POLICE & FIRE COMMITTEE Monday, March 10, 2008 Chairperson Greg Holcomb called the meeting to order at 5:30 p.m. All members present. I.
Discussion of a proposed resolution urging a moratorium on home foreclosures an enactment of the homeowners and bank protection act and foreclosures within the City of Lorain.
HOLCOMB: As we know, there was a resolution submitted by Mrs. Molnar about a month or so ago. I have invited a couple of guests to discuss more information on foreclosures in general and what people in our own community are doing to help alleviate the problem. Because of the ongoing efforts that I know Mr. Nabakowski is doing with the County and the coalition that he is bringing together too, if you want real detailed information the conference that they are holding is probably the best bet for that than just hear tonight. MOLNAR: I would like to introduce Scott Mooney, Summer Shield and Jamar Penn. SHIELDS: Summer Shield, 2922 Harrison Street, Oakland, CA. I have been organizing with a youth movement that is associated La Rouche Political Action Committee for the last six months specifically to get the support among the City Councils on the State level to put forth similar resolutions. So far we have gotten over 60 cities in support of this nationwide; including four in Ohio. We have gotten one State (Rhode Island) where both the Senate and the Assembly have voted in favor of this. This is part of a ground swell across the Country. On the one hand, we are dealing with a foreclosure crisis. Undoubtedly, I have seen it firsthand. I have been across the Midwest organizing in favor of this. To say that this foreclosure crisis was not caused by people who’s wages have been collapsed as a result of a deindustrialization process within the United States is a big “no-no”. A city like Lorain and a county as Lorain knows beyond a doubt that when you have a collapse of wages you should know that this corresponds to people’s inability to pay their monthly payments on their mortgages. Among other things, defaults on credit cards and car payments. The reason this is not called a credit card crisis or a car payment crisis at this point is because what is most in your face right now and the biggest way to get people to look away from the underlining issue of this is the foreclosure situation. I think people have an idea of what the legislation says. Scott Mooney will go through the nature of the legislation and why we are going with it. I will touch on it real briefly. What we are dealing with right now what basically amounts to a financial bubble on a large scale. On the fifth page of this packet you will see something called “La Rouche’s Triple Curb Feature”. We have had a net decline of industrial capacity inside of the United States. You are dealing with a situation at this point where the average income (especially among the youth)…..if it weren’t for parents then a lot of youth wouldn’t have much of a future between the loan payments they have which are also capitalizing banks at this point and any other sort of payment…they would not be able to sustain themselves. In many cases, they are not able to sustain themselves and they are dealing with a situation where they are losing a house and you have a much a larger crisis at hand. Banks to a growing degree have been capitalized with loans that are associated with a real, physical manifestation (whether it’s a housing loan or whether it’s a credit card loan); this is how banks have been living. The game was if we can get a house that isn’t worth $500,000 and the price of the house increased because you live in California and you moved next door to Arnold Schwarzenegger…they said “we can charge someone for $500,000 for a 1
POLICE & FIRE COMMITTEE Monday, March 10, 2008 house that shouldn’t cost that much” our bank has the ability to keep capitalizing itself through fraudulents. The subprime lenders were involved in this and the subprime mortgages were the last phase of this when they said “people can not afford much of anything at this point because of an ongoing collapse industrially so we will have people take on a loan that they definitely cannot pay back”. There have been two sides to this. On the one hand, you have had a financial increase that hasn’t been associated with less and less in this industry; so less and less reality. On the other hand, financial instruments that have been created to back this thing up and it’s reach a critical point at this point. I do not have to convince you guys of the problem. The nature of the legislation that has to be passed…if there is a view that somehow the horrendous condition phasing several people in the United States at this point is not associated with the collapse of the wages of the people then you are missing the point. Any attempt to just give money to the people or to the banks at this point is hyber inflationary. When people get their checks in May (the stimulus package) is not a solution. Increasingly, all the solutions that have been put forth by Congress have been of that nature. What we are proposing is completely different then what is being proposed for the most part. MOONEY: Scott Mooney, 25513 Five Mile Road, Redford, MI. What Summer was going through was a financial bubble that really has been building up for many decades now. In July of 2007, Linden La Rouche made the assessment that this bubble was burst; this was the end of the financial system. Since August of that year, we have been campaigning for really what is the only solution to this crisis which is a government reorganization of the system. What we are calling it is the “homeowner and bank protection act” because it adds to elements to it. Since this time in July with the collapse of the system, things