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2006-12-18PLEASE TURN OFF CELL PHONES & PAGERS IN COUNCIL CHAMBERS. -:? C'. c AGENDA 1. Call meeting to order 2. Review of Attorney General Opinion regarding question of incompatibility of offices, and consideration of possible follow -up 3. Adjourn This is a preliminary agenda and subject to change. The Council will set a final agenda at the meeting. More current meeting agendas may be viewed at City Hall or at the City of Mound web site: www. cityofmound. com. 470 U.S. Bank Plana 200 South Sixth Street Minneapolis, MN 55402 (612) 337 -9300 telephone (612) 337 -9310 fax C }i A. '.p -r a it -a http: / /www.kennedy- graven.ct)ni MAity D. TIF:TJF.N Attorney at law Direct Dial (012) 337 -9277 limail: mlietjw(i,kenncdygravcn.com December 15, 2006 Ms. Kandis M. Hanson City Manager City of Mound 5341 Maywood Road Mound MN 55364 RE: Attorney General Opinion Incompatible Office Issue Dear Ms. Hanson: On December 13, 2006, the Attorney General's office provided us with a written opinion responding to our questions related to Greg Skinner's recent election to the Mound City Council. I have enclosed a copy of that opinion with this letter. As you know, our questions to the Attorney General were related to potential incompatibility and conflict issues arising from Mr. Skinner's employment as Public Works Superintendent and his position as a city councilmember. The first question we asked is whether Mr. Skinner's position is an "office" for purposes of the incompatible offices doctrine. This question must be answered first because, if Mr. Skinner's position is not a "office" as deitiiied by Minnesota law, the ii- compatible offices doctrinne does not apply in the first place and, thus, Mr. Skinner would not be prevented from taking office. After providing a thorough description of Mr. Skinner's position, the Attorney General concluded that "it does not appear that the office of city council member and positions [sic] of superintendent of public works are necessarily or inherently incompatible." The opinion goes on to say, however, that because "the issue turns largely upon fact determinations concerning the duties of the respective positions in question ... local officials, and not the Attorney General, are in the best position to evaluate whether the position would constitute a public office under the above definitions." The Minnesota Supreme Court has defined a "public office" as one in which the employee "has independent authority under the law, either alone or with others of equal authority, to determine public policy or to make a final decision not subject to the supervisory approval or disapproval of another." McCutcheon v. City of St. Paul, 298 Minn. 443, 216 N.W.2d 137 (1974). In McCutchear, the Supreme Court held that the 303117%2 MDT MU200 -133 Kandis Hanson December 15, 2006 Page 2 of 3 positions of deputy police chief, police lieutenant and patrolman were not `offices" and, thus, those employees could also hold the position of state legislator. The McCutcheon decision relied on an earlier Supreme Court decision in which the Court concluded that a superintendent of a city's waterworks department was an employee, not an `officer." See Oehler v. City of St. Paul v. City of St. Pahl, 174 Minn. 410, 219 N.W. 760 (1928). We were unaware of any "fact determinations" in addition those already presented to the Attorney General that needed to be considered concerning the duties of Mr. Skinner's superintendent position. However, in an email to me dated December 15, 2006, Mayor - elect Mark Hanus presented several additional facts regarding the superintendent position that he believes must be considered to give a complete picture of Mr. Skinner's job duties. For example, Mr. Hanus states that Mr. Skinner performs and signs employee reviews; writes the annual report for the public works department; and reviews and provides comment on planning cases that are routed to him. In sum, Mr. Hanus states that Mr. Skinner performs many of the functions of a department head and essentially argues that he should be treated as such. Giving weight to all of the facts concerning the superintendent position, including those presented by Mr. Hanus, it is our opinion that the position does not meet the test established by the Supreme Court in McCutcheon and, therefore, is not an "office" to which the incompatible offices doctrine applies. Even if Mr. Skinner performs some of the functions of a department head, such as writing an annual report or conducting employee reviews (assuming those are department head duties), those actions are ultimately subject to supervisory approval by the Director of Public Works and the City Manager. We believe it is clear that Mr. Skinner does not have independent authority under the law to determine public policy or to make final decisions that are not subject to the supervisory approval or disapproval of others. Consequently, Mr. Skinner does not hold an "office" as defined by law and is not precluded from taking the office of council member. The Attorney General's opinion also addresses the conflict of interest issue and concludes that potential conflicts do not prevent Mr. Skinner from taking office. The Attorney General notes that while there may be situations that present a conflict or potential conflict, the existence of such does not categorically exclude a person from taking an office, but "[i]nstead, when such a conflict arises, the conflicted person should take appropriate corrective action." Thus, any potential conflict involving Mr. Skinner will need to be evaluated as it arises. If a conflict of interest is present, Mr. Skinner will be disqualified from participating in that meeting or from taking any action on the agenda item that presents the conflict. In sum, it is important to note that we have reached the point in our analysis of these issues where the City Council is not at legal risk to proceed in conducting its regular business, with Mr. Skinner as a member. Mr. Skinner's membership on the Council will not impact the validity of any Council actions or decisions, even if it is challengM sometime in the future. Mr. Skinner assumes the risk at this point. If his membership on 3031 17 v2 M I.)T M 0200 -133 2 Kandis Hanson December 15, 2006 Page 3 of 3 the Council is challenged and a court disagrees with our legal opinion (which we believe is highly unlikely), he is at risk of forfeiting his employment with the City. Mr. Skinner will need to weigh the risks involved in deciding whether or not to formally take the office of council member. Please feel free to contact us with any questions you may have. Sincerely, .