Council Candidate Woods Addresses Allegations of Repeatedly Breaking Ethics Rules and Laws

Councilmember Susan Woods, who is running for re-election in November, has answered numerous questions about possible violations of various ethics rules and laws. Detailed below, her responses include several apologies for what she says were mistakes or lapses in judgment, some denials of wrong-doing, and assurances that she will work to avoid any further appearances of impropriety if she is re-elected.

Woods has been the subject of several formal and informal complaints on a number of different issues since she first ran for Council in 2013. Recently, ELi received a letter with supporting documentation making a complaint about Woods’ ethics from Carolyn Edmunds, a citizen who made formal complaints about Woods in 2013 and who says she believes that troubling behavior has persisted. A recent survey by ELi regarding the elections showed a number of respondents raising concerns about perceived ethical lapses by Woods. (The survey also indicated strong support for Woods among a number of respondents.)

The following background information is required to understand the issues raised:

• Woods was elected to four-year seat on City Council in November 2013.
• Woods functions as the Council liaison to the East Lansing Arts Commission. This is a non-voting position.
• Woods is also the Executive Director of the East Lansing Film Festival, a federally-recognized 501c3 nonprofit charitable organization that is legally and financially independent from the City of East Lansing. She runs the organization.
• Woods is also an employee of the Film Festival, currently earning $31,200 from the organization.

Here we explain the concerns raised and provide Woods’ response to them.

Advertising the Film Festival from her Council chair:

East Lansing’s ethics law includes what amounts to pretty standard language about not using an elected office for personal gain: “No city official or employee of the city shall use, or attempt to use, their official position to unreasonably secure, request, or grant any privilege, exemption, advantage, contract, or preferential treatment for themselves, a relative, or others.”

On numerous occasions, Woods has used her Council chair to advertise the Film Festival which she runs and which pays her from its revenues, revenues that come partly from box-office sales. Asked about this, Woods says she advocates for many forms of art in East Lansing.

She adds, “From now on, I will not announce the film festival but have another council member do so.”

Advocating for the Film Festival from her Council chair:

Woods has also on at least one occasion also asked for accommodation of the Film Festival from her Council chair. In April 2015, the City was negotiating with Michigan State University to turn over management of the City’s public art space, Scene MetroSpace, to MSU.

At the April 14, 2015, meeting of City Council, Woods asked MSU’s representatives for assurance that, if MSU took over management of the space, Woods could still use the space without charge for the festival’s annual party, as she said the City had been allowing her to do. When told by MSU’s representative that MSU was open to this, Woods indicated she was satisfied.

Asked about this, Woods says, “I do not think it was a good action and I regret it. I have had no dealing with MSU concerning Scene MetroSpace.”

Lack of required disclosure about campaign contributors:

The current East Lansing City Council revised the ethics law to require that Councilmembers disclose when they are likely to be about to vote on a financial concern of a person who has donated $100 or more to their campaign. As we noted in an earlier report, some members of Council have not been following this rule until recently.

Woods has had far more instances of failed disclosure than her colleagues because her 2013 campaign was heavily funded by local developers and landlords who have had a lot of business before Council during her term.

As we reported, only about 1% of the $12,000 in donations Woods accepted for her 2013 campaign appear to have come from East Lansing residents without apparent financial business before Council. While a significant portion of her campaign funding came from out-of-state colleagues and friends, over $5,000 came from local landlords and developers, with much of it in the form of $500 lump contributions donated in the last days of the race. That timing meant that voters would not be able to see the contributions in the public record until after the election was over.

Councilmembers are not required to recuse themselves from (stop themselves from participating in) discussing or voting on business related to people who have given them money. They are only required to disclose.

Woods has apologized for not making such disclosures about campaign contributions before voting on the business of those who funded her campaign. She attributes the failure to “ignorance” and also says now, “I will not be raising any funds for this campaign and therefore will not have this conflict of interest. I will also make a disclosure before any decisions that involved my past supporters.”

She adds, “I want to reiterate that NEVER has anyone who has contributed to my campaign asked for favors, influenced a vote or in fact spoken to me prior to any decision.”

Absence of disclosure of landlord-tenant relationship with a developer:

In July, we reported that Woods had failed to disclose that she is a long-time tenant of the Balleins, co-developers of the $132 million Center City District project, which she voted to approve along with a $58 million tax financing deal.

Woods rents downtown office space for the Film Festival from the Balleins for $200 a month. A member of Planning Commission specifically recused himself from voting on the Balleins’ project because he was in the same relationship with the Balleins. The Planning Commissioner’s office was in a building slated for demolition for the project, and Woods’ office is in a building that was improved in association with the project, although it does not appear that the offices in the building were improved.

