Opinion 94 - 6


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

 

CONFLICTS OF INTEREST -- Employment Contracts (tenant member of housing authority employed by residential management corporation) -- Public Housing Authorities (tenant member employed by residential management corporation)

PUBLIC HOUSING AUTHORITIES -- Officers and Employees (conflict of interest provisions applicable to)

PUBLIC HOUSING LAW, 36: Pursuant to Public Housing Law, 36, when a public housing authority contracts with a residential management corporation to operate a federally-funded recreation program, a tenant member of the housing authority would have a conflict of interest if he or she accepts a paid position with the corporation involving the administration or operation of the program.

You ask whether a tenant member of a public housing authority would have a conflict of interest if he or she accepts a paid position with a residential management corporation which contracts with the housing authority to operate a federally-funded recreational program. The tenant member's position with the residential management corporation would involve the administration or operation of the recreational program.

Public Housing Law, 36, inter alia, prohibits a member of a public housing authority from having "any interest direct or indirect in any contract or proposed contract for materials or services to be furnished or used in connection with any project". Section 36 does not distinguish between tenant members of a housing authority and other members (cf. Public Housing Law, 30[5], providing that status as tenant member of housing authority is not deemed incompatible with, or a forfeiture of tenancy).

In the absence of a statutory definition (cf. General Municipal Law, 800[3], defining "interest" for purposes of General Municipal Law, article 18) or a judicial construction of the word "interest" as used in section 36, we note that the courts have defined this term when interpreting analogous provisions (see e.g. Yonkers Bus v Maltbie, n.o.r., 23 NYS2d 87 affd 260 App Div 893, 23 NYS2d 91; DePerno v Dolan, 9 NY2d 433, 214 NYS2d 434; see also 1982 Opns St Comp No. 82-166, p 213). In Yonkers Bus, supra, the court construed the provisions of Second Class Cities Law, 19 which, prior to its amendment by chapter 946 of the Laws of 1964, prohibited city officials from being "interested directly or indirectly in a contract to which the city is a party ...". The court defined an "interest" as follows: 'Interest' in a contract as used in Second Class Cities Law, 19 has usually been construed as a financial or pecuniary interest. The interest need not, however, be one directly flowing from the contract itself. The general welfare and prosperity of the company of an officer may be an interest therein. If [the city official] was in fact merely a nominal officer of the [company], and had no interest whatever in the progress or prosperity or welfare of the company and received and expected to receive no money, ... I suppose [there would be no interest]. (citations omitted; 23 NYS2d at 90)

Applying this definition to the situation at hand, the tenant member clearly would have an interest in the contract between the authority and the management corporation if he or she accepts the paid position involving the administration or operation of the program because he or she would receive a financial benefit flowing from the contract (see 1983 Opns St Comp No. 83-13, p 14; see also Rysaka v Board of Education of Union Free School District No. 6, 126 Misc 622, 214 NYS 264). Therefore, it is our opinion that the tenant member is prohibited by section 36 from accepting the paid position with the residential management corporation under the circumstances presented.

Since the recreation program is federally-funded, federal conflict of interest provisions may also be applicable. We express no opinion, however, on either the import of any such provisions or whether they preempt State law. To resolve these issues, we suggest contacting the United States Department of Housing and Urban Development.

April 25, 1994
Bruce A. Petito, Esq., Attorney at Law
Poughkeepsie Housing Authority