� cf Mary D. (tjen cc: Mound City Council John B. Dean, City Attorney 303117v2 MDT MU200 -133 3 STATE OF MINNESOTA 0 1C OF "E AMR NE GENERAL :.a SUM 3800 M.t rTCH December 13, 2006 us'pr�kesara .67"!T}I{�b'&?'t°XJ<?3�():.R.AL �T 1!AUL,MN'331ai 21 'i�i1:FlPHC11�1E: tS;S�Y297�2Q4i7 Mary D. Tietjen Zs—� 0 V Kennedy & Graven, Chartered 470 U.S. Bank Plaza h. � 200 South Sixth Street DEC 1 4 j Minneapolis, MN 55402" Dear Ms. Tietjen: You indicate that you are the City Attorney for the City of Mound, Minnesota, and you request an opinion of the Attorney General with respect to the matter discussed below. You state that at the 2006 city election, Greg Skinner was elected to the City Council of Mound, which is a Plan B statutory city. You further state that Mr. Skinner is currently employed as superintendent of public works ( "superintendent ") for the City of Mound, and in that capacity, he reports to the Public Works Director and the City Manager. You also state that the superintendent is a full -time, salaried, non -union city employee. The superintendent supervises and directs the day -to -day maintenance activities of l I employees. In your letter requesting the opinion, you state that the superintendent has no authority over the employees beyond the supervision of daily tasks, nor does the superintendent negotiate wages or salaries for the employees that he supervises. You indicate that the superintendent position is not appointed or otherwise supervised by the city council. You state that as part of the city budgeting process, the City Manager obtains input from the superintendent regarding items for the proposed budget for the Mound Public Works Department. The Public Works Director and the City Manager are responsible for reviewing and approving all proposed items. You state that the City Manager prepares the final annual budget estimates from each department of the City, subject to the approval of and adoption by the Mound City Council. The City Manager is responsible for presenting the budget to the City Council, although in the past, she has requested that the superintendent participate in that presentation. You state that the Public Works Director, who is a department head, and the City Manager make and implement policy decisions for the City and the Public Works Department. You further state that the superintendent does not set or implement policy for the City or the Public Works Department. In a follow -up telephone conversation, you were asked whether a written position description for the superintendent's position is available, and you indicated that none exists. Trr (651) 2112,2s2$- Tots Froe ftlft) -tsar) 36&M,12,(TM*wwyt.sSjM.mn.t11 An EV41 opparamity 6mptv*w Who Valm Dimdty 8WAQ1 ,.? 0 t dnW on 50%vdgdad poper (15% you cats mr comma) Mary D. Tietjen December 13, 2006 Page 2 In your letter, you also provided information regarding compensation of city employees. You state that as with all non -union employees, the superintendent's salary and benefits are governed by the City's administrative code. You further state that with respect to salary, the administrative code provides: 1) the City Manager is directly responsible to the City Council for the coordination and administration of the salary program; 2) all salary adjustments for employees are based upon the City's pay equity plan accepted by the City Council in 1988; and 3) annual cost of living adjustments for all non -union employees shall be equal to the highest percentage given to union contract personnel each year. The union contract is subject to approval by the City Council. You state that in addition, the administrative code may be amended from time to time by the City Council. Further, salary and cost of living adjustments are applied to employee classifications, not individuals, and employees do not receive merit increases. Under the administrative code, an employee's eligibility for other benefits such as sick time, vacation leave and severance pay is based on objective criteria such as years of service. Based on these facts, you then asked three questions. Your first question is whether the public works superintendent position is an `office" to which the incompatible offices doctrine applies. First, as you point out, the City of Mound is a statutory, Plan B city. See Minn. Stat. §§ 412.601 - 412.751 (2006). Under this form of government, known as the "council- manager plan," the council exercises the legislative power of the city and determines all matters of policy. See Minn. Stat. § 412.611 (2006) The city manager alone has the authority to hire and fire city employees. See Minn. Stat. § 412.651, subd. 3 (2006). ( "[tlhe city manager shall appoint upon the basis of merit and fitness...all heads of departments, and all subordinate officers and employees.... ") Thus, the city manager is the head of the administrative branch of government and is responsible to the council for the proper administration of all affairs relating to the city. Minn. Stat. § 412.661(2006). As you state, in a plan B city, the law strictly limits the authority of the city council in administrative matters: Neither the council nor any of its members shall dictate the appointment of any person to office or employment by the manager, or in any manner interfere with the manager or prevent the manager from exercising judgment in the appointment of officers and employees....Except for the purpose of inquiry, the council and its members shall deal with and control the administrative service solely through the manager, and neither the council nor any of its members shall give orders to any subordinate of the