# Presentation: 153393

## Conflicts of InterestSome Illustrations

- Section 8

- Public Housing

- Section 8

- Section 8

- Public Housing

- Public Housing

- Public Housing

- Section 8

## 		Illustration #1

- Judge Judy is the District Judge of Parker County, Texas.  She rents property to tenants with Section 8 vouchers.  The Judge has no other dealings with the Section 8 Program.
*You “judge” the Judge....is this a conflict of interest? *

## 		Answer #1

- NO.
- Judge Judy may continue to rent her property to Section 8 voucher holders.
- There is no conflict of interest because she does not exercise any functions or responsibilities with respect to HUD’s Section 8 voucher program:  *24 CFR §982.161 (a)(3)*
- Should Judge Judy’s properties or tenants come before her in her capacity as District Judge, she would need to seek further advice from HUD.

## 		Illustration #2

- Citizen Kane was recently appointed a Commissioner of the Elysian Fields HA.
- Mr. Kane is the Community Affairs Director of Reliance Hospital and serves in an unnamed capacity with the Rio Grande Recovery Program, an affiliate of the Hospital.
- The Recovery Program leases office space from the HA.
- Mr. Kane is a salaried employee of the Hospital, with no stock and/or other ownership interest in the Rio Grande or Reliance Hospital
*Can Mr. Kane remain on the HA Board?*

## 		Answer #2

- YES.
- Mr. Kane’s appointment as a Commissioner of the Elysian Fields HA does not constitute a conflict of interest with his employment at Reliance Hospital under Section 19 of the ACC.
- Mr. Kane has no interest in the lease which Reliance has with the HA, he is merely a salaried employee of the Hospital, and has no ownership in either the Hospital or its affiliate, the Rio Grande.

## 		Illustration #3

- Anxious Annie, the Reagan County, Texas HA Executive Director, is worried that if her brother wins election to the Board of County Commissioners there will be an actual or perceived conflict of interest.
- The HA has over 200 units of Public Housing under ACC with HUD.
*Should Annie be worried?*

## 		Answer #3

- YES.
- If Annie’s brother is elected to the Board of County Commissioners, this will constitute an immediate conflict of interest under Section 19 (A)(1)(iii) of the ACC, since County Commissioners must exercise functions and responsibilities with respect to HAs under State law:  *V.T.C.A., Local Government Code §§392.012; 392.032 and 392.041.*

## 		Illustration #4

- “Thrifty” Waters is the Executive Director of the Seadrift, Texas HA.
- His wife, Alice, builds web sites as a sideline when she is not running her restaurant.
- “Thrifty” would like his wife to build the HA a web site since she can do the job “cheaper” than her competitors.
- You advise “Thrifty” that this “looks like” a conflict under Section 19 of the ACC, Part A, and he would need to request a wavier from HUD.
*Should “Thrifty” have “smooth sailing” with a waiver request to HUD?*

## 		Answer #4

- Probably Not.
- Section 19(A)(3) provides:
- HUD may waive a conflict of interest for good cause, “if permitted under State and local law”.
- And that “no person for whom a waiver is requested may exercise responsibilities or functions with respect to the contract to which the waiver pertains...”
- As part of the waiver request, the HA must submit an attorney’s opinion that a waiver of Section 19(A)(1) is permitted by State and local law.
- Moreover, “Thrifty” could not “administer” his wife’s contract. The HA Board of Commissioners would have to make other arrangements, acceptable to HUD, for the contract administration.

## 		Illustration #5

- “River” Banks would like to lease property he owns in Gunbarrel City, Texas to a family which has a Section 8 housing voucher.
- Mr. Banks is Executive Director of the Cedar Creek Lake HA.
- The Section 8 program for Gunbarrel City is administered by the Trinity River HA.
*Can Mr. Banks lease his property in Gunbarrel City to the family with the Section 8 voucher?*

## 		Answer #5

- YES.
- Mr. Banks may do so because the Section 8 voucher program for Gunbarrel City is administered by the Trinity River HA.
- As ED of the Cedar Creek Lake HA, Mr. Banks would have no functions or responsibilities with respect to the administration of the Trinity River HA Section 8 program:  *24 CFR §982.161*

## 		Illustration #6

- The HA of Tennessee City, Texas would like to hire Davey Crockett Company to provide technical assistance (TA) for the Section 8 program.
- The company is already under contract to the TARC to provide TA for the HA’s public housing program.
*Can the HA hire the Crockett                     Company to do TA for its                                Section 8 program?*

## 		Answer #6

- YES.
- This is a procurement of services.
- Under *24 CFR §85.36(b)(3), *HUD’s regulation provides that a conflict of interest arises when an employee, officer or agent of the HA, who participates in the selection, award or administration of a contract supported by Federal funds, has a financial or other interest in the firm selected for the award.
- Since no employee, officer or agent of the HA has a financial or other interest in the Davy Crockett Company, the HA may hire the company as its TA provider for the Section 8 program.

