Conflicts of InterestSome Illustrations

Section 8Public Housing

Section 8

Section 8Public HousingPublic Housing

Public Housing

Section 8

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Illustration #1

Judge Judy is the District Judge of Parker Judge Judy is the District Judge of Parker County, Texas. She rents property to County, Texas. She rents property to tenants with Section 8 vouchers. The Judge tenants with Section 8 vouchers. The Judge has no other dealings with the Section 8 has no other dealings with the Section 8 Program.Program.

You “judge” the Judge….is this a conflict of You “judge” the Judge….is this a conflict of interest? interest?

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Answer #1

NO.NO. Judge Judy may continue to rent her property to Judge Judy may continue to rent her property to

Section 8 voucher holders.Section 8 voucher holders. There is no conflict of interest because she does There is no conflict of interest because she does

not exercise any functions or responsibilities with not exercise any functions or responsibilities with respect to HUD’s Section 8 voucher program: respect to HUD’s Section 8 voucher program: 24 24 CFR §982.161 (a)(3)CFR §982.161 (a)(3)

Should Judge Judy’s properties or tenants come Should Judge Judy’s properties or tenants come before her in her capacity as District Judge, she before her in her capacity as District Judge, she would need to seek further advice from HUD.would need to seek further advice from HUD.

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Illustration #2

Citizen Kane was recently appointed a Citizen Kane was recently appointed a Commissioner of the Elysian Fields HA.Commissioner of the Elysian Fields HA. Mr. Kane is the Community Affairs Director of Reliance Mr. Kane is the Community Affairs Director of Reliance

Hospital and serves in an unnamed capacity with the Rio Hospital and serves in an unnamed capacity with the Rio Grande Recovery Program, an affiliate of the Hospital.Grande Recovery Program, an affiliate of the Hospital.

The Recovery Program leases office space from the HA. The Recovery Program leases office space from the HA. Mr. Kane is a salaried employee of the Hospital, with no Mr. Kane is a salaried employee of the Hospital, with no

stock and/or other ownership interest in the Rio Grande or stock and/or other ownership interest in the Rio Grande or Reliance HospitalReliance Hospital

Can Mr. Kane remain on the HA Board?Can Mr. Kane remain on the HA Board?

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Answer #2

YES.YES. Mr. Kane’s appointment as a Commissioner of the Mr. Kane’s appointment as a Commissioner of the

Elysian Fields HA does not constitute a conflict of Elysian Fields HA does not constitute a conflict of interest with his employment at Reliance Hospital interest with his employment at Reliance Hospital under Section 19 of the ACC.under Section 19 of the ACC.

Mr. Kane has no interest in the lease which Mr. Kane has no interest in the lease which Reliance has with the HA, he is merely a salaried Reliance has with the HA, he is merely a salaried employee of the Hospital, and has no ownership in employee of the Hospital, and has no ownership in either the Hospital or its affiliate, the Rio Grande. either the Hospital or its affiliate, the Rio Grande.

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Illustration #3

Anxious Annie, the Reagan County, Texas Anxious Annie, the Reagan County, Texas HA Executive Director, is worried that if HA Executive Director, is worried that if her brother wins election to the Board of her brother wins election to the Board of County Commissioners there will be an County Commissioners there will be an actual or perceived conflict of interest. actual or perceived conflict of interest.

The HA has over 200 units of Public The HA has over 200 units of Public Housing under ACC with HUD.Housing under ACC with HUD.

Should Annie be worried?Should Annie be worried?

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Answer #3

YES.YES. If Annie’s brother is elected to the Board of If Annie’s brother is elected to the Board of

County Commissioners, this will constitute an County Commissioners, this will constitute an immediate conflict of interest under Section 19 immediate conflict of interest under Section 19 (A)(1)(iii) of the ACC, since County (A)(1)(iii) of the ACC, since County Commissioners must exercise functions and Commissioners must exercise functions and responsibilities with respect to HAs under State responsibilities with respect to HAs under State law: law: V.T.C.A., Local Government Code V.T.C.A., Local Government Code §§392.012; 392.032 and 392.041.§§392.012; 392.032 and 392.041.

