Volume 74, Number 43 | March 02 - 08, 2005

Borough President C. Virginia Fields’s legal counsel says she did not receive a letter from the Greenwich Village Block Associations about the Conflicts of Interests Board’s ruling pertaining to the case of Bob Rinaolo chairing Community Board 2’s Business Committee. However, Marilyn Dorato, G.V.B.A.’s secretary, has the registered-mail receipts proving the letter did arrive at Fields’s office.

Fields’s and C.B. 2 chair’s stories conflict about a conflict of interest

By Lincoln Anderson

New questions about how and why Bob Rinaolo was allowed to continue chairing the Community Board 2 Business Committee for more than a year and a half after a ruling finding he had a conflict of interest have both Manhattan Borough President C. Virginia Fields and C.B. 2 Chairperson Jim Smith now making conflicting statements, claiming they did not receive important letters and, in general, trying to duck the blame.

A Dec. 29, 2004, Villager article on Rinaolo’s conflict of interest, first reported how the city’s Conflicts of Interest Board in May 2003 ruled that, “owners of licensed liquor facilities, such as bars and restaurants, may not chair a community board committee that considers the licensing of such facilities.”

This ruling concerned Rinaolo directly, since for three and a half years he chaired the Greenwich Village board’s Business Committee, which makes recommendations on whether to grant liquor license applications by bars and restaurants.

Rinaolo owns The Garage, a bar/restaurant and jazz club on Seventh Ave. S. at W. Fourth St., and co-owns Senor Swanky’s, a Mexican bar/restaurant at LaGuardia Pl. and Bleecker St. A former chairperson of the Greenwich Village Chelsea Chamber of Commerce, he has announced plans to run in the June election for board chairperson of C.B. 2. So far, he is running unopposed.

Coinciding with The Villager’s reporting last December, Rinaolo stepped down as the committee’s head.

The Villager began reporting on Rinaolo’s conflict of interest when COIB’s ruling was provided to the newspaper by a community board member who requested anonymity. The board member said the ruling was given to the board member by someone “from the community.”

Until The Villager story broke, few board members knew the ruling existed. Arthur Strickler, the board’s district manager, or head employee, has admitted to The Villager that only he, Rinaolo, Smith and another board member were aware of the ruling and that he was surprised that the newspaper obtained a copy.

Brad Hoylman, the board’s Transportation Committee chairperson, who ran for board chairperson in 2003, said the conflict of interest ruling pertaining to Rinaolo was never discussed at monthly Executive Committee meetings, attended by the board’s committee chairpersons, though he brought it up at the January Executive Committee meeting following The Villager article.

Smith said there was an issue of privacy and that it wasn’t right to have Rinaolo’s potential conflict of interest publicly debated by the whole board.

Smith says the decision for Rinaolo to resign as committee chairperson was made in an e-mail exchange on Dec. 10. When The Villager first queried Rinaolo on Dec. 17 about the ruling, Rinaolo did not then indicate he would be stepping down. Rather, he said he planned to spend three months in Florida, then run for board chairperson in June, which, he claimed, made the conflict issue “moot.” Smith at that time initially agreed the issue was “moot.” However, within only a few days’ time, Rinaolo and Smith had decided Rinaolo would relinquish the Business Committee chairpersonship.

As to why he resisted taking action so long, Smith added that was not about to tolerate an “outside agency,” COIB, telling him who he could appoint to chair the board’s committees and that it was his right to appoint “whoever I damn well please” as committee chairpersons.

In a Feb. 9, 2005, talking point in The Villager, Marilyn Dorato and Kathryn Donaldson of the Greenwich Village Block Associations detailed how G.V.B.A. — the Village’s largest umbrella block association group, representing 35 block associations and thousands of Village residents — was seriously concerned after former C.B. 2 Chairperson Aubrey Lees appointed Rinaolo Business Committee chairperson in summer of 2001 — and launched their own inquiry into the matter. As Dorato and Donaldson put it in their recent Villager talking point: “If this were not a conflict of interest, what is?” G.V.B.A. wrote a letter to the city’s Law Department, which was forwarded to the Conflicts of Interest Board. In late May 2003, COIB sent G.V.B.A. its ruling that bar owners cannot chair community board committees dealing with liquor licenses.

