CAO 98-10
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CITY OF MIAMI BEACH
TO:
SERGIO RODRIGUEZ DATE: MARCH 20, 1998
CITY MANAGER
MORRAY H. DUBBIN ,'\I i~U<< -----
CITY ATTORNEY .\~\ ~IN
CAO #98-10 - CONFLICT OF INTEREST: CDAC MEMBER'S HUSBAND
SERVING ON BOARD OF DIRECTORS OF ORGANIZATION
REQUESTING CDAC FUNDS.
FROM:
RE:
I am in receipt of your request for legal opinion questioning whether Community
Development Advisory Committee ("CDAC") member Laura Varela has a conflict of interest in
light of the fact that her husband serves on the board of directors of two organizations that may
be requesting funds from CDAC. As is explained more fully below, although no per se conflict
of interest exists, Ms. Varela should abstain from the subject vote.
The relevant federal conflict of interest regulation, 24 CFR ~570.611(2)(b), states as
follows:
. . . No persons described in paragraph (c) of this section1 who
exercise or have exercised any functions or responsibilities with
respect to CDBG activities assisted under this part, or who are in
a position to participate in a decision-making process or gain
inside information with regard to such activities, may obtain a
financial interest or benefit from a CDBG-assisted activity, or
have a financial interest in any contract, subcontract, or agreement
with respect to a CDBG-assisted activity, or with respect to the
proceeds of the CDBG-assisted activity, either for themselves or
those with whom they have family or business ties, during their
tenure or for one year thereafter.
I "The conflict of interest provisions of paragraph (b) of this section apply to any person
who is an employee, agent, consultant, officer, or elected official or appointed official of the
recipient, or any of the designated public agencies, or subrecipients which are receiving funds
under this part." 24 CFR ~570.611(2)(c).
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CAO #98-10: Conflict of Interest: CDAC Member's Husband
on Board of Directors of Organization Requesting CDAC Funds.
March 19, 1998
Page No.2
With regards to the above-referenced regulation, HUD has opined that no conflict exists when
a CDAC member is serving on the board of directors of an entity seeking CDAC funds and that
person is not benefitting financially from the CDBG-assisted activity. Accordingly, the fact that
CDBG member Laura Varela's husband is sitting on the board of directors of an organization that
may be requesting funds from CDAC does not, in and of itself, constitute a conflict of interest
under federal regulations.
Despite the absence of conflict under federal law, recent correspondence and
telecommunication with Angelo Castillo, HUD Director of Community Planning and
Development, has confirmed the Federal Government's concern of avoiding not only actual
conflicts of interest but appearances of conflicts of interest as well -- accordingly, HUD has
strongly suggested that CDAC Board members abstain from voting on issues (such as is
presented herein) in which an appearance of conflict of interest exists.2
cc: Harry Mavrogenes, Assistant City Manager
Joanna Ravelo, Acting CDBG Projects Coordinator
Community/Economic Development
f:\atto\Salllsheila\caos\98-) O.cao
2 Under State law (~112.3143, Florida Statutes), Ms. Varela would be required to abstain
from the vote at issue if as a result of the measure either she or her husband would receive a
"special private gain or loss" -- in order to opine on this issue facts concerning the nature of the
pecuniary gain must be provided to this office.