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Law and the public interest

Veronica Whitney

Eagle County District Attorney Mark Hurlbert said he might decide today if he’ll investigate County Commissioner Tom Stone for a possible breach of conflict of interest laws.

Last week, Hurlbert received a letter from William Sepmeier of Edwards asking him to do a criminal investigation of Stone’s relationship with ASW Realty, the county’s partner at the Miller Ranch affordable housing project in Edwards.

Last year, Stone worked as a real estate broker between ASW and Cotton Ranch LLC on a $7 million land deal in Gypsum. Stone’s business with ASW, however, began a year after the Eagle County Board of Commissioners chose ASW as the developer of Miller Ranch.



“I haven’t made a decision if I’ll conduct an investigation or not,” said Hurlbert, who declined to comment on Sepmeier’s request. “I’m looking at the materials provided and the Colorado statutes.”

Stone, who on Feb. 4 recused himself from any further voting on Miller Ranch, didn’t have anything to say in response to Sepmeier’s allegations.



“It’s hearsay information and I haven’t been contacted by the district attorney,” Stone said. “So I can’t comment on something I don’t have information on.”

Sepmeier’s letter arrived weeks after Stone recused himself from voting on Miller Ranch. Stone’s recusation came a month after the Dec. 23 closing on the Cotton Ranch real estate deal with ASW. Stone will not admit to how much money he made, but it is estimated he will earn more than 2.5 percent of total sale price, approximately $172,500). The commission, however, is contingent on the sale of the houses in Cotton Ranch, Stone said.

Since Stone detached himself from the Miller Ranch project, Commissioner Arn Menconi and some county residents have questioned Stone’s timing.



“I don’t know if there’s a conflict of interest,” said Menconi, who is up for re-election in November. “I’ve been very uncomfortable with this. I am not the one to judge whether this is a conflict of interest. That is the prosecutor’s job.”

Questions arise

Stone and other county officials say the commissioner has done nothing illegal and he was legally advised by former county attorney Tom Moorhead before he showed the land to ASW.

Moorhead counseled that showing ASW the land wasn’t a conflict of interest because the land is in Gypsum, where Stone has no influence as county commissioner, Stone said. Also, if the transaction went through, Stone’s commission would be paid by Cotton Ranch LLC, the seller, and not ASW. Current County Attorney Diane Mauriello declined to comment for this story, saying that she is the commissioner’s legal counsel.

For Menconi, Stone’s recusation comes two years too late.

“Tom Stone has exploited his public office to further his personal gain. He hasn’t acted ethically by failing to disclose the nature of his relationship with a real estate development company involved in doing business with Eagle County,” Menconi said.

“Stone has been wearing two hats for the past years,” he added. “The hat as Tom Stone the commissioner and Tom Stone the real estate agent. “

Stone said his business relationship with ASW began after the Board of County Commissioners chose the New Mexico development company to build more than 280 homes at Miller Ranch.

“There couldn’t have been any promises made because the voting on Miller Ranch was done long before Cotton Ranch was even available for sale,” Stone said. “I think it’s unfortunate that my opponents are attempting to make political hay out of something that is a conflict of opinion, but that’s life.”

Tim Garton, general manager and owner of Cotton Ranch, said there was nothing illegal about the deal.

“There was no pressure from (Stone),” Garton said. “What (Stone) did was to make the transaction work where other brokers have been unsuccessful for three years.”

The relationship with ASW.

In 2000, the county was looking at bids from several developers to build 280 homes at the Berry Creek project in Edwards. That year, the Board of County Commissioners, which included Stone, Johnnette Phillips and Michael Gallagher, chose ASW Realty to develop the project.

In May 2002, after more than a year of a selection process, Eagle County officially entered into a development agreement with ASW Realty to build and develop the Miller Ranch affordable housing project on the land known as the Berry Creek Fifth. The projected net profits are estimated at about $4 million.

ASW Realty became interested in pursuing more private projects in the county and in June 2002, company officials approached Stone, a real estate agent with Slifer, Smith & Frampton, and asked him to show them land in Gypsum.

Before he agreed to show land in Gypsum to ASW, Stone approached the county attorneys to ask them if showing the land to the company could become a potential conflict of interest.

“(Tom) Moorhead said the Cotton Ranch deal wasn’t a conflict of interest because it’s part of the town of Gypsum where I have no influence as county commissioner,” Stone said. “Also the commission would be paid by Cotton Ranch LLC and not ASW.”

