April 27, 2001

Mr. Phil McKnelly, Director, North Carolina Division of Parks & Recreation

Re: Grant awards in the context of various connections to potential grant recipients (AO-01-004)

Dear Mr. McKnelly:

I am happy to respond to your April 10 request (received April 24) regarding potential conflict of interest issues related to Public Officials’ various connections to potential Parks and Recreation Trust Fund ("PARTF" or "the Fund") grant recipients.

The following preliminary advisory opinion is issued by the staff of the Board of Ethics ("BOE" or "the Board") according to the Board's "Rules and Regulations" and may be relied upon until and unless it is formally modified or rescinded by the full Board. Once the Board formally approves, modifies, or otherwise disposes of the preliminary opinion, all pertinent parties will be so notified.

All advisory opinions, both preliminary and final, are based upon the particular facts presented and issues raised in the specific request for an advisory opinion. As such, the scope of each opinion is limited to the request made and should only serve as a recommendation to the particular parties involved. It may, however, serve as a general guide to other individuals similarly situated.

I understand the basic facts to be as follows. The North Carolina Parks and Recreation Authority ("the Authority") is a covered "board" under the Governor’s Executive Order Number One (January 12, 2001) ("the Order" or "EO One") whose members are appointed by the Governor, Speaker of the House of Representatives, and President Pro Tempore of the Senate. See North Carolina General Statutes ("N.C.G.S.") §143B-313.1 et seq. Among other things, it has the power to allocate funds for land acquisition, repairs, renovations, improvements, construction, and other capital projects from the Fund. The Authority’s 11 members must include persons who are knowledgeable about park and recreation issues in the State or who have expertise in finance. N.C.G.S. §143B-313.2 (a).

One of the Authority’s responsibilities is to approve matching grants from the Fund to local governmental units for local park and recreation purposes. N.C.G.S. §113-44.15 (b) (2). The Authority will meet on May 15, 2001, to select local government grant recipients from the Fund. One Authority member’s spouse is the mayor of a town applying for a PARTF grant, and another member serves on an advisory sub-committee to a county applying for a grant that was recommended by a totally separate advisory committee to the same county. If I am mistaken about any of the foregoing facts, or if there is additional relevant information needed for a complete understanding of the issues involved, please let me know at once.

Your request poses two separate "ethical" (really conflict of interest and appearance of conflict of interest) questions. I will address them in turn.

First, you ask whether an Authority member whose spouse is the mayor of a town applying for a PARTF grant may discuss or vote on the town’s grant application. No, she should not. The basic rule of conduct for all covered Public Officials is that they "perform their official duties in a manner to promote the best interests of the public." EO One, §7. This general statement is followed by rules governing both conflicts of interest and appearances of conflict.

Conflict of interest rules are aimed primarily at avoiding undue financial gain as a result of one's official position. The basic conflict provision is found in section 7 (a) (1):

"A Public Official shall not knowingly use his or her position in any manner which will result in financial benefit, direct or indirect, to the Public Official, the Official's family, or an individual with whom or business with which the Public Official is associated."

This situation does not involve the typical "financial benefit" contemplated by section 7 (a) (1). However, presumably the mayor/spouse is compensated by the town for his services and is thus an "employee," even if only a part-time one. Generally, the interests of not only husbands and wives but also employers and employees are equated for conflict of interest analysis purposes. See generally AO-00-007-B (October 9, 2000). Thus, any financial benefit accruing to the spouse or his employer as a result of the grant award would be attributed to the Authority member.

Likewise, the Board of Ethics has previously found that an elected official of a local government applying for a PARTF grant has a conflict of interest and may not participate in any discussion or voting on that particular grant application. See AO-98-010 (June 29, 1998). Again, equating the Authority member with her spouse for this purpose, Ms. Farrior should recuse herself from the process, including discussion or other "lobbying."

Regardless of the nature or extent of any "financial" or political interests involved, however, a more obvious appearance issue argues for recusal in this situation. Appearances of conflict cover a broader spectrum of conduct. Section 7 (b) (1) states,

"A Public Official shall make every effort to avoid even the appearance of a conflict of interest. An appearance of conflict exists when a reasonable person would conclude from the circumstances that the Public Official's ability to protect the public interest, or perform public duties, is compromised by familial, personal, or financial interests. An appearance of conflict could exist even in the absence of a true conflict of interest."

