Objectives Understanding What Generally Constitutes a Conflict- of-Interest Understanding of What Generally Can and Cannot be Done When Conflict-of-Interest Exists Understanding of Common Exceptions to the Rules Understanding of General Procedures to be Followed Allowing Contract Despite Conflict-of Interest

Objectives Understanding of Consequences if Procedures Not Followed Understanding Special Requirements for Selling Property (Real or Personal) to a Town Officer or Employee Understanding of Difference Between a Conflict-of- Interest and an Incompatible Office Understanding of Potential Issues of Employing and Elected Town Official

Conflict of Interest = Town officer prohibited from being part of decision making process, including voting, on a matter before the Board due to a direct or indirect financial interest

Applies to: Definitely all supervisors Maybe Clerk Treasurer ???

Direct Interest: Town contracts directly with town officer or company owned or run by town officer such that the officer will be compensated from contract with town

Indirect Interest (contract) Contract with town officer’s employer, but town officer may see bonus, profit-sharing Contract with a family member but shared personal finances Investment holding benefits from contract

Who is Responsible for Conflicts-of- Interest? Ultimately, each officer has to make a personal call Board needs to be cautious, question possible conflicts, can’t ignore a known conflict

Non-Contractual Conflicts of Interest Public Works Project: Damages paid to acquire land Property Value Change due to Project Special Assessments and/or Fees

Non-Contractual Conflicts-of-Interest -Sale of Surplus Personal Town Property (non- rea estate) -Zoning & Land Use Matters -Rezoning, Conditional Use Permit, variance, etc. -Anything that costs land owner money or changes value of property

What is a contract? Offer Acceptance Consideration Written best, and sometimes mandated, but oral contract can be binding

Prohibitions due to Conflict-of-Interest Supervisor individually, and board collectively, prohibited from being party to contract – with exceptions. Minn. Stat. § Public Officer authorized to participate prohibited in any manner from voluntarily having financial interest in contract. Minn. Stat. §471.87

Prohibitions due to Conflict-of-Interest No sale of real or personal property to town officer or employee unless otherwise expressly authorized – Minn. Stat.§15.054

Exceptions to the Rule Minn. Stat § allows officer to have interest in contract if authorized by Minn. Stat. §471.88

Minn. Stat § Most Common Exceptions in Townships Designation of Bank Designation of Official Newspaper if only qualified paper Contracts with Volunteer Fire Departments and/or volunteer ambulance service

Minn. Stat. § Most Common Exceptions in Townships Contracts for Construction services, materials or both Population 1,000 or less All procedures followed

Minn. Stat. § Most Common Exceptions in Townships Supervisor is Employee of a contractor, but plays no role in preparing bid or in negotiating contract, and procedures followed Contracts for which sealed bids are not required Under $100,000 in value Employment Purchase or sale of real estate

Procedures Allowing a Conflict-of-Interest Identity Applicable Exception Resolution Adopted Unanimously Identify details of situation Contract price equal or lower than going value Conflicted officer or employee does not get involved or exercise undue influence

Procedures Allowing a Conflict-of-Interest Contract approved by unanimous vote Conflicted officer or employee does not get involved or exercise undue influence All Claims for Payment Accompanied by proper Affidavit

Affidavit for Payment under Conflict-of- Interest Name of Officer and Office Held Itemized list of commodities or services provided Contract Price Interest of Officer with the Conflict of Interest

Affidavit for Payment under Conflict-of- Interests Statement that to officer’s best interest, price is equal to or less than going market value If for bank designation, express disclosure of conflict made and recorded in meeting minutes If employee of contractor, refrain from voting, disclose reason for abstention and record in minutes

Consequences for Violating Conflict-of- Interest Rules Contract voided Minn. Stat. §365.37, payments are voided, officer guilty of misdemeanor and if convicted must leave office Violation of Minn. Stat. § is a misdemeanor Misdemeanor = fine up to $1,000 and/or 90 days in Jail

Special Rules on Selling Property to Town Officer or Employee Real Property – land, buildings, structures attached to land Personal Property = everything else – office supplies, furniture, road equipment, vehicles, etc. Property must be no longer needed by Township

Special Rules on Selling Property To Town Officer or Employee Employees but not officers may buy Auction (online okay) or Sealed Bids and employee not involved with process At least one-week’s published notice

Special Rules on Selling Property to Town Officer or Employee Limit on # of state vehicles – 1 per auction Plan B clerks & treasurers are employees but may also be officers

Incompatible Offices Both positions must be offices Decision making, supervision of others, etc. Duties in contrast with each other One position exercises control over the other Hire, fire, set salary, etc. Cannot be Waived

Employment by Town Exempt from Contracting Laws Affidavits for Contracts Contract Employee???

Final Thoughts Size of governing body temporarily reduced when member refrains from voting due to conflict-of- interest Don’t claim conflict just to avoid making a decision No undue influence, but probably ok to answer questions, present own case

Final Thoughts When paying clerk, treasurer or supervisor for work outside “duties” of office, think through conflict rules See Documents C6000 and TP 7000 in MAT Information Library Misdemeanor – fine up to $1,000 and/or 90 days in jail Gross Misdemeanor – fine up to $3,000 and/or 1 year in jail Emergencies can temporality waive normal rules

Questions???