MONTPELIER — A city employee with a passionate interest in state-run banking was recently chastised by the city manager for speaking out on the issue — an action that Mayor John Hollar said “can’t continue” given her position at City Hall.
Planning and Community Development Director Gwendolyn Hallsmith claims Hollar, a registered lobbyist who represents Bank of America and Wells Fargo in Vermont, brought her outside interest to the attention of William Fraser, urging the city manager to quiet Hallsmith and possibly discipline her for making any push to get the state bank issue on the town meeting ballot. The conflict is reflected in internal memos and correspondence obtained by The Times Argus.
The debate, which has spanned several weeks, has sparked a tense internal discussion about how much city employees’ personal and professional lives should be separate and can easily be blurred. It also highlights issues about conflicts of interest among elected and hired officials.
“I’m being punished for speaking out on public banking,” Hallsmith said early Tuesday. “The mayor works for the big banks, and he’s using his influence in the city government to try and silence me.”
A public bank is a financial institution run by a state or the public as opposed to privately owned. According to the Public Banking Institute, profits from a public bank go back to the public by offsetting the cost of government, which translates to lower taxes. If Vermont were to adopt a public banking system, private banks such as Bank of America would be forced out.
According to one memo issued Sept. 27, Hallsmith was forbidden from voicing her political opinions publicly.
Hallsmith, who has served in her role for the city for seven years, said she feels the mayor’s and city manager’s reactions were out of line. She believes they signal a mounting tension at City Hall over growing message control and an orchestrated effort to eliminate opinions that run counter to those of a more conservative City Council and planning commission.
Hallsmith, a credentialed national expert on local planning issues, said she believes personal politics have no place at City Hall — on a volunteer basis like hers or on a paid basis like that of Hollar, who is a partner at Downs Rachlin Martin in Montpelier.
The issue came to a head when Hollar sent an email to Fraser on Sept. 20. The email forwarded information about a campaign Hallsmith is working on to petition towns to add a resolution to their town meeting ballot asking to discuss the topic of a public bank. Along with the forwarded information from a source outside City Hall, Hollar stated he wanted to know how Hallsmith “manages to pursue this initiative while maintaining her obligation to the city” and how the campaign is consistent with the city’s economic development policies.
Hollar wrote that Hallsmith can pursue interests on her own time, but “as the city’s chief economic development officer, her position on these issues can’t be distinguished from her official position with the city.”
Hollar went on to tell Fraser “this can’t continue” and that he saw no point in meeting with Hallsmith to outline his concerns as he’d raised them before to Fraser and nothing had changed.
A week later, Hallsmith received a lengthy memo from Fraser stating that her “ability to be successful in her position” had been compromised and that she had lost the confidence and support of the City Council and the Planning Commission, as well as Fraser’s trust.
“Despite multiple conversations that we have had, you continue to be involved with and/or take public positions on political matters that may not reflect city policy and may, in fact, be in direct opposition to the city’s economic development goals,” the memo reads. “This has diluted your credibility as a city official.”
The memo goes on to address Fraser’s concerns with four directives: The first makes Fraser’s assistant, Jessie Baker, Hallsmith’s supervisor, which Fraser had previously been; the second takes the community and economic development portion of Hallsmith’s department and puts it under the direct supervision of Baker; the third tells Hallsmith to draft and prepare zoning regulations as requested by the Planning Commission without adding her own ideas or priorities; and the fourth tells Hallsmith she is to refrain from involvement in external political issues “such as public banking” that may impact her effectiveness as a city official.
Hallsmith said she was “shocked” that she was initially told she could not speak about something she cared about outside work. She refused to give up her rights to speak about something on her own time.
“I won’t be silenced, so what’s next? Character assassination? Ruining my reputation? I have no recourse in city government, that’s obvious, so I have no choice but to make it public,” Hallsmith said.
Back and forth
She responded to Fraser’s memo with a page and a half of her own, stating that she has spoken to city councilors who did not mention any loss of confidence or support for her. While Hallsmith agreed to be more clear that she was speaking as a private citizen when talking publicly about issues such as public banking on her own time, she refused to give up her right to speak about them. She said the changes to her job would have a negative impact and “it is the equivalent of a demotion.”
The Times Argus also obtained a second memo from Fraser to Hallsmith that was sent Oct. 9.
“I am disappointed but, unfortunately, not surprised that you chose a confrontational and adversarial response to my attempt to make you aware of concerns and develop a plan for your success,” Fraser’s memo says.
In the meantime, both sides of the issue sought legal counsel and advice.
