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October 6, 2020 Special Session, Governing Board...
>> MR. DEMION CLINCO: Good evening, and welcome to the October
6, 2020 Governing Board special meeting. Our first order of business
is calling the meeting to order.
First of our discussion action items is 2.1, presentation and
discussion of Arizona conflict of interest law.
Jeff, I'm going to hand it over to our legal counsel, Jeff
Silvyn.
>> DR. MEREDITH HAY: Demion, did you want to do a roll call?
>> MR. DEMION CLINCO: It's not on the list, but why don't we do
a roll call. Mr. Silvyn?
>> MR. JEFF SILVYN: Thank you, Mr. Chair. That was about to be
my next suggestion.
Mr. Clinco?
>> MR. DEMION CLINCO: Present.
>> MR. JEFF SILVYN: Dr. Hay?
>> DR. MEREDITH HAY: Present.
>> MR. JEFF SILVYN: Mr. Hanna?
>> MR. MARK HANNA: Present.
>> MR. JEFF SILVYN: Ms. Garcia? Mr. Gonzales?
So Mr. Gonzales and Ms. Garcia are not currently attending, and
they informed us this afternoon a couple hours before the meeting
that they would not be attending. Present we have three board
members, which is sufficient for a quorum.
>> MR. DEMION CLINCO: Thank you very much, Mr. Silvyn.
So prior to your presentation I'm just going to share some board
chair remarks about why we are having this special meeting and a
little bit of structure as an explanation.
Over the last 90 days there has been numerous information
requests and opinions sent by members of the community and Board
Members Maria Garcia and Luis Gonzales to the board chair and
Mr. Lambert.
These requests and opinions have focused on a number of issues
including Pima Community College's industry partnerships, procurement
and RFP process standards, shared governance, diversity, equity, and
inclusion, Governing Board protocol, and transparency.
The college has provided timely responses to the information
requests, and as part of our continued commitment to transparency, we
are now and will continue to be addressing these questions and
concerns openly and candidly in public meetings with the full
knowledge and participation of the community we serve.
I want to underscore that spirited public discourse is the
bedrock of our democratic system of government, and the board
welcomes and encourages public comment at any time. Anyone anywhere
from within or outside our college who has concerns about college
matters, including but not limited to college policies and practices,
discrimination and unethical and/or illegal behavior, is encouraged
to come forward through the complaint processed detailed on the PCC
website.
The links are provided with this report which will be attached
after I'm completed, including the student complaint process and
employee Office of Dispute Resolution.
Additionally, as a reminder, per Governing Board bylaws, Article
10, code of ethics, the board requests that all employees to avail
themselves of administrative remedies and complaint resolution
processes before requesting board involvement.
The following statement is not meant to address the underlying
questions raised by the communication of any board members as the
board has a formal process to address concerns and respond to
complaints.
Rather, the following remarks are explicitly intended to outline
the board's governance process, including the bylaws and board
policy, the Higher Learning Commission HLC criteria for accreditation
standards and the Arizona state laws related to open meeting laws and
executive session confidentiality.
It is important that the board reminds itself of these standards
periodically and commit to following them consistently and educate
the public about how the board operates.
First, the board governance and adherence to bylaws and policy.
The Governing Board bylaws, Article 12, response to complaints
provides a board approved process to raise concerns and complaints.
The intent of this policy is that to promote the timely and
appropriate response of complaints regarding the college and maintain
the appropriate distinction between the role of the board and the
college administration.
Board members shall follow the specific process for responding to
different types of complaints as set forth in the board bylaws. It
is critical that all members of the board follow this process of the
board bylaws.
Additionally, per the board bylaws, Article 10, code of ethics,
B4B3, information requests that will involve more than four hours of
college staff time per request shall require the agreement of the
majority of the board. Moving forward there will be strict adherence
to this standard.
Next, the Higher Learning Commission. Going back to at least the
1990s there has been numerous concerns raised by the HLC related to
the board governance. The HLC criteria for accreditation states in
section 2C "The Governing Board of the institution is autonomous to
make decisions in the best interest of the institution in compliance
with board policies and to ensure the institution's effectiveness."
Item 4, "The Governing Board preserves its independence from
undue influence on the part of donors, elected officials, other
interests or external parties."
While I and every member of the board appreciate the importance
of listening to constituents, board members are elected to serve the
interests of the residents of Pima County as a whole, not any
particular group, organization, or segment of the populous.
HLC accreditation standards require this, as well. Put simply,
if a board member acts at the direction of a specific community
member or individual groups they are not fulfilling the duties of
their office or complying with HLC standards.
Third, Arizona state law related to open meeting laws and
executive session confidentiality. The board has authority only when
acting as a collective, and individual board members do not have
authority to act on behalf of the college or board. See the bylaws,
Article 1, authority, and Article 10, code of ethics.
Regardless, board actions and discussions must take place at a
properly noticed public meeting like the one tonight. Outside of
properly noticed public meetings, substantive communications
including three or more board members is prohibited. See bylaws
Article 6, meetings, and Article 10, code of ethics. Also Arizona
Revised Statute 38-431 through 431.01.
Violations of this standard can result in civil penalties
assessed against the offending board member and any person who
assists in causing the violation.
Conclusion: Because of the enumerated issues outlined above, I
want to offer two specific actions to be taken in the near future.
First we will schedule an upcoming study session and request that our
HLC liaison attend to discuss the HLC criteria for accreditation.
At the same study session, we will be joined by a representative
from an authoritative public agency such as the Arizona Attorney
General to discuss the open meeting laws and confidentiality of the
executive session, as well as a representative from the Association
of Community College Trustees to discuss best practices for Governing
Boards.
