Vol. 16 Issue No. 4 | January 27 – February 2, 2010

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Mayor Schwan in tizzy over own resume’s implications

By Linda Bentley | January 27, 2010

Ignores statutory issues surrounding authorization of unbudgeted expenditures that exceed the town’s limit without council approval

CAREFREE – Last week’s article, “Carefree councilmen openly back John Traynor in recall election,” implied councilmen Peter Koteas and Doug Stavoe said Mayor Schwan was serving on the board of directors at the time he authorized a $7,305.09 payment to Foothills Caring Corps (FCC), an unbudgeted expense requiring council approval. They did not.

It was actually Schwan’s “credentials” posted on www.carefreetruth.com by supporter Lyn Hitchon on Dec. 20, 2009 via “Carefree Truth Issue #26” that implied Schwan was a director of the FCC throughout 2009, by providing only the year to indicate when he served.

Since the FCC incorporated on Feb. 25, 2009, and directors serve for one year, it was a natural assumption to believe he was a director at the time the contribution was made.
Previously, the FCC was a program under the Foothills Community Foundation, for which Schwan has volunteered since 2002.

Schwan’s bio on the town’s website states he is a volunteer with the FCC and expresses his interest in bringing social services to the community.

Although Schwan’s resume also claims he “occasionally led worship when pastor is out of town” at Christ the Lord Lutheran Church, where he was a member from 2001 until just after the elections in 2009, a long-time member of the same congregation, who asked not to be identified, said Schwan actively volunteered at the church and may have introduced speakers from time to time, but couldn’t recall a single instance where Schwan ever “led worship.”

As a council member Schwan wrote articles for “Carefree Cares,” the town’s former official newsletter, promoting the FCC.

In 2008, Schwan teamed up with former Cave Creek Councilman Thomas McGuire and Valley Metro to create a transportation survey, which garnered responses from less than 10 percent of the population.

Of the 667 that did respond, only 72 people, less than 1 percent of the population, stated they were unable to provide transportation for their needs, while 366 respondents said they might use public transportation if it were available.

During the Feb. 3 2009 Carefree Town Council meeting, Schwan said, after evaluating the [survey] data, there was a “general feeling to move forward” with a plan to provide community-wide transportation.

According to his resume, Schwan served on FCC’s steering committee from 2003 to 2009, on its long term planning committee from 2006 to 2009, managed its office computers since 2002, and is listed in the Foothills Community Foundation’s FCC program report for FY 2008-2009 as a member of its advisory committee.

To say Schwan is and has been deeply imbedded with the FCC for the past eight years, whether in the capacity as a director or not, is not a leap of anyone’s imagination.

Schwan submitted a letter to the editor, which are printed on a space available basis, to set the record straight over one minor “factual error” perpetrated by his own resume.
His tirade clouded the fact that he never addressed any of Koteas and Stavoe’s real concerns.

Schwan’s letter goes on about how last week’s article “states – falsely – that I directed a $7,305.09 payment to the FCC while I was a member of the FCC board of directors, and this payment represents ‘a conflict of interest.’”

Claiming it was a “routine payment, established under routine town procedures, for transportation services by a nonprofit organization,” Schwan states, “As mayor it is my routine obligation to sign all checks drawn up by town staff.”

However, state statute and town policies mandate such expenditures first be brought to council for a vote.

Schwan states, “I was not (emphasis original) a member of the FCC board when this check was issued … My resignation letter from the board was submitted on May 26, 2009, fully six months before any payment was rendered … I was resigning to avoid any appearance of a conflict of interest … any reputable news source would have checked with the FCC before printing such a scurrilous allegation.”

Schwan’s resignation letter to the FCC reads: “You may know that I have been reelected to the Carefree Town Council.

“I believe that responsibilities of a Carefree councilman and the responsibilities of a board member for FCC may create a conflict of interest or the appearance of such conflict. For example, town council will be creating a Carefree budget for 2009-2010 over the next few weeks and some of that discussion involves funding for 501(c)(3) organizations and LTAF II (Local Transportation Assistance Funds) funds.

“It also appears that Carefree Town Council may be closely divided on a number of issues. I believe that I must be able to participate in all Carefree Town Council matters to fulfill my obligations of elected office.”

Schwan claims the payment was “not a simple act of charity,” but involved state-authorized LTAF II funds to be paid to the FCC for the purpose of providing public transit services to members of the Carefree community.

It’s not clear why Schwan would pad his resume with a directorship he held for only three months or what triggered the epiphany that his directorship with FCC was a conflict of interest only after being reelected to council and not while a sitting council member.

Other than his three-month stint as a director, Schwan doesn’t believe his past eight years and continued involvement with the FCC constitutes a conflict of interest.

State statute is quite clear and does not permit a town to spend money for a purpose that is not included in its budget. It may only transfer monies between budget items if the monies are available, the transfer is in the public interest and based on a demonstrated need, the transfer does not result in a violation of the limitations of Arizona’s Constitution, and a majority of council votes affirmatively on the transfer at a public meeting.

Despite his resignation from the board, Schwan’s involvement with the FCC still appears to be a conflict of interest.

He has also breached state statute and town requirements by not bringing an unbudgeted expenditure, which also exceeded the town’s $4,000 disbursement limit, to council for a vote.

Schwan also didn’t address LTAF II’s matching funds requirement. In order for the funds to be disbursed, Carefree must contribute funds equal to “at least one-fourth of the amount of the grant monies requested.”

During Carefree’s June 9, 2009 budget workshop, Councilwoman Susan Vanik questioned whether or not the “pass through LATF grant to the Caring Corps should be left in.”

She asked if they could budget funds and not spend them until the end of the year, provided funds were available.

Stavoe stated the town couldn’t borrow money to give to charities.

Town Administrator Gary Neiss asked if council wanted to keep $42,500 in the budget for contributions as an expenditure line or cut the amount further.

Following discussion, Vanik suggested eliminating the category for one year and, according to the meeting minutes, “All agreed.”