**Guidance on the Board Membership**

**Requirements in the New Rural EZ/EC Regulations**

Empowerment Zones and Enterprise Communities (EZ/EC) program
regulations, published in the Federal Register March 25, 2002, contain
language clarifying the post-designation procedures that rural EZ/EC,
Champion Communities and Rural Economic Area Partnerships (herein all
referred to as the "designated community" or an "EZ/EC community") must
follow to maintain their designation. It is the responsibility of the
USDA Rural Development State Office to ensure compliance with RD program
regulations, as reflected in the state director performance element
(program management). Because board membership requirements were not
specified in the regulations prior to the March 2002 publication, some
EZ/EC community boards are currently not in compliance. As part of the
USDA Rural Development State Office oversight responsibilities, board
composition must be reviewed and corrective action taken for instances
of noncompliance with the new regulations. This document provides
guidance for implementing the regulation changes.

**Background:** On March 25, 2002, the final rule for the Rural EZ/EC
program (7 CFR Part 25) was published. Included in the new EZ/EC
regulations under Subpart E -- Post Designation Requirements, §25.404
[Validation of designation]{.underline}, is a clarification of
post-designation procedures that rural EZ/ECs must follow to maintain
their designation.

The most significant change to the EZ/EC regulations cited in the
following amendment is the requirement that at least 55 percent of the
board members to be elected. Additional guidance is being issued to
assist communities in determining how to implement these regulation
changes.

> § 25.404 (b)(3) [Board membership]{.underline}. The membership of the
> board must be representative of the entire socio-economic spectrum in
> the designated community including business, social service agencies,
> health and education entities, low income and minority residents.
> Board membership may be determined by either broad-based election or
> by appointment to meet this diversity requirement; however, not more
> than 45 percent of board members may be selected by appointment.
> Elections of community residents to the board may be done by any
> locally acceptable process; however, at least one board member from
> each of the designated community\'s census tracts must be elected and
> representative of the low income residents in their census tract. The
> Deputy Administrator, Office of Community Development, may waive the
> 45 percent maximum appointment limit only for Tribal Governmental
> Organizations where the Deputy Administrator determines, in writing,
> that a more representative board would be obtained through the
> appointment process.

The amendment was crafted in response to program reviews of the first
round of designated communities. Overall, the reviews found that the
existing board appointment process did not build boards that reflected
the racial or economic diversity present in the community, and board
decisions did not reflect either the principles of the EZ/EC program or
the best interests of the low-income residents. Inclusion of low-income
residents in the decision making process, i.e. board representation, is
a core principle that sets the EZ/EC program apart from other community
development programs. It ensures local "buy in" to the process, enhances
the chances for long-term meaningful change and supports the fullest
opportunity for low-income residents to participate in the decision
making process via board membership.

Appointed boards might be needed in the start-up phase, and some
appointments might be necessary to address special cases such as
adequate youth or low-income representation. However, as the community
evolves through the program, broad citizen leadership and board members
must be grown and community capacity built to last beyond the 10 year
life of the program. Board elections can be conducted at the required
public meetings with little or no additional cost to the community.

If a designated community is currently not in compliance with the new
board membership requirements, USDA will work with these communities to
make corrective actions in a timely manner with little additional burden
on them.

**Scope:** The policies and procedures in the new EZ/EC regulations
apply to all rural Empowerment Zones, Enterprise Communities, and
Champion Communities, regardless of when they were designated. 7 CFR,
Subpart A, § 25.1 [Applicability and scope]{.underline}

applies to all rural empowerment zones and enterprise communities
authorized under the Omnibus Budget Reconciliation Act of 1993 (Round
I), Taxpayer Relief Act of 1997 (Round II EZs), the Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies
Appropriation Act, 1999 (Round II EC's), and the Community Renewal Tax
Relief Act of 2000 (Round III), as well as any Champion Communities
designated after application for these rounds.

Accordingly, all USDA State Rural Development Offices (State Office) are
advised to take the necessary steps to ensure that each of their Round
I, II, or III designated communities are in compliance with the board
membership requirements of the new EZ/EC regulations.

This action is critical because based on a review of several bylaws and
operating documents on file at the Office of Community Development (OCD)
and from discussions with USDA field staff, there is evidence that some
EZ/EC boards, as constituted, would not be in compliance with the new
regulations. Some bylaws are fairly specific regarding board seat
allocation methods, with many implying that all appointments are by
organization type, e.g. government, business, etc. Even when seats are
allocated to low-income residents elected on a per census tract basis,
the number of seats do not come close to the 55 percent elected
requirement based on the overall number of board seats.

