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Originally published June 6, 2011 at 11:10 PM | Page modified June 7, 2011 at 2:48 PM

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Bellevue City Council probe narrowed to Wallace

An investigator hired by Bellevue to look into possible conflicts of interest involving three Bellevue City Council members has absolved two of violations related to a proposed Sound Transit light-rail route.

Seattle Times staff reporter

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An investigator hired by Bellevue to look into possible conflicts of interest involving three Bellevue City Council members has absolved two of violations related to a proposed Sound Transit light-rail route.

Attorney Jeffrey B. Coopersmith told the council Monday night he will take a closer look at Councilman Kevin Wallace's business dealings, and Wallace's lawyer has promised to deliver documents to him this week.

Wallace, a Bellevue-based developer, said on Monday he has "been working very diligently" to pull together documents Coopersmith requested three weeks ago.

"I have a day job, and I don't have 120 lawyers and paralegals working for me," he said.

Coopersmith said he had not reached any conclusion on whether Wallace violated any laws in failing to disclose his business negotiations with a short-haul freight hauler that wanted to use the same abandoned rail corridor Wallace has prodded Sound Transit to use for light rail.

Wallace, who signed a deal with GNP Railway but backed out of the deal before it became publicly known, has denied he had a conflict of interest and has pledged to cooperate with the investigation.

As they had been by City Attorney Lori Riordan, council members Claudia Balducci and Grant Degginger were absolved by Coopersmith of any conflict regarding their past or present participation in deliberations over the light-rail route through Bellevue.

Degginger and his law firm, Lane Powell, have represented Sound Transit on issues outside Bellevue. Balducci is one of three Eastside elected officials on the Sound Transit board of directors.

Caution advised

But Coopersmith said he believes Balducci "would run afoul" of conflict-of-interest statutes if she were to participate in closed-session discussions of both the City Council and the Sound Transit board about possible litigation between the jurisdictions.

Balducci said Monday night she has notified Sound Transit CEO Joni Earl she will submit a letter recusing herself from future executive sessions of the transit board. Coopersmith said he understood she also plans to recuse herself from any public Sound Transit votes on litigation.

Balducci's membership on the Sound Transit board does not of itself constitute a conflict of interest, he said.

Light-rail actions

Coopersmith was hired in April to gather information on whether any council members had conflicts of interests that could invalidate council actions relating to the future Sound Transit light-rail route through Bellevue.

City Manager Steve Sarkozy announced in March that the City Attorney's Office would commission an investigation into Wallace's business deal, but the probe was delayed while the City Council debated its scope.

Wallace and his allies then said the investigation should be broadened to examine possible conflicts involving Balducci and Degginger — an idea Balducci and Degginger resisted.

The council resolved its dispute over the scope of the investigation by deleting any reference to Wallace specifically from Coopersmith's contract and directing him to interview council members and review documents provided by them before deciding the extent of his probe.

Keith Ervin: 206-464-2105 or kervin@seattletimes.com

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