have been getting progressively worse. On a week by week basis, you can read the headlines that the major banks of the world are taking huge losses (one right after the other). They are writing off billions of dollars of their assets. As this crisis has unfolded, we have already generated about 70 cities that have signed on to the homeowner and bank protection act. What the cities and states are facing is something that can’t be solved within the domain of a city or state. What you need is a congressional piece of legislation that puts a blanket freeze on home foreclosures and takes an action to freeze this financial system. I want to make it clear that this congressional legislation. What we are asking the Lorain City Council to do is join this drum beat and moves Congress to act. Congress is coming down. They are getting pressure from the hedge funds and the banks on Wall Street not to do anything. We are talking about a Franklin Roosevelt style solution. The bankers do not want to be regulated. They do not want to be told that all these assets that you have built up over a 20 or 30 year period we are going to write them off because it’s the only way to save the economy (not the financial system but the economy). That is the only way to protect the interest of the citizens of this nation and really the world. You have to have a mobilization of base across the country demanding this action of Congress. We are asking your City Council to join the 70 City Council bodies that have so far passed this resolution (and Rhode Island). The key thing to this is that we have to dramatically reduce the prices associated with houses. The house prices today have been inflated beyond belief. We are talking in some cases a 25 percent write down of housing prices. If you take a place like Loudon County, VA which La Rouche has called the epicenter of the housing crisis…you are talking about 75 percent at write down; a 75 percent of over inflation of these real estate prices. In the mean time, what is needed to protect the homeowners in keeping their homes is a blanket moratorium. We do not make the homeowners suffer just because the financial system got out of whack. 2
POLICE & FIRE COMMITTEE Monday, March 10, 2008 Already there have been $2 million evictions in the United States since this crisis at the end of the summer. It has got to be written off. The mortgages values have to be taken down. People will say “you are going to bankrupt the banks”. This is all fictitious values anyway. If you look at the second element of this homeowners bank protection act it’s the banks. This is really the first step to a much larger type of economic recovery in which the banks are going to be needed. The banks have already bankrupted. So what La Rouche is proposing is protect the federally chartered, State chartered banks and allow them to perform their traditional functions not of speculating, not of gambling in the financial market but of being the conduits for federally generated credit into the communities for productive activity; industry and infrastructure. If you think about the crisis that is affecting the banks, in the fourth quarter of 2007 National City Bank wrote off $23 billion worth of assets, JP Morgan Chase wrote off $16.8 billion worth of assets so it’s no joke. This financial system is coming down. Bloomberg.com http://www.bloomberg.com/intro3.html a financial service has estimated that anywhere between $146 billion has been written off by the banks since the summer. The thing that I want to emphasize is that some people will object and say, “What is behind this?” What is behind this is a bailout, a taxpayer bailout. All these people took on mortgages that they couldn’t afford, they were irresponsible. You can’t make the tax payers bare the grunt of irresponsibility. This isn’t a bailout though. There is not going to be any amount of taxpayer money going into bailing out the values of these homes; you write them down (the key thing). What Congress is proposing is actually a bailout. They have three things that are under consideration. They have past a predatory lending bill; banning predatory lending which is fine but there is not much lending going on in the economy right now and credit has already frozen up. What is being proposed right now is a $20 billion bailout of these mortgages at existing prices. That is the bailout. Where is it going to go? Who is going to benefit? It’s going to benefit the banks. It’s going to benefit the speculators and the hedge funds. It’s not a bailout even of the people. It’s a bailout of the financial system that brought us to this crisis. The third thing is maybe having Fannie Man Fred Mack buy up these mortgages but look they are bankrupt themselves. If you look at your sheet, they have lost billions of dollars during this period as well. Everything that Congress is doing is wrong on this. The key thing is that this is urgent. We need your help in getting Congress to act on this. EDWARDS: I have talked to Summer Shields (since last August) and I still have a lot of questions about what you are trying to do and how it’s going to come into play with what we need the mainstream to do. Are you telling me that you have 60 cities (possibly 70 cities) out of 25,000 cities in the U.S….what is happen that we haven’t been able to move that number? I think there are some serious things that need to be talked about before we make any kind of resolution because we need to hear what the people in this area are doing, what the State is doing. I also have not heard you talk about linking up with both parties on both sides of the aisle in Washington. Unless we get their ear, pinch their ear to listen to what we are trying to do and what we want to do, at the rate your going maybe 120 or 200 cities are splashing a pen. Have you gone to the State legislators and federal legislators in regards to trying to make this happen? This is a real serious problem in this country. I brought this to Council about five years and we did not do anything about it. Now, it’s really beginning to grow in my neighborhood as well as all over the United States. The problem is here and we have to come up with a way to deal with it. Band-aid a person is a not going to help heart surgery. We have go to do the right thing. I don’t want this City to pass a resolution and in six months from now we are going to say that we did the wrong thing. Some things are 3