This session will be intended to assure all members have an
opportunity to have questions answered and to understand their legal
obligations and formal expectations.
Second, as part of the meeting today, we will determine what
additional specific actions should be taken to ensure the Governing
Board and by all of its members act in strict adherence to the HLC
accreditation standards, Arizona laws concerning open meetings and
executive session confidentiality, and the standards and procedures
that have been set by the board.
So with that, Mr. Silvyn, I'm going to hand it over to you to
talk about our first item, the presentation and discussion regarding
the conflict of interest laws.
>> MR. JEFF SILVYN: Thank you, Mr. Chair.
So with that, as you mentioned, a couple of the board members
raised some concern about the propriety of a couple of projects that
the college is working on. In particular with respect to the
college's work with SocialTech to develop the Unmudl web-based
platform and the issuance of an RFP for an energy management and
education services and ultimate award of that contract to Trane.
Then recently there has been a re-emergence of questions about
the college's decision to purchase the Tucson Inn because you have a
connection to Tucson Historic Preservation organizations.
So in response to those concerns, we engaged outside counsel to
take a look at all the applicable Arizona laws, college policies and
procedures, to make sure that these transactions had been handled
appropriately and that no one at the college had the type of
relationship of any sort outside of the college with any involved
parties that would be impermissible in any way or create an
impropriety with respect to these transactions.
Part of the reason that we retained Susan Segal, who is a partner
at Gust Rosenfeld, is she previously served in the Arizona Attorney
General's office in the education section and some other pertinent
sections and has spent a significant amount of her career advising
education-related institutions.
So what we have is sort of a two-part presentation to address
that concern. So the first is Ms. Segal was going to provide a
general overview of the pertinent policies and procedures, which
fundamentally this is a question about conflict of interest.
Second, assuming that the board passes an appropriate motion to
allow the disclosure of attorney/client communication and analysis,
she will then, in the second agenda item, provide a more detailed
analysis about how those rules apply specifically to the transactions
in question and her findings.
Finally, I just want to assure the board, if any board member
ever has a concern about whether there is any impropriety or question
of an impropriety related to any transaction, we of course want to
hear that concern, make sure we understand it, so that we can gather
the appropriate information and have an appropriate independent
analysis done so that if we are doing something or we discover that
something shouldn't have happened, we will take the appropriate steps
to remedy it.
I do want to assure the board of that. If there are any
questions about it, I'm certainly happy to address those. Otherwise
what I'd like to do is turn the floor over to Ms. Segal for the
overview of the conflict of interest law in Arizona.
>> SPEAKER: Thank you. Thank you, Jeff. Thank you, members of
the board, Chairman Clinco.
Andrea, is there a way to start sharing the PowerPoint?
>> SPEAKER: You should be -- do you want me to share it?
>> SPEAKER: Yes, if you would.
>> SPEAKER: Are you able to see it?
>> SPEAKER: You want me just to click on it right there? Can
you click on it?
>> MR. JEFF SILVYN: We are just seeing the directory with the
document titles. We are not seeing the actual display.
>> SPEAKER: Yeah, it's not working.
>> SPEAKER: What you need to do is end sharing of the desktop
and start sharing the PowerPoint presentation. It only shares one
image at a time.
>> SPEAKER: I apologize. Let me try it again.
>> SPEAKER: There we go. We can then Zoom in on the screen.
So let me just begin with an overview. This is a short
PowerPoint. It is intended to address the issues that came up in all
three opinions, if you will.
Thank you, Jeff, for your introduction. I have represented both
sides of the coin on conflicts of interest, both as an assistant AG
and special counsel to Attorney General Goddard and then in my
private practice at Gust Rosenfeld. There have been occasions when
unhappily I was called upon and have had to render opinions that
there was a conflict of interest, and in two occasions, at least one
right now, there have been grand jury indictments and no trial quite
yet, and of course COVID has interfered.
Conflict of interest is difficult to analyze, but it is
decipherable. It is something that you have to walk through and
maybe once or twice go back to it for a refresher course.
So let's go on to the third slide. The law in Arizona is
contained, as far as conflicts, is contained in this statute, 38-503,
and specifically two paragraphs, and I guess the most important thing
to know is that someone who has a substantial interest in any
contract, sale, or purchase or service shall make that known and
shall refrain from voting upon or otherwise participating as an
officer or employee.
Section B, paragraph B of that statute deals with having a
substantial interest in a decision of the public agency. So A deals
with pretty much transactions, you know, contracts, sale, purchase or
service, and B deals with decisions relating to any sort of action in
which that employee or whose employee has or whose relative has a
substantial interest.
Again, for purposes of this presentation, the two words of the
day are "substantial interest."
We can go to the next one. The term "substantial interest" is
defined specifically in 38-502(11) as any nonspeculative pecuniary or
proprietary interest, either direct or indirect, other than a remote
interest.
Again, the word in your mind that you should take away in
addition to "substantial interest" is "nonspeculative."
Interest, according to our case law starting in 1972, does not
mean a mere abstract interest in the general subject or contingent
interest but is a pecuniary or proprietary interest by which a person
will gain or lose something, as contrasted with a general sympathy,
feeling, or bias.
Then of course in 2002 we have the Hughes Jorgensen case which
said to violate the conflict of interest statute a public official
must have a nonspeculative, nonremote, pecuniary or proprietary
interest in the decision at issue.
Now, I want to add to this presentation that the term
"nonspeculative," while it's been used in case law since 1972, has
not been in statute. It was however in 2016, four years ago, added
to comply, if you will, to the case law.
There were several attempts at prosecution of public officials,
and on appeal they were struck down or else they were struck down in
the midst of trial because the interest was speculative.
