Filing Number: 15-09
Subject: Appearance of Impropriety
Keywords: appearance of impropriety, bias, conflict, County board, county grant, Department of Community Services, disclosure, employee, financial interests, impropriety, non-profit, recusal, Section 8
Decision By: Johanna Bishop, Eric Monzo, Beatrice Patton Dixon, Paula Jenkins-Massie, James Keeley, Christopher Simon (Absent: Sally Jensen)
Contact Email: admin@nccethics.org
 
Status: Active

Question:

          Whether a manager in the New Castle County Department of Community Services may serve on the uncompensated, volunteer board of directors of a nonprofit organization which has previously applied, and may apply in the future, for grant funds from New Castle County?

Conclusion:

          Yes, the requestor may serve on the uncompensated, volunteer board of directors of the nonprofit organization, as long as she recuses herself while serving on the board of directors from participation in all County matters that involve the nonprofit organization.

Facts:

           The Commission was contacted by a manager in the Department of Community Services who has been asked by a local nonprofit, housing advocacy organization to serve on its board of directors. This nonprofit organization was created in 1983 to be an advocate for safe, decent, and affordable housing throughout the State of Delaware. The organization works with grassroots constituencies in order to develop their influence. The goal of the organization is to affect, impact, and shape the environment in Delaware related to housing. The organization is governed by a volunteer, uncompensated board of directors which oversees the activities of the organization. It has three paid staff members, and many volunteers who provide specialized services to the organization. According to the organization’s website, in 2014, its total liabilities and net assets equaled $182,495. This organization is eligible for, and, in the past has applied for, grants that are partially or wholly funded by New Castle County.1 New Castle County does not regulate this organization.
 
           The requestor has donated money to the nonprofit organization in the past, but has no “financial interest” (definition set forth below) in the nonprofit organization. It is possible, in the performance of her Department of Community Services duties, for the Community Services manager position held by the requestor to be involved in decision making that involves this nonprofit organization, including whether it will receive grant funds from or through New Castle County.2

Code or Prior Opinion:

          Relevant provisions in the definition section of the Ethics Code, Section 2.03.102, include the following:
 
Business with which he or she is associated means any business in which the person is a director, officer, owner or employee; or a business in which a member of the person's immediate family is a director, officer, owner or has a financial interest.
 
Compensation means any money, thing of value or any other economic benefit of any kind or nature whatsoever conferred on or received by any person in return for services rendered or to be rendered by oneself or another.
 
Financial interest means any interest representing more than five (5) percent of a corporation, partnership, sole proprietorship, firm, enterprise, franchise, organization, holding company, joint stock company, receivership, trust, or any legal entity organized for profit.
 
Recusal means, including but not limited to, withdrawing from sponsorship, deliberation, vote, research, preparation, discussion, negotiation, contract formation, policy making, planning, decision making, and/or implementation of a matter. It also includes a prohibition on conducting, in an official capacity, any private or public discussion of a measure raising a conflict or improper appearance. As soon as a potential conflict or improper appearance arises or is recognized, an official or employee must end direct or indirect participation, advice, input, direction, recommendation, or discussion, as well as refraining from vote, if the person is a not an elected official. Elected officials may choose to avoid recusal and may vote if they follow the alternate process described in Subsection 2.03.103.A.2.
 
Regulated by New Castle County means that an entity operating in New Castle County as a business or nonprofit organization requires approval from or regulation by New Castle County in order to lawfully conduct one or more business activities.
 
Code of Conduct Provisions
 
           Certain portions of the New Castle County Ethics Code are relevant to this opinion, including Sections 2.03.103.A, 2.03.106.B, and 2.03.104.A:
 
Section 2.03.103. - Prohibitions relating to conflicts of interest.
 
A. Restrictions on exercise of official authority.
 
1. No County employee or official knowingly or willfully shall use the authority of his or her office or employment or any confidential information received through his or her holding County office or employment for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated. This prohibition does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the County official or employee, a member of his or her immediate family or a business with which he or she or a member of his or her immediate family is associated. There will be a rebuttable presumption of a knowing or willful violation of this section if the action benefits the County official or employee, his or her spouse, or his or her dependent children (whether by blood or by law).
 
B. Restrictions on representing another's interest before the County.
 
1. No County employee or County official may represent or otherwise assist any private enterprise with respect to any matter before the County Department with which the employee or official is associated by employment or appointment.
 
2. No county official may represent or otherwise assist any private enterprise with respect to any matter before the County. This prohibition is to be considered personal to the County official and is not, for purposes of the New Castle County Ethics Code only, deemed to impact other members of a firm, business, or other employer by which the County official is employed.
 
3. This subsection shall not preclude any County employee or County official from appearing before the County or otherwise assisting any private enterprise with respect to any matter in the exercise of his or her official duties.
 
Sec. 2.03.104. - Code of conduct.
 
A. No County employee or County official shall engage in conduct which, while not constituting a violation of Subsection 2.03.103.A.1., undermines the public confidence in the impartiality of a governmental body with which the County employee or County official is or has been associated by creating an appearance that the decisions or actions of the County employee, County official or governmental body are influenced by factors other than the merits.
 