manager, either publicly or privately. Minn. Stat. § 412.661 (2006). Under the council - manager plan, the city council is empowered to "create such departments, divisions and bureaus for the administration of the affairs of the city as may seem necessary, and from time to time may alter their powers and organization." Minn. Stat, § 412.671 (2006). The Mound City Council has established the Public Works Department as a Mary D. Tietjen December 13, 2006 Page 3 department of the City and designated the Director of Public Works as the head of the Department. Mound City Code, Chapter Il, section 205.05. The City Council has further provided that "the Director of Public Works is responsible to the manager for the organization, planning, administration and coordination of public works of the city. The Director of Public Works shall perform the duties described in the job description for that position and any additional duties assigned by the manager." Mound City Code, Chapter II, section 205.20. The council has not created by ordinance any other positions subordinate to the Director of Public Works. Second, at common law, public offices are considered to be incompatible, and may not be held by the same person, when the functions of the two are inconsistent such that antagonism would result if the person attempted to perform the duties of both. The determination focuses on whether there is an inherent inconsistency in the duties themselves. See, e.g., State ex rel. Hilton v. Sword, 157 Minn. 263, 196 N.W. 467 (1923); State ex rel. Young v. Hays, 105 Minn. 399, 117 N.W. 615 (1908); Op. Atty. Gen. 358 -E -9, April 5, 1971. Some prior cases and opinions have stated that public positions are incompatible if one is subordinate to the other. See, e.g., Young v. Hays, Kenney v. Georgen, 36 Minn. 190, 31 N.W. 210 (1886); Atty. Gen. 358 -E -9, April 5, 1971 (council member may not serve as fire chief). However, more recent decisions indicate that, in order for two positions to be considered incompatible offices for the purposes of applying the Hilton v. Sword principles, each must be a public office as opposed to mere employment. The distinction was explained by the Minnesota Supreme Court in McCutcheon v. City of St. Paul, 298 Minn. 443, 216 N.W.2d 137 (1974): There is a distinction between a public official and a public employee which is frequently difficult to trace. The majority of decisions hold that a position is a public office when it is created by law, with duties ... which involve the exercise of some position of the sovereign power.. . Whether a person holds a disqualifying public office is not to be determined merely by the title of his position. A more appropriate test ... is whether that person has independent authority under the law, either alone or with others of equal authority, to determine public policy or to make a final decision not subject to the supervisory approval or disapproval of another. Id. 216 N.W.2d at 139. Thus, we have previously concluded that an employee in a city utility department was not foreclosed by the incompatibility doctrine from serving on the city council. See Letter to Paul Ihle, Thief River Falls City Attorney, dated April 9, 1998. Third, while the powers and duties of council members in a statutory city are prescribed by statutes, the particular responsibilities of a "superintendent of public works" are not defined in Mary D. Tietjen December 13, 2006 Page 4 state law or city ordinance, but are presumably defined by the council or the city manager. 1 Thus, it does not appear that the office of city council member and positions of superintendent of public works are necessarily or inherently incompatible. Rather, the issue turns largely upon fact determinations concerning the duties of the respective positions in question. Consequently, local officials, and not the Attorney General, are in the best position to evaluate whether the position would constitute a public office under the above definitions. Next, you ask whether the office of superintendent is incompatible with the position of council member in a statutory plan B city if the answer to the first question is "yes." Since we are not able to answer your first question above, we cannot answer your second question. Because it is not clear whether the position of superintendent of public works, as you have described it, is a "public office" for purposes of the incompatibility doctrine, it necessarily follows that we cannot determine whether the position of superintendent of public works is incompatible with the office of city council member. We believe that the principles regarding the incompatible offices doctrine set forth in the precedents and authorities set forth above will assist you in resolving that question. Finally, you ask whether apart from the incompatibility doctrine, there a conflict of interest under 471.87 —.89 or 412.311 that would prohibit the public works superintendent from holding the office of council member? First, while the incompatible office doctrine addresses conflicting public duties, other legal principles deal with conflicts between public responsibilities and the personal interests of public officials. For example, Minnesota Statutes §§ 412.311 and 471.87 (2006) prohibit statutory city council members from having a personal financial interest in contracts of the council. A violation of section 471.87 is a gross misdemeanor. This prohibition has been construed to include contracts of employment. See, e.g.,, Op. Atty. Gen. 469a -2, Jan. 13, 1961. If the official has a prohibited personal financial interest under these sections, the existence of a violation is not dependent upon whether the official actually participates in approval of a contract. See, e.g., Op. Atty. Gen. 90 -E -5, November 13, 1969. Whether an official actually has a personal financial interest in a particular contract is often a factual issue, however, which is beyond the scope of this Office's opinion- rendering authority. See, e.g., Op. Atty. Gen. 90e -5, May 25, 1966. Where a person has a personal interest in a contract that was approved before becoming a council member, continuation