It isn't a question of whether you think, oh, this could happen,
that could happen, this could happen, that could happen. That's
speculative. If it did actually happen and you know there is a
direct line there, that is nonspeculative.
Again, the takeaway, if you were going to take away from this
presentation, in addition to substantial interest into
nonspeculative, it would be what is a remote interest? Some of us
lawyers who muddled through, and I did muddle through tax law -- I
always got frustrated because you'd go to a tax provision and they'd
say, well, this applies unless it doesn't.
Then you'd go to another page or provision of the tax code and
they say this applies unless it doesn't. In many ways, the
definition of remote interest is that type of a definition. It means
an interest that falls in any of the 12 categories that is not a
substantial interest.
And the attorney general recently revised his handbook, which
he's required to do by statute, and the section on conflicts of
interest says that the Arizona legislature has determined that
certain economic interests are so remote that they do not
impermissibly influence a person's decisions or actions.
So you could have a pecuniary interest, but if it's so remote
that it is de minimis or it could be de minimis, and it falls into
any of these categories, some of which I'm going to talk about, then
it's not considered to be a conflict of interest. So if the public
official employee only has remote interest, there is no need for
further analysis.
I'm going to give you some examples of remote interest, that of a
nonsalaried officer of a nonprofit corporation. So if you sit on a
nonprofit organization, that could be an association, it could be,
for example, for school board members, it's the Arizona School Board
Association. If you sit on the board as an officer, if you sit on
the board of the YMCA as an officer, those are remote interests and
the inquiry stops right then and there.
E, the ownership of less than 3% of the shares of a corporation
for profit, and then it goes into about the total annual income from
dividends, which I'm not going to read to you.
But the most important clause is the ownership of less than 3% of
the shares of corporation for profit. Those of you who read some of
the allegations involving school districts and investigations I have
been involved in, we had a situation in one school district where the
CFO also owned a consulting company and had more than a 3% interest
in that consulting company and nonetheless participated in decisions
to hire that consulting company.
Also, her sister had more of that interest, and of course you
have the sibling which I'm not going into in this presentation
because it's really not relevant.
And F is that of a public officer or employee in being reimbursed
for his actual and necessary expenses incurred in the performance of
an official duty. Those are requests for reimbursement of expenses,
for travel expenses, food, et cetera, et cetera.
So the Attorney General Handbook has a test to determine if a
public employee has a substantial interest. The public officer or us
should ask, could the decision affect either positively or negatively
an interest of the officer or employee or the employee's relative?
Then you go on to No. 2. Is the interest a pecuniary or
proprietary interest? Could it affect a financial interest or an
ownership interest?
Then No. 3, is the interest something that is not statutorily
designated as a remote interest?
If the answer to each of these three questions is yes, then there
is a substantial interest, but if you get down to No. 3 and you get
to something that's statutorily designated as a remote interest, then
the inquiry stops.
So there is two other prohibitions that come up from time to
time. I did not find either of these existed. One is to secure a
valuable benefit for the employee or officer that would not
ordinarily accrue to the officer employee if the thing or benefit is
of such character as to manifest substantial and improper influence
on the officer employee with respect to the officer's employee's
duties.
At one point in time -- well, if you were given a trip to Hawaii
by a vendor, that probably would, you know, probably would have an
effect on the officer employee with respect to his or her duties.
But it is -- you see that I'm struggling there because it is a
subjective test. If I took you to Burger King, if I were a vendor,
and took you to Burger King for a hamburger, that's not going to have
-- I hope it doesn't -- would not have such a substantial and
improper influence on you. If I took you to Ruth's Chris Steak
House, maybe. Maybe not. If I paid an expense-paid trip to some
elaborate resort, that may tip the scales.
There is also 38-505 that does not allow a public officer or
employee to receive directly or indirectly compensation other than is
provided by law and other than he or she would get in the ordinary
course of their duties.
So example would be getting an extra, getting that trip to
Hawaii, that wouldn't be something that would ordinarily accrue and
your employer is not paying for it. All right?
End of the slides. With that, that is the end of my part of the
PowerPoint, and of course I will go into the specifics of the
opinions.
The most important thing are the words "remote," "substantial,"
"nonspeculative."
>> MR. DEMION CLINCO: Thank you very much, Ms. Segal.
Item 2.2, waiver of privilege and release of outside legal
counsel opinion for public discussion.
Mr. Silvyn, could you read the recommendation?
>> MR. JEFF SILVYN: Thank you, Mr. Chair.
If you indulge me for a minute, I just kind of to wrap up that
first section, just to let the board know, questions about conflict
of interest have come up from time to time with board members and
with staff, and in each case we do an analysis much like you just
heard, and if it turns out that an individual has some connection to
a transaction or some party involved in the transaction that might
cross one of those lines, then we take appropriate steps to make sure
that they are not involved in any way.
So it has come up. It's been dealt with a number of times. It's
not often but it does come up from time to time with board members
and with staff.
With that, the recommendation on the second agenda item is as
follows. The chancellor recommends that the board waive
attorney/client privilege and authorize the release and public
discussion of outside legal counsel's opinions regarding potential
conflicts of interest regarding the college's purchase of the Tucson
Inn site dated March 8, 2019. The ongoing development of the Unmudl
project and related agreements with SocialTech dated September 25,
2020. And the award of an energy management and education program
contract with Trane dated September 30, 2020.
And just for clarification, the dates I read are the dates of the
opinion letters from outside counsel.
>> MR. DEMION CLINCO: Is there a motion to adopt the
recommendation?
>> MR. MARK HANNA: So moved.
>> DR. MEREDITH HAY: Second.
>> MR. DEMION CLINCO: Can you do a roll call vote?
