January 19, 2006

AVCA ponders ethics issues after Councilwoman Nancy
Pyle gives the group free Sharks tickets

Council members use freebie to reward community
leaders who serve without compensation

By Sheila Sanchez
Staff Writer

Free San Jose Sharks hockey tickets from Councilwoman Nancy Pyle’s office to the Almaden Valley Community Association are at the center of an introspective ethics inquiry by the neighborhood group.

Pyle gave the AVCA 10 tickets for last year’s Oct. 29 Sharks game in recognition of the members’ community service.

The tickets gave AVCA members and other community leaders access to the HP Pavilion box, which is also used by San Jose Mayor Ron Gonzales and other council members, to recognize neighborhood groups with a free game of hockey.

No freebies, thank you
But AVCA member Art Boudreault, one of the association’s directors, refused to accept the freebie out of concern about possible conflict of interest issues. He and AVCA member Ray Strong have been researching ethics policies, which other nonprofit organizations have adopted in light of Boudreault’s concerns.

Boudreault could not be reached for comment this week, but during a Jan. 9 AVCA meeting, he said he believed using the tickets could present ethical problems for the association.

The tickets are offered to community association members in recognition of their service to the District 10 community, said Pyle’s chief of staff Lee Wilcox, noting that, “in general, we are going down our list of associations in alphabetical order. Some groups were recognized earlier because the number of tickets we had matched the number of community leaders in that particular group,” such as the Hoffman/Via Monte Strong Neighborhood leaders, Almaden seniors, the Almaden Winery Neighborhood Association and the VEP neighborhood group.

Pyle’s explanation
“We do not believe there is a conflict of interest,” Wilcox said. “In a situation where a conflict of interest exists, competing interests make it difficult for a person to fulfill his or her duties fairly. Our community leaders are advocates for their neighborhoods and work to make their neighborhoods a better place to live. The requests they make of our office do not change simply because they attend one game or event with tickets we receive from the city’s program.”

“AVCA members had mentioned they believed accepting these particular tickets was not a conflict of interest, but that it made them think ahead to what could potentially be a conflict of interest. The fact that AVCA is so conscientious about these kinds of issues is one of the reasons they are a great group of community leaders,” he continued.

The tickets are offered to council members through the San Jose Arena Authority’s ticket distribution program for ceremonial occasions, official welcoming of visiting dignitaries, economic development outreach and recognition for direct involvement in city-related projects or programs.

David Vossbrink, a spokesman for San Jose Mayor Ron Gonzales, said the council has access to the box at the pavilion under strict protocol. “We have a city box because it’s a city-owned facility,” he said. “But actual tickets to the events come from the Arena Authority.”

Vossbrink said Gonzales has invited guests to the box for economic development purposes looking for opportunities to get businesses to relocate to the city. “We don’t have Sharks tickets to give away,” Vossbrink said. “From time to time a council office may get tickets for recognition of community organizations, community volunteers and economic development. Every council office has the same access.”

Ethics research
Lee Dimmitt, AVCA president, said after Boudreault expressed concerns about the tickets during the group’s November meeting he agreed to let him and AVCA Vice President Ray Strong prepare an ethics report to be presented to the board of directors in the next two or three months.

In December, Boudreault presented AVCA members conflict-of-interest guidelines he found on a nonprofit association’s Web site.

“My own personal opinion is that the board doesn’t think it’s necessary and that … it’s a kind of minor thing,” Dimmitt said, adding that he considers the tickets as “awareness for serving the community without compensation.”

“He’s (Boudreault) worried that we have become ingratiated to [Pyle] because she gave us this perk,” Dimmitt said. “But going to see the Sharks game, as far as I’m concerned, is not a perk at all. If she’s going to give us all Cadillacs or something like that, that’s different. Also, I don’t think any board member volunteered to serve for personal benefit and has the good of our Almaden community paramount in their decision making.”

Strong, an IBM research scientist, said he believes the AVCA board of directors would probably agree on an ethics policy statement, which could be presented as early as the next association meeting in February.

“We don’t deal with large amounts of money. There are very few situations where there are any kinds of ethical problems, but because our mission is to communicate to all of Almaden Valley about what’s going on in the realm of politics, there are times when things could have a semblance of impropriety or propriety and it would be good to have some clear policy about a few of those things,” he said.

“The Sharks tickets seem pretty straightforward and okay, but just the idea that there’s this perk, it waves a little bit of a red flag. It’s the kind of thing to look at,” Strong said.

Receiving other perks
Former San Jose Vice Mayor Pat Dando is also reported to have given the association Sharks tickets in January of 2004 as a token of appreciation for its community service, Dimmitt said.

Bob Boydston, former association president, accepted the tickets two years ago, but couldn’t attend due to a broken ankle. “I never thought of this as some kind of payoff. I looked at it as the city wanting to reward or give some encouragement to community groups for the work that they do,” he said.

Boydston, who served for eight years on the AVCA board of directors, said he thought the tickets were a nice gesture toward board members, as they don’t receive compensation for their service. “I never received or wanted anything for my service on the board,” he said. “I think this is a little appreciation for what we’re doing. It never occurred to me that there was any ethics involved. There is no quid pro-quo. We’re not delivering on something.”

Boydston, however, said he believes the association drafting an ethics policy makes sense although the group will probably never encounter a conflict of interest issue.

“I see no harm in making an ethics statement,” Boydston said.

The association created an ethics committee before the November 2004 election that was supposed to oversee campaign conduct in the candidates for the District 10 office, but its credibility came into question when some thought the committee favored Pyle as she was a former AVCA board member.

Conflict of interest
According to Boudreault’s findings, conflict of interest exists when a board member’s personal or professional concerns affect his or her ability to put the welfare of the organization before personal benefit.

Board service in the nonprofit sector carries with it important ethical obligations, he said.

Nonprofits like the AVCA serve the local community good, and when board members fail to exercise reasonable care in their oversight they are not living up to their public trust.

In addition, board members have a legal responsibility to assure the prudent management of an organization’s resources. In fact, they may be held liable for the organization’s actions, Boudreault’s research showed.

Conflict of interest does not only involve financial accountability but relates broadly to ethical behavior, which includes not just legal issues but considerations in every aspect of governance.

Three levels of ethical behavior are obeying the law; decisions where the right action is clear, but one is tempted to take a different course; and decisions that require a choice among competing options.

To prevent conflict of interest situations, Boudreault said self-monitoring is the best preventative measure.

He believes the AVCA should institute a system of checks and balances to circumvent actual or potential conflict of interest, beginning with well-defined operating policies on all matters that might lead to conflict.

Written policy
Most important, Boudreault would like the association to create a carefully written conflict of interest policy based on the needs and circumstances of the organization. He would also like each board member to agree in writing to uphold the policy.

A conflict of interest policy would require board members and staff members in decision-making rules to make known their connections with groups doing business with the organization. The information should be provided annually.

Board members who have an actual or potential conflict of interest should not participate in discussions or vote on matters affecting transactions between the organization and the other group.

Staff members who have an actual or potential conflict should not be substantively involved in decision-making affecting such transactions.

An example of actual and potential conflict of interest include an organization policy requiring competitive bidding on purchases of more than $1,000, but a printing firm owned by a board member’s spouse receiving the $25,000 contract and no other bids are solicited.

Other examples could be board members serving on two boards in the community and having to approach the same donors for both organizations or board members receiving honorariums for conducting workshops for another group in the organization’s field of interest.