Advisory Opinion No. 99-64

Re: Brenda Clement

QUESTION PRESENTED

The petitioner, a member of the Providence Neighborhood Housing Corporation (PNHC), a municipal appointed position, requests an advisory opinion as to whether she may approve or deny applications for PNHC program funds, given that she is the Executive Director of the Housing Network, an association comprised of the nonprofit community development corporations who may be applicants for funds.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, a member of the Providence Neighborhood Housing Corporation (PNHC), a municipal appointed position, may not participate in matters concerning the Housing Network (the Network), her employer, or its member organizations since those organizations serve on the Network's Board of Directors, pay dues to the Network, supervise the petitioner, and chose her to represent them on the PNHC. That type of relationship triggers the prohibitions of R.I. Gen. Laws §§ 36-14-5(a),(b), and (d), and (f). However, if the funding requests under consideration are from the Network and/or its members only, then the petitioner may participate in the discussion, recommendation and awarding of the grants since she will have the same conflict as to each applicant thereby negating the possibility of preferential treatment. However, if there are applicants other than the Network and its members for particular funds, the petitioner should recuse in accordance with Section 6 of the Code of Ethics.

Pursuant to the Code of Ethics, a public official may not have any interest, financial or otherwise, direct or indirect, or engage in any employment or transaction which is in substantial conflict with the proper discharge of his/her duties in the public interest. A substantial conflict of interest exists if the public official has reason to believe or expect that he/she, or a business associate, or any business by which he/she is employed or represents will derive a direct monetary gain or suffer a direct monetary loss by reason of his/her official activity. See R.I. Gen. Laws §§ 36-14-5(a), 7(a). The Code provides that a business associate may not appear before the public official unless the associate first advises the agency of the nature of his/her business relationship with the public official and the public official recuses himself from voting on or otherwise participating in the consideration or disposition of the matter at issue. See R.I. Gen. Laws § 36-14-5(f). Additionally, the official may not use his/her public office or confidential information received through his/her holding public office to obtain financial gain, for himself/herself, a business associate or any business which the person represents. See R.I. Gen. Laws § 36-14-5(d). Finally, a public official may not accept outside employment that would impair his/her independence of judgment as to his/her official duties. R.I. Gen Laws § 36-14-5(b).

The petitioner is employed as the Executive Director of the Housing Network (the Network). The Network is an association of non-profit community development corporations. The Network serves as a trade and advocacy association to further the interests of its members. One-half of the 21 member organizations are located outside of Providence and do not receive PHNC program funds. Each member organization is a 501(c)(3) nonprofit housing corporation that pays annual dues of between $200 to $400 to the Network. The Network is managed by a Board of Directors. The Board is made up of the Executive Directors of each of the 21 members of the Network. The Network's Board has direct supervisory authority over the petitioner. The Providence members of the Network elected the petitioner to represent them on the PNHC Board.

The PNHC publishes requests for proposals inviting applicants to apply to become recipients of Federal Community Development Bloc Grant (CDBG) and some HOME program funds for housing development. Historically, 90-95% of the applicants for such funds have been members of the Network. Additionally, applicants may receive a developer's fees for each unit produced.

The petitioner represents that the Network represents the interest of the member organizations that from time to time act as developers. [The petitioner also represents that the Housing Network has itself been an applicant for PNHC program funds and that the petitioner has made a presentation before the Board and then excused herself from the room. We remind the petitioner that she may not represent herself or another person before the PNHC while she serves as a member of the PNHC or for one year thereafter. See R.I. Gen. Laws § 36-14-5(e).]

The petitioner serves as a PNHC Board member and as a member of the PNHC Operations Committee. The Operations Committee reviews applications for PNHC program funding. The Operations Committee votes to make a recommendation to the full Board (11 members) to approve or deny the application. The full Board makes the final decision on funding.

The Commission has previously ruled that public officials should recuse from participation in matters when their employer or business associate's interest appears before them. This is often the case when the official is a private member of a board and selected for his/her experience that directly relates to the board's mission and/or subject matter. Recently, the Commission advised members of the Governor's Justice Commission Violence Against Women Planning Committee that they could not participate in grant recommendations where his/her employer or the nonprofit entity where he/she sits on the organization's board of directors is a grant applicant. See A.O. 99-35. See also A.O. 98-10 (concluding that members of the Batterers Intervention Program Standards Oversight Committee and its subcommittees may not participate in any certification, appeal, variance, or other substantive matter if they are employed by or are members of the Board of Directors of an organization, or the parent or sister of that organization, that has a Batterers Intervention Program that would be affected by the matter under consideration by the Oversight Committee); and A.O. 97-93 (advising that Health Department Non-Disciplinary Alternative Program Advisory Panel member should not participate in matters once a nurse has chosen the petitioner's employer to serve as her case manager).

The Commission also has concluded that recusal is required where a public official also has an employment or other relationship with an organization and is representing the umbrella entity and its member organizations where matters concerning a member organization appears before him/her. See A.O. 98-71 (concluding that the Exeter Town Solicitor may not advise the Exeter Town Council on the Nature Conservancy’s request for tax relief, given that he represents the Environmental Council of Rhode Island, Inc. based on the fact that the Nature Conservancy serves on the Environmental Council’s Board of Directors, participates in the Council’s advocacy efforts, and provides financial resources to the Council); A.O. 96-46 (concluding that members of the Providence Historic District Commission (PHCD) who are also Board of Directors members of the Providence Preservation Society Revolving Fund or its corporate parent, the Providence Preservation Society, were prohibited from voting or otherwise participating in the PHDC's reconsideration of an application involving the Providence Preservation Society Revolving Fund); A.O. 98-156 (advising member of the State Retirement Board who is also the President of the Rhode Island Federation of Teachers that he could not participate in matters concerning members of other locals belonging to that umbrella organization). See also A.O. 97-71.

The Code of Ethics specifically prohibits the petitioner from participating in matters where she has an interest that is in substantial conflict with the proper discharge of her duties in the public interest. Here, her employer is the Network. The relationship that exists between the Network and its members places the petitioner in a situation where in at least many important respects the interests of the various organizations converge. The petitioner not only represents the interests of the Network, but also the interests of its members. Those members voted for her to represent them on the PNHC and supervise her in her role as Executive Director of the Network.

The Commission concludes that the petitioner should recuse from participating in the discussion, recommendation, or voting on funding allocations where one or more of the applicants are the Network or one of its members. However, given the petitioner's representation that a vast majority of the applicants are members of the Network, it is likely that all of the applicants responding to a particular RFP will be Network members. If that is the case, the petitioner would have a conflict of interest as to each applicant. Therefore, it is impossible that the petitioner's judgment improperly will be affected as to those organizations with which she is connected since she has a relationship with all of them. In such cases, the petitioner may participate in the funding discussions and voting. However, if one of the applicants responding to a particular RFP is an individual or entity other than the Network itself or its members, the petitioner should recuse as to discussions, recommendations, and voting. The petitioner also should file a statement of conflict of interest with the PNHC and the Ethics Commission in accordance with R.I. Gen. Laws § 36-14-6.

Code Citations:

36-14-2(3)
36-14-5(a)
36-14-5(d)
36-14-5(e)
36-14-5(f)
36-14-6
36-14-7(a)

Related Advisory Opinions:

99-35
98-10
98-71
98-156
97-71
97-132
97-151
96-46
96-54
96-58
96-61
96-76
95-61
95-81

Keywords:

Grants
Non-profit Boards
Private Employment
Public-Private Partnerships