2. PHADA Commissioners Conference Miami, Florida January 11, 2016 Louis A. Riccio Executive Director Madison Housing Authority Lriccio@Madisonha.com

3.  The moral principles by which a person is guided.  It is doing the right thing.  It isn’t always clear-cut (black or white)  The ethical standard is set by an organization’s leader and becomes the benchmark for all employees ◦ Lead by example!

4.  HUD’s Annual Contributions Contract (Section 19)  State Housing Enabling Legislation  State Ethics Law  OMB Circular A87  HUD’s Ethics Reference Manual  PHADA Code of Professional Ethics

5.  WHO WOULD BE AFFECTED BY THE DECISION?  WHAT ETHICAL RESPONSE IS EXPECTED?  HOW WOULD IT FEEL FOR THE DECISION TO BE DISCLOSED TO A WIDE AUDIENCE?  IS THE DECISION CONSISTENT WITH ORGANIZATIONAL GOALS?  IS THE DECISION GOOD FOR THE ORGANIZATION?

6. CONFLICTS OF INTEREST Conduct, which may be fully acceptable in a private setting, may not necessarily be so in the public service context. Because public officials act under a public trust, their conduct must be exemplary, not merely lawful. The central principle underlying public ethics codes is “Conflict of Interest” – more specifically the conflict between a public official’s individual self-interest and the public interest. This may cause personal sacrifice.

7.  Making Good Public Policy  Making Common Sense Decisions  You may have to sacrifice what may be good for you financially & personally.  The good of the organization must be put before your own personal gain in making decisions.

8. More than $28.2 million in questioned PHA costs and $2 million that could have been put to better use. Many of the issues cited cast a negative light on the effectiveness of the programs that are administered by PHAs 486 investigations, 561 indictments, 414 convictions pleas/pretrial diversions, 771 arrests, 52 civil actions, 34 personnel actions & 616 administrative actions

9.  Pennsylvania-Commissioner was indicted for making false statements to HUD regarding properties that he owned and was receiving Section 8 assistance over an 11 year period.  Texas - The Authority’s management and board of commissioners failed to establish a control environment designed to provide reasonable assurance that it complied with Federal requirements. They failed to enact policies and procedures to ensure the integrity of financial operations and compliance with procurement requirements. HUD took administrative actions against the Authority’s former executive director and former board of commissioners who were responsible for the mismanagement, and required the Authority repay $4.5 million in ineligible costs, and support or repay more than $23 million.

10.  VICTORIA, Texas – Commissioner Raquel Garcia, 37, charged in a three- count indictment alleging theft from HUD and fraud against the Social Security Administration. The indictment alleges that beginning in 1998 and continuing until July 2013, Garcia concealed her husband’s cohabitation and income. As a result, she allegedly received nearly $175,000 in HUD rent reductions to which she was not entitled and SSA funds totaling $287,000. Garcia served as a mayoral-appointed commissioner of the Victoria County Housing Authority for two consecutive two-year terms from 2006-2010. If convicted, she faces up to 10 years in federal prison for each of the one count of theft of HUD government funds and up to five years on each of the two other fraud charges. All charges also carry a possible $250,000 fine, upon conviction.

11.  North Carolina-Employee was indicted for adding fictitious landlords into the Section 8 program causing 48 fraudulent housing assistance checks to be written totaling $70,000.  Nebraska-Executive Director sentenced to 3 years in prison. The ED was guilty of inflating employees payroll checks, forging their signature and cashing the checks.  Kansas-Executive Director sentenced to 5 months in prison & restitution of $102,701 for using PHA credit card to purchase personal items.

12. HUD’s ANNUAL CONTRIBUTIONS CONTRACT Section 19 – Conflict of Interest (A)(1) Neither the HA nor any of its contractors or their subcontractors may enter into any contract, subcontract, or arrangement in connection with a project under this ACC in which any of the following class of people has an interest, direct or indirect, during his or her tenure or for one year thereafter: (i) Any present or former member or officer of the Governing body of the HA, or any member of the officer’s immediate family. (There shall be excepted from this prohibition any present or former tenant commissioner who does not serve on the governing body of a resident corporation, and who otherwise does not occupy a policymaking position with the resident corporation, the HA or a business entity. (ii) Any employee of the HA who formulates Policy or who influences decisions with respect to the project(s), or any member of the employee’s immediate family, or the employee’s partner. (iii) Any public official, member of the local Governing body, or State or local legislator, or any member of such individuals’ immediate family, who exercises functions or responsibilities with respect to the project(s) or the HA. (2) Any member of these classes of persons must disclose the member’s interest or prospective interest. (3) The requirements of this subsection may be waived by HUD for good cause, if permitted under State and local law. (5) Nothing in this section shall prohibit a tenant of the HA from serving on the governing body of the HA. (B)(1) The HA may not hire an employee in connection with a project under this ACC if the prospective employee is an immediate family member of any person belonging to one of the following classes: (i) Any present or former member or officer of the governing body of the HA. There shall be excepted from this prohibition any former tenant commissioner who does not serve on the governing body of a resident corporation, and who otherwise does not occupy a policymaking position with the HA. (ii) Any employee of the HA who formulate policy or who influences decisions with respect to the project(s). (iii) Any public official, member of the local Governing Body, or State or local legislator, who exercises functions or responsibilities with respect to the project(s) or the HA. (2) The prohibition shall remain in effect throughout the class member’s tenure and for one year thereafter. (3) The class member shall disclose to the HA and HUD the member’s familial relationship to the prospective employee. (4) The requirements of this subsection may be waived by the HA Board of Commissioners for good cause, provided that such waiver is permitted by State and local law. Immediate Family Member – spouse, mother, father, brother, sister or child of a covered class member (whether related as a full blood relative, or as a “half” or “step” relative ).