Menconi said he had some concerns and in July 2002 and he encouraged Gallagher to have the board adopt a code of ethics to regulate their work.

“But Michael turn down the request,” Menconi said.

In Aug. 20, 2002, Menconi officially asked Stone to recuse himself from further voting on Miller Ranch issues due to his real estate relationship with the developer. But Menconi also said at the meeting that he didn’t think there was a conflict of interest.

Stone declined to recuse himself, saying there had been “numerous attorneys’ positions, decisions or opinions that there isn’t a conflict of interest.”

After that meeting in August, Stone continued voting on Miller Ranch issues, such as the commissioners’ approval of buying out the town of Vail’s $1 million share of the partnership.

Deed dilemma

According to state law, “a local government official should not acquire or hold an interest in any business or undertaking which he has reason to believe may be directly and substantially affected to its economic benefit by official action to be taken by an agency over which he has substantive authority.”

For Menconi, the vote to buy out the town of Vail somewhat helped ASW because it left the developer with less partners to worry about. But Stone said the buy out of Vail was more pragmatic because the town of Vail would have been entitled to set its own set of restrictions on the homeowners.

“The reason we bought them out had to do with the deed restrictions and the difficulty of administering two different sets of deed restrictions,” Stone said.

Veronica Whitney can be reached at 949-0555, ext. 454 or at vwhitney@vaildaily.com.

Menconi to propose ethics polic

Does Eagle County need something else beyond state law to regulate the behavior of its elected officials?

Commissioner Tom Stone says no because state law is enough. But Commissioner Arn Menconi says he believes the Board of County Commissioners needs a code of ethics.

Menconi has been researching ethics codes in other cities and counties and will soon present the board with his recommendations. He expects to have a proposal in the next few weeks, Menconi said.

“The city of Denver has one, Douglas and Larimer counties have them, too,” Menconi said. “It is important for us and any board in many counties. The No. 1 responsibility of elected officials is to uphold the public trust.”

For Stone, the county already has a code of ethics – state law.

“We’re all adults and should be able to govern ourselves,” Stone said. “A code of ethics hasn’t been necessary in the past in the county and the county has done fine. The driving force now seems to be simple political grandstanding.”

In July 2002, when Menconi said he had concerns when he became aware of Stone’s relationship to ASW in the Cotton Ranch real estate deal. Although Stone discussed potential conflict of interest issues with then-county attorney Tom Moorhead, Menconi asked Commissioner Michael Gallagher to adopt a code of ethics. Gallagher declined.

“My goal is to uphold the trust of the citizens of Eagle County,” Menconi said. “I just see this as the best practice in several counties and cities. Codes, laws and rules aside, county commissioners are expected to uphold the public trust.”

Although Gallagher said the idea of a code of ethics is agreeable, he added there are ways to deal with an elected official’s ethical problems without a code of ethics.

“One is you can require compliance with the law and the other one is not to elect them,” Gallagher said. “A code of ethics could be a good tool, but it could also start more allegations. Not only could you violate the law, but you could violate the code.”

Menconi said a code of ethics would “clearly delineate the difference between what’s right and wrong.”

Larry Kallenberger, executive director of Colorado Counties Inc., said there’s no special code of ethics for county commissioners. “It’s an issue to be decided by the commissioners and the county attorney,” Kallenberger said.

The city of Denver, for example, amended an ethics ordinance three years ago. Dave Broadwell, Denver’s assistant city attorney, said the city adopted its own ordinance because it’s a home-ruled city and state law doesn’t apply in many cases.

“In a county, state law controls the behavior of the commissioners,” Broadwell said. “Therefore we adopted our own local rules.

“It’s a policy discussion,” he added. “A lot of cities have adopted city ordinances, but it’s kind of apples and oranges to compare cities and counties.”

Pete Maysmith at Common Cause, a nonpartisan watchdog and advocacy group in Denver, says there are several benefits to adopting a code of ethics.

“Our state ethics law is one of the weakest in the country,” said Maysmith, who helped craft Denver’s code of ethics. “State law on ethics is unclear, it’s full of loopholes, it is permissive. It isn’t a strong piece of legislation.

Stone’s business relationship with ASW is a perfect example of how a code of ethics could have been helpful, Maysmith added.

“The county attorney’s advice based on the state ethics law may be fine, but it may well be that the law is inadequate,” Maysmith said. “That’s another reason to pass a strong code of ethics.

“Strong ethics codes are in the best interest of everyone.”


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