POLICE & FIRE COMMITTEE Monday, March 10, 2008 slowly put together that may stay but some things are put together very fast but what impact is it going to have. I know there are people out there that are struggling and suffering from these kinds of deals that have been made. We see now that they are looking at country wide lenders. I think we need to look at what is going to help out the people. I tell you that La Rouche has not been the guy that has been on our side. He has been known to be a spoiler. I am concerned about that. Where do we go with this? How many other advocate groups around the country that is nationally known? Have you looked up NAACP or Urban League? MOONEY: I think the main thing is that this piece of legislation challenges people’s actions. What La Rouche is confronting is that for the last four decades the way Congress and the American population have thought about economics is insane. You can get rid of your industries, productive elements of an economy and run an economy off of a real estate bubble and everyone has bought into this. The cities have bought into it because they have said they don’t have any industries because they are all leaving the country but we need some source of revenue. So, oh, alright a real estate bubble…fine, it will work for the time being but that’s not a real economy. The resistance to this comes from two places. One, you got a Wall Street establishment that says “no, this is communism.” It’s not communism. It’s what Franklin Roosevelt did but they don’t like Franklin Roosevelt either. The other source of resistance is that we are asking people at the base, in the City Council’s and the State legislators to take the leadership. Leadership doesn’t mean doing something that is popular; it means having the courage to tell the truth when others aren’t. EDWARDS: It means doing what is right. MOONEY: Right. Doing what is right is not always a popular thing. In fact, nine times out of ten it’s the most unpopular thing to do. I think that is the key thing. This resolution challenges at the very core the failed set of policies, which have brought us into this crisis. It’s a fundamental thing. It is not a housing crisis. The housing crisis is the blister on the patient who is terminally ill. The solution has to go to the core. EDWARDS: My question was…why haven’t you tied in with some of the popular advocate groups in this country to try to make things happen? I think numbers are power and by tying in with those groups….if you can agree on the same thing I think you will have a much better momentum around this country in developing one of the basic things (a petition). With the way things are happening in this country, you can develop millions of signatures in a few days time if you put the network together with the right group; that is what my question is. MOONEY: That is what we are in the process of doing. People know that there is a crisis but I don’t think that everybody has acknowledge the degree to which this is a systemic crisis and what we are actually facing here. There are plenty of groups like ACORE and others that are addressing this from the housing standpoint. This is a terminal systemic economic crisis and not everybody is ready to think about that. Not everybody is ready to say “we have to change the way we have been doing things entirely for four decades.” I think as these solutions that are being put forth by the cities and Congress fail….like the Ohio package that was put forth by Governor Strickland for a voluntarily participation by the lending agencies…these things are not going to work. I think as the failures accumulate 4
POLICE & FIRE COMMITTEE Monday, March 10, 2008 people will start to open up and say “we have to do something more fundamental.” We will be on the ground organizing for it. FALLIS: In the resolution, you indicate to create a federal agency to place federal and state charter banks under protection; could you give me a little clarity to what this federal agency will be? SHIELDS: What I can tell you is that on one hand (first and foremost) is that you want to make sure that you have some sort of agency set in place that can oversee this thing. It will not just be any couple of people in Congress. You are going to need some sort of federal agency that is going to oversee a number of things (the main things from the legislation). The payments coming from the people (rental payments) are going to come from people to recapitalize the bank; it’s going to have to be done through some federal program. The issue at hand is how you really capitalize a bank. If a bank isn’t really getting money from a number of mortgage back securities that have been packaged in such a way that you can have a large amount of some sort of financial capitalization then how are you going to capitalize a bank and what kind of entity are you going to have that oversees this capitalization process. In this case, we have to ensure that you have a federal mandate because through the Constitution of the United States you can have a federal mandate