "loyal" to the residents to whom he or she owes the duty and "must not" put his or her personal interests or bias before that duty.
A FIDUCIARY RELATIONSHIP; is one founded on trust and confidence reposed (to place trust in someone) by one person (a resident) in the integrity and fidelity of another (a director). A fiduciary relation exists when trust is reposed on one side and there is resulting power and authority on the other side. Thus, the placement of one's trust, confidence and responsibilty in another person or persons is the definition of a fiduciary relationship.
DEFINING FIDUCIARY DUTIES
Because a fiduciary has the power and the obligation to act for another, the law imposes on fiduciaries strict standards of diligence, responsibilty and honesty. These are similar to federal law standards for public officials, which impose on them the broad obligation to serve the public honestly. What does this mean? According to federal prosecutors, honest public service means being conscientious,loyal,faithful,disinterested and unbiased. So, would a public statement made by the chairman of the board Mike Stickney "at this point in time we like um and that's not going to change" indicate a personal interest and a bias? This statement was made in reference to why the board of directors wants Final 9 Sports located in Orangevale Community Park!
THE DUTY OF CARE; the law speaks in terms of a fiduciary using his or her best efforts on behalf of residents. This means using all possible skill, care and diligence and availing themselves of all material information before acting on behalf of their residents. That means educating oneself, talking to residents, staff, and other experts, as well as reading relevant documents, reports and studies.
Values relevant to public service decision-making include trustworthiness, fairness, responsibility, loyalty, compassion and respect. Respectfully hearing (during public meetings) from residents of the district about resident needs, complaints, wants and what they don't want is a necessary process for public officials. Directors who require greater public engagement can view themselves as stewards of an open public decision-making process.
THE DUTY OF LOYALTY; a fiduciary is "forbidden" from acting in any manner adverse or contrary to the interests of the residents he or she serves. As a public servant, your loyalty (faithful adherence) must be to the residents you serve. And, not to the district's lawyer, non-residents and certainly not to your own self interests. So, chairman Mike Stickney publicly stating "we happen to believe something different." He means they paid their lawyer and they "believe" what their lawyer says! This is in regards to members of the board listening to their "lawyer's opinion." (Lawyers exact words are as follows)"The District is a park and recreation district formed pursuant to Public Resources Code Section 5780 and granted the powers contained within those statutory provisions. The District has very broad powers with repect to its property provided it is utlilzed for a public benefit and/or in furtherance of the purpose for which the District was created." as the lawyer's "interpretation" of California Government Code Section 5786.1.b "To acquire any real or personal property within or outside the district, to hold, manage, occupy, dispose of, convey and encumber the property, and to create a leasehold interest in the property for the benefit of the district." (Lawyers exact words are as follows)"Final 9 Sports provides the District's residents with an additional recreational opportunity, that of disc golf. This is the very purpose for which the District was created. By leasing is property to third parties for the operation of recreational services, the district is able to provide more recreational opportunities for its constituents than if it were to attempt to provide all services by itself. The District is without the expertise to provide the same level of service being offered by Final 9 Sports. It is therefore within the public benefit to lease the property to final 9 Sports for this purpose."
IMPORTANT NOTE: Keep in mind, "the legislatures intent of this statute." The disc golf course has been at this park since 1982. Final 9 Sports located their commercial retail sales of sporting goods business in this park in 2002. The district's lease agreement with Final 9 Sports is for a concession business, it includes no such statemnts as the lawyer's letter to me does! So what is Final 9 Sports really doing and why?
The premise underlying conflict-of-interest law is that when decision-makers are in a position where they might reasonably be tempted to put their own interests ahead of the public, the best course of action is for them to step aside from the decision-making process. The goal is to erase any doubt about director's motivations, so residents can be assured its best interests will always come first. This is because the law determines that the public's trust and confidence in its decision-makers is more important than the decision-makers participation.
HONESTY: BEING OPEN and TRANSPARENT
AS A PUBLICLY ELECTED OFFICIAL; a board of director is held to a higher legal and ethical standard than the residents they serve. They are subscribed an "oath of office" too faithfully and impartially carry out the duties of office. Thus, certain types of conduct which might be permissible in the context of ordinary (casual) business dealings of residents are off limits to a fiduciary because of the attributes of the relationship. Only registered voters of Orangevale can vote for a director, who must also be a resident, thus director's fiduciary duty is only to residents of the district, of Orangevale, this means "directors have no fiduciary duty to non-residents."
