Do Bank of America and Wells Fargo Run Vermont’s Capitol City?

City politics get ugly in Vermont.

This article originally appeared on Reader Supported News, and is reprinted here with their permission.

To repeat myself ad nauseum, I still don’t see how our city’s chief economic development officer can hold and promote views that are fundamentally anti-capitalist in nature.”

– March 19, 2013, email from the Montpelier mayor to the city manager

When a city employee promotes a point of view that happens to center on an aspect of populist economics that seeks to serve the public good, and the democratically-elected mayor of that city has an opposing ideology that he’d rather not debate openly, why would anyone expect the resolution of this conflict to be anything but ugly?

That describes the often-covert, year-long struggle by minions of the private banking industry in 2013 to strangle the nascent idea of a Public Bank for Vermont in its cradle before the public might begin to admire it and help it grow.

In this preliminary outline of the circumstances that appear to have culminated in a process so blatantly unfair as to be laughable if it were in a movie, the three main actors all worked for the City of Montpelier:

John Hollar, the mayor of Vermont’s capitol, Montpelier (population about 8,000), is an attorney in the Montpelier office of Downs Rachlin Martin, one of the state’s more prominent law firms, for which he is a registered lobbyist with some thirty years of lobbying experience. His clients include Bank of America and Wells Fargo. In March 2012, he ran unopposed and was elected in a citywide vote as mayor of Montpelier, a part-time position paying $4,000 a year.

William J. “Rusty” Fraser has been Montpelier’s city manager since 1995, longer than any city manager before him. He has cultivated a reputation for political and ideological neutrality. He has also cultivated his music since he was about 10 years old and in recent years has performed with his band Rusty Romance, playing “roots’n’roll” around the Montpelier region. The band now appears to be moribund.

Gwendolyn Hallsmith published “The Key to Sustainable Cities: Meeting Human Needs, Transforming Community Systems” in September 2003. She was serving as executive director of Global Community Initiatives, a small 501(c)(3) non-profit organization, when she went to work for the City of Montpelier as the Director of Planning and Community Development. Her hiring letter of Oct. 11, 2006, makes specific allowance for her activity with Global Community Initiatives, which she founded, and other organizations, as well as her attendance at related conferences at city expense.

Vermont’s Reputation for Having a Green Streak was Justified

In 2001, the Montpelier City Council endorsed the Earth Charter, which defines itself as “a universal expression of ethical principles to foster sustainable development.” Montpelier was the first state capitol to endorse principles that might appear anti-capitalist in nature, as expressed in the Earth Charter preamble:

“We stand at a critical moment in Earth’s history, a time when humanity must choose its future. As the world becomes increasingly interdependent and fragile, the future at once holds great peril and great promise. To move forward we must recognize that in the midst of a magnificent diversity of cultures and life forms we are one human family and one Earth community with a common destiny. We must join together to bring forth a sustainable global society founded on respect for nature, universal human rights, economic justice, and a culture of peace. Towards this end, it is imperative that we, the peoples of Earth, declare our responsibility to one another, to the greater community of life, and to future generations.”

In this context, the city’s hiring of Gwendolyn Hallsmith made complete philosophical sense. Starting in 2007, the planning director oversaw the development of the 247-page Montpelier Master Plan using Earth Charter principles to guide “enVision Montpelier, a community driven, longrange planning initiative.” The City Council adopted the plan in September 2010, with a 30-100 Year Vision Statement that said in part:

“Our vision is to excel as a creative and sustainable community. More specifically, we seek to safeguard the natural environment and enhance our small-town setting. We aspire to strengthen community ties and expand civic participation. We aim to encourage learning and cultivate good jobs.”

For Awhile Montpelier’s Government Followed Its own Plan

Even though the City Council was changing, with two new members including Mayor Hollar elected in 2012, the governing body seemed to maintain principled continuity. In December 2012 the city again paid the planning director to attend and speak at a New Economy conference, which she helped organize as a co-sponsor through Global Community Initiatives. Also co-sponsored by the Public Banking Institute and the Donella Meadows Institute, the conference promoted itself by announcing its potentially anti-capitalist nature:

“We all want vibrant, resilient economies that support our communities, but it’s becoming clear that our current economic system can’t deliver all that. … and profits are shared very unevenly. There are alternatives. Our economies can be better, healthier, and stronger. They can be more sustainable, more fair, and more local.” [emphasis added]

The conference keynote speaker was Los Angeles attorney Ellen Brown, chairman and president of the Public Banking Institute, formed in January 2011 “to further the understanding, explore the possibilities, and facilitate the implementation of public banking at all levels – local, regional, state, and national.”

Mayor Hollar opened the conference with a three-minute welcome speech, using talking points Hallsmith had prepared for him. The mayor touted the city’s Master Plan as a guide to developing a creative local economy, and he noted recent initiatives including a wood-burning power plant, a time bank exchange, and the effort to make Montpelier bicycle and pedestrian friendly. He concluded saying, “Thank you to Gwen [Hallsmith] for all your work on behalf of the city.”