that freezes foreclosures. This has been enacted in the past for instance under Franklin Roosevelt; several Supreme Court decisions on State level were upheld by the federal government to have foreclosures occur. As a matter of fact, New York State had introduced a piece of legislation after viewing our legislation which is calling for a similar piece of legislation for the freezing process that occurred in New York State but this would be on a federal level; a federal approach to this process. FALLIS: Currently, banks and savings and loan institutions are regulated by the FDIC Insurance Corporation. The Federal Reserve Banks are audited by the Office of Control of Currency and those are federal regulators. If a bank wants to come in existence it goes to Wall Street and goes out and issues stock. That is how a bank gets started. There are many banks that get started in the United States. When they make money (any net profit) goes into their capital. The regulators of all banks in the United States are audited by a formula called camel. The auditors look at the capital, assets, management of the company, equity and liquidity. They determine whether a bank is sound or not. What I have read recently (within the last week or two) is that there are 79 financial institutions that are considered troubled out of 6,000, 7,000 or 8,000 in America today. I would not consider that a systemic economic crisis. There have been comments made that National City Bank lost $16.8 million. They have reserve set aside from that. They have adequate capital to continue to operate as a national bank so I question comments that were made today that say that there is a systemic economic crisis that banks are bankrupt. I question this based upon the information that I have read. MOLNAR: I have had enough dialogue on this. I have been corresponding with people down in Washington, DC. Personally, I don’t think we can possibly go wrong by passing this ordinance. I know there are also banks that have closed. It’s a situation where if we can be of some help by passing this ordinance then I say “let’s do it.” This is my own personal opinion. I do want to thank Summer Shields, Scott Mooney and Jamar Penn for taking the time to come here. I really admire them for coming from that distance to explain this to us. 5
POLICE & FIRE COMMITTEE Monday, March 10, 2008 Like I said, I have attended many of the foreclosures and predatory lending meetings locally here in the county and I’m looking forward to another one coming up. However, I don’t feel as though we can lose by passing this ordinance at the proper time. HOLCOMB: I have a couple of guests in the audience to speak more generally about the foreclosures locally. We have a bank from Main Street that I have invited to speak on some of the issues locally. MALANOWSKI: John Malanowski, 4884 Pheasant Drive, President of First Federal Saving and Loan Association of Lorain. I urge that when you take a look at anything that you pass in the area of foreclosures, please keep in mind your local institutions. We are a portfolio lender. As a portfolio lender, I don’t sell in the secondary market. That is not my primary purpose. Over the last five years, I think we have sold less than 12 loans out of 3,800 that we have originated on a secondary market. The only reason that we have sold those loans on a secondary market was at the wish of the customer. At that point, they wanted the absolute lowest rate on the market and we didn’t offer it. They chose a secondary market; we assisted them at that point in time. The other loans I am putting on our books. I am living with those loans. I literally prosper and have my challenges as a financial institution as our communities have challenges in the area. I am limited what I can do when we start a foreclosure process. I am limited to strictly protecting the property and I am limited to how much work I can put into the property. When we start a foreclosure on any piece of property it’s because there is a breakdown in communication between us and the customer. I have no set number of days that I have to start a foreclosure process. If you look at our records, you will find that customers are well beyond 120 days delinquent before we even start thinking about starting a foreclosure. Our attempt is to work with a customer. We prefer to work with a customer. If you have people who have problems with their mortgages (I will only speak about First Federal of Lorain) my recommendation is to please have them pick up the telephone and give us a call. We have staff that will sit down and talk with them. I don’t want to foreclosure on people. My goal is not to foreclose. Our goal as a company is to put people in homes and have them literally pay the house off at some point in time in the future which is the best day of a customer’s life (when they pay it off). FALLIS: I just want to support what Mr. Malanowski mentioned about having folks that are in financial crisis to actually call their lender. The City of Chicago did an analysis and they found that 50 percent of the people who are in a mortgage crisis situation do not go out and seek help. I would just support and encourage those folks who do have a mortgage problem to go out and seek help; talk to their lender, other agencies that may be able to give them some wisdom and look at the situation a little differently. MOLNAR: Mr. Malanowski, I understand that you have a secondary…some of the people had chosen to go to a secondary. When they go to a secondary market is it at a higher interest rate? MALANOWSKI: No, at that point it was at a lower interest rate. MOLNAR: I suppose that you are aware that we have about 743 foreclosures right here in the City of Lorain. How many are in your bank?