Fraser’s memo went on to rescind the fourth directive that Hallsmith not speak about political issues, and replaced it with a directive with five points to make sure “everyone knew” that Hallsmith was speaking for herself on her own time and did not work for her outside issues on city time.
Despite his earlier insistence that Hallsmith be sanctioned, the mayor said otherwise Tuesday.
Instead, Hollar maintained Hallsmith’s accusations about using his influence to silence her were untrue. He said he has not had any conversations with her about the issue and was never asked by Hallsmith to meet, so he never turned down a meeting.
Hollar said he has no problem with Hallsmith working on public banking in Vermont as long as it is on her own time.
“We all wear many hats,” the mayor said in an interview. “This is a small state.”
Hollar said the concern in his email, which had the subject line “FW: form a Vermont public bank – Town Meeting Campaign,” was not about public banks but the consolidation of agencies such as the Vermont Housing Finance Agency and the Municipal Bond Bank to accomplish that goal. He said his concern was that such a consolidation would eliminate jobs in Montpelier when he wants to create positions.
Asked about the subject of the email, Hollar said he did not write it, but it was sent to him with that title.
Fraser, who was admittedly frustrated to be debating the issue in public, also said the allegations made by Hallsmith were untrue. He said the email by Hollar on Sept. 20 was actually a response after the city manager had asked for feedback from Hollar about a memo that Fraser was writing to Hallsmith. Fraser said he asked Hollar in that initial email whether he thought meeting with Hallsmith would help the situation, which is why Hollar wrote that he did not want to meet.
As far as Hallsmith’s work outside of City Hall, Fraser said he thought the issue was settled after the second memo. Settled, but not comfortably.
“Once you start taking political positions on other issues ... then you become associated with this, so people have difficulty parsing when you are making a recommendation as a city official and whether that is based on your personal beliefs,” Fraser said.
Fraser said Hallsmith has not been punished and no disciplinary action has been taken against her. There has been no change to her job title, benefits or pay, Fraser said.
In terms of the directives moving some of Hallsmith’s staff around and having her report to Fraser’s assistant, he said those have been in the works for a while. Fraser said last year’s annual report even calls for his assistant to supervise the Planning and Community Development Department and that he already talked about that with Hallsmith in April.
“She is trying to make the case that this all came out of the blue,” Fraser said. “Suddenly the mayor speaks up, and she is in trouble.”
When asked why, if the plans had already been in the works, the changes showed up in a memo talking about a lack of confidence in Hallsmith, Fraser said it was simply a matter of timing, as his assistant had recently ended her probationary period.
Meanwhile, Hallsmith claims that when she was hired in 2006, it was with the understanding that she would be working on projects outside of City Hall. Fraser said while Hallsmith’s offer of employment did lay out all the projects she was working on at the time, with the understanding that she would continue to work on them, it was not an acknowledgment that she would have outside projects in the future.
When told of Hallsmith’s concern that she might lose her job, Fraser laughed and said she is “in no danger of losing her job over this.”
Hallsmith, on the other hand, has suggested tensions have been high and that she has been fearful of losing her job as a result of standing up for both her rights and principles.
Later Tuesday, Fraser released a statement to The Times Argus saying in part, “It is unfortunate that Gwendolyn Hallsmith chose to make unfounded accusations against Mayor Hollar and release documents out of context. The Mayor’s communication asks legitimate and serious questions about potential conflicts of interest for Ms. Hallsmith. Neither the Mayor, any member of the City Council nor the City Manager have done anything inappropriate or unethical. It is a shame that Ms. Hallsmith has attempted to damage the Mayor’s reputation and harm the credibility of city government.”
Hallsmith maintained her allegations stemmed from the memos and information given to her by Fraser, as well as his countenance in several private meetings. While she said Tuesday she was glad Hollar said he has no problem with her working toward public banks, that was not her impression from the email where, she said, it sounded like he had a big problem with it.
She did not comment further on that topic.
As for not being punished, Hallsmith said the restructuring of her staff and the different directives by Fraser make her job almost untenable.
One of the directives states that no agency or person with whom she has an outside financial or professional relationship may do business with the city “in any form.” Hallsmith said, as did Hollar previously, that the state is small when it comes to networking. She said she has many professional relationships and does not know how she can do her job in that context, because she knows most if not all the contractors in the state.
“You are agreeing that I did have a First Amendment right to say these things, and you can’t hold me to task for that,” she said. “But meanwhile you are giving me these impossible directives to follow.”
Hallsmith is scheduled to have her regular weekly meeting with Fraser today on a variety of topics.
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