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Illustration #4 ““Thrifty” Waters is the Executive Director of the Thrifty” Waters is the Executive Director of the

Seadrift, Texas HA. Seadrift, Texas HA. His wife, Alice, builds web sites as a sideline when she is His wife, Alice, builds web sites as a sideline when she is

not running her restaurant.not running her restaurant. ““Thrifty” would like his wife to build the HA a web site Thrifty” would like his wife to build the HA a web site

since she can do the job “cheaper” than her competitors. since she can do the job “cheaper” than her competitors. You advise “Thrifty” that this “looks like” a conflict You advise “Thrifty” that this “looks like” a conflict

under Section 19 of the ACC, Part A, and he would need under Section 19 of the ACC, Part A, and he would need to request a wavier from HUD. to request a wavier from HUD.

Should “Thrifty” have “smooth sailing” with a Should “Thrifty” have “smooth sailing” with a waiver request to HUD?waiver request to HUD?

Alice’sAlice’s

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Answer #4 Probably Not.Probably Not. Section 19(A)(3) provides:Section 19(A)(3) provides:

HUD may waive a conflict of interest for good cause, “if permitted under HUD may waive a conflict of interest for good cause, “if permitted under State and local law”.State and local law”.

And that “no person for whom a waiver is requested may exercise And that “no person for whom a waiver is requested may exercise responsibilities or functions with respect to the contract to which the responsibilities or functions with respect to the contract to which the waiver pertains…”waiver pertains…”

As part of the waiver request, the HA must submit an attorney’s 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 opinion that a waiver of Section 19(A)(1) is permitted by State and local law.and local law.

Moreover, “Thrifty” could not “administer” his wife’s contract. Moreover, “Thrifty” could not “administer” his wife’s contract. The HA Board of Commissioners would have to make other The HA Board of Commissioners would have to make other arrangements, acceptable to HUD, for the contract administration.arrangements, acceptable to HUD, for the contract administration.

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Illustration #5

““River” Banks would like to lease property he River” Banks would like to lease property he owns in Gunbarrel City, Texas to a family which owns in Gunbarrel City, Texas to a family which has a Section 8 housing voucher.has a Section 8 housing voucher. Mr. Banks is Executive Director of the Cedar Creek Mr. Banks is Executive Director of the Cedar Creek

Lake HA.Lake HA. The Section 8 program for Gunbarrel City is The Section 8 program for Gunbarrel City is

administered by the Trinity River HA.administered by the Trinity River HA.

Can Mr. Banks lease his property in Gunbarrel Can Mr. Banks lease his property in Gunbarrel City to the family with the Section 8 voucher?City to the family with the Section 8 voucher?

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Answer #5

YES.YES. Mr. Banks may do so because the Section 8 Mr. Banks may do so because the Section 8

voucher program for Gunbarrel City is voucher program for Gunbarrel City is administered by the Trinity River HA.administered by the Trinity River HA.

As ED of the Cedar Creek Lake HA, Mr. Banks As ED of the Cedar Creek Lake HA, Mr. Banks would have no functions or responsibilities with would have no functions or responsibilities with respect to the administration of the Trinity River respect to the administration of the Trinity River HA Section 8 program: HA Section 8 program: 24 CFR §982.16124 CFR §982.161

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Illustration #6 The HA of Tennessee City, Texas would like to The HA of Tennessee City, Texas would like to

hire Davey Crockett Company to provide hire Davey Crockett Company to provide technical assistance (TA) for the Section 8 technical assistance (TA) for the Section 8 program. program. The company is already under contract to the The company is already under contract to the

TARC to provide TA for the HA’s public TARC to provide TA for the HA’s public housing program. housing program.

Can the HA hire the Crockett Can the HA hire the Crockett Company to do TA for its Company to do TA for its Section 8 program?Section 8 program?

