Government / Politics

Conflict of Interest rules: Did Klauer cross the line?

Klauer was too close for comfort for group filing complaint with Fair Political Practices Commission
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The Enforcement Division of the Fair Political Practices Commission (FPPC) is conducting an ethics investigation of Hollister City Councilman Karson Klauer after it received a complaint that he may have used his office to financially enrich his family, friends and co-workers. Klauer is also being accused of the failure to recuse himself from participating in the drafting of the City of Hollister Marijuana Ordinance and subsequent revisions to the ordinance while having a real or perceived personal conflict of interest. 

Gary Cameron filed the complaint regarding action taken by the city council on Dec. 5, 2016, concerning the second reading of the city’s cannabis ordinance and the approval of certain locations under consideration for marijuana-related businesses. Cameron is a retired Highway Patrol officer and frequent speaker against marijuana during council meetings. (See article Businesses protest marijuana dispensary, council accused of possible collusion)

Cameron named five residents as witnesses to support his accusations of a conflict of interest: Jack Kirk, a real estate agent; Steve Becerra, a retired Gilroy police officer and real estate agent; Mary Voss, owner of Green Tripe, a dog food company; and Robert Bernosky, a Hollister School District board member. All were part of a working group that met with Klauer on a number of occasions.

"At the Sept.19, 2016 council meeting, Karson Klauer quit the [cannabis] ad hoc committee stating his constituents within his district were not in favor of medical marijuana and Klauer saw no reason to continue on the ad hoc committee. Mayor Ignacio Velasquez replaced Klauer as the second member of the ad hoc committee,” Cameron stated in the complaint.

Prior to that date, Klauer and Councilman Ray Friend comprised the ad hoc committee that drafted the marijuana ordinance. After Velazquez stepped in, Valezquez and Friend met with various groups and individuals to listen to their concerns. From those meetings, one change to the ordinance was to add a 600-foot setback between marijuana businesses and churches, schools, homes and other specially use areas.

Cameron claimed that after Velazquez established the more conservative 600-foot setback, “Klauer spearheaded the effort to change dramatically the setback distance, which ultimately ended up being 150 feet from building-wall-to-building-wall of marijuana facility, not property-line-to-property line [which is more common in the county planning process],” Cameron claimed. “This decision set the course to enrich the Klauer family, friends, co-workers and potentially marijuana operators.” 

Klauer, however, said the 600-foot setback was never part of the original ordinance that he and Friend had worked on and that the mayor was the one to add it to the ordinance.

“It was never voted on that it would be 600 feet,” Klauer said, adding that there was even talk of having no setbacks whatsoever.

“At the council meeting where we moved forward with an ordinance, people got up during the public comment and said San Jose does 150 feet,” Klauer said. “I said that seems to be a decent compromise and we have enough votes to pass it at zero, but a group of people wanted to have some sort of buffer, so that’s where the 150 feet came from.”

Then, during the Dec. 19 council meeting, Klauer made a motion to change the setback from 600 feet to 150 feet. Cameron explained this action on Klauer’s part would ultimately benefit his father, who owned a building at 807 Industrial Drive, which was sold to Euphoric Life, Inc. on Aug. 7, 2017, and was approved for a cannabis-use permit Dec. 18.

“Had the ‘property-line-to-property-line’ been made part of the setback by Karson Klauer, this property would not qualify at 600 or even 300 feet setback,” Cameron maintained. “There are only 16 parcels of land on Industrial Drive, two of which were owned by Karson Klauer's father and a family friend. It would be disingenuous of Karson Klauer to claim ignorance of these facts.”

Cameron believes Klauer had a conflict of interest because his father, Kraig and Klauer’s co-worker at Nino Real Estate, Jason Noble, benefited from his actions in influencing the change in setback distances regarding the Industrial Drive property.

Cameron argued that Klauer should not have been involved in drafting the ordinance and even though he repeatedly recused himself whenever Industrial Drive properties were under discussion, the change in setback distance benefited his father directly.