of the contract has not been considered a violation. See, e.g., Op. Atty. Gen. 90 -a -1, March 30,1961. Second, to the extent that the union contract, pay equity policy, city administrative code and any other items affecting the terms and conditions of the superintendent's employment were in place prior to his taking office as council member, there was no statutory conflict at the time they were adopted, and the council member could continue to be employed by the city without a 1 See, e.g., Minn. Stat. §§ 412.191, 41'2.221 and 412.241 - 412.311(2006). Mary D. Tietjen December 13, 2006 Page 5 conflict until the expiration, renewal or amendment of any relevant contracts, codes or policies. However, at such time as the contract is renewed or extended, or the city's pay equity policy or compensation - related provisions of the administrative code are readopted or amended, the council member would be in violation of sections 412.311 and 471.87 unless one of the exceptions contained in section 471.88 applies. Third, Minn. Stat. § 471.88 (2006) provides for a number of exceptions to this general prohibition whereby a governing body may, by unanimous vote, approve a contract with an interested official. These include "a contract for which competitive bids are not required by law." Id., subd. 5. Generally, cities are not required to seek competitive bids for employment contracts; Minn. Stat. § 471.345 (2006), the Uniform Municipal Contracting Law, does not generally apply to employment contracts. Furthermore, the procedures for negotiating collective bargaining agreements as set forth in the Public Employment Labor Relations Act (Minn. Stat. ch. 179A (2006)) does not involve the concept of public bidding. Therefore, it appears that the exception contained in section 471.88, subd. 5 may be utilized in renewing the relevant employment agreement to avoid a violation of section 412.311 or section 471.87. Of course, the city's pay equity policy and administrative code are not, strictly speaking, "contracts." However, to the extent that their terms may affect the superintendent's compensation, a cautious approach would be to treat them as contracts with an interested official for purposes of sections 412.311 and 471.87. Fourth is important to note that a governing body that contracts with an interested member must still comply with several procedural requirements, despite the fact that an exemption exists. See Minn. Stat. § 471.88, subd. 1 (requiring a unanimous vote approving the contract);Minn. Stat. § 479.89 (2006) (requiring adoption of a special resolution and the filing of affidavits). Fifth, in circumstances not specifically addressed by statute, courts have not applied a bright -line rule prohibiting public officials from participating in matters where they have a personal interest. Rather, courts consider such situations on a case -by -case basis, evaluating the circumstances in light of several factors. In Lenz v. Coon Creek Watershed Dist., 278 Minn. 1, 153 N. W.2d 209 (1967), the Court said: The purpose behind the creation of a rule which would disqualify public officials from participating in proceedings in a decision - making capacity when they have a direct interest in its outcome is to insure that their decision will not be an arbitrary reflection of their own selfish interests. There is no settled general rule as to whether such an interest will disqualify an official. Each case must be decided on the basis of the particular facts present. Among the relevant factors that should be considered in making this determination are: (1) The nature of the decision being made; (2) the nature of the pecuniary interest; (3) the number of officials making the decision who are interested; (4) the need, if any, to have interested persons make the decision; and (5) the other means available, if any, such as the Mary D. Tietjen December 13, 2006 Page 6 opportunity for review, that serve to insure that the officials will not act arbitrarily to further their selfish interests. Id. at 15, 153 N.W.2d at 219 (footnote omitted). See also E.T.O., Inc. v. Town of Marion, 375 N.W.2d 815 (Minn. 1985). Sixth, we are not aware of any controlling authority providing that the existence of a conflict or potential conflict of interest categorically excludes a person from taking an office. Instead, when such a conflict arises, the conflicted person should take appropriate corrective action. Applying the five factors set forth in the Lenz decision, there may well be circumstances in which the council member will be disqualified from participating in council meetings. Each occasion will need to be separately evaluated as it arises. Cf. 1989 Street Improvement Program v. Denmark Twp., 483 N.W.2d 508 (Minn. App. 1992); Rowell v. Board of Adjustment, 446 N.W.2d 917 (Minn. App. 1989), review denied Dec. 15, 1989; E. TO., Inc. v. Town of Marian, 375 N.W.2d 815 (Minn. 1985). Finally, apart from the conflict of interest question addressed above, for a Plan B city such as Mound, there is the statutory prohibition contained in Minn. Stat. § 412.661 (2006), which states as follows: Except for the purpose of inquiry, the council and its members shall deal with and control the administrative service solely through the manager, and neither the council nor any of its members shall give orders to any subordinate of the manager, either publicly or privately. We are not aware of any previous cases or opinions that address the scope of this prohibition. • It could be argued that, to the extent the duties of the Superintendent of Public Works include directing other city employees, such actions would be contrary to law if performed by a member of the council. However, it could also be argued that the purpose of the statutory prohibition is to prevent the council or its members from circumventing the authority of the city manager and attempting directly to control the work of city employees. Thus, the prohibition might not be violated if the person directed that actions of city employees not as a council member, but as a subordinate of the city manager implementing the manager's policies and directives. Since the manager