Opinion  EC-COI-81-167

Date:	12/01/1981
Organization:	State Ethics Commission

A municipal employee serving as legal counsel to a housing authority may not maintain a financial interest in rental properties receiving subsidies administered by that authority. Because the employee has a financial interest in contracts made by the same municipal agency, G.L. c. 268A, § 20 prohibits the arrangement. The employee is also prohibited from participating in matters involving those contracts under § 19. Additionally, the dual role creates an appearance of impropriety that undermines public confidence, in violation of § 23.

Facts

You are legal counsel for a local Housing Authority (LRA). You are also a member of a realty trust which owns rental property in the locality. Some of the units in your rental buildings receive rent subsidies from the Section 8 Housing Assistance Payments Program, as created by the U.S. Housing Act of 1937. These subsidy payments from the federal government are administered by the LHA which enters into an agreement with the owner of the buildings containing the subsidized units, pursuant to an Annual Contributions Contract between the Housing and Urban Development (HUD) agency of the federal government and the LHA.

Question

You ask whether G.L. c. 268A permits you to maintain your financial interest in buildings containing subsidized units while you serve as legal counsel to the LHA.

Answer

The Commission concludes that it does not.

Discussion

In rendering this opinion, the Commission has relied upon the facts as you have stated them and has not made any independent investigation of those facts. As legal counsel to the LHA, you are a municipal employee within the meaning of G.L. c. 268A, s.1(g). Although the Commission does not ordinarily render advisory opinions to municipal employees, the Commission has chosen to render this opinion in view of your partnership with a state employee who has also requested an opinion from the Commission on comparable facts. As a municipal employee, you are prohibited by G.L. c. 268A, s.20 from having a financial interest, directly or indirectly, in a contract made by an agency of the locality. Inasmuch as the LHA is a municipal agency for the purposes of G.L. c. 268A (see, G.L. c. 121B, s.7), the scope of the s.20 prohibition would apply to any contracts made by LHA. LHA is clearly a party to the contribution contract with HUD and is an interested party in view of the primary role which the LHA plays in the administration of the Section 8 Program. Therefore, since your realty trust receives assistance payments pursuant to the Section 8 contribution contract, you have a direct financial interest in a contract made by the same municipal agency which employs you in violation of G.L. c. 268A, s.20. Even if you are designated a special municipal employee, the Commission's conclusion will not be altered. The exceptions to Section 20 which are available to a special municipal employee are not applicable to your situation.^[1] Specifically, clause (c) is not applicable because as legal counsel to the LHA, you do have official responsibility for its activities. Clause (d) does not apply because you have not received an exception of your interest from the city council or a board of aldermen. Finally, you cannot utilize clause (e) because the contract here was not one in connection with the improvement or rehabilitation of your residence. Moreover, in view of the Commission's conclusions regarding the application of G.L. c. 268A, s.23 to your situation, any exemption granted to you under clause (d) would not be sufficient to permit you to maintain your financial interests in a contract made by the LHA. You should also be aware that section 19 of G.L. c. 268A prohibits you from participating^[2] as a municipal employee in any particular matter in which you, your immediate family or partners, or a business organization in which you are a director, trustee, partner or employee has a financial interest. You and your partners have a financial interest in the contract between HUD and the LHA. Further, a contract is a particular matter within the meaning of G.L. c. 268A, s.1(k). You would, therefore, be in violation of this section if you participated as an attorney for the LHA in any aspect of the process by which the payments contract is awarded or specifically in the contract in which your realty trust has a financial interest.

Section 23 of G.L. C. 268A is also relevant to your situation. It establishes standards of conduct for all state, county and municipal employees. Section 23(d) prohibits you from using or attempting to use your official position to secure unwarranted privileges or exemptions for yourself or others. Section 23(f) prohibits you from pursuing a course of conduct which will raise suspicion among the public that you are likely to be engaged in acts that are in violation of your public trust. These sections exemplify the conflict law's goal of avoiding even the appearance of impropriety by municipal employees in private actions which are related to their public duties. See, EC-COI-81-66 and EC-COI-81-55. The Commission concludes that your dual status as counsel to the agency which administers a rental subsidy program and which distributes funds to your partnership violates these sections. In particular, this arrangement raises significant public concern over the impartiality and credibility of the LHA's system of carrying out the Section 8 Housing Assistance Payments Program. See, EC-COI-81-63 and EC-COI-81-65.

Decision

In conclusion, you may not maintain your financial interest in buildings containing these subsidized units while you serve as legal counsel to the LHA.

End Of Decision

[1] Section 20 of Chapter 268A does not apply (c) to a special municipal employee who does not participate in or have official responsibility for any of the activities of the contracting agency and who files with the clerk of the city or town a statement making full disclosure of his interest and the interests of his immediate family in the contract, or (d) to a special municipal employee who files with the clerk of the city or town a statement making full disclosure of his interest and the interests of his immediate family in the contract, or (e) to a municipal employee who receives benefits from programs funded by the United States or any other source in connection with the improvement or rehabilitation of his residence to the extent permitted by the funding agency.

[2] Participate means "to participate in agency action or a particular matter as a state or municipal employee through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise." See, G.L. c. 268A, s.1(k).