MassHousing conflict?

THE STATE’S CONFLICT of interest law seems pretty straightforward. A public official may not participate in any matter in which she or a member of her immediate family has a financial interest. But real life, as illustrated by a situation at the Massachusetts Housing Finance Agency, is rarely that simple.

CommonWealth received a tip recently that an employee of the authority, Deborah Morse, played a role in a vote committing $73 million for the development of a property in Boston owned by the nonprofit Preservation of Affordable Housing. In presenting the deal to the authority’s board, the minutes of the meeting indicate Morse did not disclose that the nonprofit’s founder and chairman is her father and her domestic partner is a vice president at the business.

The minutes do indicate that a member of the agency’s board recused herself from the vote because her employer had previously provided consulting services to the nonprofit on a matter unrelated to the development proposal.

Asked whether Morse’s failure to disclose her ties to officials at Preservation of Affordable Housing violated the conflict of interest law, officials at MassHousing said Morse did nothing wrong because no family member had a financial interest in the deal. They noted Morse’s father is not compensated as chairman of the board and her domestic partner is not a family member.

“Therefore, for conflict disclosure purposes, no member of Ms. Morse’s immediate family had a financial interest relative to this matter,” said MassHousing spokesman Eric Gedstad in an email.

Maria Plati, a spokewoman for Preservation of Affordable Housing, issued a similar statement. “There is no conflict of interest because, as a non-profit, the funding does not benefit any single person at POAH,” she said.

The state ethics statute, which is enforced by the Ethics Commission, isn’t triggered solely by the involvement of a family member with a financial interest. It can involve the appearance of a conflict of interest in a countless variety of potential situations.

The Ethics Commission does not comment on actual situations. But David Giannotti, chief of the commission’s public education and communications division, said: “Generally, the conflict of interest law restricts whether public employees can perform their duties if they have a private or outside interest in a matter. At a minimum, the conflict of interest law would require a public employee to file a written disclosure of the conflict of interest prior to performing their duties.”

Morse filed her disclosure 10 days after she made her recommendation to the MassHousing board.

Gedstad said that Morse’s relationships with her father and her domestic partner were previously disclosed “orally” to the management of MassHousing.

Gedstad also said the agency board’s vote was done to support the Boston Housing Authority’s application to the Department of Housing and Urban Development for federal funding. MassHousing funding, he said, will not be formally approved until another vote is taken.

“The transaction presented by Ms. Morse was MassHousing expressing its intent to finance the project in the future once it received HUD funding,” he said.

Preservation of Affordable Housing is a developer, owner, and operator of 81 affordable housing properties in nine states and the District of Columbia, most of which (25) are in Massachusetts.  The properties generate revenue of $38.5 million, a number that is $6.1 million greater than the nonprofit’s expenses.

Founded by an act of the Legislature, MassHousing is a quasi-public state agency that raises money by selling bonds and using the proceeds to finance affordable housing.  The agency has 350 employees and $7 billion in assets under management.

Last year, MassHousing was involved in another situation that raised eyebrows. The agency’s board replaced then-executive director Thomas Gleason with Timothy Sullivan without doing a search and without any notice. The entire process took all of 10 minutes.  At the same time, the board decided to keep Gleason on for one year with the title of executive director emeritus at an annual salary of $251,024.

Two members of the Baker administration — Kristen Lepore, secretary of Administration and Finance, and Chrystal Kornegay, an undersecretary in Housing and Economic Development – serve on the MassHousing board. Neither official would comment on Morse’s failure to disclose to the board her relationship with officials at Preservation of Affordable Housing.