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New policy could affect council votes

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BY LINDELL JOHN KAY
Staff Writer

Sunday, July 15, 2018

A new conflict of interest policy under consideration by the Rocky Mount City Council may affect whether some council members will have a vote on certain matters — possibly including the Rocky Mount Event Center.

The proposed policy presented to the council during last week's Committee of the Whole meeting adds federal guidelines to existing local and state rules. The guidelines apply to sub-recipients and includes apparent conflicts as well as actual conflicts.

Councilman Reuben Blackwell asked city staff about making sure the council signs all the required documents. He said he wants to make sure the council understood the policy and all it entails.

Blackwell is the president and chief executive officer of the Opportunities Industrialization Center, a nonprofit organization that helps residents with health care, job training and other programs. He earned a $141,114 salary from OIC in 2015, according to the most recent IRS tax forms made available by GuideStar, a watchdog organization that provides information on nonprofit groups.

The city gives OIC money directly through an annual budget expenditure.

“There is $31,000 budgeted in Business Development for the Construction/Carpentry Trade Class program,” said Ken Hunter, the city's budget manager.

Blackwell told the Telegram that he doesn't recuse himself from votes on OIC-related matters — including the Event Center, which will house an OIC clinic — because of the “direct benefit” stipulation in state law, which means a public official has to receive remuneration as a result of casting a vote in order for it to be a conflict.

Blackwell said all the money given to OIC by the city goes straight to programs.

“None of the city money goes to administration,” Blackwell said, adding that his salary at OIC comes from money generated by the organization.

However, things could be different under the new guidelines.

“We've got a great lawyer who will figure it out and let us know,” Blackwell said. “I'm not doing anything wrong so I'm not worried about it.”

City Attorney Jep Rose said the new federal rules, which were enacted June 30, apply whether the council adopts them or not. The rules apply to federal grants.

An OIC clinic was placed in the Event Center in order for the city to receive new market tax credits. Moving forward, the city would have to look at specific provisions and situations if federal funds are involved, Rose said.

“If the city passes federal grants along to the OIC clinic, then we would have to look close at it,” Rose said.

As far as Blackwell's continued votes on OIC-related matters, he is covered by “direct benefit,” Rose said. Direct benefit comes from ownership of 10 percent or more of a business, receiving income directly from voting and the acquiring of property.

Rose said Blackwell is covered for the city's 2015 sale of the China American Tobacco Warehouse Building on Pearl Street because Blackwell doesn't have ownership in OIC.

In that situation, the city received an offer in March 2015 from Rehab Development to buy the building — which had sat dormant for years — for $300,000 after a year to allow time for a market analysis.

In May 2015, four days before a council meeting, OIC put in a bid for half that amount. The city council voted to sell the property to OIC at the meeting pending upset bids. Rehab Development didn't bid on the building because it wanted time to conduct the market research. Rehab Development's proposal included 55 to 60 market-rate apartments in the three-story section of the building and commercial, retail and office space in the warehouse section of the property.

The OIC proposal including renovating the property within a year into warehouse, storage and light manufacturing operations then enlist the assistance of a third-party entity for commercial and residential mixed-use development within a three-to-five year period.

A parking lot has been paved and a dock has been refurbished on the front side of the building. No clear work was evident Friday as far as installing housing in the building three years after the deal.

Rehab Development and its lender, which offered to purchase the building in a private-public partnership, hasn't engaged in activity in Rocky Mount since then, taking its business to Wilson and other municipalities of similar size, according to a city official familiar with the deal but not authorized to speak about it publicly.

Councilman Andre Knight is now the chairman of the OIC Board of Directors, members of which don't receive compensation. At the time of the China American deal, Knight was a member of the OIC board. He said at the time he was against the Rehab Development proposal because he wanted to control gentrification in downtown.

Blackwell, Knight, Councilwoman Lois Watkins and Councilman Lamont Wiggins, now a judge, voted to sell the property. Councilman Tom Rogers and Councilwoman Chris Miller voted against the sale. Councilman W.B. Bullock didn't vote.

The council hasn't voted on the conflict of interest policy, which will combine the city's code, state law and federal guidelines.

Amy Staton, the city's director of finance, said new federal regulations require recipients of federal funding to have a written conflict of interest policy.

The city addresses conflict of interest in its existing local municipal code, and the city is subject to existing North Carolina laws regarding conflict of interest.

“The federal requirements are slightly different than the local and state laws,” Staton said. “The policy was recommended as a way to bring all the requirements together into one easily understood policy that is accessible to all employees. The recommended policy complies with local, state and federal requirements.”

The city's municipal code establishes policies governing conflicts of interest and political activity applicable to city employees and public officials. The code also provides specific acts that are deemed to be in conflict with the city’s best interest.

N.C. General Statute 14 prohibits public officers and employees involved in making or administering public contracts from deriving a “direct benefit” from them. NCGS 14 is a criminal statute, making any violation subject to criminal penalties.

Federal law requires all federally funded projects, loans and grants to follow Uniform Administrative Requirements, Cost Principles and Audit Requirements for federal awards. These requirements apply regardless of whether those projects, loans and grants are funded in whole or in part by federal sources. The requirements also apply to both the city and to any entity that receives federal funds passed through the city as sub-recipients.

If a public official appears to be unable to remain impartial, they can remove themselves from participation or they can be disqualified due to a real or apparent conflict of interest.

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