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Home / Articles / News / News /  City board appointments called into question
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Thursday, August 9,2012

City board appointments called into question

Becker, Karakehian respond to concerns about business partners

By Jefferson Dodge
Attorneys David Lane and Faisal Salahuddin and client Seth Brigham

This week, as local political activist Seth Brigham finally had his day in court regarding the city’s restraining order against him, new allegations about Boulder City Council members’ possible conflicts of interest have come to light. And council member KC Becker has responded to questions about her financial disclosure forms that Boulder Weekly raised last week.

 

At an Aug. 7 hearing, Judge David Archuleta did not rule on the city’s request for a permanent restraining order against Brigham, instead giving City Attorney Tom Carr until the end of next week to provide additional affidavits regarding the personal and emotional toll that Brigham’s antics have taken on city officials. Brigham has been under a temporary restraining order since early May.

In recent months, as BW has looked into allegations Brigham was making about council members, irregularities have emerged about members’ business interests, income and properties. Council member George Karakehian failed to disclose several limited liability corporations (LLCs), saying they represented his “retirement” and were owned not by him, but his company. Council member Ken Wilson labeled a Longmont apartment complex by its name, not by the ownership LLC in which he was a partner. Macon Cowles failed to declare the capital gains he received from the sale of his home in 2011.

The rash of irregularities has contributed to the need for City Attorney Tom Carr, who is both hired by council and advises members on how to handle conflicts of interest, to research how to clarify the financial disclosure forms.

But the questions keep piling up. At least one additional claim has arisen this week regarding Karakehian’s possible conflicts of interest.

City council minutes for the Oct. 5, 2010, meeting show Karakehian voted to approve three nominees for the board of the Downtown Boulder Business Improvement District. One of those nominees was attorney John Mehaffy, who was not only Karakehian’s business partner in Sport-Kar, Inc., but who has been listed as power of attorney for Karakehian’s primary business, Art Source International. Documents show Mehaffy has also served as the registered agent for several LLCs in which Karakehian has an interest, including KAK LTD, which was formed by his wife, Kristin. Mehaffy donated to Karakehian’s election campaigns and is listed on the Downtown Boulder Inc. website as being employed by local powerhouse developer Stephen Tebo, with whom Karakehian owns at least one LLC.

In response to a request for comment about whether he should have recused himself on that vote, Karakehian sent the following email to BW: “Discussed your issue with Tom Carr and he does not see any conflict!!!!”

As for Becker, on her 2010 form, under “Business Interests,” she lists herself as an investor in “1240 Cedar LLC.” Records show that 1240 Cedar bought a Boulder apartment complex at that address for $2.05 million in early 2010. Later that year, city Planning Board files show that 1240 Cedar LLC applied for a “non conforming use review” to gain permission for improvements that included “new landscaping, new site amenities including a seating area and walkways, and a paved driveway and parking lot including a trash enclosure and 13 carports, one for each unit.” Becker did not disclose that the “non conforming use review” submitted to the city involved a property in which she had invested.

Her LLC was one entity that sold the property for $2.5 million on Sept. 3, 2010, six days before the date on her disclosure form. She does not list revenues from that sale on her 2010 or 2011 forms.

After BW raised questions about the transaction on Aug. 2, Becker said this week that she did not receive any profits from the sale of the property until after her September 2010 form was due, and that the failure to include those revenues in her “Sources of Income” section on the 2011 form was an oversight. She says she assumed that including the LLC in the “Business Interests” section of the 2010 form was sufficient.

“That’s a sincere mistake,” Becker says. “Maybe you’re supposed to list those things twice. … If I make a mistake, I make a mistake. I certainly wouldn’t withhold anything, any information. There’s just no reason for me to do that.”

As for the “non conforming use review” submitted for the property while she was an investor, she says she never dealt with that application, and that while she might have been aware of it, it was not a decision that came before council or even the planning board, which has the right to “call up” such decisions. In this case, the request was approved by staff.

“I had no involvement in that,” Becker said. “I never knew what their plans were. I didn’t weigh in on those things. I never actually went over to the property or went in the property.”

When asked whether she ever considered alerting city officials that she had a vested interest in the project, she said, “Heck no. There’s no way they would know. I feel like if I were to call someone and say, ‘Oh, by the way, I own that property,’ it could be mistaken for trying to peddle influence, and I think the less they know, staff knows … I don’t want them to feel awkward. I don’t want them to question why I’m letting them know I own a property they’re looking at.”

One issue that Brigham has repeatedly raised is Becker’s possible involvement in former Mayor Susan Osborne’s appointment of Becker’s friend and former business partner Scott Holton to the Boulder Housing Partners (BHP) board in March 2011. This week, Brigham provided BW with copies of emails sent among Holton and council members around the time of his appointment, including an email from Becker to council member Suzy Ageton, who was the liaison to the BHP board. In the Feb. 25, 2011, email, Becker says she encouraged Holton to apply for the position. She refers to him as a “friend,” outlines his qualifications and recommends him for the board. (Osborne has said she was not aware of the relationship between Becker and Holton at the time of the appointment.)

Becker didn’t deny recommending Holton this week.

“Because I think he’s very smart and competent and insightful, I’m sure I would have recommended him to people, to council members,” she says.

She told BW that her involvement in the 1240 Cedar LLC ended with the sale of the property in September 2010, so she was no longer business partners with Holton when he applied for the BHP board in spring 2011. Becker also points out that Holton was the only applicant for the seat, and the mayor, not the full council, makes those appointments.

But in an email to Holton, council member and current Boulder Mayor Matt Appelbaum indicates that council does have a say in such appointments.

“As you may know, the seat on the BHP authority is technically filled by the mayor, although in practice the council weighs in on the choice, which I would expect to do as well,” Appelbaum wrote in the March 2, 2011, message.

One of Holton’s business partners, Calvin Cox, was also involved in the 1240 Cedar deal and is included on the city of Boulder’s website in a list of recommended lenders for buyers of affordable homes.

Becker told BW that she was unaware that such a list existed, much less that Cox and his bank appear there.

She says the council members likely need more guidance when it comes to filling out the disclosure forms.

“I don’t think anyone ever paid any attention to these; I remember being totally frustrated with it when I first got on council,” she says. “I know I’m willing, and I’ve heard from other council members that they’re willing, to tighten up the form or create a process where there’s more consultation between council members and city staff about the contents of the form.”

Still, Becker says, there will always be relationships that disclosure documents don’t capture, putting the onus on the elected official to come clean.

“No matter how good those forms are, it comes down to council members stepping up and recognizing and thinking about potential conflicts when they’re supposed to,” she says, adding that BW’s inquiry has had an impact. “I think you have some fair criticisms, and I think that’s absolutely brought some things to council’s awareness, and I think that’s all worthwhile.”

Respond: letters@boulderweekly.com

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