has ultimate supervisory authority over all city employees including the superintendent, she is presumably well situated to assure that her authority is not compromised. Mary D. Tietjen December 13, 2006 Page 7 We hope the foregoing analysis is responsive to your questions. For your convenience, we have enclosed copies of the cited cases and opinions. Very truly ours, KENNETH E. RAS ° E, JR. GREGORY P. HUWE Assistant Attorneys General (651) 297 -1223 (Voice) (651) 297 -1235 (Fax) Enclosures cc: Mayor -elect Mark Hanus AG: # 1711020 -v I December 5, 2006 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337 -9300 telephone (612) 337 -9310 fax http://www.kennedy-graven.com The Honorable Michael Hatch ATTN: Greg Huwe, Esq. Office of the Minnesota Attorney General 1400 NCL Tower 445 Minnesota Street St. Paul, MN 55101 RE: Attorney General Opinion Request City of Mound Incompatible Office Question Dear Attorney General Hatch: MARY D. TIETJEN Attorney at Law Direct Dial (612) 337 -9277 Email: mtietjen @kennedy- graven.com Via Fax & U.S. Mail 651- 297 -1235 On November 21, 2006, I sent you a letter requesting an opinion related to a newly- elected member of the Mound City Council. Your office contacted me for clarification regarding the questions that were presented in Section IV of that letter. To clarify, I offer the following. If the answer to Question A is "no," then Question B need not be answered. Obviously, the incompatibility analysis is not necessary if the superintendent position is not an "office" to which the doctrine applies. However, if the answer to Question A is "no, please answer Question C and address whether or not a conflict of interest otherwise exists under Minnesota Statutes sections 471.87 - .89 or section 412.311 that would prohibit the public works superintendent from holding the office of council member. (Question C should also be answered if the answer to Question A is "yes," and the answer to Question B is "no. ") If, on the other hand, the answer to Question A is "yes," then an answer to Question B is required. If you conclude that the offices are incompatible and have answered both Questions A and B "yes," then it is not necessary to address the conflict of interest issue in Question C. 302296vl MDT MU200 -133 i ii W" am 0 1 C H A R T E R E D December 5, 2006 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337 -9300 telephone (612) 337 -9310 fax http://www.kennedy-graven.com The Honorable Michael Hatch ATTN: Greg Huwe, Esq. Office of the Minnesota Attorney General 1400 NCL Tower 445 Minnesota Street St. Paul, MN 55101 RE: Attorney General Opinion Request City of Mound Incompatible Office Question Dear Attorney General Hatch: MARY D. TIETJEN Attorney at Law Direct Dial (612) 337 -9277 Email: mtietjen @kennedy- graven.com Via Fax & U.S. Mail 651- 297 -1235 On November 21, 2006, I sent you a letter requesting an opinion related to a newly- elected member of the Mound City Council. Your office contacted me for clarification regarding the questions that were presented in Section IV of that letter. To clarify, I offer the following. If the answer to Question A is "no," then Question B need not be answered. Obviously, the incompatibility analysis is not necessary if the superintendent position is not an "office" to which the doctrine applies. However, if the answer to Question A is "no, please answer Question C and address whether or not a conflict of interest otherwise exists under Minnesota Statutes sections 471.87 - .89 or section 412.311 that would prohibit the public works superintendent from holding the office of council member. (Question C should also be answered if the answer to Question A is "yes," and the answer to Question B is "no. ") If, on the other hand, the answer to Question A is "yes," then an answer to Question B is required. If you conclude that the offices are incompatible and have answered both Questions A and B "yes," then it is not necessary to address the conflict of interest issue in Question C. 302296vl MDT MU200 -133 Honorable Michael Hatch December 5, 2006 Page 2 of 2 Please do not hesitate to contact me if you have additional questions. q cerel n J cc: Mound City Council Kandis Hanson, City Manager Mayor -elect Mark Hanus Greg Skinner, Public Works Superintendent John B. Dean, City Attorney 302296v1 MDTMU200 -133 470 U.S. Bank Plaza Kennedy 200 South Sixth Street Minneapolis, MN 55402 (612) 337 -9300 telephone (612) 337 -9310 fax C H A R T E R E D http: / /www.kennedy- graven.com MARY D. TIETJEN Attorney at Law Direct Dial (612) 337 -9277 Email: mtietjen @kennedy- graven.com November 21, 2006 The Honorable Michael Hatch Office of the Minnesota Attorney General 1400 NCL Tower 445 Minnesota Street St. Paul, MN 55101 RE: Attorney General Opinion Request Dear Attorney General Hatch: We represent the City of Mound as legal counsel. We are writing to request an opinion regarding questions that have arisen with respect to a newly - elected member of the Mound City Council. Enclosed is a copy of a letter previously sent to you from Mr. Mark Hanus, Mayor -elect of Mound, regarding the same situation. Also enclosed is a copy of a letter Mr. Greg Skinner, council member elect. I. FACTUAL BACKGROUND A. Public Works Superintendent. A newly- elected city council member is the public works superintendent ( "superintendent ") in the City of Mound. A basic description of the position and job duties is as follows. The superintendent is a full -time, salaried, non -union city employee. He supervises and directs the day -to -day maintenance activities (such as repairing streets) of 11 employees. The superintendent has no authority over the employees beyond the supervision of daily tasks. For example, he may not determine or carry out discipline, other than a verbal reprimand. Nor does the superintendent negotiate wages or salaries for the employees that he supervises. The superintenderit position is not appointed or otherwise supervised by the city council. The superintendent reports and is frilly accountable to the Public Works Director and the City Manager. As part of the City's annual budgeting process, the City Manager obtains