>> MR. JEFF SILVYN: Mr. Clinco?
>> MR. DEMION CLINCO: Yes, I would like to explain my vote
quickly, Mr. Silvyn. I said it in my remarks before. I want to
underscore it again. The college and this board welcomes concerns.
We are interested, if somebody has concerns that something
illegal, inappropriate, unethical is going on in any way, we have a
process, and this board takes them very, very seriously.
With that, having an outside legal review and assessment done and
making that public is important I think to the public trust, and with
that I vote yes.
>> MR. JEFF SILVYN: Dr. Hay?
>> DR. MEREDITH HAY: Yes.
>> MR. JEFF SILVYN: Mr. Hanna?
>> MR. MARK HANNA: Before I vote, can I just verify that the
fact that we are taking an action tonight was noticed as
appropriately by law?
>> MR. JEFF SILVYN: Yes, sir. Actually, so the motion I read is
in the agenda that was published for tonight that the board might be
considering this particular motion.
Yes, this was noticed as an action item with the recommendation
in the public notice for this meeting.
>> MR. MARK HANNA: Thank you. Yes.
>> MR. DEMION CLINCO: Okay. So we have a motion carries 3-0
with two members absent.
Mr. Silvyn, would you like to -- or Ms. Segal, would you like to
go ahead and give this presentation?
>> SPEAKER: Sure. I'll start. I'm going to go in chronological
order. Yes.
Approximately a year and a half ago, 18 months ago, I was asked
to analyze whether Mr. Clinco had a substantial interest in a
transaction concerning the acquisition of properties by Pima College
for its Downtown Campus so as to create a conflict of interest.
The inquiry arose from allegations that board chair, Demion
Clinco, began serving on the board in December of 2015 had a conflict
of interest when he voted on the district's purchase of four
properties in 2017 and 2018.
This was by virtue of his previous efforts years before when he
began his board service to place those properties on the National
Register of Historic Places.
At no time did he or any relative have an ownership interest in
these properties or derive any direct or indirect economic benefit.
In order to render this opinion, I interviewed Mr. Clinco,
reviewed a complaint authored by Luis Gonzales, a former board
member, and its attachments as well as board agendas, minutes,
transcripts, and videos.
I have examined, I did, online materials related to the
nomination and placement of these properties on the national register
as well as corporate documents. I also researched the law and
referred to the Arizona Attorney General Handbook.
The facts are that Mr. Clinco was appointed to serve on the board
in December of 2015. He was elected in 2016 to serve a full six-year
term. In January of 2018 he was elected chair of the board, and he
now currently -- he then and now currently serves.
Before he went on the board, he was employed as a contractor
serving in the functions of a CEO of the Tucson Historic Preservation
Foundation, a nonprofit charitable foundation. Previously he served
as the president of the foundation's board of directors from 2008 to
2014. He also was the CEO of Frontier Consulting Group which he
owns.
The salient facts show that he was hired in 2011, Frontier
Consulting was hired in 2011 by the City of Tucson to prepare a
Miracle Mile National Register of Historic Places nomination and
Arizona State Historic Inventory forms. The project was completed in
August of 2013.
Neither he nor his employer did any further compensated work on
the effort to have these properties placed on the national register
after 2013, I believe. He did answer questions from time to time
from governmental agencies and individuals.
Then commencing in 2017 the board approved the purchase of
different properties including Tucson Hotel and Resort, Tucson Inn,
Frontier Motel, Copper Cactus Inn. Mr. Clinco derived no money from
that acquisition. Neither he nor any relative had an ownership
interest in those properties.
Similarly, Frontier Consulting group and Tucson Historic
Preservation Foundation did not derive any anything.
Based on that set of facts I concluded that this did not fall
within the definition of a conflict of interest. He did not have a
nonspeculative, proprietary, or pecuniary interest in the district's
purchase of any of these four properties. Same applied to his
relatives. I did that analysis just to cover all bases. No one
stood to gain or lose economically by the board's decision to
purchase these properties.
Neither his employer nor his company, Frontier Consulting, had a
nonspeculative, pecuniary, proprietary interest in the district's
purchase of any of these properties.
For this reason I concluded that there was no proof available, no
evidence of a conflict of interest, any violation of law or district
policy.
>> MR. DEMION CLINCO: Any questions from the board? Mr. Hanna?
>> MR. MARK HANNA: Yeah, two things.
Ms. Segal, you did not find that Mr. Clinco had any discussions
with the owners of these properties or that there was any connection
between Mr. Clinco and the actual owners of the properties; is that
correct?
>> SPEAKER: That's correct. But the principal inquiry, however,
was whether this violated, whether he had a direct nonspeculative
pecuniary interest in these transactions.
>> MR. MARK HANNA: Right. And there was really no benefit to
the Tucson -- no monetary benefit to the Tucson Historical Society by
the purchase of these properties; is that correct?
>> SPEAKER: Correct.
>> MR. MARK HANNA: Thank you.
>> MR. DEMION CLINCO: Are there any other questions?
Okay. Thank you very much, Ms. Segal.
Do you want to move to the next?
>> SPEAKER: Yes. This one is the opinion dated September 25,
2020. This involves the Unmudl.com platform committee and Chancellor
Lambert's involvement in the steering council.
Mr. Silvyn asked me to address whether Chancellor Lambert's
membership and position on the steering council of the Unmudl.com
network platform creates a conflict of interest under Arizona's
conflict of interest laws by virtue of his employment as chancellor
of the college.
He also asked me to recommend possible changes to policy or
practice going forward. I examined relevant documents, which are
attached to my opinion, including the Unmudl information as to what
Unmudl was. It took a little while for me, as an outsider, to
understand that but I think I do now. A memorandum of understanding
that was signed for initial services, and the minutes of the
inaugural meeting of the steering council.