Section 7 (b) (2) adds,

"A Public Official shall take reasonable and appropriate steps, under the particular circumstances and considering the type of proceeding involved, to remove himself or herself, to the extent necessary to protect the public interest and comply with this Order, from any proceeding in which the Public Official's impartiality might reasonably be questioned due to the Official's familial, personal, or financial relationship with a participant in the proceeding."

At a minimum, I believe a reasonable person would question the Authority member’s objectivity when the town of which her spouse is the mayor is the applicant for a PARTF grant. Also, given the fact that a grant award is a quasi-judicial-type decision, I believe the "reasonable and appropriate step" in this case is total recusal from the decision-making process, including discussion or "lobbying" as mentioned above. There is no evidence or indication that Ms. Farrior possesses unique, irreplaceable knowledge pertaining to the town’s grant request.

Your second question raises more difficult issues and requires the recitation of additional facts. The member in question is from one of North Carolina’s largest counties which has created several levels of advisory bodies to study and make recommendations regarding various local parks and recreation issues. Specifically, each of the county’s nine park districts has a separate and distinct "advisory committee." These separate advisory committees report to and are overseen by a 13-member Parks and Recreation Commission which is appointed by the county commissioners. The nine advisory committees operate independently of one another and make separate recommendations to "district supervisors" for routine matters and the Parks and Recreation Commission for larger or multi-district issues.

The member in question serves on the county advisory committee for one such district. The county has applied for a PARTF grant in another district. Neither the member nor his particular advisory committee was involved in the preparation, review, or presentation of this separate grant proposal.

You ask whether the member should discuss or vote on the county’s grant request for one park district given his membership on a parks and recreation advisory committee in a separate district. This is a variation of a question posed in 1998. See AO-98-010 (June 29, 1998). In that earlier opinion, the Board stated that in order to avoid an appearance of conflict, an Authority member who is an active member of a local government’s parks and recreation advisory board or commission should recuse himself from voting on a grant proposal from the local government that member serves:

Although a member of a local parks and recreation board will not obtain any personal financial benefit if his community is awarded a grant, the public perception may well be that the member voted for his project without consideration of other potentially more pressing needs in other parts of the state.

AO-98-010, question 1 (A), page 2 (emphasis added). In the situations contemplated by that earlier opinion, I believe the reasoning is sound and the conclusion reached correct. The key to that decision, I believe, was the fact that the Public Official would have already predetermined his decision by having been a part of the preparation, review, and presentation of that particular grant proposal to the local government. It would create, at a minimum, an apparent conflict between the Official’s belief in the validity of the local grant request and his or her duty to evaluate all such requests on the basis of statewide merit.

That does not appear to be the present situation, however. Here, the Public Official is a member of a totally separate advisory committee from the one which prepared and presented the grant request to the Recreation Commission. As he was not involved in the development or presentation of the original grant request, he would not have the same actual or apparent predisposition and therefore conflict of interest.

Therefore, the Authority member here should generally be allowed to fully participate in the Authority’s decisions regarding the PARTF grant request to a district other than the one on which he serves on an advisory committee. This includes discussion and voting. He should, of course, disclose his relationship with the requesting county and one of its advisory committees and remove himself from the process if he feels that his personal relationship with the county or its other advisory committees prevents him from being unbiased in a particular case. See AO-00-007-B (October 9, 2000) ("[the Official] would always be free to remove himself from the decision-making process if he personally feels that personal, financial, or professional interests or associations could improperly influence his objectivity in a given situation").

Finally, this request shows a high degree of sensitivity to the ethical ramifications, both real and perceived, of public service, and I commend the Authority and it members for seeking clarification and advice when there is any doubt whatsoever about the proper course of action. I hope this opinion adequately addresses the specific questions raised in your request, but if it does not, please do not hesitate to call on me for further discussion and analysis.

Perry Y. Newson, Executive Director