POLICE & FIRE COMMITTEE Monday, March 10, 2008 MALANOWSKI: There are over 1300 foreclosures in Lorain County and I had 15. MOLNAR: We are not counting the other banks as to how many they have. MALANOWSKI: Again, I will speak of the First Federal of Lorain. Any moratorium that you implement, you are affecting all institutions across the board. MOLNAR: I understand that. HOLCOMB: I wanted to get a little local perspective on this banking issue and try to get multiple sides on the issue before making any decisions. FERRER: Mike Ferrer, 3520 Edgewood Drive. I here on behalf of Fred White, President of the Lorain County Urban League. We were invited by Councilman Edwards to come in. What we are seeing at the Urban League are foreclosures that in many cases we cannot help with; very bad decision making but at the same time, very questionable services offered by mortgage companies. I know there was something that I was reading the other day about Evergreen and how they worked a situation in Cleveland. What we are seeing a lot of is people who now have these balloon payments that are coming up. They were given a great initial deal for the first five years and not really scrutinizing contracts that said “come years 8 and 9 we will be getting the house back from you because your balloon payments and the mortgage increase.” What happens when you miss one to three payments? We have sent people back to First Federal and Third Federal and they seem very willing to work something out with these people. I have been watching a lot of the hearings and we have seen that countrywide all of a sudden they want to cooperate, they want to work with you but there was a lot of taken advantage over the last ten years (they say it goes back three decades). The National Urban League which is all over the country is doing an analysis on this. They are about to publish a study within the next couple of months of what they see. The National Council of La Raza which is the advocacy organization for the Hispanic community throughout the United States has already opened up a whole department on mortgage foreclosures; that is the nature of the crisis. In general, the Hispanic community is looking at it as…we have a conference every year (this is our 13th year) and we believe mortgage foreclosures will overtake even the issue of immigration starting with next year; the problem is that out of control. In hopes of doing what we can, the Urban League, the National Council of La Raza, many of the nonprofit organizations is doing a lot of mitigation. We are bringing the bank, lender and the buyer together who is now in trouble hoping that the fact that the Urban League or La Raza are interested would at least have some of these lending companies want to discuss it. You saw on the credit crisis the moment that it went into the committee and the things were televised. We do a lot of financial literacy. What you are doing is for the future. People need to become aware. Many banks did not give out the disclosure forms that they were supposed to give out when someone got a loan from them; they forgot. It never went out to many of the people who are not in fiscal trouble. The Lorain County Urban League does a lot of the housing training for Lorain County. We work with several cities. We are also dealing with many of the workouts. That means bringing the lending institution together with the buyer and letting them know that we are aware; hoping that they will do the right thing and pointing out certain things that we saw in the original contract that apparently people did not go check out. You have to understand that a lot of people that we are dealing with saw the possibility 7
POLICE & FIRE COMMITTEE Monday, March 10, 2008 of the American dream of getting a home and didn’t read everything because that was the American dream. In many cases, mortgage companies took advantage of that. We do a lot of prepost counseling for homebuyers. I don’t know if you are aware but one of the things that Lorain County has put together is a foreclosure task force. In fact, I would encourage if people want to see what the movement and progress would be then this would be a good way to see it. This will be this Saturday between the office of the Lorain County Courts, Lorain County Recorder, Lorain County Commissioners and they are doing legal assistance, credit counseling, housing counseling, lending professionals and also bringing in lawyers to actually sit one on one with people in foreclosure status or moving towards foreclosure status. They will counseling them, advise them and showing them what the options can be; that is all we can do. People who are in the situations that they are in for whatever reason have very little time (in the