Case Law and Commission Precedent
 
The New Castle County Ethics Code prohibits conduct on the part of County officials or employees which either creates the appearance of impropriety even where no direct conflict of interest is present. Specifically, conduct which creates an appearance of impropriety is prohibited by Section 2.03.104(A) of the New Castle County Code. To determine if an appearance of impropriety exists, the Delaware courts have stated that “[t]he test is… if the conduct would create in reasonable minds, with knowledge of all relevant facts, a perception that an official’s ability to carry out [his or] her duties with integrity, impartiality and competence is impaired.” Hanson v. Delaware State Public Integrity Com’n, 2012WL3860732, at *16 (Del.Super. 2012), aff’d, 69 A.3d 370 (Del.Supr. 2013); and “[t]he test for appearance of impropriety is whether the conduct would create in reasonable minds, with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, a perception that the [official’s] ability to carry out [the official’s] responsibilities with integrity, impartiality and competence is impaired.” In re Williams, 701 A.2d 825, 832 (Del.Super. 1997). The courts have advised the Commission to look at the totality of the facts presented, and this Commission has historically applied this standard when reviewing the conduct of County officials and employees.
 
           In Advisory Opinion 15-03, the Commission was asked whether an appointed official could serve as a member of a nonprofit board which has occasionally received federal funds that are administered by the official’s department. In concluding that the official may join the board of the nonprofit, the Commission required the official to reveal potential areas of improper appearance to both the nonprofit and the appropriate County authority and to recuse him or herself from any activities which may cause the appearance of conflict, including policy making, promotion, or other activities concerning the nonprofit’s relationship with the County.
 
          In Advisory Opinion 10-06, a County employee requested guidance as to whether he or she may serve on a board of directors for a nonprofit organization which provided services for citizens at a County park administered by his or her department. Due to the fact that the function of the board of the nonprofit was to oversee activity that was conducted under extensive and continuous regulation by the employee’s County department, the Commission concluded that the employee may not assume a seat on the board without violating the New Castle County Code provision against representation of a private entity before his or her department. Further, the Commission reasoned that assumption by the employee of a leadership role in the nonprofit organization extensively regulated by his or her department would create an appearance of partiality in decisions made by that department concerning the nonprofit organization.
 
          In Advisory Opinion 09-05, a County official on a nonprofit board wanted to participate in the formation or execution of a contract between the nonprofit and a company that was acting as an agent for the County. The Commission ruled that the official must recuse him or herself from all of the board’s discussion, negotiations, votes, or contract formation with the County or its agents.
 
          In Advisory Opinion 05-24, an elected official asked whether he could become a member of a nonprofit board which receives federal community development funds administered by the County and a small County grant. Quite similarly to the conclusion in Advisory Opinion 15-03, mentioned above, this Commission held that the elected official may join the board of the nonprofit if he or she reveals the potential areas of conflict to both the private entity and the appropriate County authority and requests that both the entity and the County permit him to recuse him or herself from the activities which cause the appearance of conflict, including policy making, promotion, or other activities concerning the nonprofit’s relationship with the County.

Analysis:

          Prior Commission decisions are especially instructive on the issues raised by this request for an advisory opinion. The requestor is a manager in the County department that is involved in housing issues. Her position with the County Department of Community Services has much authority over the provision of County housing programs and the requestor is involved in setting and executing County policy in that subject matter. The purpose of the nonprofit organization at issue here is to advocate for the provision of more and better housing for individuals and families with low and moderate incomes in Delaware. While the potential exists for the nonprofit advocacy organization to receive County funds, it is not currently receiving any and the requestor’s involvement with the nonprofit as a County employee is limited at this time. Nevertheless, in order to avoid any violation of the Ethics Code, the requestor my serve as a volunteer, uncompensated member of the nonprofit housing advocacy organization’s board of directors only if she follows the dictates and restrictions outlined in Advisory Opinions 05-24, 09-05, 10-06, and 15-03, and in Ethics Code Section 2.03.103.B, which require her to recuse from any issues regarding the nonprofit organization that come before the County and recuse from any issues regarding the County which come before the employee as a member of the board of the nonprofit organization.

Finding:

          The County employee may join the board of the nonprofit organization if the employee reveals the potential areas of improper appearance to both the nonprofit and the appropriate County authority and recuses from any activities which may cause the appearance of conflict, including policy making, promotion, or other activities concerning the nonprofit’s relationship with the County. The requestor employee is reminded, in order to assure compliance with the Ethics Code, that recusal requires more than abstaining on matters put to a vote. The Ethics Code definition of recusal also means that the employee may not engage in any County discussion or circumstance that involves the nonprofit board, and the employee may not engage in any nonprofit board discussion or circumstance that involves the County. In addition, the employee must make it clear in her participation and activities with the nonprofit advocacy organization that she is not acting or speaking on behalf of New Castle County, and she may not appear before New Castle County officials or employees on behalf of the nonprofit organization.
 
          In rendering this advisory opinion, this Commission has applied the New Castle County Ethics Code, which establishes the minimum level of ethical conduct required of County officials and employees.
 
BY AND FOR THE NEW CASTE COUNTY ETHICS COMMISSION ON THIS 12TH DAY OF AUGUST, 2015.
 
 
 
                                                _____________________________________
                                                Johanna P. Bishop, Chairperson
                                                New Castle County Ethics Commission
 
Decision: Unanimous

Footnotes:

1Currently, the nonprofit organization at issue is not receiving any grant funds from or through New Castle County, nor has it been awarded any contracts for services by New Castle County.
2Additionally, New Castle County is currently in the process of reactivating the Housing Advisory Board. The Housing Advisory Board reviews and provides recommendations to the County Executive and County Council on its views on how to prioritize fund allocations from the housing trust fund, as well as providing comments on legislation regarding affordable workforce housing in New Castle County. One of the 13 members of the Housing Advisory Board will be from a housing advocacy organization. And it is possible that the requestor may provide staff support as a representative of the Department of Community Services in the future. In the event that the requestor is asked by her department to provide support to the Housing Advisory Board once it is active, the Commission directs the requestor to seek further advice from the Commission at that time, so that actual or perceived conflict s of interest may be avoided.