Housing panel yet to approve conflict rules

JEFFERSON CITY, Mo. -- Almost two years after a state housing commissioner made a substantial profit selling land to a developer, Missouri officials are still wrangling over language to avoid future conflicts of interest.

Housing commissioner Bill Luetkenhaus, a St. Charles County real estate broker, bought a 20-acre parcel of land in Wentzville for $931,794 in September 2006 and sold it two months later to Columbia developer Jeff Smith for more than $1.7 million.

As a member of the housing development panel, Luetkenhaus votes on projects submitted by Smith and other developers who are seeking state subsidies.

While the commission determined the sale didn't violate any state statutes, its members did say they needed rules to address these types of situations in the future.

On Friday, the issue came to a head as assistant attorney general Jeff Schaeperkoetter accused Luetkenhaus of distracting the panel from crafting those policies.

"There is a problem, Bill," Schaeperkoetter said during a commission meeting. "And to say that there's not and that you can simply avoid a conflict of interest by reporting it to somebody, that's what got us into this problem in the first place. What got us into this problem were dealings with people that are predominantly active in developing projects before this commission."

Luetkenhaus has defended the land deal, saying he sent a letter detailing the sale to state Treasurer Sarah Steelman, who was then commission chairwoman. But no other commissioners said they knew about it. Luetkenhaus also said he also accepted $200,000 less than the appraised value for the property.

He later voted for projects involving Smith.

Pete Ramsel, the commission's executive director, told Steelman in an e-mail that Luetkenhaus "created another conflict" when he rezoned the land in Wentzville for a future elderly tax credit development, bought it and then sold it to Smith.

On Friday, Luetkenhaus said he thought he avoided conflicts of interest under the commission's existing policies.

"A person can send a letter in or abstain," he said. "I either abstain or write a letter every time I think I have a problem."

A subcommittee of the full commission is debating a new standards of conduct, including a provision banning commissioners from allowing their personal business to interfere with their commission duties. If they can't, they must recuse themselves from voting.

Luetkenhaus tried to start discussions on other issues, such as a proposal that would prevent commission staff from leaving the agency and going to work in the development community. But Schaeperkoetter, who represents Attorney General Jay Nixon on the board, said that wasn't the problem.

Commissioners established the subcommittee in December to develop the new standard of conduct, appointing Luetkenhaus chairman. His committee has yet to send a draft to the full panel, which Luetkenhaus blamed on a summer recess and lack of quorum.

Gov. Matt Blunt has said Luetkenhaus should avoid voting on issues involving Smith, but reappointed him to the board in February.

Blunt spokesman Rich Chrismer said the governor still hopes a new set of standards "are quickly reviewed and adopted." But that likely won't happen before November, a month before the commission approves millions of dollars worth of low-income housing tax credits.

Republican Congressman Kenny Hulshof, who is running for governor, has pushed for changes on the commission, including the removal of statewide elected officials. That change wouldn't affect Luetkenhaus.

"However, Kenny believes that the self-dealing needs to end," said campaign spokesman Scott Baker.

Nixon, the Democratic gubernatorial candidate, opposes having the governor appoint all the commission seats, said campaign spokesman Oren Shur. He said Nixon "has been an outspoken voice for openness and transparency on [the commission].

"In fact, he has often been the only vocal advocate for openness," Shur said.