2014 Union Hall Contract for Purchase violated law –

LOGAN CO., IL.. (ECWd) –

Our last article dealt with the Atlanta Public Library District’s signing of a 20-year “Contract to Purchase” the building known as Union Hall. Library Trustee William Thomas and/or one of his business ventures owned the building. We believe this “contract” violated established law in several ways, and that the violators need to be charged. This was not an inadvertent action, but rather a multi-year, well-planned operation which is still ongoing.

This contract should be considered invalid:

• Contract was approved at meeting without being properly placed on the meeting agenda
  • Placing items for action on the agenda informs the public what is about to be voted on so they can determine whether or not to attend the meeting. This allows them to voice their opinions to the board either in favor or against whatever measure they may be concerned about.
  • Iroquois County State’s Attorney Jim Devine said it best here (click for video) – Agendas are not for the benefit of the public officials, they are for informing the public about what the public body is about to do.
• We believe there never was any intent to actually fulfill the obligations under this signed contract
  • No payments were ever made (that we can find) towards this “contract”
  • We believe its sole purpose was to “comply” with a requirement to obtain a grant from the Illinois Secretary of State, Illinois State Library – the requirement was to prove ownership or long-term occupancy
  • The meeting minutes reflect discussion that the contract would be void if the grant never came thru
• We believe this contract violates the Illinois Public Officers Prohibited Activities Act
  • Section 3: Prohibited Interest In Contracts (or Conflict of Interest)
  • Section 3.1: Failure to disclose ownership of real estate, in a written statement, filed under oath

Section 3 of the Public Officers Prohibited Activities Act

This section prohibits officeholders from having an interest in contracts with the public body they are officeholders for. There are some exceptions – with the qualifier “and” after each one, which means that the officeholder must meet every qualifier (not just some of them) in order to have an excepted interest in the contract:

Trustee William Thomas FAILS on numbers 1, 5, and 6 of paragraph 1 – FAILS on numbers 1, 2, and 3 of paragraph 2 (the Library is not a municipality so the entire paragraph does not apply to him) – FAILS on paragraph B-5 (not applicable)

None of the below exceptions would allow Trustee Thomas to have an interest in this contract. Each bullet point under each paragraph must be met, and Thomas cannot meet all of them, and therefore, cannot conduct business with the District.

IF: (paragraph 1)

1. Must have less than a 7 1/2% ownership share, AND
2. Publicly disclose the interest prior to or during discussions of the subject of the interest, AND
3. Abstain from voting on the contract, AND
4. Contract approved by a majority vote of those presently holding office, AND
5. Contract awarded after sealed bid if exceeds $1500, and without sealed bid if under $1500, AND
6. Contract award would not cause an aggregate amount in the same fiscal year to exceed $25,000

IF: (paragraph 2)

1. Contract approved by a majority vote of the Municipality provided interested party abstain from voting, AND
2. Amount of contract does not exceed $2000, AND
3. Contract award would not cause an aggregate amount in the same fiscal year to exceed $4000, AND
4. Interested party discloses the nature of the interest prior to or during deliberation of the subject, AND
5. Abstain from voting

Additional IF: (paragraph B-5) Only applies if the interested party is a member of a Municipality, Advisory Panel, or Commission with other conditions applied

Section 3.1 of the Public Officers Prohibited Activities Act

Under this section, everything must be completed BEFORE any contract relating to the ownership or use of real property is entered into by and between a . . . local government unit…