next three months). If you look at Mr. Bellamy’s data which I believe a long time ago the banks didn’t want to speak out but we believe the data is more than valid. At the conference this year, we are doing two foreclosure work sessions; on how it came to be (step by step) and utilizing the services of this task force. There just isn’t a lot that we can do right now. They are in these situations that have gone past 120 to 160 days. The best that we can do is prepare this next generation and also do the mitigating, bring organizations together and talk about it, let them know that City Council, the Law Director, nonprofits are watching and we are hoping that you will do the right thing. This is a crisis that is not going away. We may have a moratorium situation but some people just really made dumb decisions. Do we penalize everyone or give everybody a free pass? It’s a difficult thing when we hear the word “blankets” because not everyone in our opinion is culpable and there is culpability on both sides. That is the struggle that we ourselves (when people come in) want to empathize, sympathize and look at the context. It is real difficult to know what really transpired. All we can do is continue our financial literacy workshops, our home counseling and mitigating on behalf of people that are in this situation. I will tell you that there are more people close to this situation that we can even imagine at this time (people who are sitting in this room who are wondering what they are going to do as the payment structure changes within the next couple of months). All we can do is counsel, mitigate and provide as much information as possible. I invite you to visit the National Council of La Raza’s website and the National Urban League’s website. You will see where things are moving. They have done a lot of work in legislative bodies that may be of use to you as you are considering any resolution. EDWARDS: The name that you have mentioned has been like a Godfather in this city, Paul Bellamy. I called Paul but he didn’t get back to me. Someone said that he is working out of Columbus. Paul has been a guy in this community that has championed this foreclosure thing a couple of years ago. I’m glad the Urban League has got into this, trying to put the information out there. I don’t know how you are trying to reach the people but they need to know that there is someone out there willing to listen and help them. SCHUSTER: Understanding that we do have a very serious problem not only locally but on a State and Federal level as well. At this point, there is a lot of information here. There is a lot more that I would like to be able to obtain. I would like to make a motion to put this into abeyance until we can get the other information that we need to receive and move forward with it at a later time.
POLICE & FIRE COMMITTEE Monday, March 10, 2008 EDWARDS: I ask that you hold a meeting approximately about a month from now. I think there are other people in this County and State that we need to bring and get more information from.
Moved by Mr. Schuster, supported by Mr. Fallis, to hold the legislation in abeyance. Motion carried.
EDWARDS: I think the cities and communities that have passed this resolution, what do you intent to do with this? SHIELDS: The intent as we seen in Pennsylvania (who had the most amount of cities to pass this) is to apply pressure on the federal level and get some sort of activity going on a federal level to enact this. With the basis being that things are going to be getting a lot worse in the coming future. No one thought about 6 months ago that 2 million people would have been foreclosed on by the end of 2007. If you asked people if City Group was going to be contemplating that they would be in huge financial trouble, they would have said “no, that wouldn’t happen.” It’s a similar type of situation today. As things start to unfold, people will have to open their eyes. EDWARDS: If Lorain City Council passes the resolution, would you sign an affidavit saying that we will not see this advertised someplace in the Wall Street Journal or some other place? SHIELDS: I don’t know why they would…. EDWARDS: I’m not asking you why they would. I’m asking what would you do. Would you sign an affidavit to that affect? SHIELDS: I would have to get back to you on that. I’m not quite sure. EDWARDS: Well, get back to me and let me know. We don’t want to get caught in a “catch 22.” I hate to say it but it’s the truth. The guys that you are working for may have the best intentions but his track record doesn’t have the best benefit for America. -------------------------------------------------------------------------------------------------------------------II.
A work session on ethics.