While questions or complaints regarding the validity of EZ/EC boards
have been raised in the past, they had to be considered under previous
regulations that contained only general language and little specificity
on community representation and board membership. With specific board
membership and representation requirements now in the new EZ/EC
regulations, there is a firmer legal basis for complainants to question
the composition of an EZ/EC board and demand remediation by USDA.

**Process for Validating EZ/EC Designation Regarding Board Membership**

Each State Office shall initiate the process of determining whether all
rural EZ/EC communities in their state are in compliance regarding board
membership under Subpart E---Post Designation Requirements of the new
EZ/EC regulations. A report on the status of each EZ/EC board, including
an assessment on the status of compliance with the regulations, shall be
submitted to OCD annually. The steps for reviewing EZ/EC board
membership and suggested corrective actions are as follows:

1\) State Office Review of Existing EZ/EC Board Structure

Rural Development state staff will meet with representatives from each
EZ/EC community to discuss the new regulations and the reason for the
review. Document the current board structure: who they are and where
they live or work, what organizations, groups, or geographic areas they
represent, and which census tracts are represented on the board. Review
any written documents such as bylaws establishing the procedures for
constituting the EZ/EC board. Compare the language in the bylaws or
operating documents relating to board membership and election procedures
with what is actually being employed by the EZ/EC community. Discuss the
election process with community residents to ensure that the process as
described by the board/managing entity is similar to the process as
perceived by the community. Document any discrepancies between actual
and written procedures.

2\) Compare Board Membership with the new EZ/EC Regulation Requirements

Boards must be in compliance with the board membership requirements
found in §25.404(b)(3) *Board Membership*, as determined by RD staff.
Questions that will be asked include:

> \* Are a minimum 55 percent of the board members elected? Is there a
> process in place for elections? Does the board membership represent
> the broad spectrum of organizations, income levels, and racial types
> found in the community?
>
> \* Do all census tracts have a resident on the board? While a board
> member may be from an organization that is active\--and said to
> represent---a census tract, not having a single board member from each
> tract that is representative of its residents seems contrary to the
> EZ/EC principles and does not comply with the specific language in the
> new regulations.
>
> \* Are residents of the tract aware of the EZ/EC designation and the
> process for constituting a board? Outreach is an imprecise science and
> one that may require additional due diligence by the State Office, but
> the process can help illuminate the reasons why certain sectors appear
> to be absent from board representation. Does is it appear the current
> board and managing entity made any effort to include residents from
> census tracts not represented on the board? More importantly, does it
> appear systematic efforts were taken by the board to at least tacitly
> exclude certain areas or groups?
>
> \* Are there well-documented, good faith outreach and communication
> activities by the board to ensure that all residents (including low
> income) have had adequate opportunity to participate in the board
> selection process? If it appears one or more organizations or groups
> (geographic, socioeconomic, or sector-based) are largely unaware of
> their EZ/EC designation and what it means, this is a concern. Past OCD
> reviews have found this to occur in some poorly performing EZ/EC
> communities.
>
> \* Does the board appear to be well-balanced? Does the percentage of
> board seats made available to low income residents reflective of the
> percentage of persons below the poverty level in the designated
> community? The same question should be asked for geographic
> representation and other community characteristics. There is not a
> perfect recipe, but large discrepancies are a red flag.
>
> \* Is low-income representation required in outmigration communities?
> For EZ/EC communities designated under outmigration criteria, the 1990
> census poverty rate does not apply, and there may actually be very few
> residents of such an EZ/EC that meet this or any other definition of
> "low income." While ensuring low-income representation on the board
> may be a moot issue, outmigration EZ/EC communities still need to meet
> the 55 percent election requirement, with at least one board member
> elected from each census tract who is representative of tract
> residents.

3\) Prepare a Report on Each EZ/EC Board

The Rural Development state office representative will prepare a report
that documents the status of compliance with § 25.404 (b)(3)for each
designated community board. The report shall include status of
compliance, explanation of their process, summary of corrective actions
proposed if the community is non-compliant (details will be in the
corrective action plan), and other general findings. The report is due
to OCD annually, at a date to be established by OCD.

4\) Prepare a Corrective Action Plan.

