Lawrence Mayor Sue Hack conceded Thursday that she made a mistake by not completing documents disclosing that she has a financial interest in a company that is set to receive economic development incentives – including cash – from the city.

Hack said she did not file a “substantial interest form” – a state-mandated document – listing her stock holdings in Deciphera Pharmaceuticals. The company last month was approved to receive at least $3 million in economic development incentives from the city, county, state and economic development organizations in an effort to keep the promising startup company in Lawrence.

Hack said she was not trying to hide her interests from the public. Instead, she said she did not believe her interest in the company, which she has yet to state, required her to file the state form, which is kept on file at the Douglas County Clerk’s office.

“It was just a mistake on my part,” Hack said.

The mistake, though, has brought up other questions about Hack’s involvement in the deal. Gwen Klingenberg, a member of Grassroots Action – a local political activism group – said the organization is concerned that Hack’s financial interest in the company should have led her to abstain from any discussions regarding the deal. Hack abstained from last month’s vote that approved the package, but she did participate in a closed-door executive session where commissioners were briefed on details of the proposed incentive deal.

Hack said she does not believe her participation in the executive session was improper. She said she did nothing in the executive session – or at any other time – to try to sway city commissioners to vote for the deal or to include provisions that would make the deal more attractive to Deciphera.

“Absolutely not,” Hack said. “I didn’t have anything to do with the contract. I don’t think I probably indicated my position on the issues one way or another.”

That point could become important because state law states no elected official shall “make or participate in the making of a contract” with any business that the elected official has a substantial interest in. The penalty for violating that portion of state law is serious: the elected official shall resign from office.

The district attorney is responsible for determining whether to file charges related to violations of that law, said Carol Williams, executive director of the Kansas Governmental Ethics Commission.

Williams did not comment specifically on Hack’s situation, but pointed to a 2003 opinion the Ethics Commission has issued on what constitutes “making or participating in the making of a contract.” That opinion states participation is defined as “discussions and conversations with other council members regarding the options before the council.”

It is not known exactly what topics were discussed in the executive session. Kansas law does not require minutes to be kept of executive sessions. But the Deciphera deal included several specific points on which someone had to provide direction. Included among those are provisions agreeing to give Deciphera cash payments when the company reaches certain job totals. Also, the contract contains details about a tax rebate program that allows Deciphera to receive a break on its property taxes without going through the typical tax abatement review process.

Neither of those items was discussed by commissioners as part of the Oct. 23 City Commission meeting where the contract was approved.

Klingenberg said the Grassroots Action group was researching whether to ask Branson to investigate whether Hack violated the conflict of interest statute.

Grassroots Action already has asked Branson to investigate whether the city violated the Kansas Open Meetings Act by conducting the closed-door executive session on the deal.

Branson is in the process of investigating that issue. The city on Wednesday was required to present Branson with a written response to the open meeting allegations. On Thursday, both the city and Branson declined to release that written response to the Journal-World.

The city said it was up to Branson to decide whether to release the document to the public, and Branson said he would not do so while the investigation was ongoing. He said to release the document now could taint any future investigative efforts – such as questioning additional people – that his office may take.

Branson said he is reviewing the city’s response and soon will make a determination on whether to pursue a case alleging the city violated open meetings law.

Branson’s office also would be responsible for determining whether Hack should be charged for not filing the substantial interest form – which is a class B misdemeanor under state law.

Hack said Thursday that her failure to file that form was simply a misunderstanding of the requirements of the law. She believed that the law only required her to list her ownership in companies that she had owned at least 5 percent of the company’s stock.

But Williams, with the Governmental Ethics Commission, said the law requires elected officials to disclose any ownership interests that are greater than $5,000 in value. Hack said her interest in the company was greater than $5,000 but less than 5 percent of the company’s total.

“It is not a major holding for us,” Hack said of the investment, which also is in her husband’s name.

Hack said she hoped members of the public would recognize that she has a history of abstaining from matters in which she has a financial interest. She has abstained from votes the commission has taken related to business dealings with CEK Insurance. Hack’s husband is an officer and major shareholder of CEK Insurance.

“I understand that there are folks who question the actions of the commission, but I would hope that they understand they are dealing with five people who can be trusted,” Hack said of herself and her fellow commissioners. “Nobody is in this for personal gain. The gain we want is the gain for the community.”

Hack is not the only elected official who has a financial interest in the company. Douglas County Commissioner Bob Johnson has $8,200 worth of stock in Deciphera. But Johnson in May did file a substantial interest form disclosing those holdings, and made a public declaration of his financial interests during at least two County Commission meetings. He also abstained from the County Commission’s vote on the Deciphera deal. He did not participate in any executive sessions on the Deciphera matter because the county did not have any such sessions, he said.