In the face of criticism from both the public and his fellow council members, embattled Council Member Kevin Wallace said he welcomes an investigation into his failed dealings with GNP Railway that have led to questions of a conflict of interest.
Wallace said at Monday’s council meeting he supports the opinion of the city manager and city attorney to seek an independent investigator to vet the issue. He thinks the investigation will turn out in his favor.
“I firmly believe that when the the investigation concludes it will show there has been no conflict of interest on my part,” he said.
At issue is a non-binding Memorandum of Understanding that would have Wallace Properties, of which Kevin Wallace is chief operating officer, invest $500,000 in GNP with a pledge to assist raising another $30 million to help GNP develop a rail line from Snohomish to Redmond. As a partner, Wallace Properties could manage and develop stations and other uses near the tracks. The document showed further ambitions to later connect south to Renton. According to the memo, the deal could not become official until Wallace obtained the legal ruling that he was not creating a conflict of interest by working with GNP.
Had the deal gone through, and GNP bought easements to bring the line further south, the line would operate in the same general area as the B7 light-rail alignment that Wallace and three other council members favor.
The deal fell through as GNP faced financial troubles. The MOU first became public in bankruptcy court earlier this year.
The failed deal has raised concerns with council members, and the public alike.
“The issues here are serious,” said Council Member John Chelminiak. “It brings into question a lot of things. It brings into question some of your votes,” he told Wallace. “It brings into question whether or not city staff was doing due diligence for your private company. If they were, it’s really really wrong.”
Wallace’s statement in favor of his own investigation followed more than half an hour of public comment that touched on a variety of issues. Much of the commentary diverged into familiar arguments that have enveloped where Eastlink light-rail tracks will be placed. Many of those who spoke favored the investigation, while some wanted it to be widened.
“I applaud this action and I urge you to include all council members who may have a conflict of interest, including council members (Grant) Degginger and (Claudia) Balducci.
Both council members have been accused by citizens of having conflicts of interest due to their places of employment. Balducci is the director of the King County Jail and Sound Transit board member, and Degginger is a share holder at Lane Powell law firm, which has represented Sound Transit. Both council members spent time at the meeting discussing their roles and were cleared by City Attorney Lori Riordan of possible conflicts of interest.
As it relates to Wallace, comments varied on the desired outcome. Some wanted the full story, and more transparency about Wallace Properties’ failed MOU with GNP, while others were interested in a more dramatic conclusion.
“Kevin Wallace, I think you should resign,” said Susan Hazelman, a 20-year Bellevue resident. “I think it’s very clear you kept information from the public that should have been available.”
Wallace received admonishments from his fellow council members. Chelminiak was disappointed that Wallace neglected to make a quick call to the city attorney his first move in the deal. Degginger criticized Wallace’s decisions, saying all these issues could have been avoided.
Other citizens focused on a bigger picture that several council members agreed was the long-term concern, the public trust. Council members called for the need to establish an ethics code in the wake of this issue. All council members have day jobs that occasionally intertwine with city business, and a code would turn what currently remain gray issues into ones of more black and white outcomes, they said.
The Bellevue council has long been known for its ability to collaborate and reach agreement on even the most difficult of issues, but the placement of light-rail has created conflict and vitriol common to many councils, but traditionally foreign to Bellevue.
“This whole discussion is not about Sound Transit; it’s about public trust,” said Chelminiak. “The public trust frankly has been shattered.”
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