April 6, 1993
Ms. Gail Brock Chief, Grants Management Section 1307 Glenwood Avenue, Suite 250 Raleigh, NC 27605
Re: Advisory Opinion: Chief, Grants Management Section, Division of Community Assistance, Department of Commerce; Statesville Conflict of Interest; N.C.G.S. § 14-234
Dear Ms. Brock:
The following is submitted in response to the request for an opinion contained in your memorandum dated March 25, 1993 regarding the existence of a conflict of interest arising from a HOME grant to be administered by the Iredell HOME Consortium.
This office concurs in the conclusions set out in your memorandum to the effect that conflicts of interest exit in Case #1 and in Case #2 under the provisions of both paragraph 3(1) of the funding agreement and 24CFR92.356. As set out in your memorandum, the facts of Case #1 and Case #2 are as follows:
Case #1: A member of the Iredell County Board of Commissioners who also serves on the board of the consortium, is a real estate broker who owns a real estate firm. The city has inquired as to whether the commissioner or an employee of his firm selling a home listed through his agency to a person receiving HOME funds to assist with the purchase constitutes a conflict of interest.
Case #2: The city has requested an opinion on whether a contractor, who is the son of a member of the city council, may contract to build or repair homes that are funded with HOME funds.
Paragraph 3(t) of the funding agreement prohibits certain officials and their relatives from having any financial interest in any contract in connection with the grant. The provisions of 24CFR92.356 also prohibit certain officials and their relatives from having any financial interest in a project assisted by the HOME grant funds. Both the commissioner and the some of the councilman would very clearly benefit financially from the HOME program funds and, therefore, would have a conflict of interest under the provisions of paragraph 3(t) of the funding agreement and under the provisions of 24 CFR92.356.
The provisions of N.C.G.S. §14-234(b) create an exception to the conflict of interest provisions of N.C.G.S. §14-234(a) for programs that directly assist needy individuals. N.C.G.S. §14-234(b) provides generally that under certain expressly stated circumstances and conditions, it is not unlawful for a commissioner to accept payment for services furnished directly to needy individuals in connection with a program of direct public assistance to needy persons. The HOME program can be considered to be a program of direct public assistance to needy persons and, therefore, in Case #1 a conflict of interest does not arise under N.C.G.S. §14-234(a).
Ann Reed Senior Deputy Attorney General Charles J. Murray Special Deputy Attorney General