Conflict at the CSHC

By Sarah Owens and Michael Livingston

But, what if we form a committee, and take turns voting for each other?  Wala!  No conflict of interest.

After we reported on the initial federal (HUD) funding recommendations of the Urban Development, Community Services and Housing Commission (CSHC)  (see here), additional funds came in or were "found" (Chair Kohler's word) and allocated to area agencies, including a couple of agencies lucky enough to have representatives on the CSHC.

It's not been easy for us to "follow the money" as it moves around, even though we are on the CSHC!  Or we were.  Michael's partial term was up in June, and he wasn't reappointed, we were told, because he had a "conflict of interest" stemming from our partnership.  Now isn't that interesting?

It's even more interesting that Kim Lemman, Executive Director of St. Francis Shelter and CSHC vice chair, and Jayne Downing, Executive Director of the Center for Hope and Safety and longtime (looooooong time) member of the CSHC and its predecessor the SSAB  -- both of whom regularly declare conflicts of interest due to the fact that every year they apply for and receive CSHC funds -- have no trouble at all getting reappointed.  In fact, to hear them tell it, the Mayor practically begged them to serve.  It's also interesting that their conflicts somehow don't prevent either of them from from voting to fund each other's projects.  It's a good thing we have a City Attorney keeping everything on the up and up.

For those unfamiliar with Oregon's conflict of interest law, there are two kinds -- "actual" (ORS 244.020(1)) and "potential" (ORS 244.020(12)).  According to the Oregon Government Ethics Commission's guidance,

A public official is met with an actual conflict of interest when the public official participates in action that would affect the financial interest of the official, the official’s relative or a business with which the official or a relative of the official is associated. A public official is met with a potential conflict of interest when the public official participates in action that could affect the financial interest of the official, a relative of that official or a business with which the official or the relative of that official is associated.

Training materials put out by the Salem City Attorney's Office say that potential conflicts of interest have the "same requirements as an actual conflict, except the financial consequences are possible, not certain."  (Emphasis in original.)

A person with an "actual" conflict of interest can't discuss or vote on the matter at issue, but one with a "potential" conflict of interest may.  Although Kim and Jayne maintain that their conflict of interest is merely "potential", they choose to treat it as if it were an "actual" conflict by not publicly discussing or voting on matters that "could" affect the financial interest of their respective businesses.  They do discuss and vote on each other's matters, however. 

Now, we weren't there when the City Attorney explained why Kim and Jayne's conflict of interest was "potential", not actual, but it would definitely take a law degree to understand how the CSHC's decision on how to divvy up a pie that, say, St. Francis had asked for a piece of is not certain to affect St. Francis's interest in that pie.  Most non-lawyer people would assume the decision would be certain to affect anyone who'd asked for a piece.   

The situation used to bother the Mayor, but, according to Kim and Jayne, he got over it.  We think maybe it bothers Kim a little, but not enough to risk disappointing Jayne.           

The CSHC's initial funding recommendations (made in March, based on estimates of available funding), were incorporated into a Draft Annual Action Plan.  The Draft AAP was then put out for public comment, and subsequently removed from the City's website.  (Refer to chart, below, for the initial funding recommendation amounts.) 

On May 9, City staff emailed the CSHC to say HUD had announced the City would be receiving an additional $66,400 in CDBG funds and $190,000 in HOME funds.

On May 14, the City Council was presented a revised version of the AAP which, according to a   supplemental staff report, included all the additional HOME and CDBG funds, but allocated only $66,395 in CDBG funds.  (See chart below, where "amount" = requested amount.) 

On June 13, the CSHC was informed that $148,200 in CDBG funds and $270,000 in HOME funds  needed to be allocated.  There was no cogent/consistent explanation as to the source of the additional funds ($148,195 CDBG and $80,000 HOME) over what had been reported to the CSHC in the May email.  The CSHC recommended one small CDBG award (per staff recommendation that they could do so because the public service "cap" of 15% was really 20% and "flexible"), and reserved the balance.  They also made recommendations as to the $270,000 in HOME funds (see chart below).

On August 22, the CSHC was asked to recommend another 2018 CDBG award in the amount of $85,000 to St. Francis.  (See charts above and the last page of the meeting packet here.)  They were also asked to recommend amending the 2017 AAP to reallocate $90,000 to the Center for Hope and Safety (CHS). That's two awards to Kim (this year), and three to Jayne, if anyone's counting.

Also in August, the CSHC was asked to recommend that the City Council approve a "Substantial Amendment to the 2014-2019 Consolidated Plan" which bumps economic development to the bottom of the list of priorities (see chart above), and puts ending homelessness at the top, making more money available for projects and programs like Kim's and Jayne's.

Although it's not mentioned in the document, the re-prioritization was the product of a quiet little work group consisting of Councilors Hoy, Kaser, Lewis and McCoid, and the CSHC chair/vice chair (see June 13 minutes, Item 6).  The City maintains that such work groups are not subject to Oregon's public meetings laws.

In September, the City Council adopted the Con Plan amendment and approved the additional awards as amendments to the 2018 and 2017 AAPs.  The 2017 amendments/reallocations (totaling $500,000) have to be "reimbursed" from whatever the City gets in 2019.  It's pretty confusing how all this works. 

In a recent radio interview, the Mayor spoke about the Downtown Homeless Solutions Task Force recommendation that the City take more responsibility for coordinating the social service response to the needs of the downtown homeless.  But, he said, 

For the City to get involved, really directly in...providing the kind of support that services may need...we really need to get...a handle on...the budget implications of...these proposals, and what's the funding source...We have some money that comes in from the federal government, and some from the state government...We've used traditionally a kind of a grant system...That may not be the right answer any more.  We need to take a look at that.

What might "taking a look" mean for the CSHC?  On the one hand, the CSHC, like the Citizen Budget Committee and most of the City's other advisory bodies, is bit of a "rubber stamp."  But, unlike other advisory bodies, the CSHC has additional duties relating to oversight and coordination under SRC 20G.040 -- duties they do not perform, because that's the way staff and the CSHC have preferred it.  (This was also true of the Social Services Advisory Board, the CSHC's predecessor entity.)  Considering  the CSHC's minimal contribution and poor "optics", the Mayor's entirely correct in suggesting that the City's "grant system" is "not the right answer any more", if it ever was.  But, the City should do much more than just "take a look" at the current "grant system."  We should either insist that the CSHC live up to the full range of its responsibilities, or end the pretense, and replace the CSHC altogether with an efficient, staff-driven, process (with just enough citizen involvement to satisfy HUD requirements).

[11/16/18 Update:  Jayne and Kim, along with Chair Adam Kohler and the United Way representative resigned after HUD made it known in a letter dated October 29th that the CSHC as it was currently configured could not participated in the City's grant application review/ranking process.  Unclear when they resigned.  Brynelson, T. "City commission derailed over potential conflicts of interest." Salem Reporter, 16 November 2018.]

[12/8/18 Update:  UDD Director Kristin Retherford recommended killing the CSHC, having found that "many duties of the CSHC are now included in the position description for the Homeless Coordinator" and "community input in grant program awards and other matters can be achieved through limited duration ad hoc committees and work groups."  Note: The City has taken the position that work groups are not subject to Oregon's public meetings laws.]

12/20/18 Update:  Bach, J. "Salem development commission may disband after feds raise ethics concerns", Statesman Journal, 20 December 2018.

CSCH web page

City Manager's 3/13/19 Update