A plan for corrective action will be prepared for each EZ/EC board not
in compliance with § 25.404 (b)(3) as identified in the above report
submitted to OCD. The action plan should include a description of the
non-compliance, corrective actions including the type of election
procedure the board will employ to become compliant, a timetable, and a
description of the restructured board.

5\) Report Progress and Results of Corrective Action to OCD

As the State Office progresses in bringing a designated community board
into compliance, regular progress reports will be made to OCD. When the
EZ/EC board comes into compliance, the State Office will certify this in
a letter submitted to OCD for concurrence.

**Appeals Procedure**

If there is a disagreement between the community and the State Office
over the board election requirements and the corrective actions
identified, a community can submit to the State Office a written request
for clarification, an appeal, or mediation services. The request should
outline community's reasons for the appeal, and any compelling factors
that warrant special consideration. The request must come from the
managing entity or a member of the board. The State Office has the lead
role in the board election certification process, and all appeals will
be reviewed by OCD in consultation with the State Office. The 45 percent
maximum appointment limit may only be waived for Tribal Governmental
Organizations. Within two weeks after the request is received, OCD will
issue and initial finding (opinion?) to the community and the State
Office.

To help guide the State Office through the EZ/EC board validation
process, below is a discussion on some items relating to board
membership referenced in the new regulations.

**Issues and Definitions:**

Attachment B contains a specific list of questions and answers that
contain specific language relating to the election process. Please refer
to this attachment for more specific definitions.

*Calculating the Number of Board Members to be Selected by Broad-Based
Elections:*

A minimum of 55 percent of board members selected by election means that
at least 6 of 10 members of a board must be elected, 11 of 20, etc.
Attachment A is a table to assist with calculating the number of elected
seats needed for a specific board size to meet the 55% minimum.

*Defining Broad-Based Elections:*

The election requirements of the new regulations are not limited to the
typical elections for government officials with formal procedures,
election days, ballots, and polling booths. Attachment C contains Q&As
and definitions related to broad-based elections. Whatever the election
process, the most critical element is not how votes are tallied, but
rather that each resident of the designated community have adequate
opportunity to participate, and that the purpose of the election widely
known. An open community meeting in all census tracts, and with all
partner groups, with adequate notice and publicity would be a sufficient
vehicle for broad-based elections. This is probably the most common
method used with most community-based, nonprofit organizations. Sub-zone
meetings and elections can also be used.

*Census Tract-Based Representation:*

Both the new regulations and the principles of the EZ/EC Program require
at least one low income board member be elected from each of the
designated census tracts. Many EZ/EC communities have provisions for at
least one board member from each census tract, but not an elected
representative of low income residents. To be in compliance, all EZ/EC
communities must now have at least one elected board seat from each
census tract representing the low income residents of that tract.

The size of the board will dictate the number of required elected
representatives. The average EZ/EC community has about five census
tracts. If only one board seat per census tract is elected, a board with
more than nine members would need one or more of the other members
elected. For example, in this situation a 15-member board would require
that 4 more seats would need to be elected to meet the regulatory
requirement (nine of 15). A review of several EZ/EC community bylaws
showed that several board seats not based on census tract representation
would have to be converted to an elected seat to be in compliance with
the regulations.

### Election Board Members and Representatives of Low Income Residents 

The §25.404 (b)(3) states that at least one board member from each of
designated community's census tracts must be elected *and*
representative of low income residents. This does not limit census
tract-based board members to low income residents, but it is clear that
the new regulation requires at least one seat per census tract be made
available act in the interest of low income residents. The majority of
EZ/EC designations are specifically targeted to rural census tracts with
high poverty rates, and the associated EZ/EC principles dictate that
those residents participate in the process, especially in the direction
of the strategic plan implementation via board representation.

*Defining Low Income Residents:*

In accordance with authorizing legislation, about 25 percent of the
residents of each designated census tract must be below the 1990 census
poverty rate. This poverty rate is not the only definition of low
income. Other factors may be considered such as unemployment and public
assistance. In theory, people generally considered as low income by the
community might actually be above the 1990 poverty rate. Given that
EZ/EC communities by definition are often located in areas with the most
systemic, long-term poverty in the U.S., the majority of a community's
residents may fit the most generally accepted low income definitions.
For program review purposes we rely on the individual's willingness to
identify themselves as low-income, and the community's acceptance of the
individual as being of low income. The percentage of residents meeting
the 1990 census poverty rate should be used as a guidepost for
validating an EZ/EC board's membership. The allocation of board seats
should seem proportionate to the number of residents meeting the 1990
census poverty criteria.