The analysis went very much like I did in my presentation. I
analyzed 38-503. I analyzed the definition of substantial interest.
I analyzed the definition of a remote interest. Let me go back and
point out that Unmudl is a project or a program that was developed by
SocialTech which is a for-profit organization.
The network platform of Unmudl connects community colleges,
students, and employers to provide individuals with learning
opportunities intended to increase their employability, to procure
advancement. It also connects employers, gives them resources for
training their employees and finding prospective employees with
particular skills. Those are all evidenced in tabs 1 and 2 of my
opinion.
The college has a short-term memorandum of understanding with
SocialTech that was executed on October 15, 2019. The amount of this
MOU is under the threshold amount specified by board policy 1.05 that
delegates to the chancellor the authority to enter into agreements
with third parties. That threshold amount is $250,000. Thus
Chancellor Lambert had full authority to sign the MOU, which was less
than that amount, far less than that amount. It was 25,000.
SocialTech created a 13-member steering council which according
to the document dated January 1, 2020, provides future focused, and
pardon me if I'm a little -- a lot of this is educationese, future
focused strategic leadership support and expert guidance on Unmudl's
progress. Council members are not responsible for day-to-day
activities and tasks and instead focus on guiding the vision leading
the field with cutting edge, trail blazing, future focused,
thoughtful leadership, informing marketplace policies and providing
expert feedback to the leadership team.
Chancellor Lambert is the chair of the council. He received no
compensation or direct or indirect pecuniary benefit by virtue of his
participation in and membership on and service on the council. He
has no ownership interest in either SocialTech or Unmudl.
The analysis again went through what was prohibited under Arizona
conflict of interest law. I found that it did not rise, any of his
activities were outside of the definition of the substantial
interest.
Again, I cited that interest does not mean a mere abstract
interest in the general subject or contingent interest but is a
pecuniary proprietary interest by which a person will gain or lose
something, as contrasted with general sympathy, feeling or bias.
I also analyzed this question under ARS 38-504 and 38-505, which
are the two statutes I talked to you about earlier and did not find
any application of either one.
He does not receive extra compensation by virtue of his service
on the steering council, and I did not find evidence any sort of item
that he would be given that would influence his decision-making.
Therefore, my analysis was that Chancellor Lambert's
participation on the steering council does not violate Arizona
conflict of interest.
Now, college policies you have procurement purchasing and
acquisition procedures manual and you have AP 1.25.05. Those follow
generally Arizona's conflict of interest laws. And I found that
section 1.4 of the procurement purchasing and acquisition procedures
also incorporates the Arizona conflict of interest law.
Since I concluded that Chancellor Lambert's participation on the
steering council does not violate Arizona conflict of interest law,
my conclusion is also that it does not violate section 1.4 of the
procurement purchasing and acquisition procedures manual.
The same is true with respect to the college handbook. The
college employee handbook entitled Ethical Standards of Any Conflict
of Interest, which was adopted September 11, 2020, that section also
reiterates Arizona's conflict of interest law. And again, since I
included that Chancellor Lambert's membership and participation on
the steering council does not violate the Arizona conflict of
interest law, my conclusion is also it does not violate the college
employee handbook ethical standards and conflict provisions.
I did, as requested by Mr. Silvyn, I did make a recommendation.
I said that I recommend the chancellor continue to refrain from
participating in the negotiation with Unmudl or SocialTech and also
refrain from executing a final agreement with SocialTech so long as
he participates on the steering council.
And I understand that that is the practice and has been the
practice. He did sign the MOU for $25,000 which was within his
authority, and there is no conflict in him signing that.
I just believe that while there has been no violation of the law,
going forward, in order to reduce the questions that seem to
continuously surface in the last 18 months, first with you,
Mr. Clinco, and then with respect to the chancellor, that this would
be a good move.
Execution of final agreement could be done by another authorized
college official who does not hold a position of the Unmudl steering
committee.
>> MR. DEMION CLINCO: Thank you very much, Ms. Segal.
Any questions from the board? Mr. Hanna?
>> MR. MARK HANNA: I'm a little confused as to the connection
between SocialTech and Unmudl. Do you have a clue about that?
>> SPEAKER: Yes. I had the same confusion initially.
SocialTech is a for-profit corporation and Unmudl.com is a program
SocialTech has developed.
>> MR. MARK HANNA: Is SocialTech a publicly traded company, do
you know?
>> MR. JEFF SILVYN: No. Mr. Hanna, so the answer is no, it's
not publicly traded. It's small.
>> MR. MARK HANNA: So there was no indication that there was any
other deal made for the chancellor, participation in some kind of
profits somewhere else down the line? You couldn't find any evidence
of that, correct?
>> SPEAKER: No. Yes, I could not find any evidence. And
remember, even if -- not that he did, but even if he did, even if he
had an ownership interest in SocialTech, again, remote interest is
less than 3%. He doesn't own any interest in SocialTech or in
Unmudl.
One could speculate -- let me give you some speculations. I
tried to do the devil's advocate with myself. Well, does this
increase Chancellor Lambert's prestige within the college? No, it
doesn't. Is this a résumé builder? Well, if it was, it still is a
remote interest. It's not a nonspeculative.
Again, I was speculating while I was being the devil's advocate,
and I could not find any angle by which I believed the conflict of
interest law or college policy would have been violated.
>> MR. DEMION CLINCO: Dr. Hay, any questions?
>> DR. MEREDITH HAY: No, thank you.
