City Council

Keene city councilors easily approved selling part of a property on Lower Main Street Thursday night but debated their moral and ethical duty to pay for a local real estate agent’s services absent a legal obligation to do so.

Froling Energy of Peterborough wants to buy 10 acres at the former landfill at 560 Main St. for its future home, and the council unanimously OK’d the $250,000 sale.

Drawing considerably more discussion was an area real estate agent’s hope to get a finder’s fee — compensation for facilitating the relationship between Froling Energy and the city.

City staff argued there was never any signed agreement that he would be paid, but H. Gregory Johnson insisted he provided his services in good faith.

Though divided on the matter, councilors ultimately decided against paying him, 8-5.

Thursday’s vote comes one week after Johnson, of HG Johnson Real Estate, appeared before the council’s finance, organization and personnel committee to make his case.

Committee Chairman and Councilor Mitchell H. Greenwald — who owns Greenwald Realty downtown tried to recuse himself from that item due to prior business dealings with Johnson. Keene’s charter mandates recusal for councilors with a financial interest in a vote, and though he said that didn’t apply here, Greenwald said he felt “very, very uncomfortable.”

But the committee split on whether to allow Greenwald’s recusal, with Councilors Carl B. Jacobs and Bettina A. Chadbourne opposed and Thomas F. Powers and Terry M. Clark in favor of it. With a tie vote, Greenwald’s attempt to recuse himself failed.

Johnson detailed to the committee his email communications with City Manager Elizabeth A. Dragon. The documentation showed the time he invested into the project, he argued, and proved he was supposed to be paid by the city at the completion of the sale.

“I was led to believe that I would be paid, that I would have a fee agreement signed, and I would be paid at closing a 3 percent commission ...,” Johnson said.

But Greenwald and Clark, who is also a real estate agent, hounded Johnson on the specifics last week, homing in on the fact that there was no signed paperwork between him and city staff. Dragon acknowledged Johnson inquired about compensation but also noted that she told him up front the council would have to approve any payments to him.

Johnson countered that her continued communication with him and including him in meetings “led me down (the) primrose path.”

City Attorney Thomas P. Mullins interrupted, saying he took “umbrage” with that assertion and that he and Dragon were clear that the fee was not within her scope of authority.

After more than an hour of tense discourse — which included accusations of Real Estate Commission violations — the committee voted 4-1 to recommend accepting Johnson’s presentation as informational and taking no further action, with Chadbourne opposed.

When the item came up Thursday, Councilor George S. Hansel suggested amending that recommendation to have Dragon negotiate a finder’s fee with Johnson and report the results back to the council.

Noting the importance of cooperating with businesses and other organizations, Hansel said the city should lead by example and act in good faith when situations like this arise.

“The sale of 560 Main Street is a really good thing,” he said, adding that Froling Energy is a green business that will bring jobs. “... I don’t want to taint this good thing for Keene by leaving someone with a bad taste in their mouth, feeling like they got a bad deal from the city.”

But Greenwald and Clark reiterated many of their concerns from last week, particularly regarding typical real estate procedures and the lack of signed paperwork.

Councilor Robert B. Sutherland argued, though, that the sheer amount of communication between Johnson and Dragon indicates an understanding that he was providing services for his customer as well as the city.

“No, there was no contract, but it seems that this gentleman was operating in good faith, and I think it’s incumbent upon the city to also come to the table in good faith,” Sutherland said.

Mayor Kendall W. Lane pointed out that the issue before the council was more of “a moral and ethical question that you have to answer, not a legal question.” No one could dispute that there was no signed agreement, he said, so the city has no legal obligation to pay Johnson.

“However, I do think that what the City Council needs to decide (is) whether they feel morally and ethically obligated to pay him for services that the city of Keene — and quite frankly, the taxpayers of Keene — have benefited from,” Lane said.

He posed a question: Would Froling have approached the city or purchased this property without Johnson?

Councilor Randy L. Filiault dismissed that argument and instead agreed with Clark and Greenwald. He said paying Johnson would set a dangerous precedent and lead to a slippery slope.

“We are the stewards of the taxpayers’ money, OK? This is a legal issue, not a feel-good issue,” Filiault said. “… We cannot be spending taxpayers’ dollars on good faith. We are here to follow the legal definition of the law. It can be cold at times, but that’s why we’re elected.”

After a half-hour of debate, Hansel’s amendment failed 8-5, with councilors Chadbourne, Hansel, Steve Hooper, Janis O. Manwaring and Sutherland in favor.

Opponents were councilors Clark, Filiault, Greenwald, Jacobs, Gary P. Lamoureux, Powers, Margaret M. “Maggie” Rice and David C. Richards.

This article has been changed to clarify that the city is selling 10 acres of the property at 560 Main St., not the entire property.

Sierra Hubbard can be reached at 355-8546 or at Follow her on Twitter @SierraHubbardKS.