Borough President C. Virginia Fields, speaking at a recent mayoral candidates’ endorsement meeting, above, gave Bob Rinaolo plenty of slack after the Conflicts of Interest Board ruled that bar and restaurant owners cannot chair community board committees considering liquor licenses.

Caliente was too hot

Besides G.V.B.A., another party also filed a conflict of interest inquiry over Rinaolo. According to a source, Rinaolo’s refusal to recuse himself from discussions in early 2002 on an application by Howard Berke, a former business partner of Rinaolo’s, for a liquor license renewal for Caliente Grill on Seventh Ave. S., prompted the applicant to contact COIB. Several years earlier, Rinaolo and Berke had parted ways as business partners on bad terms and Berke was concerned Rinaolo was now trying to misrepresent his business and his application and would urge the committee to deny the application.

“[Rinaolo] was hearing the application of a former partner who sued him and forced him out of the business,” the source said.

Lora Tenenbaum, a former Board 2 member who was on the Business Committee at the time of the Caliente Grill application, recalled Rinaolo called her to lobby her to vote against the application, and that he characterize it as a likely rowdy “tequila shot bar.”

“I think it was entirely inappropriate to have someone involved in a bar business chairing the Business Committee from day one — whether or not there was a ruling from the Conflicts of Interest Board,” said Tenenbaum. “I think there’s a real problem when the fox is guarding the henhouse. It’s not about Bob — it’s about the position. But I think that Bob making those calls about someone he’d been in litigation with was outrageous.”

The source said there was a meeting with Berke in Fields’s office, at which Fields’s representative said, “There’s no policy in effect at this point requiring [Rinaolo] to recuse himself.” The source said Berke was told his only recourse would be to make an inquiry of the Conflicts of Interest Board, and he did so. COIB’s ruling on the issue of bar and restaurant owners not being allowed to chair liquor licensing committees came a year later.

In the end, Rinaolo didn’t recuse himself from presiding over the Caliente Grill discussions, but did recuse himself from voting. A representative from the B.P.’s office was even reportedly sent to one meeting to keep an eye on Rinaolo. Although the Business Committee twice recommended denial of Caliente Grill’s application in January and February 2002, in the end the full board — in a rare incidence of overturning a committee’s recommendation — approved the application.

Without being more specific, the ruling says COIB “received a request for advice from a community board member with an ownership interest in a licensed liquor facility as to whether he may 1) chair the community board committee which makes liquor licensing recommendations and 2) whether he may vote on such recommendations.”

Rinaolo says he wasn’t the bar owner who requested the ruling.

Wayne Hawley, COIB’s general counsel, says COIB’s rulings are generally sent to the person who requested it, though he added, “It may not have happened here.” The rulings are also included on a e-mail distribution list that “includes a lot of city agencies,” Hawley said, adding he believes it includes the borough president.

But G.V.B.A., wanting to make sure Smith, who had recently been elected C.B. 2 chairperson, was aware of the May 2003 ruling, sent him a copy of it shortly afterwards.

From the start, Smith indicated he didn’t intend to follow COIB’s ruling and would “appeal,” if necessary, e-mailing back Dorato: “Fortunately, as I read it COIB’s opinion is merely advisory.”

However, last December, COIB’s Hawley unequivocally told The Villager that — in the case of a community board committee chairperson’s having a conflict of interest — when notification is made, “If someone is in violation who is chairing that committee, that person has to step down immediately.”

‘Beep’ has oversight

Yet, oversight of the community boards lies with the borough president, who appoints the 50 volunteer members of each Manhattan community board, who serve at her pleasure.

One would think an October 2003 letter sent to the B.P.’s legal counsel urging action on the Rinaolo conflict situation from G.V.B.A. — the Village’s largest umbrella block association organization — would have made an impression.

Dan Willson, Fields’s press secretary, claimed the borough president’s office had no knowledge of G.V.B.A.’s letter.

“The letter that [they say] came to Denise Outram did not,” Willson said. “Denise has absolutely no recollection of them ever writing to her, so we weren’t sitting on anything, actually.”

However, Dorato retained the registered-mail tickets showing the letter, addressed to Outram, was delivered to Fields’s office.