>> SPEAKER: The last opinion was on September 30th. It was my
letter. It addressed participation of Chancellor Lambert in
transactions or decisions relating to the award of a contract for a
comprehensive integrated energy management program.
It's my understanding, by the way, just to clear this up, because
there seems to be some misunderstanding, there is an ongoing study by
Trane, which was the successful contractor, but there is no
subsequent contract even before the board or closely on the table.
I'll let Jeff address that later on.
This is a question as to whether Chancellor Lambert's position on
the board of directors of the National Coalition of Certification,
which I will call NC3, creates a conflict of interest under Arizona's
conflict of interest laws or policies of Pima County Community
College District with respect to the award of a contract to Trane
U.S.
The relationship is very attenuated, but let me talk about what
NC3 does. NC3 develops certification standards using industry
consultants. For example, you have heard maybe over the years the
complaint by members of industry, businesspersons, well, you're
churning these kids out into the marketplace but they are not
properly trained.
So the purpose of NC3, as I can tell, is that NC3 gets people
together, industry and educational institutions, so the industry can
say this is the type, these are the type of skills that we need an
HVAC tech to have or whoever we are talking about. The board of NC3
consists of predominantly institutions that provides career and
technical education.
The question is even more attenuated. NC3 is nonprofit, and
Chancellor Lambert sits on the board, along with several other people
from around the nation also and from Arizona, that basically do the
part of the governance structure. He receives no remuneration. It's
a nonprofit association.
But the most important thing I think in this analysis, before we
clog our minds with all of this is that NC3 has nothing to do with
the Trane transaction. What it has to do is on the board of NC3 is
an employee of Trane.
So the question is whether the fact that Chancellor Lambert sits
on a board with an employee of Trane, of a board of a nonprofit
organization, with Trane, does that create a conflict of interest?
And the answer is no.
I didn't even need to -- I went through the analysis as if NC3
had participated in a Trane sort of transaction. It didn't. The
whole slim thread is that Chancellor Lambert is a board member as
well as Mr., I believe, Archambault, who is on the board of
directors, Patrick Archambault, who is employed by Trane, director of
strategic programs, is a member.
Let's analogize is to the local Rotary Club. Say you're on the
Rotary Club board with a member of industry. Maybe it's somebody
that's an employee at Intel. And then you do a deal or a transaction
with Intel.
Does that create a conflict of interest because you belong to the
same Rotary Club or are on the board? The answer is no.
So again, I'm not going to repeat my analysis other than to say
that it is so attenuated, and it's on such a slim thread, there is no
way to even approach a conflict of interest.
Just to finish, because I took my task very seriously in all
three cases, I addressed, well, what can be done and what sort of
recommendation can be made? And I suggested that, I will read you,
conflict of interest laws are not easy to understand, and recognizing
the difference between a remote interest and a substantial interest
is key to comprehending how the statute operates and how courts
interpret the law. The relevant college policies are fully aligned
with Arizona conflict of interest law.
Given the number of inquiries and allegations about violations of
Arizona's conflict of interest law, I suggest training be given to
your board and senior staff on a regular basis. I believe the chair
of your board has scheduled such a session in the very near future,
which is why we are here tonight, in part.
And that's the sum and substance of my three letters.
>> MR. DEMION CLINCO: Thank you very much. Are there any other
questions from board members? Mr. Hanna has one.
Before he does, Mr. Silvyn or Ms. Segal, could you clarify, this
is around the Unmudl situation, SocialTech, is it a public benefit
corporation?
>> SPEAKER: They use that term, but it is a private corporation.
>> MR. JEFF SILVYN: Right. So to be very specific, so
SocialTech is a public benefit corporation formed in the state of
Delaware. Public benefit corporation means that in addition to
profit motive, they are supposed to consider certain other social
values and benefits as part of their mission and criteria for what
goals they set. So it's still a for-profit. It's a modified
for-profit.
So it's incorporated in Delaware. Many corporations take
advantage of the law in Delaware to incorporate there. There are
some benefits to doing that.
They are doing business primarily out of Texas where they are
registered under the name SocialTech. There was some question raised
about that, whether there should be some concern about that, and the
answer is no. They're doing what they are supposed to be doing.
If you're incorporated in one state but you're doing a
significant amount of business in another state. You have to
register in that state. SocialTech followed that requirement.
>> MR. DEMION CLINCO: Thank you for that clarification.
>> MR. MARK HANNA: So just for the sake of transparency and just
to be clear, there was a lower bid, as I understand it. And,
Mr. Ward, you can chime in here, there was a lower bid for the Trane
-- and it's not, as I understand it, it's not equipment. It's the
evaluation of our systems plus a design of a hands-on program that
would be beneficial to our students, but there was a lower bid but
that's not how all our bids are chosen or our contractors are chosen.
There is a point system; is that correct?
>> BILL WARD: Board Member Hanna, when you go out for an RFP,
you know, you do not have to pick the low bidder. So I'm not aware
of that, because I wasn't -- you know, I was not on the committee, so
I did not see those.
But that's just how that works is when you do an RFP, you do not
have to pick the low bidder, if there was a lower number.
>> MR. JEFF SILVYN: Mr. Hanna, I was going to say we have on the
line tonight Terry Robinson. He's the director of procurement, so
perhaps he could give you an overview of what process was followed,
and then if you have specific questions, he probably would be the
best person to address them.
>> SPEAKER: Thank you, Jeff. I certainly can. There is a
difference between the RFP process, request for proposal, as opposed
to a bid process.
Bidding is a process in which you look for lowest, most qualified
bidder, whereas the RFP process you're looking at multiple evaluation
criteria that are scored based upon a look at various proposals that
we received.
In this case, after evaluating all the proposals, the Trane
proposal received the highest evaluation scoring based on the
criteria that our evaluation committee reviewed.
