Two opponents of a proposed Zika Avenue NW housing development say council member McGrane is too beholden to builder Kyle Skogman and should not have voted

Two opponents of a plan to build 81 homes with government subsidies across from the Ellis Golf Course say City Council member Jerry McGrane should have abstained from voting on the matter because of the appearance of a conflict of interest.

McGrane's vote mattered because he voted with a 5-4 council majority last month to approve the site development plan for the Sugar Creek development along Zika Avenue NW.

Council member McGrane, a flood victim, says he did nothing wrong. His was a vote for housing for flood victims, he says.

Linda Seger, a flood victim who has become a prominent neighborhood voice on matters related to flood recovery, and Linda Prachar, who lives across from the proposed Sugar Creek site, see it differently.

Both say McGrane should have stayed out of discussion on Sugar Creek and should not have voted on the matter because they say he is beholden to one of the project's proponents and builders, Kyle Skogman, president of Skogman Homes.

The seed of an alleged conflict comes because McGrane, a longtime neighborhood leader in the Oakhill Jackson Neighborhood, was one of 19 flood victims to get significant city subsidies for a new home in his neighborhood just a few months ago. The conflict alleged now is not that the homes were built by Skogman Homes or even that they came with city subsidies.

“This was a little different set of circumstances,” Seger says.

What Seger is referring to is that Skogman did the legwork – for which the city's Replacement Housing Task Force gave him much credit – to identify flood victims who could both qualify and were willing to take on a new mortgage in one of the new houses he wanted to build with city subsidies in Oakhill Jackson.

City Council member McGrane and Skogman both have spoken in recent months about the process that led up to McGrane becoming one of the 19 flood victims who was able to quality to get one of the new Skogman-built homes.

Skogman has pointed out that McGrane did not jump to the head of the list for a new subsidized home, but instead waited until Skogman needed people who could meet the profile Skogman was looking for – flood victims who could qualify for a new mortgage and who wanted to live in Oakhill Jackson.

This week, McGrane and Skogman both acknowledged, though, that Skogman did all the heavy-lifting to find the buyers for the Oakhill Jackson homes, and both said those who wanted to get on the list for one of the homes went through Skogman.

McGrane, though, says Skogman didn't have the power to reject a person if the person qualified for the program. In a sense, McGrane says Skogman had to take him. Thus, Skogman didn't do him any favor, McGrane says.

Skogman says McGrane “fit the criteria.” At one point, more people were seeking the Oakhill Jackson homes than Skogman was building, but some didn't qualify for a mortgage, Skogman says.

The actual down-payment assistance for the new Oakhill Jackson homes came from a City Hall program established a couple years before the June 2008 flood, a program intended to attract builders to a neighborhood long in decline. McGrane says he knew that Skogman had arranged to tap into the program for funding after the flood with City Hall's blessing. And McGrane says he approached Skogman to get in line, and by late May, he was in his new Skogman-built home, at 1105 Eighth St. SE.

Flash forward to last month.

Kyle Skogman was among a group of developers/builders in front of the City Council seeking a site approval and city subsidies of up to some $2 million to build 81 homes along the south side of Zika Avenue NW across from the Ellis Golf Course.

Darryl High, president/CEO of High Development Corp., is the central player and developer of the Sugar Creek proposal; Tom Berthel, of T.J. Berthel Enterprises Development, owns the 25-acre site; and Skogman has been an advocate and intends to build 20 of the homes.

The Sugar Creek development has had somewhat of a rocky ride. Aspects of it were not endorsed by the Replacement Housing Task Force; the City Planning Commission rejected it on a 4-3 vote on concerns about water runoff and housing density; and the City Council in early discussion wondered if it really was housing that flood victims could afford even with city subsidies of up to $29,000 a lot. Then the council wondered where it would find the money to pay for the subsidies.

Even so, the council on Aug. 26 voted 5-4 to approve the site plan for the development, though where the government subsidies will come from remains unclear. (City Manager Jim Prosser said no city money will be used on the project).

Linda Seger says watching McGrane cast his vote for the proposal “just didn't feel right.”

The problem, she says, is not that McGrane went out a few months before and bought a Skogman-built home. The problem, she says, is how unique Skogman's homebuilding-program in Oakhill Jackson was and how closely and recently Kyle Skogman worked with people like McGrane who ended up getting houses there.

“There's a feeling that maybe he (McGrane) has an obligation to do something nice in return,” Seger says.

Linda Prachar says a similar thing of McGrane: “How could he not feel somewhat obligated to him (Skogman)?”

Seger raised the issue during the public comment period at the Council meeting on Sept. 2 without referring directly to McGrane.

McGrane now says he did not know what Seger was talking about at the council meeting. And he says he had never given any thought to not voting on the Sugar Creek proposal because of any connection he might have had to Kyle Skogman and his new Skogman-built home in Oakhill Jackson.

“I guess I'm at a loss for words really,” says McGrane, speaking during an interview on the front porch of his new house. “I have absolutely nothing to do with anybody building there (in the Sugar Creek development). I guess I just don't understand where they're coming from.”

He says the Sugar Creek vote was a vote for helping flood victims.

“How can I turn my back on people who have lost their homes and not vote for something where they have an opportunity to get a home like I did?” he says.

For his part, Kyle Skogman calls it “a stretch” to link his house-building effort for flood victims in Oakhill Jackson to the Sugar Creek proposal off Zika Avenue.

“I guess I'm not understanding that logic,” Skogman says. “Sugar Creek is not about Skogman, it's about High Development and affordable housing. To me they are making quite a leap to try to make that project about Skogman and Jerry McGrane.”

Skogman notes that he intends to build 20 of the houses in Sugar Creek, and he acknowledges that he was a vocal proponent of the development in front of the City Council.

However, he says he sees McGrane's vote for Sugar Creek as consistent with McGrane's commitment to support affordable housing.

The city's Board of Ethics – the only local ethics board in Iowa – has made it clear in recent deliberations that the city's ethics statute only recognizes actual conflicts of interest and not what might appear to be a conflict of interest.

The ethics board also has looked narrowly at matters to see if a city official has directly benefitted from something or might benefit based on a vote they have cast. McGrane clearly isn't benefiting from the Sugar Creek development, and the ethics board has never considered if an earlier benefit, if there was one, should preclude someone from voting on a matter.

The ethics board's emphasis has been on openness and disclosure so that the public knows of relationships even if they are not relationships that should prevent an elected or appointed official from voting on a matter.