13.  Cost Principles for state, local and Indian Tribal Governments for those in receipt of federal funds.  This circular established the principles for determining costs for federal awards.  All costs must be made in accordance with these cost principles

14.  Can you be reimbursed for alcoholic beverages? NO! (attachment B, #3)  How do you determine reasonable compensation? Comparability (attachment B, #8b)  How do you determine fringe benefits? (attachment B, #8d)  Post employment health benefits (attachment B, 8f)  Entertainment (attachment B, #14)  Travel Expenses (attachment B, #43)

15. Compensation for personal services.  a. General. Compensation for personnel services includes all remuneration, paid currently or accrued, for services rendered during the period of performance under Federal awards, including but not necessarily limited to wages, salaries, and fringe benefits. The costs of such compensation are allowable to the extent that they satisfy the specific requirements of this Circular, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established policy of the governmental unit consistently applied to both Federal and non Federal activities; (2) Follows an appointment made in accordance with a governmental unit's laws and rules and meets merit system or other requirements required by Federal law, where applicable; and (3) Is determined and supported as provided in Subsection h.  b. Reasonableness. Compensation for employees engaged in work on Federal awards will be considered reasonable to the extent that it is consistent with that paid for similar work in other activities of the governmental unit. In cases where the kinds of employees required for Federal awards are not found in the other activities of the governmental unit, compensation will be considered reasonable to the extent that it is comparable to that paid for similar work in the labor market in which the employing government competes for the kind of employees involved. Compensation surveys providing data representative of the labor market involved will be an acceptable basis for evaluating reasonableness.

16. § 572.051. Standards of Conduct A state officer or employee should not: (1) accept or solicit any gift, favor, or service that might reasonably tend to influence the officer or employee in the discharge of official duties or that the officer or employee knows or should know is being offered with the intent to influence the officer’s or employee’s official conduct; (2) accept other employment or engage in a business or professional activity that the officer or employee might reasonably expect would require or induce the officer or employee to disclose confidential information acquired by reason of the official position; LAR:WFS 2016

17. § 572.051. Standards of Conduct A state officer or employee should not: (3) accept other employment or compensation that could reasonably be expected to impair the officer’s or employee’s independence of judgment in the performance of the officer’s or employee’s official duties; (4) make personal investments that could reasonably be expected to create a substantial conflict between the officer’s or employee’s private interest and the public interest; or (5) intentionally or knowingly solicit, accept, or agree to accept any benefit for having exercised the officer’s or employee’s official powers or performed the officer’s or employee’s official duties in favor of another. LAR:WFS 2016

18.  Purpose: ◦ The purpose is to set standards of ethical conduct for State officials and employees, thereby ensuring that the State's business will be conducted impartially and not be subject to improper influences.  To Whom Does It Apply: ◦ State officials and employees, members of State boards and commissions whether or not they are compensated for their work.  Law primarily addresses the following: ◦ Description of situations that present a conflict of interest; ◦ Financial disclosure requirements; ◦ Separate provisions for members of the Assembly; ◦ A process for requesting an advisory opinion; ◦ Requirements for registration and financial disclosure for lobbyists; ◦ Complaint procedures, and ◦ Enforcement and penalty provisions. LAR:WFS 2016

19.  Conflict of Interest: ◦ A conflict of interest exists whenever an employee's private interest could affect the performance of his/her official duties.  Conflicts can occur when: ◦ The actions an employee takes in an official capacity relate to his/her personal activities; ◦ Personal activities in which the employee uses his/ her employment to gain a benefit; ◦ Gifts are offered or received; ◦ The employee’s non-official employment or volunteer activity involves the official organization. LAR:WFS 2016