>> SPEAKER: May I also add, I left it out maybe in my haste, I
did interview Mr. Robinson who walked me through that. I did attach
the scoring sheet. Ameresco was the second-highest and engaged in
both rounds. There was a protest that did not raise this issue at
all. The protest was denied, and they have not appealed.
I did look at some of the bidding documents and the scoring
sheets. Every member of the committee, the evaluation committee, was
required to and did sign a conflict of interest and confidentiality
provision basically saying that they agreed they would not talk to
anyone about this and be influenced by anyone and that they didn't
have any interest in the picking, in the selection of Trane.
>> MR. JEFF SILVYN: And just to clarify or to add to that, so
Chancellor Lambert was not a member of the selection committee and
did not participate in the deliberations of the selection committee.
>> SPEAKER: Right. The reason I was kind of stalling is I was
trying to find the list. RFP review and evaluation committee
consisted of Greg Wilson, committee team leader and college dean of
applied technology. James Russell, college faculty member. Jessica
Normoyle, a college program manager. David Clark, college
superintendent of operation. Raj Murthy, college chief information
officer. College senior procurement analyst, Jan Pose (phonetic),
convened and facilitated the committee. There was no evidence of any
wrongdoing based upon my discussion with Mr. Robinson.
>> MR. DEMION CLINCO: Just as a follow-up question,
Mr. Robinson, on our RFP processes that we normally do an RFP, is
this the standard practice where a committee is convened, a variety
of stakeholders across the college, in this case, senior
administrators, faculty, others, do that ranking?
>> SPEAKER: That is correct. All members actually, as a part of
the process, score independently of each other as they review their
roles, as their role is for reviewing each of the proposals received.
>> MR. DEMION CLINCO: Our RFP process, that's outlined in
policy, right?
>> SPEAKER: That's correct.
>> MR. DEMION CLINCO: So we were just, just so I'm completely
clear, we were consistent in following our adopted college policy
around how this particular RFP was prepared, was issued, was
reviewed?
>> SPEAKER: And following our standard procedures and practices
from a procurement perspective, sir.
>> MR. DEMION CLINCO: Thank you very much. I appreciate the
clarification and the good work.
Is there any other questions? I just want to, for clarification
how many members were on the...
>> SPEAKER: Oh, I knew you'd ask me that again after --
>> MR. DEMION CLINCO: I'm sorry.
>> SPEAKER: It was five, sir.
>> MR. DEMION CLINCO: Five. And it included a member of our
faculty, member of our senior administration --
>> SPEAKER: That is correct. It included Greg Wilson, again,
dean of our applied technology unit. Jim Russell, instructional
faculty. Jessica Normoyle, program manager. David Clark from
facilities area, superintendent of operations. And Raj Murthy, AVC
for IT.
>> MR. DEMION CLINCO: Thank you very much. We really appreciate
it. I think that concludes this item unless there are any other
questions?
Thank you, Mr. Robinson, we appreciate you being here. And
Mr. Ward. Thank you, Ms. Segal, for your review of these matters,
and Mr. Silvyn.
Next item on our agenda is the discussion of recent board written
communication and board members' questions and concerns regarding the
Unmudl project and energy management and education program contract
award to Trane, possible action by the board to authorize further
steps to address the issues.
>> MR. JEFF SILVYN: If I might, Mr. Chair, let me just explain
kind of what the intent of this agenda item was, and then given our
present circumstances, the board can decide how it thinks best to
proceed.
So based on the various questions and concerns that were
expressed, and based on my understanding that all five members of the
board had committed to attend the meeting this evening, this agenda
item was crafted and noticed to allow the board an opportunity to
express any questions or concerns they had and for their fellow board
members and for appropriate staff to both address questions and also
ask clarifying questions so that we would all be on the same page and
make sure we understand exactly what the questions and concerns are.
Then we could determine what would be the next best appropriate
steps in order to make sure that any unresolved questions and
concerns were appropriately addressed.
Unfortunately, because two of the keyboard members decided not to
participate, what I had intended to accomplish or help the board
accomplish with this item doesn't quite work that way. So that was
the intent behind this, so I guess a question is whether there are
any further questions from the attending board members about these
particular matters or whether there are additional steps that you
would like staff to take in order to address these concerns.
>> MR. DEMION CLINCO: Any additional questions from the board or
concerns?
>> DR. MEREDITH HAY: None from me.
>> MR. DEMION CLINCO: I mean, I think the other important thing
to note about this is this document is hyperlinked, has all of the
underlying documents and responses made by board members.
Again, I think this board has made an effort to be as transparent
and as clear as possible. All of our meetings are broadcast. We
post all of our agenda material, the underlying documents. This is a
continuation of that.
So the public is invited to go and take a look at these. They
look at the responses that were provided by the college and by myself
in some cases.
This was the opportunity to have any of these questions
addressed. I mean, I would like to also thank the senior staff and
faculty members and everybody who took time from their evening to be
here to help answer and address questions. These questions have been
circling for the past 60 days, and it still has not been clear what
the intent of some of these requests, the underlying intent really
has been. And this was really in hope this meeting was to try to
address and better understand the underlying concerns.
So we publicly noticed this meeting. The meeting has now been
held. You know, people can raise the questions in alternate ways,
but I think the board has now addressed them.
Okay. Next item on our agenda is 2.4, future board study
sessions regarding compliance with open meeting laws, executive
session, confidentiality requirements, and accreditation standards
for boards.
Mr. Silvyn, do you want to read or share the background on this?
>> MR. JEFF SILVYN: So I can --
>> MR. DEMION CLINCO: This is an action item, right?
