Is there a conflict of interest under the New Castle County Ethics Code where a County employee owns a real estate investment property within the incorporated area of the City of Wilmington and also participates in the "Section 8 Existing Housing Assistance Payments Program" administered by the Department of Community Development and Housing?

 

          As an ancillary issue, assuming a conflict of interest is presented, the employee has inquired whether the conflict could be avoided by placing the title to the rental property in a family member's name as agent for the employee.

          Based upon the foregoing facts, it is the decision of the Commission that there is no conflict of interest in the employee's participation in the Program administered by the New Castle County Department of Community Development and Housing even though the employee works for that department. Though there is no actual conflict of interest, the Commission is concerned about the possibility of an appearance of impropriety. In order for the employee to comply with the Code in that respect, the Commission advises that:

 

1. The employee disclose his participation in the Program to his department head; and

 

2. The employee recuse himself from the overall responsibility, implementation or administration of the Program with respect to his property.

 

          Since the Commission finds that no conflict of interest exists, the secondary issue of whether a conflict of interest can he avoided by placing the property in a family member's name for the benefit of the employee is moot. Nonetheless, the Commission emphasizes that had a conflict of interest existed, placing the property in someone else's name as agent for the benefit of the employee would not have avoided the conflict. One may not accomplish indirectly that which is directly prohibited.

           The Section 8 Existing Housing Assistance Payments Program (hereinafter the "Program") is a federally funded program designed to help low and moderate income families and elderly and disabled individuals pay rent for housing in the private market. Though funded by the federal government, the program is administered by local governmental agencies such as the City of Wilmington, the City of Newark, and New Castle County with respect to the unincorporated areas of the County. In order to maximize the effectiveness of the program, a land owner/landlord who owns rental property within the jurisdiction of one governmental unit may participate in the same program administered by another governmental authority. Thus, as the case presented here, a City of Wilmington property can participate in the Program administered by the New Castle County Department of Community Development and Housing. This joint participation is effected through a voucher system where the County, concurrently with the City of Wilmington, administers the Program and funds the guaranteed portion of rents on behalf of tenants and subsequently receives credit from the City of Wilmington.

 

          The person requesting this Advisory Opinion is an employee of the Department of Community Development and Housing for New Castle County. Though the employee does not handle money or process payments of any kind under the Program, the employee does market the Program to possible landlords and also helps tenants and landlords resolve problems that occur during the tenancy of any rental property participating in the Program. As the Commission understands the facts, the subject property is located within the incorporated area of the City of Wilmington and the City will be the primary administrator for overseeing all matters relating to the Program with respect to the property.

 

          The reimbursement would depend on whether the certificate/voucher holder family was from the City or county. If the property were rented to a City certificate holder, the City would handle all matters concerning the property including the payments.

 

          The employee had his rental property certified for the Program through the City of Wilmington License and Inspections Department approximately eight months ago. The employee has elected, however, not to participate in the County supervised program because of the employee's uncertainty as to whether a conflict of interest would arise.

          Section 2-30.l of the New Castle County Ethics Code defines the term "conflict" and the phrase "conflict of interest" as follows:

 

Use by a County official or County employee of the authority of his office or employment or any confidential information received through his holding County office or employment for the private pecuniary benefit of himself, a member of his immediate family, or a business with which he is associated. 'Conflict' or 'conflict of interest' 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 sub-class consisting of an industry, occupation or other group which includes the County official or County employee, a member of his immediate family or business with which he or a member of his immediate family is associated.

 

          The Commission believes that the exclusionary language of this definition applies to the foregoing facts. The employee is a member of a subclass of the general public which consists of owner/landlords who are willing and otherwise eligible to participate in the Program. The employee's participation in the Program is such that the employee is affected to the same degree as all other participating owners/landlords. Further, since the employee's property initially qualified for the Program by the City of Wilmington Licensing and Inspection Department, there is no possibility of a use or misuse of the authority inherent in his office as a County employee or use of any confidential information received through such County employment in obtaining eligibility status.

 

          The Commission emphasizes that its decision here is based in significant part on the fact that the County is merely acting as agent and administrator for a federally funded program. No money is paid from the County fund and the continued participation of an owner/landlord in the Program is contingent upon his compliance with federal guidelines. Thus, any owner/landlord who participates in this program is, as a matter of law, contracting with the federal government.

 

          Nonetheless, the Commission is concerned about the possible "appearance of impropriety" in this situation. Section 2-30.1 defines that phrase as:

 

Conduct of a County official or County employee which does not constitute a conflict of interest but which undermines the public confidence and the impartiality of a governmental body with which a County officer or employee is or has been associated, by creating an appearance that the decisions or actions of the County official, County employee or governmental body are influenced by factors other than the merits.

 

          An integral part of this employee's job responsibilities involves the resolution of conflicts between landlords and tenants under the Program. Because of these responsibilities, it is possible that a dispute may arise between a tenant and the employee that would need to be resolved by the same governmental agency with which the employee is associated. If such a dispute arose, an appearance of impropriety might well arise which would undermine the public confidence in the impartiality of the Department of Community Development and Housing.

 

          The Commission therefore recommends that the employee take preventative measures to avoid any possibility of an appearance of impropriety. Though there is no precise language in the Code covering this situation, the Commission, by analogy, finds guidance from the provisions of Section 2-30.2(e) which provides as follows:

 

No County official or County or County employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500.00 or more with the County or any sub-contract valued at $500.00 or more with any person who has been awarded a contract with the County with which the County official or County employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the County official or County employee shall not have any supervisory or overall responsibility for the implementation or the administration of the contract. Any contract or sub-contract made in violation of this section shall be voidable by a Court of competent jurisdiction.

 

            As stated earlier, the Commission finds the contract here to be between the owner/landlord and the federal government. Further, the Commission finds that participation in this Program is accomplished through a "public process", although no public notices are required prior to a person's participation. Nonetheless, and for the sole purpose of avoiding an appearance of impropriety, the Commission suggests that the County employee recuse himself from any supervisory or similar responsibility for the administration of the Program as it pertains to his property. To provide adequate checks and balances, the Commission further suggests that, should the employee elect to participate in the County Program, he disclose that relationship to his department head.