input from the superintendent regarding items for the proposed budget for the Mound Public Works Honorable Michael Hatch Letter November 21, 2006 Page 2 Department. The Public Works Director and the City Manager, however, review and approve all proposed items. The City Manager prepares the final annual budget estimates for each department of the City, subject to the approval of and adoption by the city council. The City Manager is responsible for presenting the budget to the Mound City Council, although she has, in the past, requested that the superintendent participate in that presentation. The superintendent does not set or implement policy for the City or the Public Works Department. The Public Works Director, who is the department head, and the City Manager make and implement policy decisions for the City and the Public Works Department. Like all other non -union employees, the superintendent's salary and benefits are governed by the City's Administrative Code. With respect to salary, the Code provides: 1) the City Manager is directly responsible to the City Council for the coordination and administration of the salary program; 2) all salary adjustments for employees are based upon the City's Pay Equity Plan accepted by the City Council in December 1988; and 3) annual cost of living adjustments for all non -union employees shall be equal to the highest percentage given to Union Contract personnel each year. The Union Contract is subject to approval by the City Council. In addition, the Administrative Code may be amended from time to time by the city council. Salary and cost of living adjustments are applied to employee classifications, not individuals. Employees do not receive merit increases. The Administrative Code also defines an employee's eligibility for benefits such as sick time, vacation leave and severance pay based on objective criteria, such as the employee's number of years of service. B. Plan B /City Manager form of government. The City of Mound is a statutory, Plan B city. See Minn. Stat. §§ 412.601 — 412.751. Under this form of government, the city manager alone has the authority to hire and fire city employees. See Minn. Stat. § 412.651, subd. 3. ("[t]he city manager shall appoint upon the basis of merit and fitness ... all heads of departments, and all subordinate officers and employees ... ") The city manager is the head of the administrative branch of government and is responsible to the council for the proper administration of all affairs relating to the city. Minn. Stat. § 412.611. In a plan B city, state statute strictly limits the authority of a city council in administrative matters: Neither the council nor any of its members shall dictate the appointment of any person to office or employment by the manager, or in any manner interfere with the manager or prevent the manager from exercising judgment in the appointment of officers and employees... Except for the purpose of inquiry, the council and its members shall deal with and control the administrative service solely through the manager, and neither the council nor any of its members shall give orders to any subordinate of the manager, either publicly or privately. Minn. Stat. § 412.661. Honorable Michael Hatch Letter November 21, 2006 Page 3 II. LEGAL BACKGROUND A. Incompatible Offices. Certain combinations of public "offices" may not be held simultaneously by one person. "Public offices are incompatible when their functions are inconsistent, their performance resulting in antagonism and conflict of duties, so that the incumbent cannot discharge with fidelity and propriety the duties of both." State ex rel. Hilton v. Sword, 157 Minn. 263, 264, 196 N.W. 467 (1923). In applying the Hilton test, courts will compare the duties and functions of each office, using several criteria to determine incompatibility, including whether one office is subordinate to the other or when one officer can interfere with or has supervision over the other. See, e.g., Kenney v. Goergen, 36 Minn. 190, 192, 31 N.W. 210, 211 (1886); Op. Atty. Gen. 358 -E -9, April 5, 1971. Your office has taken the position that in order for two positions to be incompatible offices for purposes of applying the Hilton principles, both must be "public offices." (See April 9, 1998 AG letter to Paul Ihle, City Attorney for Thief River Falls) (copy enclosed). In that opinion letter, your office relied on the distinction between a "public official" and a "public employee" as explained by the Minnesota Supreme court in McCutcheon v. City of St. Paul, 216 N.W.2d 137 (Minn. 1974). In McCutcheon, the court held that a public office includes all elected and appointed positions that have independent authority under law to determine public policy or to make a final decision not subject to the supervisory approval or disapproval of another. Id. at 139. (emphasis added) In the 1998 opinion letter, you concluded that a city employee who worked as a computer aideel [sic] drafting (CAD) operator could also serve as mayor. Your decision was based on the fact that the CAD operator position did not include any independent policy - making authority and, thus, was not a public office for purposes of incompatibility analysis..." B. Conflict. Two state statutes prohibit city council members from having personal financial interests in contracts with the city: "Except as authorized in section 471.88, a public officer who is authorized to take part in any manner in making any sale, lease, or contract in official capacity shall not voluntarily have a personal financial interest in that sale, lease, or contract or personally benefit financially therefrom." (Minn. Stat. § 471.87.) "Except as provided in sections 471.87 to 471.89 no member of the council shall be directly or indirectly interested in any contract made by the council." (Minn. Stat. § 412.311) Honorable Michael Hatch Letter November 21, 2006 Page 4 In the 1998 opinion letter referenced above, the CAD operator was employed pursuant to an employment contract. Your office concluded that when the employment contract was renewed or amended, the mayor would be in violation of section 471.87 and 