>> MR. JEFF SILVYN: Right. So I can read the recommendation if
that would be helpful, and then the board can discuss and decide how
to best proceed.
Again, the context of this is again we had a variety of questions
and concerns raised from multiple board members, so this was an
attempt to take at least one concrete step to making sure we were
adequately addressing those.
The chancellor recommends that the board schedule one or more
study sessions focused on, one, application of the Arizona meeting
laws to the board, including presentation by a representative of an
authoritative Arizona agency.
Two, confidentiality requirements for public officials concerning
executive sessions and attorney/client privileged communications
including a presentation by an independent subject matter expert.
And three, Higher Learning Commission accreditation standards
regarding board member duties and conduct including a presentation by
a subject matter expert.
Each discussion topic will also address the risk to board members
and the college for noncompliance with these standards.
>> MR. DEMION CLINCO: Do I have a motion to adopt the
recommendation?
>> DR. MEREDITH HAY: So moved.
>> MR. DEMION CLINCO: Second?
>> MR. MARK HANNA: Second.
>> MR. DEMION CLINCO: Discussion on the item?
>> MR. MARK HANNA: Yeah, Chairman Clinco.
I just want to be sure that I state from my point of view that I
value each and every board member, and I value the responsibility
that each of us have to ask questions and to -- Lord knows I have
used that responsibility over my six years about asking questions --
so that's important that we respect each other in terms of having
that responsibility.
But I also understand that in order for us to operate as an
efficient governing body that we have to have some rules in place.
There are not only just rules but there are laws governing how we
act.
So I especially welcome us reviewing all those laws and rules as
to how we should act as a responsible governing board. That's it.
>> MR. DEMION CLINCO: Thank you very much, Mr. Hanna.
I can't agree more. I think this is an opportunity for everybody
to get their questions answered directly from the source. I think if
you review the communications that have been sent, there is a lot of
sort of speculative qualities or statements that discuss different
aspects of these things, and I think to have somebody from the
organizations or agencies to address everybody's questions and
concerns is really probably the most straightforward and best thing
we can do.
Again, I think it's the most transparent. And I think it's worth
-- is Dr. Moses available? Is he here this evening?
>> DR. BRUCE MOSES: Yes. I'm here, Chair Clinco.
>> MR. DEMION CLINCO: One of the things I continue to be
concerned about, and maybe you can provide a little bit of insight,
is over the past 25 years the college has had a number of issues with
the Higher Learning Commission, specifically about board behavior or
board actions or inactions.
I was wondering if you could just provide very, very sort of
high-level overview of what some of those things have been over the
years? I just think for the sake of this conversation it's helpful.
>> DR. BRUCE MOSES: Sure. I'd love to do that. So first of
all, let me just say that under the chancellor's leadership and based
on Higher Learning Commission recommendations over the years, the
chancellor has invested a lot of resources and time in the Governing
Board members being available to professional development
opportunities.
I think why this is important and why it's important to the
chancellor is because of what you just stated, Chair Clinco, is twice
in our history the Board of Governors' role and effectiveness and
perceived public support has contributed to the cause of being placed
on probation twice.
So as individuals responsible for maintaining the college's good
standing with the HLC, I have had conversations with the chancellor
multiple times about ongoing professional development for the board
is a good thing, especially when you have board turnover.
So the chancellor has basically every time a new board member or
new board members have come on, he's invested in those efforts
through either basically having the HLC, ACCT come out, and ensure
that those folks have a good understanding of what their role and
their responsibilities are.
But dating back all the way to 1984, this has always been an
issue for the college. The role of the board, either communication,
undue influence, interference, various natures of things have
happened with the boards over the time that the college has been with
the Higher Learning Commission.
Again, twice the board's role has come into question, their
effectiveness, their delegation of the day-to-day operations to the
chancellor have contributed to sanctions by the HLC.
So I applaud what you guys are doing as fellow board members and
the chancellor in investing in these efforts, because I think it's a
very, very important -- I think the college has, in the last ten
years, this is the best position the college has ever been in in
regards to their accreditation standing with the HLC. I don't think
we need to jeopardize that moving forward.
Thank you, sir.
>> MR. DEMION CLINCO: Thank you very much, Mr. Moses.
And I would say this board, and at least some of the members who
are sitting here tonight, have participated at a very high level of
education around HLC standards. We have attended HLC conferences and
had multiple sessions with liaisons and representatives.
I mean, all of that I think has really provided a very strong
understanding of the importance that the Commission really plays in
assuring our ability to function as highly as we do.
So you would recommend that we have additional, that we bring in
our liaison to just answer everybody's questions so we all hear
exactly the same thing and there is no more confusion?
>> DR. BRUCE MOSES: Absolutely, 100%. She'd be happy to do
that. I have already talked to her. She'd be very happy to do that.
Thank you.
>> MR. DEMION CLINCO: Any other questions?
Okay. Thank you very much, Mr. Moses.
So with no other questions, if we could have a roll call vote.
Mr. Silvyn?
>> MR. JEFF SILVYN: Thank you, Mr. Chair. Mr. Clinco?
>> MR. DEMION CLINCO: Yes.
>> MR. JEFF SILVYN: Dr. Hay?
>> DR. MEREDITH HAY: Yes.
>> MR. JEFF SILVYN: Mr. Hanna?
>> MR. MARK HANNA: Yes.
>> MR. DEMION CLINCO: The motion passes 3-0 with Board Member
Gonzales and Board Member Garcia absent.
Finally, we have on the agenda 2.5, a motion to direct college
legal counsel to implement the direction given at executive session,
and we have no action on that item.
So with that, the meeting is adjourned. Thank you all very much.
(Adjournment.)
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