Snoqualmie City Councilmember and mayoral candidate Peggy Shepard has been censured for the second time in just over a year after an investigation determined she had violated city and state ethics laws.

In a report produced July 19, Grant Degginger, the city’s ethics hearing officer, concluded that Shepard had violated ethics laws by failing to disclose conversations and information she gathered outside of the official record, violating the appearance of fairness during city developments, and sharing emails containing attorney-client privileged information.

“Councilmember Shepard’s conduct raises serious questions about her ability to be trusted with sensitive information,” Degginger wrote in his report. “[She is censured] for her poor judgment in failing to protect confidential information and for disregarding the due process rights of project applicants by failing to act in an open, transparent and impartial manner.”

In a 4-2 vote on July 26, the council agreed to strip Shepard of her position on the public safety committee, following a request by Councilmember James Mayhew. In addition Shepard, councilmember Bob Jeans, the chair of the public safety committee, was the only no vote.

“Although there is merit to the suggestion, I oppose this action,” Jeans said. “Councilmember Shepard attends this meeting religiously.”

Shepard is currently campaigning for mayor against fellow Councilmember Katherine Ross. She said she was disappointed, but not surprised by the decision. She said the complaint is partially due to her concerns regarding city development projects.

“The mayor and elected officials are all very pro-development,” Shepard said. “I’m not anti-development. I just am concerned about the environment. I ask questions they don’t want to hear.”

Two of the complaints Mayor Matt Larson filed against Shepard were related to her actions regarding city development projects including the Salish Lodge Expansion and the Weyerhaeuser Mill Site. The Mill Site is currently under consideration for development by the city.

The initial complaints were filed by Larson on Feb. 4, 2021. An ethics hearing was held in June.

“The council has been short with me since I started,” Shepard said. “This is an ongoing thing that’s been happening since I started on council.”

Larson said he first asked staff to investigate Shepard during the summer of 2020, during the height of the Black Lives Matter movement, when Larson said she made comments criticizing the Snoqualmie Police Department.

The comments followed the exposure of a 2019 incident where Snoqualmie police allegedly handcuffed a Black teenager on suspicion of shoplifting. In August 2020, the other six members of the city council unanimously censured Shepard for her comments, arguing that they were baseless.

Several of the complaints Larson filed against Shepard in his complaint are years old, dating back to 2018. Larson said the city did not have evidence until recently to file a formal complaint.

“Although we had suspicions, we didn’t have clear evidence,” Larson said.

Shepard said Larson and officials knew about the complaints at the time, but failed to bring them to her attention. She said she did not intentionally violate any laws.

Larson said Shepard’s actions were concerning because they could have led to a lawsuit against the city. He said Shepard shared confidential documents that ended up on Facebook. According to documents, the city did not face any apparent consequences from Shepard’s actions.

“Regardless of whether the city is exposed or not, she was acting on her own and acting somewhat recklessly, so I asked staff to dig into city emails to see what correspondence was going on,” Larson said. “That’s when it came to light.”

Degginger’s report recommends not to refer the issue to a prosecuting attorney, given that a significant amount of time has passed and the city did not face consequences.

The Salish Lodge Expansion

In October 2018, the City of Snoqualmie approved the Salish Lodge Expansion project, which would have paved the way for the construction of 210 new homes along with a 182-room hotel and convention center.

In an October 2018 email, Shepard sent a message to an employee at the King County Geographic Information System (GIS) office, asking for a map of the property based upon the legal descriptions of the property. Shepard said the legal description of the property was complicated and made it difficult to determine what property was being developed.

Shepard said she had previously asked for maps from city staff during a hearing, but did not receive them.

According to documents, council members were asked twice in October 2018, and again in October 2019, to disclose information or contacts they had made regarding the project. Shepard said she disclosed the maps in an October 2018 council meeting and via email. Larson claimed that Shepard failed to disclose these conversations with the city.

After the resolution was passed, Larson claimed Shepard made multiple attempts to contact the King County Boundary Review Board and Office of Financial Management, seeking documents to support a reconsideration of the resolution.