HOLCOMB: I have been questioned and put a letter in the packet as to why we are having a discussion on that after we passed our resolution last week that Mr. Given had proposed. My answer was that I don’t think passing one resolution puts us in the clear and says that we are good to go and that we are good on ethics for the remainder of the year or the existence of the City of Lorain. I think it should be an ongoing discussion that we have. I just wanted to take a little bit of time to see possibly what other steps that we can take to ensure that we have an ethical workforce; ethical standing with our elected officials including ourselves and seeing what can be done. One of the things that I included was a printout that had a sample document that we passed…it’s the State law. It’s a model ordinance put together but at the 9
POLICE & FIRE COMMITTEE Monday, March 10, 2008 end of it, it also adds in the fact suggestions of permanent education, assistance for people that want to find out where to go and penalties. The fact that it also arises is the idea that we can go ahead and make suggestions above and beyond what the State also requires. One of the thoughts that I had, at the State level the General Assembly passes a resolution jointly reaffirming their ethic standards much like they do their rules. Every year they discuss those and pass those for every session. I thought maybe that could possibly something we can work into either the Council rules or through an ordinance that we can add in and be something that this City does on a yearly basis or at least every couple of years as a new session of Council if new members come in. In addition to that, I also read Pinkerington (outside of Columbus) was the first city in the State to basically pass this model ordinance as part of their actual ordinance not just as a resolution. They took it one step higher with one requirement that their appointed officials be required to file the “voluntary ethics form” the same filing form that we all fill out that their appointed officials also file the “voluntary form.” The only difference (we would have to do research on this) is that they are a charter city however and their appointed officials would be somewhat different than the ones that we have. I still think that there may be ground for us to work off of. I wanted to ask if this is something that we want to pursue. Is this something that we think we should do (maybe review once or twice a year)? FALLIS: I can tell you from the business community when someone is hired in they have to read the ethics policy, sign a statement that they read it, understand it and abide by it. In addition, each employee is required to affirm that they have read the policy once a year and people in the human resources are would send them a hard copy or they can get one off of the web page. It’s the best practice to have your employees just be reminded of that at least once a year. I would concur with your thoughts that it would be good practice that we would want to consider to implement here in the City of Lorain. HOLCOMB: You just reminded me, in the printout I made, the section just below, a paragraph just below the model ordinance link has a statement in here that I would like to question the Administration if we actually do this. Ohio Revised Code Section 102.09(D) requires that each public agency provide a copy of the ethics law to each employee official or employee serving the agency within 15 days of the hire election or the appointment. It does state that each official or employee must acknowledge in writing that he or she has received it and that you can obtain the copies by contacting them. I was wondering if that takes place or is that something we need to possibly let our department heads know as new hires come one so that we can keep on top of that. MAYOR: What hasn’t been done in previous Administrations, to my recollection, is any explanation of benefits, responsibilities, description of benefits, requirements of the job, there is to my knowledge no updated employee handbook. This Friday, Mr. Shawver has compiled a list of employees that will be coming down to receive that training. I believe a copy of the ethics law will be in the packet that will be distributed to them at this employee training session. That is something that hasn’t been done prior. SHAWVER: The list was compiled for me by Mrs. Mary Garza. She is going to be doing orientation (this Friday) and we will make that stuff available before the meeting (Friday 10:00) for new employees. Chase and I have put together in the past, it’s unfortunate that they hire an employee and as time goes on they would have to learn next month that there 10
POLICE & FIRE COMMITTEE Monday, March 10, 2008 was an AFLAC program. We are putting together a program now that when they get hired they will go through everything during orientation before they take their job. We will make sure that ethics is part of it. I would like to see that as much as I would like to see every elected official take a drug test. HOLCOMB: That is another discussion. I don’t think that is a suggestion that wouldn’t be too farfetched for all the officials. SNODGRASS: I have been to a number of ethic seminars sponsored by the State of Ohio. I wondered if you have been in contact with the Ethics Commission that maybe they would be willing to come here and give a presentation to this Council and maybe to all of the department heads concerning ethics. HOLOCMB: That is a very good suggestion. I know they do provide training and presentations. If that is something the body would think would be a worthwhile thing then I think we can go ahead….the Mayor advised me that they will