412.311. However, you also noted that such a violation could be avoided because section 471.88, subd. 5, excludes contracts for which competitive bids are not required by law. Also in that case, you concluded that there would be circumstances in which the mayor would be disqualified, under the common law, from participation in council proceedings, but that each occasion would need to be evaluated as it arises. III. PREVIOUS CORRESPONDENCE Your office has also received previous correspondence regarding this situation from Mr. Mark Hanus, the Mayor -elect of Mound. The City has the following clarifying comments regarding the facts set forth in Mr. Hanus' letter: 1) the superintendent is not a department head of the City; and 2) the superintendent has no final authority to determine the budget for the City of Mound or the public works department. Subject to the foregoing, Mr. Hanus' letter is enclosed for your review and consideration. IV. QUESTIONS PRESENTED A. Is the public works superintendent position an "office" to which the incompatible offices doctrine applies? B. If the answer to A is "yes ", is the office incompatible with the position of council member in a statutory plan B city? C. If the answer to A is "yes ", is there a conflict of interest under 471.87 - .89 or 412.311 that would prohibit the public works superintendent from holding the office of council member? As you are aware, the newly - elected council member will take the oath of office shortly after the first of the year. The taking of the oath will trigger the potential incompatibility issue and, thus, we would appreciate your response to this matter before then if at all possible. Honorable Michael Hatch Letter November 21, 2006 Page 5 Thank you and I look forward to your response. Please contact me with any questions. Sincerely, Mary D7j en Enclosures cc: Mound City Council (w /encls.) Kandis Hanson, City Manager (w /encls.) Mayor -elect Mark Hanus (w /encls.) Greg Skinner, Public Works Superintendent (w /encls.) John B. Dean, City Attorney (w /o encls.) To: Office of the Minnesota Attorney General 1400 Bremer Tower 445 Minnesota Street St. Paul, MN. 55101 From: Mayor -Elect Mark Hanus City of Mound 4446 Denbigh Rd. Mound, Mn. 55634 Dear Sir, As the Mayor -elect of the city of Mound I am deeply concerned about a potential incompatibility of office condition that is about to occur. This was reviewed briefly by the City Attorney in September, but not being very comfortable with his opinion, he suggested it be reviewed by your office. In the interest of the city and its future operational and contractual viability, as the new Mayor, I need to be certain that this City Council seat is occupied by someone that does not already hold an incompatible office. It is equally important that the city not face a future challenge of incompatibility. If that were to occur, it could call into question the legality of any past actions (contractual or other actions) and cause serious upheaval in general. In addition, if the incompatibility were found after the elected individual in question were to take his new office, he may no longer have a choice of which office he could hold and could face losing his primary job. As stated in the Information Brief of the MN House of Representatives Research Dept., Compatibility of Offices, Revised: October 2005 Page 3 (Enclosed) "Unless otherwise limited by law, an individual may apply for a job or ran for office incompatible with a current position without resigning from the current position. Op. Att'y Gen. 358 -E-6, Feb. 18. 1958. However, if he or she accepts a position or receives a certificate of election to an office considered incompatible with the previously held job or office, the matter is treated as if the individual had resigned from the first position. Hilton v. Sword, 157 Minn. 263, 196 N.W. 467 (1923)." As a result of the 2006 general election in the city of Mound, Greg Skinner was elected to one of the two available City Council seats. Mr. Skinner is an employee that works in 3 different departments within the city of Mound (Streets, Sewer, Water). Mr. Skinner's job title is Superintendent of Public Works and has worked for the city for nearly 30 years. He directs nearly a dozen people on a daily basis that range from Streets, Sewer, or Water department employees. Mr. Skinner reports to both the Public Works Director (Carlton Moore) and to a lesser degree, the City Manager. (Kandis Hanson) I have three primary areas of concern relative to the incompatibility issue. They are as follows: 1. Councilman Skinner will directly supervise, evaluate, establish the employment of, set the compensation package of, and approve the benefits package of the City Manager. In turn, the City Manager (also the City Human Resources Manager) directs, hires, and fires the position that Superintendent Skinner holds. SS. 412.651 Subd. 3 states that "The City Manager shall appoint—all heads of departments, and all subordinate officers and employees..." Councilman Skinner would have to represent the publics interest relative to the employment of the City Manager(as her direct supervisor /employer). But this can create a temptation to divide Mr. Skinners loyalty between his boss (City Manager Hanson) vs. and the public interest (tire people who elected him). As an example, if he treats her well with pay, benefits, and favorable reviews, she can directly reciprocate with unearned or favored treatment. According to the Information Brief of the MN House of Representatives Research Dept., Compatibility of Offices, Revised: October 2005 Page 4 (Enclosed) on Compatibility of Offices, "The statutes also implement the principle that even if one office does not supervise the other, there may be combinations that involve an undesirable potential for divided loyalties." The City Manager can also face the same divided loyalty for the same reason. Even if we question the direct supervisory relationship between Mr. Skinner and the City Manager, divided loyalties are likely, or at the very least, encouraged by the incompatibility. 