Introducing the mayor, the planning director had just said, “I’ve been working hard over the last six years to make Montpelier a model of a resilient local economy … trying to set an example for other communities.”

By the end of 2012, public banking legislation had been introduced in at least 16 state legislatures, but Vermont was not among them. As of November 2013, banking lobbyists continued to be successful in keeping the Vermont Legislature from even forming a study committee on public banking.

How Many Personal Attacks Does It Take to Add Up to “Ad Nauseum”

It’s not clear precisely when Mayor Hollar started ragging on his planning director for her “views that are fundamentally anti-capitalist in nature,” but by March 19, 2013, by his own email account, the mayor had been repeating himself ad nauseum at least to the city manager. That particular email outburst was apparently prompted by an email he had received about an hour earlier from Lucie Garand, a fellow attorney at Downs Rachlin Martin.

Garand was reporting to him and other lawyers in the firm about legislative testimony earlier that day dealing with pendingpublic banking legislation and the threat public banking could pose to the firm’s private banking clients. A Demos report in February had argued that “large out-of-state banks are failing Vermont small businesses.” Even though the Senate committees on finance and appropriations reported the bill favorably, it died quietly April 30, on a parliamentary move by Democratic senator John Campbell, and never came to a vote.

Whatever the mayor may have expected on March 19 that the city manager would do about the planning director, the city manager appears not to have done it. On April 10, while chairing a City Council public meeting with startling ineptitude (so startling it might appear to have been deliberate), Mayor Hollar allowed a disgruntled member of the Planning Commission (John Bloch) to vent at length, including thinly veiled personal attacks on the planning director (although apparently not for her anti-capitalist views). Bloch’s uncontrolled vitriol prompted at least one member of the public to complain at length (four pages, single-spaced) to the mayor directly, with copies to the council and the city manager. [The video of this meeting is no longer available on the city website.]

Three days after the April 10 meeting, Mayor Hollar sent a four-line apology to the planning director, with copies to the council and the city manager. The mayor said, in part:

“I want to apologize for not intervening and cutting off John Bloch’s rambling criticism of you and the Planning Department. … and you should have been given an opportunity to respond in any event.”

What Happens when City Officials try Shutting Down Free Speech?

The day after the meeting, Planning Director Hallsmith had filed a complaint form with the American Civil Liberties Union (ACLU), seeking their help in defending her First Amendment rights. The city manager had by then showed her the mayor’s “anti-capitalist” email, with its clear intent to coerce the city manager into quieting Hallsmith. She summed up her situation this way to the ACLU:

“On two separate occasions now, my supervisor – the city manager – has expressed his concern about my outside speaking and writing, and last week, on April 4th, he told me that serious changes are being considered for my job responsibilities because members of the City Council think that the ideas in my books and outside writing are not consistent with what the city should be doing. …

“Last night the City Council met to discuss one of the changes to my job responsibilities and reiterated their belief that the role I have been playing in community and economic development is not appropriate, due in part to my interest in the public side of it, as opposed to the private sector side. While no action has been taken yet, the atmosphere at work has become very intimidating, and I feel as if I’m being punished for the writing and speaking I have done when it doesn’t match the ideological bent of a few City Councilors.”

Hallsmith did not claim that city officials were creating a hostile workplace by their actions, but she describes workplace conditions that would support such an allegation. Nor did she complain that she was under pressure, in effect, to violate the law as expressed by the city’s duly-adopted Master Plan, which some city officials wanted to ignore, although that, too, appears to be the case.

“I am hoping that it can be resolved without a huge public scandal,” Hallsmith wrote the ACLU. “I am not looking to make headlines – but I feel my rights are being compromised and my job is in jeopardy. I work hard for the city, and I do not like being treated this way.”

Her request of the ACLU was simple and moderate: “I think it would probably be sufficient to send a letter to the city manager advising him of the questionable legality of his actions.” In a letter to Hallsmith almost six weeks later, the ACLU declined to meet with her or offer her any help whatsoever.

The Mayor was on Notice in April of Potential City Illegalities

Responding to the mayor’s apology the same day, Hallsmith thanked Mayor Hollar for his “belated regrets” while criticizing his failure to maintain order and civility by reining in obstreperous city officials who were making unfounded personal attacks. She went on to point out what Attorney Hollar surely knew: that it was her duty to follow the Master Plan and the state law that gave it authority. [She did not mention that one of the contentious zoning issues involved property in which the mayor had a personal interest.] She outlined the larger city government problem bluntly:

“In both Planning Commission and City Council meetings, there appears to be very little understanding that the zoning needs to be in compliance with the other city policies. When I’ve brought it up in City Council, [councilor] Tom Golonka accused me of ‘throwing the Master Plan in our face.’ [Planning commissioner and attorney] Eileen Simpson was quoted in the paper questioning the need to change the zoning in the first place. At the City Council the other night, Tom Golonka said again that ‘policy changes’ needed to be vetted with City Council first. When the City Council adopted the Master Plan and received Growth Center designation, you established the policies the zoning needs to implement.” [emphasis added]

To resolve this collective impasse, the planning director suggested to the mayor “that we schedule a joint meeting of the City Council and the Planning Commission where we do a workshop on state land use law, the master plan and zoning adoption and amendment processes, and the substance of our current policies … to insure that a few people can’t change the overall city policy direction without due process.”

