A Big Island state lawmaker ran afoul of the state ethics code when he offered to exchange land in which he had an ownership interest to help with a new motorsports complex at Kalaeloa, the state Ethics Commission has found.

The commission, in an informal advisory opinion, found that state Rep. Jerry Chang, D-2nd (S. Hilo), should not have represented the company that owned the land before the state Legislature because he was a company director and had a 25 percent ownership interest. Chang also should not have represented the company on an issue that he worked on as a lawmaker.

The commission found that Chang's actions were "beyond dispute" but chose to resolve the charge through the informal advisory opinion to help educate other lawmakers rather than proceed to a formal, contested-case hearing. The opinion is the commission's interpretation of the law and has no other binding effect. The commission's decision was made in November, but the opinion was not released publicly until this month.

Chang had offered the state Department of Hawaiian Homelands to exchange land the company owned in Hilo for a state parcel in Kalaeloa being sought for a new motorsports complex. If the department had agreed to the land swap, the company would have sold the Hilo land to Mike Oakland, the president of the Hawai'i Motorsports Center, who would have completed the transaction with the state.

At the time in 2006, the state House was about to approve a $50 million tax credit for the motorsports complex that Chang had actively supported. But House leaders quickly pulled the tax-credit bill from the floor after The Advertiser raised questions about Chang's potential conflict.

Chang told The Advertiser at the time that he only proposed the land swap to see if the department was serious about negotiating for the Kalaeloa parcel. But the commission found that his explanation "did not square" with Oakland's public testimony about the land or Chang's proposal to the department.

"I still don't agree with what they came out with, but I have to live with it," Chang said yesterday. "I think this is a good wake-up call for all of us."

The section of the law the commission applied to Chang's behavior was written to prevent legislators or public employees from being compensated while helping private interests before the government.

"The evil envisioned by various prohibitions is that legislators and public employees will 'peddle' for their own enrichment their 'influence,' or access to 'inside' information, or at least the perception of such will be created," the commission found in its opinion.

State House Minority Leader Lynn Finnegan, R-32nd (Lower Pearlridge, 'Aiea, Halawa), asked House leaders in April 2006 to form a special committee to investigate Chang's actions. State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), declined, informing Finnegan in a letter that Chang had "at most, a potential and not an actual conflict of interest." Say also said he told Chang that he should "take care, as we all should, to arrange his finances in such a manner as to minimize potential conflicts in the future."

Finnegan then filed a sworn charge with the ethics commission. A second group also filed a sworn charge. After reviewing the material, the commission itself decided to file its own charge against Chang, which led to the informal advisory opinion.

Chang had described Finnegan's complaint against him as "frivolous" and an "appalling use of state resources." He also claimed that he had legislative immunity and that the complaint was "invalid on its face."

The complaints alleged that Chang violated the fair treatment section of the ethics code, which prohibits lawmakers from using their offices to grant "unwarranted privileges." But the commission found that Chang's behavior fell under the section barring lawmakers from representing private interests for compensation before the Legislature.

"It's something that you never want to do," Finnegan said yesterday of filing a complaint against a fellow lawmaker. "But these actions make sure that we are meeting the challenge of keeping this institution on the right track."

The House agreed last week to form a bipartisan six-member ethics committee to review complaints brought by lawmakers, including, for the first time, conflicts of interest. Lawmakers are generally exempt from the conflict-of-interest provisions that apply to state employees in the state ethics code.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.