Update: City Attorney Finds No EDA Conflicts of Interest

Summary

City Attorney Sally Gillette said she now understands that properties owned by Economic Development Authority (EDA) members are not eligible for proposed parking reductions for new tenants in commercial buildings. As a result, she walked back her prior concern that EDA members violated conflict-of-interest rules.
Ms. Gillette also provided guidance to EDA members on how to disclose potential conflicts and to recuse themselves from matters that come before the Authority from which they may benefit.

Reversing her initial assessment

At its September 17, 2024, meeting, the Falls Church Economic Development Authority received guidance from City Attorney Sally Gillette regarding potential conflicts of interest as well as her statement that she found no such conflicts due to ownership by EDA members of properties that would benefit from proposed reductions in commercial off-street parking.

Ms. Gillette did not attend the EDA meeting. Her statement dated September 17, 2024, was read by Economic Development Division Chief Becky Witsman, who is City staff liaison to the EDA: “It is my understanding that no member of the EDA that discussed or voted on the proposed commercial parking ordinance on June 4, 2024, owns a property or a business that would be benefited by the proposed ordinance (nor is an agent of someone who owns a property or a business that would be benefited). As a result, no further action by the EDA is needed on this item.”

What changed?

Less than a month ago, Ms. Gillette indicated to the City Council that she was aware of two violations by EDA members of conflict of interest rules. Her concern, made public during a mayor’s agenda meeting with staff, was tied to the proposal to relax parking requirements for new tenants of existing commercial buildings. [Read Pulse post below, Owners of Commercial Buildings Eligible for Parking Reductions, September 2, 2024.] It was not clear during the EDA meeting what changed between the City Attorney’s statements on August 28 and September 17.

Some clarity at the September 23 City Council meeting

The Pulse inquired of the City Attorney and Planning Director Paul Stoddard and Senior Planner Jack Trainor if the criteria for eligible buildings had been revised in a way that removed properties owned by EDA Chair Robert A. Young and Member Matthew Quinn from the list and map of buildings to which the new parking rules would apply, if approved by the City Council. The properties to which they are connected and that were on the list of eligible buildings through August are 105 N Virginia Avenue, and 248, 250, and 252 W Broad Street, respectively.

The City Attorney answered this question during the September 23, 2024, City Council meeting. Ms. Gillette said that she “asked EDA members to reassess their potential conflicts relative to the commercial parking ordinance. Each member did that and reported no conflicts exist.” However, “this review caused us to realize that one property – 105 N Virginia – was erroneously mapped by the City…” Because the property is subject to a shared parking agreement, it is not eligible to benefit from the ordinance. “That explains why there was no conflict there,” Ms. Gillette said.

Mayor Letty Hardi asked City Manager Wyatt Shields to ensure the map of eligible properties is corrected and accurate when the City Council receives the proposed commercial parking regulation for a public hearing and final consideration on October 28, 2024. He said he would do so.

Last minute shift in the EDA meeting agenda

The discussion of conflicts of interest on the EDA’s public agenda for the September 17 meeting appears to have been removed just prior to the meeting being held. “We were going to have a discussion about conflicts of interest, and it’s now off the agenda,” Ms. Witsman said. Instead, she said that Ms. Gillette asked her to read the statement, which was available as part of the meeting presentation and was also sent to members of the EDA in an email message.

“We’re just skipping that discussion for tonight,” Ms. Witsman added. Asked by a member of the EDA whether the Authority would come back to this subject, Ms. Witsman responded, “As issues and discussions take place in the future, it’s just something we have to be mindful of that we have to disclose if there’s an action we might take that would benefit [any EDA member].”

Vice Chair Ross Litkenhous inquired, “What are we supposed to do with all of the documentation that was sent from Sally [Gillette] prior to the meeting?” Ms. Witsman replied, “I think just take it under advisement.” The EDA did not discuss the subject further.

City Attorney’s guidance to the EDA

In her guidance to the EDA for discussion purposes, Ms. Gillette posed and answered the following question: “Does a member of a public body have a conflict of interest by virtue of owning a property, the value of which could benefit from a proposed Ordinance under consideration by the public body to which they belong?”

The City Attorney’s short answer was: “Yes. Under the Conflict of Interest law, a person has a “personal interest in a transaction” when he has a personal interest in property … and such property … (i) is the subject of the transaction, or (ii) may realize a reasonably foreseeable direct or indirect benefit or detriment as a result of the action of the agency considering the transaction. An ordinance is considered a “transaction.” Persons who have a “personal interest in a transaction” may elect to either: (i) orally disclose the personal interest at each meeting at which the ordinance/transaction is discussed, or (ii) recuse themselves.”

Her guidance provided sample disclosure and recusal statement templates, an explanation for her opinion, and references to the relevant law.

Update on the conflicts of interest work group

In addition to her comments about the EDA at the September 23 City Council meeting, Ms. Gillette provided an update on a work group consisting of the City Manager, City Clerk, and City Attorney “for the purpose of strengthening the City’s processes around conflicts of interest.” She said, “The goal of our work will be to develop a few protocols for employees and public officials that will offer them increased awareness of and support in assessing their potential conflicts when they take up a new item on behalf of the City. Each individual employee and official will remain responsible for their own conflict assessments and their own reporting.”