2. SS. 412.661 (Limit On Council Powers) states, "Except for the purpose of inquiry, the council and its members shall deal with and control the administrative service solely r through the manager, and neither the council nor any of its members shall give orders to j any subordinate of the manager, either publicly or privately." If Mr. Skinner holds both offices in question, it will be impossible for him to comply with this statute. Councilman Skinner would be barred from directing a city employee in any way. But Superintendent Skinner is required to direct them on a daily basis as part of his managerial duties. Having any administrative or directional control over city employees, is something no other councilmember or the Mayor have, and is expressly forbidden in the above stated statute. 3. Mr. Skinner plays a key role in developing the budgets and annual reports for three different and separate city departments. Those being the water, sewer, and streets departments. There appears to be a clear division of interest between someone who develops the requests for funding as a city Superintendent, and someone who approves the same funding as a City Councilmember. Mr. Skinner is about to take a second office where this will be occurring. If Mr. Skinner held both positions, he would be able to filter operational and budget information from the rest of his fellow council members because of his role as Superintendent of those three departments. If this happened, it would result in council decisions based on inconsistent, wrong, or partial information designed to greatly benefit his departments over any other. If someone held both of these offices at the same time, as is about to occur, the temptation to act in his own department's interest over other departments would be significant indeed. This is exacerbated even more in difficult times of limited financial resources. Again, in the Information Brief of the MN House of Representatives Research Dept., Compatibility of Offices, Revised: October 2005 Page 4 (Enclosed) under the section that 2 references Minnesota Supreme Court Cases it states, "There have been a few Minnesota Supreme Court cases on the compatibility of a pair of offices in the absence of constitutional or statutory guidelines. In these cases the court relies on a common law test that two offices are compatible: 1. If one hires, supervises or evaluates, or sets the salary for the other; or 2. If occupying the two offices is likely to result in occasions where the individual must harm or neglect one position in order to perform duties that are part of the other position. See, Hilton v Sword, 157 Minn.263,196 N.W. 467 (1923)" I believe I have illustrated several circumstances that will be encountered which will certainly meet the criteria in item number two of the above reference. Especially the second concern where it would be impossible to comply with the statute mentioned. Summary My three main areas of concern relative to incompatibility of offices are: 1. Divided loyalty caused by being his employers employer causing the public interest to bejeopardized. 2. Job requirements that, by their very nature, require daily statute violations. 3. Inconsistent and divided budget and revenue interests and incompatible budget influence. Even though Mr. Skinner will have countless other conflicts of interest, its the compatibility issue is one that I need a swift opinion on prior to his taking office. If an opinion can not be generated in this short time frame, I would ask that a suspension be ordered to delay him from taking office until an opinion can be provided_ When I take office in early January, I need to be confident that I am not presiding over a City Council with an incompatible member for the reasons stated earlier. I am requesting that this opinion be addressed expeditiously so that, if these offices are incompatible, Mr. Skinner will have a choice of which office he wishes to hold. Thank you for your immediate attention on this matter. It would clearly be better for all concerned if this opinion is made prior to him taking office. Sincerely, Mark Hanus Mayor -Elect City of Mound I Please provide a copy of your determination to Mayor -Elect Mark Hanus, City Manager Kandis Hanson, and City Attorney John Dean at the addresses below. Mayor -Elect Hanus 4446 Denbigh Rd. Mound, MN. 55364 Day Ph 952- 882 -6211 Fax 952 -472 -5480 City Manager Kandis Hanson City of Mound 5341 Maywood Rd. Mound, MN. 55364 952 -472 -0600 Fax 952- 472 -0620 City Attorney John Dean 5341 Maywood Rd. City of Mound, MN. 55364 Contact phone number can be requested from the City Manager. 4 I am writing in regards to the City or MOUTICi' S request ror your :4-.N opinion on ,the compatibility?to hold office as a Mound City Councilman and serve in my position as Superintendent of rublic Works. - There is a clear dstinc:t.lon e i of duties between my role as a '' " counci. l man and my job as superintendent of Public Works. My work experienco has given _ me a keen understanding of city functions and that, knowledqe will help me in malting ' decisions that are in Lhe best interest of the City of Mound. My position as super1ntendenL of Public works is to arc:nmplish Lhe day -to -day, front line works on the eiLy streets, benefiting ai.l of Mounda residents and visi.tors, not myself Y'�~ alone, f' I have worked in a professional manor during my 30 -year career at the city of Mound and intond on continuing Lo be a professional in my voter elected ' position. 1 will abstain rrom adopting my employmenL contract even `•' • : " -•' though the unions represented in Mound, and not myself negotiate the contract. (maybe _ - zomething abhur - 1 will look at each vote o++d obst:Cain from any that may appear to be personal in nat.are, similar to the way any mayor or council ' member would _ hava to do.) ;F Also, 1 have found no City code L•haL prohibits me rrom serving as a s;. council member. My loyalties are with the Cit:y of Mound and it's residents. I have lived in the " city my entire life and my wife and I plan to spend many more ywarsi here. mho votwzra put mo in office and I believe that I will represcent them ;.. well. Gres Skinner Mound Councilman Elect •A . .. y ..: •, a �.• r.