*Participation of Minority Residents*

When the term "minority" is used regarding race, it generally refers to
those who are other than the majority of the population nationally.
Locally, however, groups considered nationally as a minority such as
African American, Hispanic, or Native American, may be the predominant
race in a particular community. When considering minority representation
on the board, comparing the relative percentages to board member
representation to local racial composition is valid. If a particular
race makes up the majority of low income residents in a community, the
board composition should reflect this. Racial quotas cannot be put on
board seats. If the board racial composition does not appear to match
that of the community, it is likely that a sector of the community is
not participating and an updated outreach plan can be requested,
including corrective actions to be taken.

*Board Seats Allocated to Elected Officials*

The new regulations do not provide specific guidance on whether board
seats allocated to elected officials are considered "elected" seats.
This is a significant issue, as many EZ/EC communities allocate several
board seats to elected officials. The critical question is: "Is an
elected mayor, county commissioner, etc. who is appointed to the EZ/EC
board automatically considered "elected" under the requirements of the
new regulations?" OCD supports allowing elected officials to be counted
as elected board members on a case-by-case basis, provided they do not
constitute a majority of the elected seats on the board. OCD approval is
required before a board member is appointed in this manner.

Given the overarching EZ/EC principle of broad-based citizen
participation and the clear intention of the new regulations to better
ensure the manifestation of this principle in the process of
constituting a board, the argument for allowing the elected officials to
also be considered as elected to the board must consider the following
issues:

1.  Transparency of the election process in terms of the community
    residents being fully aware that when they are electing a specific
    government official, they are also designating that individual to
    represent them on the EZ/EC board.

2.  Whether the boundaries of the area served by an elected official
    match the boundaries of the EZ/EC as determined by the designated
    census tracts.

3.  The level of support from the residents of the designated tracts for
    the official (did they vote for someone else?).

Requests for approval will be sent to OCD and should address these
issues.

# Ensuring EZ/EC Board Compliance

There are three principal methods that an EZ/EC board can use to meet
the broad-based election and community representation requirements of
the new EZ/EC regulations. The regulations state that elections may be
done by any locally acceptable process. However, any election method
must adhere to the following:

1.  All community residents and organizations have equal and ample
    opportunity to participate in both the election and in serving as
    board members.

2.  Ample (4 weeks) public notice about the timing and purpose of the
    election. This could include newspaper and radio announcements,
    presentations to group meetings, fliers, and direct mailings.

3.  Allocation of board seats is included in the by-laws and reflects
    the number of census tracts, types of organizations, and economic
    and racial composition of the designated community.

An acceptable election process does not specifically require formal
procedures associated with government elections.

**Corrective Actions for Out-of-Compliance Boards**

*Adding Board Seats*: One straightforward method for meeting the 55
percent elected requirement is to increase the number of overall board
seats, with the new seats filled via election. A 10-member board with
one elected from each 5 census tracts would have to add one new elected
member to be in compliance. However, allocating these seats may not be
straightforward. While doubling the number of elected census tract
representatives would easily put the board in compliance, there is
always a concern about creating a large, unwieldy board. OCD has found
that boards of between 13-25 members generally function most
effectively.

*Converting an Appointed Board Seat to an Elected Seat:* Allocating or
"appointing" a board seat to a particular entity or individual without
some form of broad-based election is limited to no more than 45 percent
of the board's membership. Special needs representation can still be met
by appointment, but the intent of the new regulations is to increase the
percentage of board members elected by community members, particularly
those that the EZ/EC program supposed to benefit, low income residents.
This may require converting an appointed seat to one filled through a
broad-based election. Possible methods for converting appointed seats to
an elected seat include:

> \* Community-wide election for "specialty" or "set-aside" board seats,
> such as "business" or "elderly." Residents do not have to be
> affiliated with a particular sector or entity, or be established
> experts in the subject matter, but must be able to represent that
> groups interest and views. Each nominee for the specialty seats on the
> EZ/EC board should state their qualifications and why they want to
> represent that particular interest on the board.
>
> \* Broad-based election among representatives of a specific sector. A
> special election can be held specifically targeted to a type of
> organization such as "businesses," "schools" or "churches" to elect
> from their collective organizations a board member(s) to represent
> their interests.