There is no available record of the mayor or others responding to the planning director’s response to his personal apology (she sent copies to the same list he had copied his apology to). No workshop has been held in the interim and, as of late 2013, the city government is no less dysfunctional and peppered with conflicts of interest than it was in the spring.

The Slow Kabuki of Gwen Hallsmith’s Kangaroo Court Proceeded

On April 15, according to Hallsmith, an angry city manager, accompanied by his assistant, berated Hallsmith for writing to the mayor directly, even though it was in response to an email directly from the mayor and the city manager was on the copy list of the exchange. Hallsmith reports that the city manager ordered her “not to speak or write about New Economy issues,” which includes public banking, and warned her that the mayor was still “angry about the Dec. 7 conference” at which he had spoken.

Through the summer and into the fall, Hallsmith continued to speak and write about the issues she cared about, without immediate consequence.

On April 23, Jed Guertin, a Montpelier resident and former state employee, who likes to keep track of city government issues (he’s watched the broadcast or attended most of the Planning Commission meetings in 2013), wrote a letter to Mayor Hollar, the Council and the manager about the April 10 Council meeting. Guertin was disturbed by several facets of the meeting, including the mayor’s failure to control personal invective. There is no available response from anyone to Guertin’s letter, which independently confirms the governmental failures the planning director had described. At Guertin’s request, the City posted his April 23 letter with the Dec. 20 city manager’s report.

At its June 24 meeting, the Planning Commission made clear its intention to ignore the City’s ethics policy when discussing properties in which members had some interest.

In July, Vermonters for a New Economy, one of Hallsmith’s projects, initiated a “State Bank Town Meeting Campaign,” designed get Vermonters at a town meeting on March 4, 2014, to support this resolution:

“We call on the State Legislature to create a Public Bank for Vermont that enhances the work of the Vermont Economic Development Authority, the Vermont Student Assistance Corporation, the Vermont Housing Finance Agency, the Municipal Bond Bank, and Vermont chartered community banks and credit unions by accepting deposits from the state and municipal governments and making loan programs available for students, homeowners, municipalities and enterprises to make Vermont economically stable, self-reliant, and successful.”

State Turf Defenders Squeal, Mayor Hollar Seeks Hallsmith’s Head

The executive director of one of the targeted state agencies – the Vermont Housing Finance Agency (VHFA) – got hold of an earlier version of the resolution that called for consolidating, not just enhancing the agencies. VHFA’s Sarah Carpenter took the wrong version of the resolution and raised an alarm with a “high importance” email to a short list of people that included Attorney Jennifer Hollar, the wife of the Montpelier mayor. Forwarding the email to his city manager, Mayor Hollar added his own volcanic response (here in its entirety) in his own “high importance” email:

“I would like to know 1) how Gwen manages to run her non-profit and pursue this initiative while maintaining her obligation to the City; and 2) how this campaign is consistent with the City’s economic development policies and her job

description. Why in the world would the city want to take a position in support of consolidating the agencies below (and antagonizing some of the ‘most senior economic development officials in the state’)? More importantly, this is something the council has never discussed. Gwen obviously can pursue interests on her own time, but as the City’s chief economic development officer, her position on these issue can’t be distinguished from her official position with the City.

“Between this and the planning commission fiasco, this really can’t continue. I’m not sure I see the point in my meeting with her to outline these concerns. I’ve raised them before with you, I assume they’ve been communicated to her, and

nothing has changed.” [emphasis added]

The mayor admits the City Council has never discussed public banking, much less determined a City policy on public banking. The planning director cannot possibly be speaking out against a policy that does not exist. The point is that she has been told not to speak at all and, while working to keep his fingerprints off the apparent plot to decapitate this anti-capitalist, the mayor manages to make it clear that he’s had more than enough!

This has long been a traditional response of power to truth, illustrated similarly in the 12th century, when an angry King Henry II took umbrage at the integrity of Thomas Beckett, Archbishop of Canterbury. “Will no one rid me of this meddlesome priest?” the King complained to his underlings, and soon the archbishop was murdered in the cathedral. Montpelier in the 21st century may not be so grand, but a willing city manager and a kangaroo court would soon accomplish a similar if less bloody end.

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