Asked why she did not at least disclose the relationship with the Balleins, Woods responded, “I didn’t think of it. That was an oversight.”

Obtaining grants for the Film Festival from the City:

East Lansing’s Arts Commission is provided funds by City Council from the annual budget to give out grants to local artists and art events. There is an annual competition for these grants, and not all applicants are funded.

Woods applies annually for these competitive grants from the Arts Commission for the Film Festival and has a record of being awarded the grants. Last year the Arts Commission had $10,500 in total for the grants and awarded Woods’ organization $2,500.

Questions have been raised about whether it is appropriate for the City to award a grant to an organization run by and employing a City Councilmember. As a Councilmember, Woods votes on who is on the Arts Commission and also votes on the City budget that provides the grants. She is also the Council liaison to the Commission.

Woods says that because she competes for the grants, and does not vote on who gets the grants, it is not inappropriate. Minutes for the 2016 Arts Commission meeting where the grant decisions were made show Woods absent as City Councilmember but present as Executive Director of the Film Festival, indicating separation between the roles.

The City’s ethics law requires Councilmembers fill out an annual disclosure indicating whether they run or are paid by any organizations “doing business” with the City. Woods has said she does not see any reason to indicate on the disclosure form her directorship of and employment by the Film Festival, because she does not see obtaining money from the City to provide local arts services a form of “doing business” with the City. This year she did start indicating on the annual forms that her organization obtains grants from the City.

Because all of the Council members are partly responsible for the multiple roles being played by Woods at the Arts Commission, I asked the rest of them if they saw any problem with it. Only Mayor Pro Tem Ruth Beier, who is also running for reelection, responded. Beier said, “she is a liaison but not a voting member of the Arts Commission so I don’t see a conflict there.” Beier said she also has no problem with Woods “having input on who serves on the Arts Commission.”

As for the money, Beier said, “the budget [of the City] is huge and it would not make sense to recuse based on one line in the arts budget.” But, Beier added, “if I were her, I would make a statement that the budget includes money for the Arts Commission which gives a grant to the film festival which pays her salary.”

Use of the Film Festival’s resources for political activity:

In 2013, when Woods was running for City Council for the first time, she used the East Lansing Film Festival’s email list and website to promote her campaign. A formal complaint about this was filed with the Michigan Department of State by East Lansing citizen Carolyn Edmunds, as the use violates the Michigan Campaign Finance Act.

Woods explained what happened as a “one time, unintentional error caused by a technological mishap.” She made a contribution to the Film Festival to reimburse it for the use of its resources, and signed a Conciliation Agreement with the State.

Edmunds also made a complaint to the IRS, because the Film Festival is prohibited under its 501c3 nonprofit status from engaging in political campaigning. Woods told us this week, “I paid the violation to the IRS and was cleared by them.”

From the time of being sworn-in, however, Woods steadily continued to use her Film Festival email accounts, including that associated with the domain name of the Festival (elff.com), for her political activities. For example, in the current campaign, she has answered questions about her campaign’s goals from the email account she uses as Director of the Festival. All of her emails about her campaign therefore include her signature line as “ELFF Director,” with the phone number and address of the Festival.

IRS law indicates that 501c3 organizations “are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”

Asked whether she sees any legal problems with using ELFF email for corresponding about Council and campaign business, Woods responded, “I have all the mail forwarded to me from the City [Council email] account. I respond from the film festival account to save time.”

She said she would ask the City Attorney if that is a problem. She also said that sometimes other Councilmembers use their work email addresses for Council business.

Responding to Edmunds’ questioning of the pattern:

In her recent communication to ELi raising concerns about whether Woods’ behavior has changed since she violated Michigan campaign finance law and IRS law in 2013, Edmunds concluded, “There are too many of these supposed unintended oversights to be one-time events—either Ms. Woods is deliberately pushing the limits to see how far she can go before someone complains, or she is careless, unthinking, and incompetent.”

Asked for her response, Woods replied, “This [is] her opinion and I respect it.”

In her defense, Woods added, “I have done many things outside of the usual duties of a Council member.” She named creation of a brochure “to inform and encourage people to live in East Lansing and attend our fine schools,” fundraising for the ceramics studio at the community center, putting on a Welcome Dance when students return to East Lansing in the fall, and fundraising for Parks and Rec.

Woods is one of three people running for two open four-year spots on City Council. Earlier this week, ELi published a report about complaints against candidate Aaron Stephens. We have not received any complaints about candidate Ruth Beier.

Note: After publication, the sentence "Council has not been following this [campaign contribution disclosure] rule until recently" was changed to indicate that some Council members have not been following it. Read specifics here.