**Attachment A: Table on Minimum Number of Elected Board Members Needed
to Meet the 55% Requirement Given a Specific Board Size**

  ----------------- ----------------- ----------------- -----------------
  Total Board       Elected Members   Appointed Members \% Elected
  Members                                               

  3                 2                 1                 67

  4                 3                 1                 75

  5                 3                 2                 60

  6                 4                 2                 67

  7                 4                 3                 57

  8                 5                 3                 63

  9                 5                 4                 56

  10                6                 4                 60

  11                6                 5                 55

  12                7                 5                 58

  13                8                 5                 62

  14                8                 6                 57

  15                9                 6                 60

  16                9                 7                 56

  17                10                7                 59

  18                10                8                 56

  19                11                8                 58

  20                11                9                 55

  21                12                9                 57

  22                12                10                55

  23                13                10                57

  24                14                10                58

  25                14                11                56

  26                15                11                58

  27                15                12                56

  28                16                12                57

  29                16                13                55

  30                17                13                57

  31                17                14                55

  32                18                14                56
  ----------------- ----------------- ----------------- -----------------

**Attachment B: Case Studies**

*Examples of Broad-Based Elections:*

A number of examples already exist within rural communities that can
provide models for EZ/EC boards. Most communities already have some
existing boards that exist for the purpose of improving live in the
community. OCD suggest that communities look for non-profit and
community group boards that are functioning well in their community.

\* USDA County Committees: One widely used election method familiar to
many communities is the one employed by USDA's Farm Service Agency to
establish county committees. While these committees are specific to the
operations of USDA farm programs at the local level, they have a similar
intent as the EZ/EC board to in terms of broad-based representation and
local control. Their elections are well publicized with fliers and
newspaper advertisements, and have a clearly documented nomination and
election procedure. Some provide up to two months for the nomination
period---with standard forms widely available---and three weeks for
votes to be mailed in. Ballots are mailed to each eligible resident in
the county. The downside to the FSA county committee method is the cost
of direct mailings and the verification and tabulation of votes. The
community can consult with a local FSA office about the process and
costs as it evaluates its options.

The EZ/EC board could consider this type of process for both
community-wide and census tract-based elections. The methodology, and
not necessarily the scope, is the critical element. Nominations and the
election process for both census tract-level and entity-based board
seats could be used in the same manner.

*Use of Open Public Meetings for Elections:*

For community-based organizations, the use of open public meetings for
elections is relatively common. For an EZ/EC community, use of these
types of meetings would be an acceptable method for meeting the 55%
requirement of the new regulations, as long as they are open to the
public and well publicized as to their purpose.

Many EZ/EC communities use the open public meeting method to elect board
members. A community would be in compliance if they used the following
procedure as outlined in these bylaws on file at OCD:

\*Round I EC:

"MEMBERSHIP: The board shall consist of thirty-nine (39) members
representing six (6) counties and ten (10) census tracts comprising the
EC community.

\(a\) CENSUS TRACT REPRESENTATIVES: The local tract shall elect 2 tract
representatives, who meet current poverty guidelines and live in the
census tract, at a duly called and publicly advertised meeting of the
Local Tract Organization.

\(b\) COUNTY AT-LARGE REPRESENTATIVES: After receiving nominations from
the County Commissioners and each City Council serving the local EC area
and notice of an election to all members both regular and affiliated,
the Local Tract Organization(s) will hold a County-Wide Public Meeting
to elect 3 at-large representatives."

The last seat is allocated to the area Regional Development Center.
Items to note is that the paragraph (a) speaks directly to the census
tract-level requirements that "must be elected and representative of low
income residents.." In paragraph (b), while the nominations come from
elected officials, all residents are afforded the opportunity to vote
for those representing their census tract. Also, the County At-Large
representative is not limited to elected officials.

In terms of compliance with the board membership requirements in the new
regulations, this community would easily be in compliance: 97% of its
board is elected.

\*Round I EC:

An open meeting process is used to select an EC board member from each
census tract that must be a low income resident.

"There will be one low income resident from each of six census tracts
within the EC to be elected from a community meeting with that census
tract. The community meeting will be conducted by the Chairperson of the
EC or his/her designee. The Chairperson will take nominations from the
floor and will conduct a secret ballot, with the person with the most
votes elected as the member from that census tract."