Director Manuel Meraz publicly stating "they were an answer to all our porblems." This statement was made in reference to why the board wanted Final 9 Sports in Orangevale Community Park! But, yet the 1st. page of the district's lease agreement does not imply this or state this was the reason for having them in Orangevale Community Park. These public statements made by members of the board, are examples of the "self-interests" of these public officials, these directors. As a resident, why take your time to address them publicly and state your support or opposition, when the board of directors will do whatever they want anyway and then say they "believe" they act in the residents best interests.
BREACH OF FIDUCIARY DUTY
What constitutes a breach of fiduciary duty? Would say a written request from two (2) non-resident owners of Final 9 Sports, to put their request "for a disc golf pro shop" on the agenda (O.R.& P.D. Agenda Policy;Impart; The district administrator shall prepare the agenda for the regular meetings, with the concurrence of the chair. Any request or complaint of a "resident" (it does not say or imply anything about non-resident requests) will become an agenda item if such request or complaint is submited to the district administrator in writing at least five (5) working days before the regular meeting) and eighteen (18) months later, the board of directors acted on the agenda item, by motion, a second motion and by majority vote of the board (after dismissing residents opposition to this commercial business and the board of directors accepting their lawyer's opinion) voted to approve a "lease agreement" (they never approved the agenda item, a disc golf pro shop) they approved a fifteen (15) page lease agreement between the District and the two (2) non-resident business owners of Final 9 Sports, whereby the board leased district owned Orangevale Community Park to the owners of this business so they could locate their own modular building and their commercial business in Orangevale Community Park for a financial benefit (a significant benefit)to these non-residents.
A breach of fiduciary duty would apply to the chairman, as the chairman allowed the non-resident written request to become an agenda item. The board breached their fiduciary duty to their residents in two (2) ways, by not using their independent judgement (by listening to the opinion of a third party, their lawyer) and by acting on the agenda item by a motion, a second motion and by majority, voted to approve a lease agreement based on the opinion of the district's lawyer, that had nothing to do with the original agenda item. You tell me, did they serve their residents?
As fiduciaries, directors "shall not" put themselves in a position where their own interests conflict with the duties that they owe to their residents.(what if these public officials, these directors do not know what fiduciary duties are, or what they mean, then what?) The accepted view (law) is that good faith must not only be done, but must manifestly (evidence of) seen to be done, and the law will not allow directors to escape liability by asserting that they "believe" their decisions were in residents best interests.
The director's loyalty to the two (2) non-residents of the district is a "breach of their fiduciary duty" (the Sacramneto County Grand Jury should be able, if they are willing, to determine this issue) and that was in 2001/2002.
In 2011 it turns out the chairman and the members of the board were again loyal to these two (2) non-resident business owners, as the members acted by motion, a second motion and by majority vote, voted in "haste" to approve the use of district funds (public funds) to purchase a $40,000.00 Gazebo that was one (1) of six (6) improvements requested (in 2009) from the owners of Final 9 Sports to the Board of Directors, that again became an agenda item and "somehow" (without board approval) ended up on the district's 2009 Capital Projects list.
Chairman Mike Stickney and members of the board have plans for spending more district funds to further give back to these two (2) non-resident business owners. Of the 33,000 plus residents of Orangevale, who of you are watching this district, this board of directors, as residents of this district, it is your responsibility. When you elected these public officials, these directors, did that mean that you could turn a blind eye to them and let them do whatever they want? Orangevale residents, you should have been more responsible for what was created for your benefit and for your enjoyment. The district does not belong to district staff or to the casual, informal and self-serving Board of Directors even though they think and act like it is their district, it is definitely not theirs to do whatever they want with. I want to ask all Orangevale residents what will you do, continue to be silent and apathetic and live your lives or will you step up and speak up?
A 42 year Orangevale resident
PS; Orangevale residents, if these are the kinds of public officials, directors that you like, then you certainly will not vote for me as a director, in November 2012