In an email to the boundary review board on Nov. 9, Shepard wrote: “There is a master planned project called the Salish Expansion that was recently approved by city council that I have some concern about. The application’s legal description of total acres is 100, while the total acres described in a sentence for the property is 50 acres.”

Documents also state Shepard was concerned about a lack of environmental impact report or a traffic report related to the project.

On Nov. 8, Larson alleged Shepard met with residents from the Snoqualmie Friends of Responsible Growth, a nonprofit group, to discuss options to prevent the project, documents show.

At the Nov. 13 city council meeting, Larson alleged that Shepard presented a map, alleging that the boundaries for the development were different from the description in the adopted resolution, and attempted to make a motion to revisit the subject, but was ruled out of order. Shepard admits to meeting with residents, but denies attempting to make a motion, according to documents.

The eventual development of the Salish Expansion project was halted after the lodge was sold to the Snoqualmie Tribe for $125 million. Larson said Shepard’s actions were in violation of the Appearance of Fairness Doctrine, which Degginger’s report confirms.

The appearance of fairness is a law requiring government officials to remain unbiased in proceedings and hearings when making decisions. It prevents officials from speaking with opponents or proponents of a city project outside of hearing, without disclosing this information.

“Instead of relying on the information in the record brought to the Council, [Shepard] was actively seeking additional information outside the record,” Degginger wrote. “She did not attempt to utilize the mechanisms for disclosing the information she obtained and the conversations that she had. She could have requested the information from GIS during the proceedings so that all parties knew what and why she wanted the information.”

The Mill Site Project

Degginger’s report said that Shepard continued to require information outside of the record in regards to the Mill Site Project.

The Snoqualmie Mill project is a 261-acre site that the city annexed in 2012. The property is a former lumber mill, and cleanup of the property has been ongoing for a decade. The project is being considered for development by the city and waiting on a final environmental impact statement. Residential and commercial space are being considered for the property.

According to the report, Shepard made multiple contacts to the state Department of Ecology in 2018 and had a meeting with the department in April 2020. Shepard said she had concerns about contamination at the site and wanted further review. Larson had previously expressed opposition to the completion of a larger environmental study, the Seattle Times previously reported.

Shepard admitted to meeting with the DOE, claiming to provide updated information, and argued this did not violate an appearance of fairness because the DOE is a neutral agency. She also said that because no current action is being placed before the council, she has not violated the appearance of fairness. However, Degginger’s report disagrees with these assertions.

“Her conduct to date demonstrates poor judgment in once again inserting herself into investigation and advocacy rather than safeguarding her ability to act as a neutral and objective decision-maker at the point in time when the project or any appeals are brought before the council,” he wrote.

Degginger’s report argues that Shepard should recuse herself from any action taken on the Mill Site. Shepard said she does not plan to do so. If action on the Mill Site comes forward, several members of the city council said they expected to take action to prevent Shepard from participating.

On July 9, 2020, the DOE provided a report that expressed concerns about the draft environmental impact report, and whether the city had sufficient capacity under current water rights to service the development. Additionally, according to documents, Shepard shared an email from Thomas Buroker, Regional Director of Ecology’s Northwest Region, stating that the department is not an advocate or opponent of project proposals.

Disclosure of privileged documents

Larson alleged that on separate instances, Shepard shared attorney-client privileged documents with people who were not entitled to them, documents said.

On June 17, 2019, city attorney Bob Sterbank sent an email to Larson, Shepard, the council, and selected city staff members. The message included in the subject line “RE: Mous refunds: attorney-client privileged.” That same day, Sterbank sent another email on the same topic with the subject line “Re: Mous refund,” this time without the phrase about the email being privileged.

Shepard shared the message with the state auditor’s office, documents show. Shepard admitted to sending the message, saying she did not believe the documents deserved privilege status, and said she needed to send the email to report illegal activity.

Degginger’s report said Shepard again provided privileged info from an email on Oct. 11, 2019. The report says Shepard shared an email, sent to all council members, with her husband. Shepard said she shared the email over concerns it could impact her husband as well.