This process would be considered an acceptable election *if* the purpose
of the meeting was well publicized with ample advance notice. While the
process is acceptable given these conditions, the mathematics of
constituting the board may cause them to still not be in compliance
because of the appointed-elected ratio. These six tract representatives
appear to be the only members elected to a 31-person board (19%
elected). While this EC would meet the requirement that at least one low
income resident be elected from each census tract, it would fall far
short of the overall 55% elected requirement.

**Attachment C: EZ/EC Boards: The Election Process**

1.  What constitutes a broad-based election?

A broad-based election is conducted through a public process, and any
resident of the census tracts included in the EZ/EC, or other designated
community subject to 7 CFR 25, is allowed to vote for candidates running
for board seats. The election is a two part process; the nomination of
candidates, and the election of board members. It may be held at a
public meeting, or through a balloting process. It is the responsibility
of the existing board and the managing entity to ensure that nominations
are obtained from all census tracts and socio-economic groups in the
area. If an election fails to produce a balanced board, appointments may
be used to balance the board with the remaining 45% of the board seats.

2.  What does "locally acceptable" mean?

"Locally acceptable" can be defined as a process that is acceptable or
considered normal for the designated community, and is open and
accessible to any resident of the designated census tract. Methods of
election vary. The community is responsible for keeping documentation of
the options considered by the board, and the justification of the method
selected. The time of day the election is held and the location of the
election must be considered generally accessible to community residents.
Some communities consider official paper ballots submitted over a fixed
period of time acceptable, some do a show of hands or a colored marble
count in a public meeting. Some communities hold elections in multiple
locations or times within the designated community, or allow absentee
ballots, to ensure that the election is accessible to all residents.

3.  Where do nominations for the board come from?

Nominations for board seats should also be obtained through a public
process (see questions 2 and 5) from residents and organizations
operating within the designated community. Nominations should be
obtained before the public notification process is started, since the
slate of candidates is an integral part of the public notice of the
election.

4.  What constitutes sufficient notice?

Elections should be publicly announced at least 30 days before they are
held. Depending on other events in the community (seasonal labor,
harvest, school schedules, or inclement weather), there may be a need
for a longer notice period.

5.  What constitutes public notice?

Broad-based public elections require adequate public notice. Public
notice can be achieved in a variety of ways. Posting the election notice
in a public places in each affected census tract, running notices in the
local newspaper(s), mailings to residents, and announcing elections at
other public meetings, are all acceptable methods. It is not likely that
any one of these alone, however, will reach a majority of residents.
Multiple methods of public notice should be employed. Managing entities
must keep documentation of methods used for election notification, and
may be asked to produce such documentation for community residents and
program evaluators.

6.  What information has to be shared to constitute adequate public
    notice?

At a minimum, the date, time and location of the election and a list of
candidates must be posted to be considered adequate public notice. It is
a good idea to also include a brief thumbnail sketch of the candidates,
issues in the plan that they may have experience with and/or their
relevant qualifications for board membership.

7.  What is a representative board?

A representative board reflects the socio economic and geographic makeup
of the community. It also includes, sometimes as ex officio members,
representatives of major sectors of the community (education,
healthcare, etc). The regulations require representation from
low-income, and each of the census tracts. It is the responsibility of
the existing board and the managing entity to ensure that nominations
are received from a broad-based group of candidates, and that the final
board makeup is representative and conflict of interest issues have been
addressed (see question 8). Areas that are not covered through the
elective process can be filled through appointment.

8.  What is conflict of interest?

EZ/EC boards should be representative of the community (see question 7),
but should not have members who have a vested interest in the projects
being funded by the EC (conflict of interest). In small rural
communities, this is a challenge. Board members who have a financial
interest, or whose close family members have an interest in, a project
being funded by the managing entity or significant partner organization
may have a conflict of interest and should refrain from exercising
influence over decisions made that would affect the project in which
they have an interest. Boards must have procedures in place to address
conflicts of interest. These procedures must be available for public
review. Some areas to watch out for are:

-   Board members with direct involvement in EZ/EC funded projects

-   Over representation on EZ/EC board by board members of the managing
    entity

-   Multiple family members on board

-   Lack of or over representation of one sector (business, education,
    low-income)

Some times the appearance of a conflict may be just as damaging as a
real one. It is incumbent on both the managing entity and the board to
address such situations, keep their funding process transparent, and
maintain good communications with the public.