“It was signed for in the borough president’s office,” Dorato said. “If [Outram] didn’t sign for it, then it’s up to someone in the office to get it to her.”

Although what happened to the G.V.B.A. letter is a mystery, Willson said Fields’s office was on the case promptly after COIB issued the ruling in May 2003.

“As soon as we heard from the Conflicts of Interest Board, we relayed that opinion and issued an advisory opinion to the community board on the…subject,” Willson said. “My understanding is the ruling was challenged by the chairperson of Community Board 2, Jim Smith, in the summer of 2003. They disagreed with the Conflicts of Interest Board’s ruling. They asked for our opinion. We agreed with COIB’s ruling and said that this individual was in conflict of interest and should step down. Jim Smith was told numerous times that they needed to obey the Conflicts of Interest ruling and that Rinaolo should step down.”

The borough president’s office set up a meeting between Smith and a COIB representative in January 2004.

“In January 2004…Jim Smith said they asked the Conflicts of Interest to review [the ruling],” Willson said. “They didn’t answer [for a long while], but the Conflicts of Interest Board did respond in August 2004, saying there was no room for debate.

“All along we felt the Conflicts of Interest Board’s ruling was right,” Willson said. “We told [C.B. 2] there was no room to challenge it or appeal and they needed to take action.”

Given that Smith and Rinaolo refused to heed the borough president’s directives, the question arises — and was put to Willson — who runs the community boards, the boards themselves or the borough president?

“The chairperson of the community board runs it,” Willson responded. Usually, the borough president “lets it play out in these cases — but they said they’re disagreeing with us and said they’re appealing it,” he said. “We certainly made our views known on numerous occasions.”

Fields would not comment directly for this article.

Another missed letter

Smith tells a different version of events than the borough president’s press secretary. Notably — in another case of a letter not reaching its destination — Smith says he never received COIB’s August 2004 letter notifying him the conflicts board had rejected his appeal.

“The only reason I ever became aware COIB had taken a position on my appeal was because I followed up on it on Dec. 3, 2004,” he said.

“I never had any discussions with the borough president herself on this matter. There were discussions from time to time with some of the B.P.’s staff. My impression was that they were uneasy with the situation but there was no directive to me written or verbal that I must remove Bob. At a meeting with COIB’s representative in January 2004, however, the B.P.’s counsel indicated that she supported [COIB’s] advisory opinion and that I should be guided by it. A few days later I wrote my appeal to COIB, cc to the B.P.’s counsel. At no time then or since did anyone, anywhere demur in my right to appeal.”

Smith maintains it was of utmost importance to the board that Rinaolo be kept on as chairperson of the Business Committee.

“Why did it take so long to bring this matter to a conclusion?” Smith said. “The inboxes of counsels and councils are stacked high. Fortunately, in this case, it allowed me to keep a top-notch public servant, Bob Rinaolo, in his chair for almost my entire term. And as I made clear in my 7/22/03 e-mail to Ms. Dorato (part of which was quoted in her recent Villager talking point piece) I meant to go the last mile, if necessary, on this issue.”

According to Willson, another opinion on a related subject was issued by COIB around the time Smith’s appeal was denied, and it was the denial and the new opinion that made Fields tell Smith that Rinaolo must resign as committee chairperson.

However, Smith said, “All the decisions with [Rinaolo] staying or going were my decisions,” adding he wasn’t aware of any other related COIB ruling having been issued. Smith added that Rinaolo, toward the end, considered hiring an attorney to continue the appeal. “There was some talk about an additional appeal — but that would have been up to him to carry forward. There was agreement between the borough president’s office and myself that Bob had to go at that point.”

Rinaolo did not return phone messages left at his home and at The Garage. Doris Diether, a veteran C.B. 2 member, said she recently saw him walking in the Village. However, an employee answering the phone at The Garage said Rinaolo has recently been spending most of his time in Florida. Last December, Smith gave Rinaolo an excuse for undisclosed reasons for a three-months leave of absence from the board. (Four unexcused absences in a year is grounds for removal.)

Board wasn’t told

Although Rinaolo’s conflict of interest at C.B. 2 went unresolved for a year and a half, during this period, most of the board was left in the dark about it. There was not even a discussion of the issue at the board’s January meeting, following The Villager’s December article, though C.B. 2 member Melissa Sklarz did raise it at the February meeting. Sklarz, a transgender activist, admitted she had wanted to talk about the issue at the January meeting but “chickened out.”