20.  Employees are prohibited from: ◦ Using their position for the private benefit of themselves or others; ◦ Soliciting any gift; ◦ Subject to certain limited exceptions, accepting gifts from persons or business entities doing business or negotiating to do business with the State; ◦ Disclosing or using for private advantage confidential information acquired through State employment; LAR:WFS 2016

21.  Employees are prohibited from: ◦ Engaging in certain kinds of activities after leaving State employment related to matters in which the employee was involved as a State employee; ◦ Being employed by or having financial interest in an entity or with a person negotiating or doing business with their public entity. ◦ Being a member of the governing body (Board of Directors, etc.) or an officer of a non-profit or volunteer or charitable organization that is negotiating or does business with their public entity, even though the employee is not paid for that service. LAR:WFS 2016

22.  Public official or employee" means any person who is elected or appointed to an office or is an employee of any public agency.  Public agency" means the general assembly, all courts, any department, division, institution, board, commission, authority, bureau or other instrumentality of the state, a county, city, village, township, and the five state retirement systems, or any other governmental entity.  Immediate family" means a spouse residing in the person's household and any dependent child.  Requires all governmental employees to annually submit a Financial Disclosure Form. LAR:WFS 2016

23. PROHIBITED CONDUCT  Ethics Law recognizes that many public officials and employees are in a position Ohio’s to make or influence decisions that directly affect their personal interests. The Ethics Law attempts to prevent this type of activity. Generally, a public officer may not participate in matters that involve his own financial interests, or those of his family or business associates. The following types of conduct are prohibited or restricted by Ohio’s Ethics Law. MISUSE OF OFFICIAL POSITION  A public official or employee may not use, or authorize the use of, his public position to benefit himself or others in circumstances that create a conflict of interest where his objectivity could be impaired. This is a general restatement of one of the most important prohibitions in the Ethics Law.  Public officials and employees must avoid situations in which they might gain personally as a result of the decisions they make or influence as public servants. For example, a public official who owns property and profits by influencing his public agency to buy that property would likely be in violation of this prohibition. LAR:WFS 2016

24.  MISUSE OF OFFICIAL POSITION  A public official or employee is also prohibited from using his position to benefit others, such as business associates and family members, because his relationship with those individuals could impair his objectivity in his public duties.  Two related provisions of the Ethics Law prohibit: 1. A public official or employee from soliciting or accepting anything of value that would create a substantial and improper influence upon the official in his public duties; and 2. Any person from promising or giving a public official anything of value that would create a substantial and improper influence upon the official in his public duties.  These provisions prohibit a public official from soliciting or accepting gifts, travel expenses, consulting fees, or any other thing of substantial value from a party that is interested in, regulated by, or doing or seeking to do business with his public agency. Similarly, a private citizen may not promise or give things of value to a public official or employee under circumstances that create a conflict of interest. The Ethics Commission recommends that public servants should avoid all conduct that creates the appearance of impropriety. LAR:WFS 2013

25.  DO’s  Do pass resolutions and policies only after through discussion and understanding of the purpose, usage, intent and implications.  Do monitor policies and procedures from time to time to ensure that the result is what was intended.  Do establish monitoring controls to detect and prevent conflicts of interest, fraud and abuse.  Do ensure that an audit is conducted annually and that the report is reviewed by the Commissioners. If you have an area of concern, you may ask the auditor to expand their review to include that area.  Do conduct meetings at least quarterly with Resident Council leaders to solicit comments and advice.  Do ensure that the PHA operates legally and with integrity. Establish high ethical standards for PHA staff and act as positive role models.  Do learn what the common risks are and be alert for problems such as embezzlement, improper procurement and other irregularities.

26.  DON’Ts  Don’t sign blank checks or checks that are not backed up with bills, invoices or vouchers.  Don’t have any bank accounts which are controlled by one (1) signature.  Don’t, if at all possible, let the persons who are authorized to sing checks reconcile bank statements.  Don’t use PHA supplies, equipment, machinery, construction or rehabilitation supplies or staff for personal use.  Don’t use PHA tax exempt status or PHA credit cards for personal use.  Don’t use PHA contractors for personal purposes while they are engaged in PHA work.  Don’t accept gifts, dinners or other gratuities from contractors or those bidding for PHA work.  Don’t become involved in any business relationships between yourself and the PHA where you or your company are dealing with PHA matters.  Don’t approve contracts with provisions that are in violation of the ACC or HUD regulations.

27.  Lead by example  Place the interests of your organization over your personal interests in making your decisions  Develop an Ethics Policy that reflects the organization’s standards for ethical conduct.  Avoid any appearance of a Conflict of Interest.  Look for symptoms that can lead to ethical breaches (gambling, drugs/alcohol abuse, high-end lifestyles, people with excessive debt).  Perform pre-employment background checks  Adopt a reasonable internal control structure to protects the Authority assets

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