You are a member of the judiciary. A number of years ago, you acquired title jointly with your spouse in land and buildings at Lot A. You both subsequently conveyed your entire interest to relatives, who assumed the mortgage on the property. Recently, due to the relatives' apparent lack of interest in continuing their joint ownership, and the fact that you and your spouse own the adjacent parcel of property, you two would like to reacquire the property. One of the five rental units at Lot A, however, presently receives Section 8 Housing Assistance Payments from the federal government[1] and another unit is subsidized under the Chapter 707 Rental Assistance Program.[2] Both programs are operated and administered by the Town Housing Authority (THA).
Would your financial interests in these subsidized units violate the state conflict of interest law, G.L. c. 268A?
Your financial interest in the Chapter 707 subsidized unit constitutes a conflict of interest, whereas your interest in the Section 8 subsidized unit does not.
As a member of the judiciary, you are a state employee as that term is defined in G.L. c. 268A, § 1(q). State employees are prohibited by § 7 from having "a financial interest, directly or indirectly, in a contract made by a state agency in which the commonwealth or a state agency is an interested party... " Any restrictions you will be subject to as a state employee will therefore depend on the degree of state involvement in the contracts and funding process of the subsidy programs.
1. Section 8 Program
The Section 8 subsidy program is administered in your area under a contract between the THA and the U.S. Department of Housing and Urban Development (HUD). The subsidy is funded by the federal government and paid directly to the THA, which in turn pays the landlord. While the state Executive Office of Communities and Development (EOCD) periodically reviews and signs-off on such contribution contracts, EOCD is neither a funding source for the subsidy nor a party to the contract for § 7 purposes. Thus, your financial interest in the Section 8 subsidy program contract (i.e. the monies THA will pay you from its contract with HUD to subsidize your tenant's rent) will not violate § 7 inasmuch as you will have a financial interest in a contract made by a municipal rather than a state agency.[3] See EC-COI-81-189.[4]
You should be aware, however, that you are subject to the standards of conduct set forth in § 23. Section 23(¶ 2) (2) and (3) prohibit you from using or attempting to use your official position to secure unwarranted privileges or exemptions for yourself or others, or from giving reasonable basis by your conduct for the impression that one can improperly influence or unduly enjoy your favor in the performance of your official duties. You should keep these guidelines in mind should you have any official dealings with EOCD.
2. Chapter 707 Program
The Chapter 707 Rental Assistance Program pays rent subsidies to landlords with qualifying tenants in your area under a contract between the Department of Community Affairs (DCA) and THA. See generally G.L. c. 121B, §§ 42-44. DCA annually allocates a certain amount of state funds to the THA for tenant rental assistance. This sum is determined by DCA by considering the number of eligible units assigned to THA and the maximum amount each unit can be rented for, within DCA's fair market rent schedule, See G.L. c. 121B, § 43. The Commission concludes that your receipt of Chapter 707 rental subsidies would constitute a financial interest in a contract made by DCA, a state agency. Moreover, DCA is an "interested party" in the contract within the meaning of § 7, in view of the use of state funds and DCA's substantial involvement in the administration of the Chapter 707 Program. None of the exemptions in § 7 apply to you. In particular, the § 7(b) exemption[5] is inapplicable since the process under which DCA designates eligible units does not constitute competitive bidding or offer comparable protections. Similarly, you are ineligible for the welfare exemption[6] inasmuch as the rental subsidies are set in accordance with the DCA schedule, not a schedule promulgated by DPW or the Rate Setting Commission.
Accordingly, the Commission advises you that the Section 8 subsidy will not present a Chapter 268A problem, whereas your receipt of Chapter 707 monies will place you in violation of § 7 of the conflict law.[7]
End Of Decision