Council Member David Snyder asked whether the work group’s recommendations would include “avoiding even the appearance of conflicts of interest.” Ms. Gillette responded, “That would enter into the arena, in my opinion, of public policy, and our objective is to ensure compliance with the Conflicts of Interest Act statute and help to support compliance in that area.” She added, “Our group was not going to tackle that issue.”

However, she said, “We could see if policies could be developed around that subject. The one question that would need to get answered first is if such policies that go beyond what the state requires of individuals [are] preempted. In order to answer that, I’d have to do some digging…and come to you with an answer…” Mr. Snyder asked her to do so, and Ms. Gillette agreed that she would.

Council Member Erin Flynn said she understood the City Attorney’s concern that “we…not [impose] obligations that go beyond what Virginia requires.” She suggested, though, that the Council’s Government Operations Committee continue the conflicts of interest discussion at its October meeting, focusing on the role of staff liaisons to City boards and commissions in flagging potential conflicts when setting agendas, and in questions posed by Council’s Appointments Committee when interviewing prospective board and commission members. A member of a board or commission may be “compliant with the law,” Ms. Flynn said, but still have “many touch points…with other things going on in the City” that might invite conflicts.

References

Economic Development Authority meeting, September 17, 2024. Discussion regarding conflicts of interest begins at timestamp 19:20 and ends at timestamp 20:33.
EDA Meeting Presentation, September 17, 2024. See Slide #19.
Guidance on Conflicts of Interest from City Attorney Sally Gillette, September 17, 2024.
Commercial Parking Zoning Ordinance Amendment Staff Report, September 17, 2024.
City Council Meeting, September 23, 2024. Discussion regarding conflicts of interest is found from timestamp 2:17:02 to 2:23:01 and from timestamp 2:33:25 to 2:34:51.

September 2, 2024

Summary

Upon request, the Falls Church Pulse received from City staff a list of the addresses of 172 existing buildings staff identified whose new commercial tenants would benefit from a proposed zoning change to reduce parking requirements. Further research of those addresses using publicly available databases yielded information about property ownership. We present the complete results of that research with this post.
The Pulse found that two members of the City’s Economic Development Authority have interests in properties whose new commercial tenants would benefit from relaxed parking rules. Both EDA Chair Robert A. Young and Member Matthew Quinn participated in the Authority’s unanimous June 4, 2024, vote to recommend expanded parking allowances to the City Council.
Four buildings slated for reduced parking have recently been put up for sale. Sales materials for one site, 821 W Broad Street, state that the new parking rules are already in place, despite the fact that the City Council has yet to approve them.
Beyond the Pulse analysis, at the August 28, 2024, Mayor’s Agenda Meeting with Staff, Mayor Letty Hardi asked City Attorney Sally Gillette for more detail about “concerns” Ms. Gillette included in a conflicts of interest update she emailed the City Council. In her response, Ms. Gillette referred to “EDA violations” of conflicts of interest rules. She also recommended that a lawyer other than herself represent the EDA in the future.

Exploring a list of addresses eligible for reduced parking

Last month, the Falls Church Pulse requested and the City planning staff provided a listing of the commercial addresses shown on the most recent map of eligible properties whose new tenants would benefit from proposed reductions in parking requirements. In making the list available, the staff noted that some buildings have multiple addresses and storefronts, leading to a total of 172 structures and 224 addresses.

Map of 172 buildings eligible for parking reductions
(Source: August 7, 2024, planning staff report to the Planning Commission)

The stated goals of the zoning amendment to remove the demand for off-street parking for the first 1,000 square feet of new leased space are to help small businesses locate and thrive in the City and encourage adaptive reuse of existing commercial buildings under 20,000 square feet (sq ft). At the same time, the substantial number of properties on the list underscores the broad nature of the impact on current tenants who may be affected if property owners decide to attract other businesses as a result of the parking reductions.

Advisory boards and commissions, including the Economic Development Authority (EDA) and the Planning Commission, have either voted for or signaled they will recommend increasing the allowance of newly leased square footage before parking is required to anywhere from 1,200 to 1,500 sq ft. The Planning Commission is scheduled to make its final recommendation on September 4, 2024, and the City Council to vote on the parking changes on September 23. [Read Pulse post, Planning Commission Public Hearing On Commercial Parking Reductions Delayed to September, August 10, 2024.]

In the most recent staff report to the Planning Commission for its September 4 meeting, the Planning staff proposed that “the Planning Commission recommend approval of the commercial parking ordinance reduction and recommend that the exempt space be 1,500 square-feet, or, in the alternative, the highest square footage under 1,500 square feet allowed by law.”

Research insights

A review of the list of eligible buildings and associated addresses provided by City staff and augmented through research conducted by the Pulse of the City’s property assessment database and State Corporation Commission records coupled with Internet searches of properties for sale generated the table available here and surfaced the following information regarding building ownership:

Two members of the EDA have an interest in properties whose tenants would benefit from relaxing current parking rules. Robert A. Young, EDA chair, is listed as managing member of Jefferson 105, LLC, which owns 105 N Virginia Avenue. Matthew Quinn, EDA member, appears to have an interest in 248, 250, and 252 W Broad Street through the Quinn Family Trusts, which is listed as the owner of the building with the 248 W Broad Street address.

