# Presentation: 273048

## Conflicts of Interest

-  Melodee Humbert
- Affordable Housing Specialist

-  Ken McDonald
- Attorney, Office of Regional Counsel

## What is Conflict of         Interest?

- Black’s Law Dictionary defines a “conflict of interest” as:
***“******a real or seeming incompatibility between a person’s private interests and his or her public or fiduciary duties.”***

## Discussion Topics

**ALERT**:  ***Will discuss applicable Federal law and Federal regulations...State and local conflict provisions not subject of this presentation***

-        CDBG

-      HOME Program

-    Conflicts of Interest:

## Conflicts of Interest

- Procurement
- Non-procurement

-  Two Types

## Procurement Conflicts of Interest

- Procurement of:
- Supplies
- Equipment
- Construction
- Services

***Key point – ALL other Conflicts of Interest are NON-PROCUREMENT***

## Procurement Conflicts of Interest

- Procurement by State of Texas, Local Governments and Sub grantees:
***24 CFR § 85.36***
- Procurement by Non-profit organizations (Recipients) and Sub recipients:
***24 CFR § 84.42***

***This presentation will cover non-procurement conflicts only....with two exceptions!***

## Decision Point! 

- Four Possibilities
- CDBG Procurement
- CDBG Non-procurement
- HOME Procurement
- HOME Non-procurement

## Non-Procurement Conflicts

- What Regulations and Rules apply?
- CDBG
***24 CFR § 570.611***
- HOME
***24 CFR § 92.356***

**ALERT**:  ***Check State and Local laws!***

## CDBG Conflicts

***24 CFR § 570.611***
- No person who is employee, agent, consultant, officer or elected or appointed official of recipient or sub recipient who:

## CDBG Conflicts

- Exercises any functions or responsibilities w/ respect to CDBG activities,
- Is in a position to participate in the decision making process,
- Or gains inside information with regard to such activities may:

## CDBG Conflicts

- Obtain a financial interest or benefit from a CDBG activity.
- Have a financial interest in any contract with respect to a CDBG activity or its proceeds.
- For themselves or those they have business or immediate family ties.

**ALERT**:  ***Reg applies during the person’s tenure and for one year thereafter.***

## CDBG Conflicts

- HUD may grant exception to Conflict of Interest on a case-by-case basis.
- Recipient must request an exception in writing.

## CDBG Conflicts 

**ALERT!**
-      ALL Conflict of Interest documents MUST be included in any request for an          exception!!!

## Exceptions

- Threshold Requirements:
- Public disclosure of conflict.
- Opinion of Recipient’s attorney that exception does not violate State or local law.

***HUD legal counsel determines ***
***whether threshold requirements ***
***are met.***

## Exceptions – 7 Factors

- Significant cost benefit or essential expertise to project.
- Opportunity for open competitive bidding or negotiation.
- Person affected:
- Member of low or moderate income class of persons intended to be beneficiaries of the assisted activity.
- Exception will permit such person to receive same benefits as the class.

## Exceptions – 7 Factors

- Person affected has withdrawn from his or her functions or responsibilities, or the decision making process with respect to the assisted activity.
- Interest or benefit was present *before* affected person was in the “conflicting” position.

## Exceptions – 7 Factors

- Undue hardship to recipient or person affected when weighed against public interest served by avoiding the prohibited conflict.
- Any other relevant considerations.

***HUD CPD determines whether to grant the exception.***

##     HOME Conflicts

***24 CFR § 92.356.***
- Similar to CDBG.
- What constitutes conflict.
- Persons covered.
*Participating jurisdiction* must make written request for exception.

##     HOME Conflicts

- Threshold requirements for exception similar to CDBG.
- Exceptions:
- 6 factors similar to CDBG.
- “open competitive bidding” not one of the HOME factors.

##     When in Doubt?

- Contact your HUD CPD Representative to resolve a question or conflict.