On Monday, February 25, 2013, Lisa Kuzela submitted to the Iowa State Ethics Board claims of conflicts of interest that Mayor Ron Corbett has violated Iowa Code 68B.2A which prohibits outside employment and activities. Those charges have been forwarded to the Linn County Attorney’s office.
The pertinent subsections to the code are as follows:
Iowa Code 68B.2A – “Prohibited Outside Employment and Activities-Conflicts of interest:”
“Any person who serves or is employed by the state or a political subdivision of the state shall not engage in any of the following conduct:”
“Outside employment or an activity that involves the use of the state’s or the political subdivision’s time, time, facilities, equipment, and supplies …”
In addition, specifically regarding employment conflict…
“Outside employment or an activity that is subject to the official control, inspection, review, audit, or enforcement authority of the person, during the performance of the person’s duties of office or employment.”
Corbett was the Vice President of Human Resources at CRST. John Smith was President and CEO of CRST International, Inc. and is currently Chair. David Rusch is the current President and CEO of CRST. Corbett supposedly remains employed by CRST, although questions remain as to if he actually works there or simply receives a salary under a fictitious position.
Corbett has a personal interest through his official capacity of mayor which has benefitted John Smith and David Rusch at CRST which violates State Law.
The most recent actions he has taken in regards to the casino have prompted me to finally file an official complaint and request for an investigation.
My suspicion rose first when I learned who the investors were. They included John Smith and David Rusch of CRST.
Two weeks ago I learned about the Agreement between the Cedar Rapids Development Group (“investor” group) and the Linn County Gaming Association (nonprofit group) which states that if there is any debt incurred on the land or operations, then a “third party” will cover that debt. I knew what that meant. Again, the city taxpayers will be subsidizing another facility. But this time, it will be for Corbett’s employers.
Last week, I learned of the Memorandum of Understanding (MOU) (see attached) that Corbett approved at the October 9, 2012 City Council meeting.
This Memorandum is basically a no-competition declaration stating that the City will exclusively support the Cedar Rapids Development Group, LLC and the Linn County Gaming Association, Inc. They will not consider anyone else who wants to bid for the gaming license.
This created an environment in which there can’t be competition. A bid process would have been in the form of bidding a higher percentage of funds to go to the nonprofit who then allocates it to the community.
By doing so, Corbett not only dishonored the residents, costing them tens of millions, but he secured that those proceeds will stay in the hands of the investor group, of which Smith and Rusch are investors.
The MOU that Corbett supported therefore:
1) secured that this investor group, of which Smith and Rusch are members, Cedar Rapids Development Group, LLC, and no one else, would be sole ownership of the casino, entertainment, gift shops, etc. proceeds – as stated in the Agreement;
2) secured that a lower percentage of proceeds be distributed into the community;
3) secured that this investor group will make millions more (that otherwise would’ve gone into the community).
Note that I don’t think that a bid process is required under law or regulations in this situation, however, through Corbett’s official actions, he has granted favor to Smith and Rusch of who Corbett is employed.
This MOU agenda issue was a critical one for Cedar Rapids, yet was not only not discussed at the council meeting; it was noticeably inconspicuously placed on the consent agenda. No council member pulled it off to discuss, and it was passed by the simple vote of passing the consent agenda.
Earnestly submitted by
Extended information: The casino conflict of interest has many tentacles …
In April 2012, I, along with others, attended and spoke at a House Ways and Means Subcommittee regarding Senate File 2217 – a $600 million bill for “flood protection” in which Mayor Corbett strongly lobbied for. At that meeting, there were two lobbyists from CRST. At the time none of us could understand why they were there.
This bill, signed into law April 19, 2012, was so broadly worded that it allows any project to be funded under this bill, as long as part of the major project qualifies as “flood protection.” This includes a casino.
Senate File 2217, Section 4 – New Section 418.1 Definition #5 “Project”
“A project may consist of one or more phases of construction or reconstruction that are contracted for separately if the larger project, of which the project is a part, otherwise meets the requirements of this subsection.”
Although the bill states the funds would be granted to the “governmental entity,” this city knows how to get around that. Three LLCs (Courthouse II LLC, Courthouse II Tenant LLC, and Courthouse II Manager LLC) were created for the former Federal Courthouse / new City Hall, in which they used all public funds to rehabilitate. By doing this, not only did the taxpayers end up paying more, but it bypassed any bidding process that was required by law with these funds and prevented transparency.
There’s already an LLC formed for the casino – Cedar Rapids Development Group, LLC. I predict they will do the same with the casino – providing even more funding to the “investor” group – all with our tax money!
Now that the casino project is being pushed and John Smith and David Rusch have been named as investors, I think I understand now why a trucking company located miles from the river was lobbying for a “flood protection” bill.
However, if this is granted by the Board then, according to the bill, the taxpayers, rather than the investors, can be paying for the construction of the casino project with the appearance that the investor group (LLC) is paying for it.
Sidebar: Each phase or subproject is capped at receiving $15 million through this law. In addition it requires a “local match.” However, the State received a waiver from HUD allowing the CDBG Disaster Assistance to count as a local match. Therefore, with this match, it allows Corbett to help fund up to $30 million per phase / subproject of the major casino project. Thereby, leaving the investor group, of which John Smith and David Rusch of CRST are investors, to invest very little, if any, toward the casino, obligating Local, State and Federal taxpayers to fund the construction of the casino.
Recently, it’s been published that Ron Corbett has historically opposed a local casino. I even heard him say so at a dinner during his campaign at the Islamic Center in Cedar Rapids. He said that the market is saturated and it doesn’t make sense to have another one here.
Now he suddenly supports a casino.
Of course this sudden change of attitude about such a major issue is usually explained away politically, but when all these facts are pieced together, questions can’t help but be raised as to why he is now using his elected position as mayor to push through the casino upon which Smith and Rusch are an investors.
Earnestly submitted by Lisa Kuzela, Cedar Rapids, Iowa
- Cedar Rapids Mayor Says a Casino Would Complement City Projects (kcrg.com)
- Corbett says city’s flood protection could take another 10 years (thegazette.com)
- Cedar Rapids mayor Corbett votes for casino – for first time ever (thegazette.com)
- Anti-Casino Activist Accuses Mayor of Conflict of Interest (thegazette.com)