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Answer #6 YES.YES. This is a procurement of services.This is a procurement of services. Under Under 24 CFR §85.36(b)(3), 24 CFR §85.36(b)(3), HUD’s regulation provides HUD’s regulation provides

that a conflict of interest arises when an employee, officer that a conflict of interest arises when an employee, officer or agent of the HA, who participates in the selection, award or agent of the HA, who participates in the selection, award or administration of a contract supported by Federal funds, or administration of a contract supported by Federal funds, has a financial or other interest in the firm selected for the has a financial or other interest in the firm selected for the award.award.

Since no employee, officer or agent of the HA has a Since no employee, officer or agent of the HA has a financial or other interest in the Davy Crockett Company, financial or other interest in the Davy Crockett Company, the HA may hire the company as its TA provider for the the HA may hire the company as its TA provider for the Section 8 program.Section 8 program.

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Illustration and Answers #7

Marshall and Associates (M&A) manages Marshall and Associates (M&A) manages HAs and also does Fee Accounting for HAs and also does Fee Accounting for them.them.

M&A comes to you with several “conflict M&A comes to you with several “conflict of interest” concerns. of interest” concerns.

What advice would you give in these What advice would you give in these situations?situations?

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Illustration and Answers #7

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

YES.

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

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Illustration and Answers #73.3. Could the accounting contract be terminated Could the accounting contract be terminated

and a management agreement be executed and a management agreement be executed that includes the accounting?that includes the accounting?

NoNo, because the conflicts prohibited by , because the conflicts prohibited by Section 19 would continue for one year after the Section 19 would continue for one year after the termination of M&A’s Fee Accounting contract termination of M&A’s Fee Accounting contract with the HA.with the HA.

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

NoNo, Janet Marshall is an owner of M&A and , Janet Marshall is an owner of M&A and also a member of the “immediate family” of her also a member of the “immediate family” of her spouse, the other owner of M&A. The answer for spouse, the other owner of M&A. The answer for #2 on the previous slide would also apply to any #2 on the previous slide would also apply to any member of an owner’s immediate family, or an member of an owner’s immediate family, or an owner’s partner.owner’s partner.

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Illustration #8

Tou Minney Ironsinthefire was recently elected to Tou Minney Ironsinthefire was recently elected to Marathon, Texas, City Council.Marathon, Texas, City Council. The Chairperson of the Marathon Neighborhood The Chairperson of the Marathon Neighborhood

Association wrote HUD asserting that it is a conflict of Association wrote HUD asserting that it is a conflict of interest for Tou Minney to serve on the Marathon City interest for Tou Minney to serve on the Marathon City Council, and at the same time, participate in HUD’s Council, and at the same time, participate in HUD’s Section 8 voucher program as a Section 8 landlord.Section 8 voucher program as a Section 8 landlord.

Do you agree?Do you agree?

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Answer #8 NO.NO. The Marathon City Council has no functions or The Marathon City Council has no functions or

responsibilities with respect to the administration responsibilities with respect to the administration of the Section 8 housing voucher program under of the Section 8 housing voucher program under HUD regulations: 24 CFR Part 982. HUD regulations: 24 CFR Part 982.

Consequently, it is not a conflict of interest for Consequently, it is not a conflict of interest for Tou Minney to continue with his civic duties to Tou Minney to continue with his civic duties to Marathon and also rent his property to eligible Marathon and also rent his property to eligible Section 8 voucher holders.Section 8 voucher holders.

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Illustration #9

Mr. Clean is the head of maintenance for the Napoleonville, Mr. Clean is the head of maintenance for the Napoleonville, LA, HA’s LaFourche Village Homes (Homes).LA, HA’s LaFourche Village Homes (Homes). The HA has asked HUD for a conflict of interest waiver The HA has asked HUD for a conflict of interest waiver

under Section 19(A)(3) of the ACC, Part A, to permit Mr. 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 Clean’s sister and her three children to lease a unit at the Homes.Homes.

The LA Board of Ethics has issued an advisory opinion The LA Board of Ethics has issued an advisory opinion that this situation would be a conflict of interest under the that this situation would be a conflict of interest under the State Ethics Code.State Ethics Code.