In a separate location at 1091 San Felipe Road, Cameron argued that because Klauer did not recuse himself and voted to grant that location a cannabis permit, it benefited Noble again because he represented that sale too.

“As soon as I found out that my family member [Klauer's father] was planning on selling the property [807 Industrial Drive], I knew something was going to come up because they had been giving me a hard time already, so it wasn’t much of a leap for something to happen,” Klauer said about the group that filed the complaint.

Klauer said he tried to avoid any appearance of a conflict of interest. FPPC has five basic rules that determine a conflict of interest. All five require the official to have a financial interest and the category related to personal finances includes immediate family.

Klauer has maintained that he has not experienced any financial gain from any of his decisions. FPPC will determine if he had a conflict involving the Industrial Drive property because his decision could be interpreted as having benefited his father. The rule specifically states: “An official has a financial interest in decisions that affect the official’s personal expenses, income, assets, or liabilities, as well as those of the official’s immediate family.”

There is nothing, however, in the five FPPC rules that would indicate the commission payment Noble received after the sale of the San Felipe Road property, would be considered a conflict of interest for Klauer. He has maintained after receiving advice from the city attorney, that there is only a conflict of interest if he or his immediate family benefits from his actions as a city official.

However, Klauer went as far as to say, “I didn’t do any real estate with anybody who was thinking about doing a cannabis business and I tried to avoid commercial real estate. I could have done the deal on Industrial Drive because I knew I was going to have to conflict out anyway, but I didn’t because I was trying to avoid the optics of it all, but sometimes you can’t see everything coming.”

Even though it would appear FPPC rules for conflicts of interest support Klauer’s contention that he has none on the San Felipe Road property, he did admit that he might have made an error in judgment concerning it.

“I can see where I may have messed up on this one,” he said. “I don’t know for sure, because I haven’t heard back from FPPC on that. I can understand why they would think there was a possible conflict of interest. But I haven’t worked with the applicant or the owner and never received any benefit from a business deal with Jason.”

On Dec. 22, 2017, FPPC forwarded to Klauer information it had received on Dec. 6 that contained additional allegations being made by C. David Barnard, also concerning the property on San Felipe Road.

In his statement to FPPC, Barnard—who is married to Julia Vancil, owner of CrossFit San Benito on Industrial Drive, and was in meetings with Cameron, Becerra, and Kirk—wrote that he too was concerned about Klauer’s actions regarding his voting on cannabis permits, especially for the San Felipe Road location.

Barnard echoed Cameron’s accusations that Klauer’s vote to approve a cannabis permit for the San Felipe Road property increased its value and benefited Noble. Even if Klauer’s vote did benefit Noble, it would appear, according to the five rules, there is no FPPC conflict of interest if a co-worker benefits.

In hindsight, Klauer said it may have not been one of his best decisions to join the city council because he believes a real estate agent’s motives will always be suspect.

“I think as a real estate agent, it’s a little bit harder because there’s a difference between a conflict of interest and a perceived conflict of interest,” he said. “As a real estate agent, you’re going to have perceived conflicts of interest all the time and that does not necessarily mean you have to exclude yourself from a vote. It hasn’t been easy from a personal standpoint.”

On Dec. 30, Klauer announced on Facebook that he will not run for a second term. He said Jan. 2 there is no connection between his decision and the investigation. He is doing so because he is moving across town out of the district, a decision he made months before the complaint was filed with FPPC.

John Chadwell

John Chadwell is a freelance photojournalist with additional experience as a copywriter, ghostwriter, scriptwriter, and novelist. He is a former U.S. Navy Combat Photojournalist and is an award-winning writer, having worked for magazine, newspapers, radio and television. He has a BA in Journalism and Mass Communications from Chapman University and graduate studies at USC Cinema School. John worked as a scriptwriting consultant, and his own script, "God's Club," was produced and released in 2016. He has also written eight novels, ranging from science fiction to true crime, which are sold on Amazon. To contact John Chadwell, send an email to: [email protected]