Advisory Opinion No. 2000-16

Re: Richard H. Godfrey Jr.

QUESTION PRESENTED

The petitioner, the Executive Director of the Rhode Island Housing and Mortgage Finance Corporation (RIHMFC), a state employee position, requests an advisory opinion as to appropriate procedures that should be followed in his and RIHMFC's business dealings with a non-profit corporation that receives funds from RIHMFC and at which his fiancée is the Executive Director.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, as the Executive Director of the Rhode Island Housing and Mortgage Finance Corporation (RIHMFC), a state employee position, should not participate in any matters involving SWAP, a non-profit corporation once his fiancée the Executive Director, becomes his spouse. In situations where his involvement ordinarily would be required, such matters should be addressed by the Board of RIHMFC, the petitioner’s supervisor. (We note that the Code of Ethics does not require the petitioner to follow such procedures until he is married since the definition of family in the Code of Ethics does not include fiancées; however, the petitioner may wish to adopt such procedures in the interim to avoid an appearance of impropriety.)

The petitioner is the Executive Director of RIHMFC. RIHMFC is primarily a financing entity and relies on the efforts of others, especially non-profit community development organizations, to develop and market housing. SWAP Inc. is a nonprofit community development corporation whose mission is to revitalize the residential communities of South Providence. SWAP from time to time receives funds from or through RIHMFC. These include construction loans to build homes for purchase by low and moderate income families, loans to build affordable apartments, federal low income housing tax credits which are sold to raise money for affordable apartments, and federal home dollars to reduce the rental costs of affordable apartments. In conjunction with each of the homes developed and sold or rented by SWAP, the organization earns a developer’s fee. RIHFMC also provides funds to various community development umbrella organizations that in turn may make loans or grants to SWAP. The petitioner’s fiancée is the Executive Director of SWAP.

The petitioner represents that his staff has contact with or works with SWAP on varying administrative levels in administering the loans. The Board of RIHMFC is involved in such matters as approval of programs not specific to SWAP and approval of large loans on multi-family units that may concern SWAP specifically. The petitioner represents that his staff follows set procedures in managing the programs and that he would become involved only when a policy issue arose.

The Code of Ethics provides that a public official may not participate in matters where he/she has a substantial conflict of interest. A substantial conflict of interest exists if the official or employee has reason to believe or expect that he or any family member will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. R.I. Gen. Laws §§ 36-14-5(a), 7(a). Also, a public official or employee may not use his public position to obtain financial gain, other than that provided by law, for himself or any member of his family. R.I. Gen. Laws § 36-14-5(d). Family members include spouses. See R.I. Gen. Laws § 36-14-2.

The Ethics Commission has generally required a public official to recuse on matters concerning his/her family member’s employer if he/she could reasonably foresee an impact on his/her family members due to his/her official action. See A.O. 96-7 (advising that a Woonsocket School Committee member should not participate in or vote on any matter relating to a contract with a social service agency for services similar to those which are or could be provided by the agency employing the petitioner's spouse as its President/CEO); A.O. 91-33 (finding that Newport Zoning Board of Review member should not participate on petitions sought by Newport Hospital given that his spouse is employed as an administrator at the Hospital with responsibilities that includes public relations and acting as liaison between the community and the hospital representatives); A.O.97-35 (concluding, inter alia, that Tiverton School Committee member should not participate or vote on any matter relating to florist services, given her spouse owns a floral shop and has had a business relationship with the School Department); A.O. 93-66 (finding that Cranston Town Councilor should recuse if matters concerning Fleet National Bank, his spouse’s employer, comes before the City Council particularly if his wife should ever participate in matters concerning the bank's relationship to the municipality); A.O. 95-12 (concluding that Department of Business Regulation Director should not participate in applications limited to consideration of rates or other matters which have a significant and direct affect upon his spouse’s medical practice). Compare with A.O. 99-28 (advising Westerly Town Councilor that he could participate on special use permit for spouse’s employer to construct drive-thrus since decision would not impact his spouse as a baker for the company). As Executive Director of an organization whose mission is to revitalize housing in South Providence and that is dependent on funding to accomplish its mission, matters that financially impact SWAP would necessarily impact the petitioner’s spouse. Therefore, he should recuse on such matters.

The Commission also has advised that when a public official recuses due to a conflict of interest, that recusal should result in the decision making going up, rather than down, the chain of command. See A.O. 2000-5 (relying on representation that the Chief of Food Protection at the Department of Health nor his subordinates will take action on personnel matters or matters that particularly affect his spouse). Here the Board of RIHMFC is the petitioner’s superior. Therefore, matters that he would ordinarily be involved in that involve SWAP should be referred to the Board of RIHMFC. We note, that under the Commission’s guidance, ordinarily subordinates of a public official also would be required to recuse since they might feel pressured to make decisions that the public official would have wanted had he been able to act but for his conflict of interest. However, in this particular circumstance, the petitioner is the Executive Director and all staff members of RIHMFC are his subordinates. The Board, while involved in matters affecting RIHMFC, is not involved in the day-to-day administration of the housing programs or the loans and construction issues that accompany them. Requiring the petitioner’s staff to recuse on administrative matters where there are set procedures for handling them and where his only superior is a board that could not take on the work of the staff is not feasible and would require significant hardships on the persons involved. Additionally, there is no evidence that SWAP would be treated differently than any other organization given that the administrative matters involved essentially are ministerial in nature. It is incumbent upon the petitioner and the Board to set in place any additional procedures to ensure that that is the case.

Code Citations:

36-14-5(a)
36-14-7(a)
36-14-5(d)

Related Advisory Opinions:

2000-5
99-28
97-35
96-7
93-66
91-33

Keywords:

Family: Private Employer/ment
Nepotism