## 			Illustration 		    and Answers #7

- Marshall and Associates (M&A) manages HAs and also does Fee Accounting for them.
- M&A comes to you with several “conflict of interest” concerns.
*What advice would you give in these situations?**	*

## 		 	Illustration 		    and Answers #7

*Could M&A manage a HA that has not been under contract for Fee Accounting for a period of one year or more?*

-    YES.

*Can M&A manage a HA if M&A is under contract for Fee Accounting? *

-      NO.  **If  HUD were to permit this, then the HA would have a contract with M&A as it Fee Accountant in which M&A, as the HA’s managing “employee” would have an interest:  Section 19 (A)(1)(ii) of the ACC, Part A.**

## 	Illustration and Answers #7

*Could the accounting contract be terminated and a management agreement be executed that includes the accounting?*

-    No, because the conflicts prohibited by          Section 19 would continue for one year after the termination of M&A’s Fee Accounting contract with the HA.

-  *Could Janet Marshall, not as part of M&A, manage a HA that is under contract with M&A for Fee Accounting?*

-   No, Janet Marshall is an owner of M&A and also a member of the “immediate family” of her spouse, the other owner of M&A.  The answer for #2 on the previous slide would also apply to any member of an owner’s immediate family, or an owner’s partner.

## 		Illustration #8

- Tou Minney Ironsinthefire was recently elected to Marathon, Texas, City Council.
- The Chairperson of the Marathon Neighborhood Association wrote HUD asserting that it is a conflict of interest for Tou Minney to serve on the Marathon City Council, and at the same time, participate in HUD’s Section 8 voucher program as a Section 8 landlord.
*Do you agree?*

## 		Answer #8

- NO.
- The Marathon City Council has no functions or responsibilities with respect to the administration of the Section 8 housing voucher program under HUD regulations: 24 CFR Part 982.
- Consequently, it is not a conflict of interest for Tou Minney to continue with his civic duties to Marathon and also rent his property to eligible Section 8 voucher holders.

## 		Illustration #9

- Mr. Clean is the head of maintenance for the Napoleonville, LA, HA’s LaFourche Village Homes (Homes).
- The HA has asked HUD for a conflict of interest waiver under Section 19(A)(3) of the ACC, Part A, to permit Mr. Clean’s sister and her three children to lease a unit at the Homes.
- The LA Board of Ethics has issued an advisory opinion that this situation would be a conflict of interest under the State Ethics Code.
*Should HUD grant the HA a waiver of the conflict?*

- ALERT:  Not TEXAS!

## 		Answer #9

- NO.
- Section 19(A)(3) permits conflicts of interest to be waived for good cause, if permitted under State and local law.
- The LA Board of Ethics has determined that the State Ethics Code prohibits an immediate family member of a public servant from leasing a public housing unit at the public servant's agency.
- Accordingly, HUD will not grant the requested waiver because such a waiver is not permitted under State law.

## 		Illustration #10

- Marvin Manager is the administrator of two apartment projects in El Niño, Texas, that participate in HUD’s Section 8 voucher program through the El Niño HA.
- Marvin is also a HA Commissioner.
*Is there a problem here? *

## 		Answer #10

- YES.
- HUD’s Section 8 Housing Choice Voucher regulations provide that the HA may not enter into any contract in connection with tenant-based programs in which any present member of the HA has an interest:  *24 CFR §982.161(a)(1). *
- Marvin must resign from the HA Board or the HA must seek a waiver of the conflict of interest from HUD.

## 	“The Final Exam Question”

- Letter from consultant asking whether contractual arrangement among the Muleshoe Housing Finance Corp (MHFC), Brown & Brown Consultants, Inc. (B&BCI) and John Brown as President of B&BCI creates a conflict of interest, because of MHFC’s ownership of the Village of Coyote Lake (Village).
- What Conflict of Interest Regs apply?
- Is this a Conflict of Interest?

## “The Facts of the Case”

- Some of the tenants of the Village participate in HUD’s Section 8 Housing Choice Voucher Program administered by the City of Muleshoe PHA.
- MHFC contracted with B&BCI to perform all MHFC’s daily and project management requirements.
- John Brown is not a member of MHFC’s Board, not an employee of MHFC or the City, and is not under contract with the City.
- The Village is not a recipient of any Federal or private grants.
- John Brown, as part of B&BCI’s consulting service, serves without compensation as MHFC’s Executive Director.

## “The Answer Sheet”

- Two conflict of interest provisions which might apply:
*24 CFR §85.36(b)(3) – Procurement conflict of interest regulations*
*24 CFR §982.161 – Section 8 Housing Voucher conflicts of interest regulations*

-   No conflict under procurement regs because there is no
*    *“contract supported Federal funds” being awarded and/or
-     administered by MHFC:  24 CFR §85.36(b)(3).

-   No conflict under Section 8 regulations because MHFC is neither the PHA nor a contractor of the PHA administering the Section 8 voucher program for the City: *24 CFR §982.161(a).*

## Thanks for Your Attention!