“I wasn’t talking about Bob Rinaolo, but about the process,” Sklarz recalled of her comments. “ ‘I’m reading about this for the first time in The Villager and the Dorato letter — how can you appeal all this in our name without discussing it with us?’ ” Sklarz said she told Smith. Smith replied Rinaolo was too valuable as Business Committee chairperson, which is why he filed the appeal.

Ironically, Sklarz recalled how in early 2003 then board Chairperson Lees summarily removed seven members of the Waterfront Committee over Lees’s “concern” that they had a conflict of interest in the Pier 40 development process. Ultimately, B.P. legal counsel Outram found only one of them had a conflict of interest.

“The community board’s not democratic apparently,” Sklarz said. “The chairperson has all the authority, and the current chairperson and prior chairperson have made that quite clear. And the old-time community activists who were on the board are gone. The people on the board now are mostly business owners — who’s going to speak out about what’s going on? I guess this is how the borough president wants it and how Alan Gerson wants it.”

Ed Gold, a veteran C.B. 2 member, also is troubled by the drawn-out Rinaolo conflict issue. He added it’s a misperception that the whole board is cowed and afraid to speak out.

“Two aspects of this situation should be of interest to all C.B. 2 members,” Gold said. “First, as the talking point by Marilyn Dorato indicated, Bob Rinaelo and only a few others on the board knew of the COIB decision as early as June 2003, and no action was taken on it until December 2004. Furthermore, it concerned a C.B. 2 matter, yet neither the full board nor the community were told about it. That lack of transparency is disappointing.

“Second, I don’t doubt, as some Business Committee members say, that Bob worked hard as chairperson, but the fact remains that the committee decision in the Caliente case was not objective, reflecting a personal animus, and proved an embarrassment to the full board, which fortunately reversed the committee position.”

Confused over COIB

In Smith and Rinaolo’s defense, Hoylman said there isn’t much understanding of COIB and how it works. For example, he asked, can a COIB ruling even be appealed?

(“People can always write us letters,” Hawley said. There also seems to be confusion in some quarters as to whether a COIB ruling is “binding.” In response, Hawley said a COIB ruling “sets forth the board’s interpretation of the law.”)

“There seems to be a reluctance on the board to dwell on this issue,” Hoylman said, “but people outside of the board, including G.V.B.A., have asked questions about this issue. It’s a basic accountability problem that I think is endemic to community boards. The community boards are not elected by the voters and they’re basically responsible to the borough president’s office. I don’t think we’ve gotten any guidance from the borough president’s office.” But he added, “As a board member, I can’t explain why it took so long for this issue to come to our attention.”

Although some board members say they’re worried the board is being dominated by a “Chamber of Commerce/nightlife business clique,” they claim they’re afraid to speak out.

Explaining why she was requesting anonymity, one board member up for reappointment next month said, “I heard Bob Rinaolo doesn’t want me reappointed — I don’t want to screw up my reappointment.”

‘He did a great job’

Yet, other board members said Rinaolo has done a good job as Business Committee chairperson and that, to them, this trumped the conflict ruling.

“The concern would have been is Rinaolo doing a good job?” said Don MacPherson, chairperson of the C.B. 2 Waterfront Committee. “That Bob Rinaolo was a great chairperson of that committee makes it less of a concern to me. I frankly don’t see it as a conflict of interest,” MacPherson said, adding he feels that if someone has a professional license in a certain area it gives them the expertise to be a good committee chairperson.

As to whether Smith should have heeded the borough president’s counsel and made Rinaolo step down, MacPherson said, “That really was a judgment call on the part of Jim Smith.”

Gerson rebuffed Rinaolo

Councilmember Gerson, a former Board 2 chairperson, supported Smith against Hoylman in a tight board chairperson race two years ago. Gerson appointed a new member to the board who was instructed to vote for Smith — and Tenenbaum was told she would only be reappointed if she voted for Smith. However, it was Fields who really tipped the election, appointing a handful of new board members at the last minute, at least some of whom were lobbied by a Fields staffer to vote for Smith.

