The DC Chief Financial Officer position: what is to be done? Make it elected!

When DC went into receivership in the 1990s and the Federal Government created the Financial Control Board to manage the financial affairs of the city, a Chief Financial Officer position was created to independently manage the financial affairs of the city.  The CFO is appointed by the Mayor to a 5-year term, by the  Mayor, with confirmation by the City Council.

For the past 11+ years, the CFO has been Natwar Gandhi.  While the city's finances have been managed fairly well under his tenure including high ratings of the city's bonds and finances, a variety of improprieties occurred within the various units under his purview.  Recently he resigned, effective in June.

Besides those problems, a recent press release by the DC Library Renaissance Project about the CFO's evaluation of a land sale deal of city-owned property in the West End makes good points that the evaluation of the deal was incomplete, disadvantaging the city.  See "After Gandhi’s Resignation, Questions About West End Library Deal Remain Unanswered." From the press release:

The information that D.C. Council members were provided by the CFO, while not untrue, omitted a key variable: the estimated fair market value of the land to be sold. Without further analysis of their own, Council members would not have had adequate information to evaluate the deal.

At stake is the value of three properties in the West End “sold” to a developer, Eastbanc, through a complex and unprecedented land swap. The deal calls for a new library facility, new firehouse, and new affordable housing — together worth $30 million according to Eastbanc — in lieu of payment for the land.

The CFO’s report states, based on values from its own tax database and those of an independent valuator, that the land sale would reduce the city’s assets by approximately $30 million. The Mayor, D.C. Council members, and community groups assumed that $30 million in new construction matched the $30 million reduction in assets, making the deal seem reasonable.

In his testimony, however, the CFO noted that deed and recordation fees totaling $1.45 million would be forgiven as part of the deal. Since deed and recordation fees in D.C. are based on a formula of 1.45% of the total estimated fair market value, the real value of the land is $100 million, not $30 million. So transferring ownership to Eastbanc is a giveaway worth roughly $70 million.

There are definitely issues and problems with how the CFO office operates.  There needs to be more openness and transparency with regard to evaluation of tax abatement requests and other matters, as well as contracting (which is under the Executive Branch).

The kinds of proscriptions offered in this old Boston Globe op-ed about eminent domain, "Make Eminent Domain Fair For All," offer some good guidelines for how to tighten DC government procedures with regard to these kinds of decisions about financing.  From the article:

• Requiring... that any exercise of eminent domain for economic development have a primarily public purpose rather than a merely incidental one.

• Requiring the government to demonstrate the public benefit through a full-scale financial analysis that could be challenged in court.

• Requiring that eminent domain not be used for a solely fiscal purpose and that it instead must be part of a comprehensive land use plan.

• Requiring that the affected neighborhood have adequate participation in the planning process, a right that would be backed up by state-provided technical assistance upon the neighborhood's request.

• Requiring that the state demonstrate good-faith dealing with the owners of the property targeted for taking prior to exercising the eminent domain power.

Today's Post has an article, "DC mayor wants to rethink strong CFO role," where Mayor Gray suggests that the city's elected officials should take back control of this function of government.

Scary. Many of DC's elected officials have clear conflicts of interest or other ethical issues that make it difficult for citizens to believe that they would carry out these responsibilities responsibly--after all that's why the Federal Government created the CFO set up to begin with.

Make the CFO an elected position

Just as years ago I had suggested that the city's Attorney General position should be popular elected ("DC elections and the referendum on the Attorney General" and " Another wrong judgement by the Washington Post: an elected Attorney General is a good idea and should be supported") and that will happen effective in the 2014 election, I recommend that the CFO position be popularly elected as well, to increase the checks and balances existing between the various branches of local government and to make a more direct link between "the people" and the necessity of financial stewardship propriety within local government.

The city has an opportunity to strengthen its processes and democracy at the same time by making the CFO or a "Comptroller" position popularly elected.

In New York City, the Comptroller is popularly elected, and limited to serving a total of 3 terms.  The Comptroller position in New York State is also popularly elected, without the term limit.  I'd recommend a term limit for the position.

(Comptrollers can be elected in other jurisdictions as well, such as at the county government level, or at the state level, such as in Texas.)

Making the CFO elected would, along with my previous suggestion (in "Continued musing on restructuring DC's City Council (mostly)") of creating an independently elected "Public Advocate" or Ombudsperson position, incorporating also the functions of the Inspector General (which currently is a position that serves at the pleasure of the Mayor, and is not fully independent), be a significant contribution to improving openness and transparency in DC government.