| Date: | 03/12/1984 |
|---|---|
| Organization: | State Ethics Commission |
A construction firm which is owned by a state employee may be hired as a subcontractor under a project receiving funding from the Massachusetts Housing Finance Agency because the employee qualifies for the exemption under §7(b).
You are an employee of a state agency (ABC). You are also owner and president of Inc. (Inc.), a construction and development firm doing business in Massachusetts. A developer (Developer) who is planning a housing development which will utilize construction funds from the Massachusetts Housing Finance Company (MHFA) intends to employ Inc. as the contractor on the project.
The Developer applied to the MHFA for funds in 1980 when MHFA advertised the availability of a pool of funds for which developers could apply. MHFA does not grant a mortgage to every applicant. The developer of a proposed project must first receive approval for the site where it is to be located. A project can be rejected on this basis. Only after site approval may a developer submit an MHFA application for mortgage financing. The MHFA staff evaluates the proposed project in all respects to see whether it meets the MHFA housing development selection criteria. These threshold considerations concern overall design of the project, expertise and experience of the developer, contractor and architect, and their financial history in meeting obligations to MHFA and other lenders. The developer must demonstrate the availability of sufficient financial resources to complete construction and guarantee complete and full payment of any construction loan. Based on all these factors, the MHFA staff recommends whether the proposed project’s application should be subject to an MHFA mortgage loan commitment.
May Inc. be employed by the Developer as the contractor on this Project receiving MHFA funds while you are employed by the ABC?
Yes, provided you fully comply with the guidelines below.
As an employee of ABC, you are a state employee as defined in the state conflict of interest law, G. L. c. 268A, §1 et seq., and, as a result, are covered by the provisions of that law.
Section 7 of that law prohibits a state employee, unless eligible for an exemption contained therein, from having a financial interest in a contract made by a state agency. MHFA is a state agency, and, as owner of the firm acting as contractor, you will have a financial interest in the MHFA mortgage contract with the Developer. According to one exemption, the prohibition in §7 does not apply:
to a state employee other than a member of the general court who is not employed by the contracting agency or an agency which regulates the activities of the contracting agency and who does not participate in or have official responsibility for any of the activities of the contracting agency, if the contract is made after public notice or where applicable, though competitive bidding, and if the state employee files with the state ethics commission a statement making full disclosure of his interest and the interest of his immediate family in the contract, and if in the case of a contract for personal services (1) the services will be provided outside the normal working hours of the state employee, (2) the services are not required as part of the state employee's regular duties, the employee is compensated for not more than five hundred hours during a calendar year, and (3) the head of the contracting agency makes and files with the state ethics commission a written certification that no employee of that agency is available to perform those services as a part of their regular duties. [G. L. c. 268A, §7(b)]
You are not employed by the contracting agency (MHFA), nor do you participate in or have official responsibility for any of the activities of that agency. The advertisement by the MHFA of the availability of funds satisfies the public notice requirement. See, EC-COI-83-37, 81-97. Therefore, since the mortgage contract is not a contract for personal services, you need only file with the Commission a statement making full disclosure of your interest in the contract in order to qualify for this exemption. If you do so, §7 will not prohibit your company from being employed by the Developer as contractor on this MHFA-funded project.
End of Decision
DATE AUTHORIZED: March 12, 1984