 <span style="font-family: Courier New; font-size: small;">(50 ILCS 105/3.1)</span> <span style="font-family: Courier New; font-size: small;">(from Ch. 102, par. 3.1)</span><span style="font-family: Courier New; font-size: small;"> </span>    <span style="font-family: Courier New; font-size: small;">Sec. 3.1. </span>
<span style="font-family: Courier New; font-size: small;"><span style="text-decoration: underline;"><strong>Before</strong></span> any contract relating to the ownership or use of real property is entered into by and between the State or any local governmental unit or any agency of either the <span style="text-decoration: underline;"><strong>identity of every owner and beneficiary having any interest</strong></span>, real or personal, in such property, and every member, shareholder, limited partner, or general partner entitled to receive more than 7 1/2% of the total distributable income of any limited liability company, corporation, or limited partnership having any interest, real or personal, <strong><span style="text-decoration: underline;">in such property must be disclosed</span></strong>. The disclosure shall be <span style="text-decoration: underline;"><strong>in writing and shall be subscribed</strong></span> by a member, owner, authorized trustee, corporate official, general partner, or managing agent, or his or her authorized attorney, <span style="text-decoration: underline;"><strong>under oath</strong></span>. However, if the interest, stock, or shares in a limited liability company, corporation, or general partnership is publicly traded and there is no readily known individual having greater than a 7 1/2% interest, then a statement to that effect, subscribed to under oath by a member, officer of the corporation, general partner, or managing agent, or his or her authorized attorney, shall fulfill the disclosure statement requirement of this Section. <span style="text-decoration: underline;"><strong>As a condition of contracts entered into on or after the effective date of this amendatory Act of 1995, the beneficiaries of a lease shall</strong></span> furnish the trustee of a trust subject to disclosure under this Section with a binding non-revocable letter of direction authorizing the trustee to provide the State with an up-to-date disclosure whenever requested by the State. The letter of direction shall be binding on beneficiaries' heirs, successors, and assigns during the term of the contract. This Section shall be liberally construed to accomplish the purpose of requiring the identification of the actual parties benefiting from any transaction with a governmental unit or agency involving the procurement of the ownership or use of real property thereby.</span><span style="font-family: Courier New; font-size: small;"> </span>    <span style="font-family: Courier New; font-size: small;"><span style="text-decoration: underline;"><strong>For any entity that is wholly or partially owned by another entity, the names of the owners of the wholly or partially owning entity shall be disclosed under this Section, as well as the names of the owners of the wholly or partially owned entity</strong></span>.</span><span style="font-family: Courier New; font-size: small;">(Source: P.A. 91-361, eff. 7-29-99.)</span> 
    For any entity that is wholly or partially owned by another entity, the names of the owners of the wholly or partially owning entity shall be disclosed under this Section, as well as the names of the owners of the wholly or partially owned entity.
(Source: P.A. 91-361, eff. 7-29-99.)

So with alleged violations of the Open Meetings Act, and separate Sections of the Public Officers Prohibited Activities Act, we believe this contract to be invalid and unenforceable. We believe Trustee Thomas should be charged with allegedly violating this statute as it carries substantial penalties. We also believe the Library Board intentionally failed to make any payments towards the contract so that it would default and become void all on its own – evidenced with the later leases of the real estate which we will discuss in a future article.

When discussing the Public Officer Prohibited Activities Act, the Illinois Supreme Court has stated the legislative intent and application of the act was designed to prohibit even the most remote possibilities of self-dealing – and this 2014 contract had an obvious self-dealing clause built in where it was a contractual obligation of the Library District to permit Thomas to remain in the building as a tenant.

The statutory prohibition in section 3 could scarcely be broader. It prohibits a public officer from being “in any manner interested * * * in any contract * * * in the making or letting of which such officer may be called upon to act or vote.” (Emphasis added.) (Ill. Rev. Stat. 1975, ch. 102, par. 3.) In Brown v. Kirk (1976), 64 Ill.2d 144, 151, this court reversed an unduly narrow reading of section 3 by the appellate court, and observed: “Like most other conflict of interest provisions, it is aimed not only at the actual bad faith abuse of power for an officer’s own personal benefit, but is also designed to prevent the creation of relationships which carry in them the potential of such abuse, by removing the possibility of temptation.” Again, in People v. Savaiano (1976), 66 Ill.2d 7, 15, this court construed section 3 as barring an official not only “from having a private interest in situations in which a binding contract exists but also from allowing himself to be placed in a situation where he may be called upon to act or vote in the making of a contract in which he has an interest. The evil exists because the official is able to influence the process of forming a contract.”

Finally, the Public Library District Act contains no provision(s) for permitting conflicts of interest, and since Illinois is a Dillon’s Rule state (where one must seek an enabling statute), conflicts of interest of all kinds are prohibited with the district trustees. Only two things would have fixed this problem, remove the conflict (don’t lease or purchase the building) or removal of the trustee from the board.

.