schedule that in and invite us all. I think that is something that would help out in understanding all of the issues that are involved with ethics law. SNODGRASS: As elected officials, we have to file with the State Ethics Commission a disclosure report. I don’t know if it would be the pleasure of this body but if we would make those available on file with the Council Clerk (in regards to City Council). Things can be obtained through Columbus but maybe this would make it a little bit easier for the public if they do have certain questions. CLERK GREER: I think a number of the members already do. They provide me with a copy and I keep them on file in the office. SCHUSTER: They had mentioned that these packets would be handed out to new hires and that the previous Administration and previous years before don’t know that our current employees have possibly a good understanding exactly of the same laws that our new hires are going to be held to. My suggestion would be that every employee should receive of those ethic laws and also sign that they do and have received it so in the future if there is a problem they won’t have the excuse that they didn’t know or didn’t understand. I would think that possibly every employee, new hire or current would get a copy of these laws and be held to sign for that so that everybody is on the same page. MANTINI: As part of my general audit, I send a form out to each of department heads in the City and many of the sub department heads…it’s not a detailed questionnaire but it does discuss some of the ethics questions that you are posing as whether they had any interest in different types of businesses that do business with the City of Lorain. They are required to fill that out and return it to our external auditors. If you like, I could get a copy of that memo and distribute it to each Councilman so that they know at least what we are doing. I can also give you the distribution list that I use on that if you would like. FALLIS: I would make a recommendation that the document that Auditor Mantini just referenced be considered incorporated as part of the ethics policy. It is a very important document to have. I think it should be part of the ethics policy. 11
POLICE & FIRE COMMITTEE Monday, March 10, 2008 TOBIAS: Paula Tobias, 1503 East Erie. It’s positive to hear that we are going to hire new employees. I was a little worried this year that we would be letting go employees. Will you have work sessions and have a speaker come with specific examples? Will there be a phone number in case people have questions? MAYOR: As part of what the Ethics Commission sends down, it doesn’t have specific instances but it goes through the law and has a phone number for the Ethics Commission. TOBIAS: A phrase that I have heard before is “I’d rather beg for forgiveness then ask for permission.” I am concerned that people are trained properly so that they don’t have to come back later and say they didn’t know. Are the fines and penalties going to be strict enough to have these enforceable? What happens to whistle blowers that are within the City if they witness ethics violations? MAYOR: It is all covered under State law. HOLCOMB: Other than the website, http://www.ethics.ohio.gov/ has a list of multitudes and opinions that have already been produced that you can go through; some have footnotes that link to other issues and how it all ties together. They also provide advice and assistance regarding application of the ethics law and related statues. They can be contacted at 614466-7090. One of the suggestions that I was making is the fact that the model ordinance that they suggest (the Ethics Commission suggests) is that they have a section for assistance (where do you go). It’s more than our normal financial disclosure. I would like to see possibly us adding that into the mix of everything for the future. GARZA: Mary Garza, 220 West 32nd Street. I would ask that if we are going to do this and have these training sessions (you mentioned department heads) would you include representatives of each of the employee groups; union reps or some representative because if we want all of the employees to do this then it’s important that they are all represented. HOLCOMB: I would definitely concur with that. I was thinking about possibly creating an ethics and government reform subcommittee. It would be three people (Police & Fire Committee) that could review some issues throughout the year on a periodic basis and could only report back to the Police & Fire and legislation committee because they are a subcommittee and not legislative this way they can focus on some of these more specific issues recommended to the Police & Fire Committee which later can recommend the idea of legislation to the general body. GIVEN: Since there are only five people on the Police & Fire Committee, why should we have a subcommittee of that? HOLCOMB: It just requires less work for some of the others. That is why I am throwing it out there. I know people have busy schedules. There are members that have several children and to try to add in an extra meeting during the week could be next to impossible. GIVEN: I think if we do something where you are only getting two or possibly three people on a committee, then you are not really getting a true reflection of the Council, 12
POLICE & FIRE COMMITTEE Monday, March 10, 2008 community, and City government as a whole. I don’t think I would go any lower than our current committee process. HOLCOMB: Maybe we will just hold off on that and hold Police & Fire committee meetings to discuss that. We can always bring it up again if we think it is necessary. There being no further questions, meeting adjourned at 6:45 p.m.