Gerson said that when he was C.B. 2 chairperson, Rinaolo, in fact, asked to be appointed Business Committee chairperson. Gerson said he refused to do it.

“We had an extensive discussion of it — on what I believed was a potential conflict of interest,” Gerson said, “because at the time he was chairperson of the Chamber of Commerce.”

Gerson said that “without doing a thorough review and investigation” of his own, he wasn’t prepared to comment on Smith’s handling of Rinaolo’s conflict of interest. But he added, “I have tremendous respect for Bob Rinaolo overall and I think he’s been a good board member overall.”

Councilmembers recommend half the board members to be appointed to each community board, though the B.P. has the final say. Gerson noted neither Rinaolo or Smith are his appointees.

Rinaolo was appointed by Fields and Smith by Councilmember Christine Quinn, who did not return phone calls as to whether she had tried to intervene in the situation with her appointee Smith.

In her eight years in office, Fields has gained a reputation for appointing business members to the Manhattan community boards, which formerly were seen as generally anti-business.

Board 2 members have contributed to Fields’s mayoral campaign, though no one has hit $3,850, the maximum contribution allowed for the borough president in this election cycle for both the primary and general elections. Rinaolo has given Fields $1,100; Smith and Lees have both given $400; Rocio Sanz — who has been fundraising for Fields — has given $2,850; Maria Derr $600; and Carol Yankay and David Reck have both given $200.

Candidates concerned

Fields will be term-limited as B.P. at the end of this year, and some are hoping the next borough president will exert more authority over the boards on matters like policing conflict of interest.

Eva Moskowitz, a candidate for borough president, said, “Councilmembers must reveal, and update yearly, any affiliations they have that present even the resemblance of a conflict of interest. Community board members are public servants, too, and should do the same. It is crucial that the public and…elected officials are aware of factors — personal or otherwise — that would impair their ability to make responsible decisions.”

Moskowitz noted she was familiar with Board 2’s situation and that during a meeting with some C.B. 2 members the issue came up.

“I heard about this. Frankly, it’s very surprising to me,” she said. “You have people with a vested interest making the decisions. It seems to me there’s a clear conflict of interest…. I was asked about it by Community Board 2 members during a general discussion. I was asked, ‘How would you handle this?’ I said, definitely it’s a problem. I don’t stand for conflict of interest — and it’s got to be dealt with immediately and expeditiously as soon as it’s uncovered.”

Assemblymember Scott Stringer, another B.P. candidate, said, if elected, he would appoint an impartial panel to help him screen and select board members and would then hold the board members to a “code of conduct.” Diversity on the boards is important, he said, noting, “You obviously want grassroots community folks, business leaders. We’re going to be very proactive [about it].”

Told about how Rinaolo had spoken against a former business partner’s application, Councilmember Margarita Lopez, who also hopes to succeed Fields, said, “That’s totally wrong. On the issue of conflict of interest, the borough president and anyone who’s an elected official must take it very seriously. Because when the public loses faith in the system, we are in deep trouble. It must be resolved quickly, because public perception is very important. If a conflict of interest is found, we need to move immediately — because [otherwise] the public suffers.”

Other boards’ actions

As opposed to Board 2, another Downtown community board, Community Board 1, covering Tribeca and Lower Manhattan, after being informed last September of COIB’s ruling, immediately complied with it. Formerly, the board’s catchall Tribeca Committee — chaired by Albert Capsouto, a partner in Capsouto Freres restaurant — considered liquor license applications. Yet, Capsouto never chaired the part of meetings dealing with liquor licenses, at those times turning the reins over to a fellow committee member. In October, a new committee just overseeing liquor licenses, the Tribeca Licensing Committee — headed by a new chairperson — was created.

“Yes, we did make the change at Community Board 1 based on the Conflicts of Interest Board ruling that was forwarded to us,” said Paul Goldstein, C.B. 1 district manager. Goldstein said a community member, Carol Martin, had provided the ruling to the board.

The issue has not been a problem at Community Board 3, covering the East Village and Lower East Side. Before becoming C.B. 3’s chairperson last June, David McWater was on the board’s S.L.A. Committee, but never tried to chair the committee. McWater says that five years ago at the borough president’s orientation for new board members, he was instructed that, to avoid conflicts of interest, members shouldn’t chair committees in the same area as their profession.

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