Should HUD grant the HA a waiver of the conflict?Should HUD grant the HA a waiver of the conflict?

ALERT: Not TEXAS!ALERT: Not TEXAS!

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Answer #9

NO.NO. Section 19(A)(3) permits conflicts of interest to be Section 19(A)(3) permits conflicts of interest to be

waived for good cause, if permitted under State and waived for good cause, if permitted under State and local law. local law.

The LA Board of Ethics has determined that the State The LA Board of Ethics has determined that the State Ethics Code prohibits an immediate family member of Ethics Code prohibits an immediate family member of a public servant from leasing a public housing unit at a public servant from leasing a public housing unit at the public servant's agency. the public servant's agency.

Accordingly, HUD will not grant the requested waiver Accordingly, HUD will not grant the requested waiver because such a waiver is not permitted under State law.because such a waiver is not permitted under State law.

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Illustration #10

Marvin Manager is the administrator of two Marvin Manager is the administrator of two apartment projects in El Niapartment projects in El Niñño, Texas, that o, Texas, that participate in HUD’s Section 8 voucher participate in HUD’s Section 8 voucher program through the El Niprogram through the El Niñño HA.o HA. Marvin is also a HA Commissioner.Marvin is also a HA Commissioner.

Is there a problem here? Is there a problem here?

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Answer #10

YES.YES. HUD’s Section 8 Housing Choice Voucher HUD’s Section 8 Housing Choice Voucher

regulations provide that the HA may not enter into regulations provide that the HA may not enter into any contract in connection with tenant-based any contract in connection with tenant-based programs in which any present member of the HA programs in which any present member of the HA has an interest: has an interest: 24 CFR §982.161(a)(1). 24 CFR §982.161(a)(1).

Marvin must resign from the HA Board or the HA Marvin must resign from the HA Board or the HA must seek a waiver of the conflict of interest from must seek a waiver of the conflict of interest from HUD.HUD.

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“The Final Exam Question”

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

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“The Facts of the Case” Some of the tenants of the Village participate in HUD’s Some of the tenants of the Village participate in HUD’s

Section 8 Housing Choice Voucher Program administered Section 8 Housing Choice Voucher Program administered by the City of Muleshoe PHA.by the City of Muleshoe PHA.

MHFC contracted with B&BCI to perform all MHFC’s MHFC contracted with B&BCI to perform all MHFC’s daily and project management requirements. daily and project management requirements.

John Brown is not a member of MHFC’s Board, not an John Brown is not a member of MHFC’s Board, not an employee of MHFC or the City, and is not under contract employee of MHFC or the City, and is not under contract with the City.with the City.

The Village is not a recipient of any Federal or private The Village is not a recipient of any Federal or private grants.grants.

John Brown, as part of B&BCI’s consulting service, serves John Brown, as part of B&BCI’s consulting service, serves without compensation as MHFC’s Executive Director.without compensation as MHFC’s Executive Director.

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“The Answer Sheet”

Two conflict of interest provisions which might apply:Two conflict of interest provisions which might apply: 24 CFR §85.36(b)(3) – Procurement conflict of interest 24 CFR §85.36(b)(3) – Procurement conflict of interest

regulationsregulations 24 CFR §982.161 – Section 8 Housing Voucher 24 CFR §982.161 – Section 8 Housing Voucher

conflicts of interest regulationsconflicts of interest regulations No conflict under procurement regs because there is noNo conflict under procurement regs because there is no ““contract supported Federal funds” being awarded and/orcontract supported Federal funds” being awarded and/or administered by MHFC: 24 CFR administered by MHFC: 24 CFR §85.36(b)(3).§85.36(b)(3). No conflict under Section 8 regulations because MHFC No conflict under Section 8 regulations because MHFC is neither the PHA nor a contractor of the PHA is neither the PHA nor a contractor of the PHA administering the Section 8 voucher program for the City: administering the Section 8 voucher program for the City: 24 CFR §982.161(a).24 CFR §982.161(a).

Thanks for Your Attention!