At its June 4, 2024, meeting, the EDA voted unanimously on its recommendation to the City Council that the first 1,200 square feet of new tenant leased space be exempt from any parking requirements. According to minutes from that meeting, “Matt Quinn moved that the EDA support the proposed amendment to section 48-1003 of the Zoning Ordinance as presented but preferably instead permitting a 1200 square feet parking calculation reduction (vs. 1000 as currently in the proposed amendment), so long as the extra 200 square feet meets intended objectives and does not delay progress. Jim Coyle seconded. Unanimous approval.”

The minutes do not reflect any mention by Mr. Young or Mr. Quinn of their interests in properties on the City staff’s map.

Council Member Erin Flynn previously asked during the City Council’s July 15, 2024, work session on the proposed parking changes that they be sent back to the EDA with the request that its members determine whether they should disclose their interests in the eligible buildings on the map so that those interests are clear on the public record. As reported in the August 10 Pulse post, she said, “We’re unlocking land, and we’re unlocking individual uses, and there are reasonably foreseeable direct and indirect benefits to the owners of these properties.”

Asked by the Pulse whether her request had been met, Ms. Flynn said, “I want to be careful not to reveal attorney-client privileged communications. My expectation is that the EDA will take up any required disclosures at its September 17 meeting, before this returns to Council for final consideration on September 23.”

Of interest from the Pulse research, two other limited liability corporations in which Mr. Young is listed as managing member sold properties in 2009 and 2023, respectively, that are on the list of eligible buildings for the new parking rules, if approved. Mr. Young’s Washington 442, LLC sold 442 S Washington Street to Metaxatos Properties, LLC, Washington, DC, for $2.8 million in December 2009, and Metaxatos Properties sold it to The Duvar Family Trust for $2.1 million in November 2017. More recently, Mr. Young’s FC603, LLC sold 603 W Broad Street, which it purchased in November 2021 for $1.95 million, to Optima Holdings, LLC in September 2023 for $3.85 million. Part of 603 W Broad is currently leased to Smoothie King.

Four eligible buildings on the list are currently for sale, and the sales materials for one structure promotes “the new parking regulations in Falls Church,” though they have yet to be approved. The fact that there is a perceived sales benefit broadens the City staff’s stated rationale for the zoning amendment by providing a benefit to existing owners that may aid the sale of their buildings.

The properties listed for sale are 105 N Maple Avenue, 703 and 705 Park Avenue, and 821 W Broad Street. 105 N Maple Avenue appears to be a sale unrelated to the others; its owner, 105 Maple Associates LLC, is represented by Tartan Properties.

However, Sweeney Enterprises, LLC is listed as the owner of the other three – the two Park Avenue properties, bought in 2014 and 2020, respectively, and 821 W Broad Street, purchased in 2023 from Nguyen Revocable Trusts for $1.5 million. In addition, Erik Ulsaker, Executive Vice President of Divaris Real Estate, Inc. is the listing agent for all three properties.

The video and brochure for 821 W Broad describe it as “a prime corner lot for sale with site plans” that would replace the present 1,926-square foot freestanding building on the .35-acre corner lot. The redevelopment calls for a 15,500-sq ft building that “is 90% approved by the City. Zoned B-1, this property is suitable for various uses, including retail and restaurants, especially considering the new parking regulations in Falls Church that support such establishments.”

Aerial view of 821 W Broad Street, located on the corner of Broad and S Spring Street across from St. James Catholic School, and rendering of a planned 15,500-sq ft building.
Source: Divaris Real Estate sales materials

Mayor raises City Attorney’s concerns about EDA violations

At her August 28, 2024, agenda meeting with staff, Mayor Letty Hardi referred to an update City Attorney Sally Gillette provided the City Council on conflicts of interest and asked for more information. “I think the email was a little vague in terms of what the two concerns you had were,” Ms. Hardi said. She asked for more detail about them, noting that “it sounded like the remediation for both of them were pretty straightforward.”

Ms. Gillette did not provide more information about what became clear in her exchange with Ms. Hardi were EDA violations of conflict of interest rules. Instead, she responded that while she did not think there was anything confidential about the violations, “…the EDA is a separate institution of the state—a separate state agency from Council….As their lawyer, I have a duty to them…and I also have a duty to you. …In this case, I have to wear the hat of the EDA lawyer, not the Council lawyer when reviewing how I handle the EDA violations, and how I disseminate that information.”

Ms. Gillette expressed her preference that the EDA have separate counsel, a structural change and staffing addition that the City Council would need to approve. Mayor Hardi suggested that she and Ms. Gillette take further discussion offline.

Council Member David Snyder said, “Mayor, since you raised the topic, I’m very interested in staff moving forward on conflicts of interest and appearance of conflicts of interest standards and training. Hopefully, that can be added to our agendas.”