Did you know that the ICMA Code of Ethics references conflicts of interest 11 times? Guidelines address conflicts that may stem from performing your official duty, personal relationships, investments, private employment, giving policy advice, advocating for your personal cause, and confidential information, just to name a few. The sheer coverage on the issue serves as one more reminder: it’s critical for public leaders and staff to discern when they have a conflict of interest and address it the right way.

Here are a few real-world conflicts of interest scenarios members raised with ICMA and our advice on how to address the issue.

Scenario 1. Supporting Our Tax Base

The local economic development corporation (EDC) approached the city council seeking an endorsement of the EDC’s plan to support local businesses suffering from the impact of COVID-19. The plan they are promoting is to crowdfund zero-percent interest loans via an established global micro-lending service. They want the city to contribute funding and will also market this to individual and corporate contributors. The city council voted to endorse the project and contribute funding. One of the elected officials owns a business in town that would be a potential beneficiary of the program.

As the supporters began their effort to market the program, they asked for support from the city manager. The city manager immediately raised critical questions. Is it a conflict of interest for staff to give their personal financial support to the program? What if they just want to keep their favorite lunch spot in business? What if that favorite lunch spot is owned by the elected official? Can they fund a loan for the elected official’s business?

In exploring both the “what” and “how,” this scenario presents some interesting twists. On the “what” side of the equation, the program has the green light from the city council. That is key to maintaining a harmonious relationship moving forward as the city manager promotes the program and staff decides whether to participate. It’s a loan, not a gift, so contributors will conceivably be made whole in the end. It’s a zero-interest loan, so lenders do not financially gain from the transaction. Supporting local businesses would not be a new ask since some staff already frequent some of the businesses that would benefit.

On the “how” side, the loan platform requires the lender to select the recipient for the loan. The lender can elect to reveal or conceal their identity from the forward-facing website. But it’s not clear from the platform whether the recipient knows how their loan was sourced. That should mitigate concerns about a quid pro quo, correct? The short answer is no!

The approach creates a direct relationship between the lender and the business. If staff contribute to a business operating in the city, that direct funding presents the opportunity for a conflict of interest, in fact or appearance, to occur. The fact that the source of the loan may not be known to the business doesn’t really cure the issue. The ethical concerns are heightened if the potential beneficiary of the program happens to be an elected official given their role and responsibilities.

Weighing all the factors, the advice is that the city manager, assistant manager, department directors, any staff who represent the manager or support the elected officials, and any employee who serves in a regulatory role should not participate in the program. City employees, some of whom may be residents, have a vested interest in the future of the local economy. They care about the quality of the city. There is nothing wrong with them wanting to personally support the local economy and this program would afford them the opportunity to do so without personal financial gain. On the other side of this equation, however, is the role and responsibility of city staff in managing and providing public services to these businesses, and for some, the regulatory function they play.

Scenario 2. Historical Preservation: All in the Family

The town owns a house dating back to the early 1800s that is vacant and in need of serious renovation. The property is adjacent to municipal facilities. The town manager proposed demolishing the house to expand parking for the municipal facilities. That plan was met with substantial opposition from the neighbors since the house is part of the historic district. In a compromise, the town agreed that it would actively market the property for sale and if there were no buyers within 18 months, the house would be demolished, and the town would proceed with their plans.

The town put the property on the market and had some inquiries, but no formal offers. Most recently, the town manager’s son, who was looking for a home in the town, saw the listing and inquired about the purchase. Immediately, that inquiry set off concerns. Isn’t it a conflict of interest for the son of the town manager to purchase town property? Are there any steps that could be taken to cure this conflict?

Is this an insurmountable conflict? Depending on the efforts made by all parties, probably not. Arriving at the intersection of work and personal life, the town manager needs to tread cautiously. Assuming that the town manager is not assisting in any financial way with the purchase, there are several steps that can be taken to reduce the conflict of interest and promote confidence with all parties that the sale was entirely legitimate and in the public’s best interest. Consider the following:

•  Review state and local laws and ethics regulations. In some states, this transaction may not be permitted.

•  Assuming there is no legal obstacle, the town manager should recuse him or herself immediately. Advise both the elected board and staff of the recusal.

•  Get an appraisal.

•  Consider using a sealed bid process to establish the parameters of the sale, including base price rather than a negotiated sale.

•  Think ahead. If the son is successful in the purchase, consider how the town will provide oversight of any building permits and inspections.

When facing a conflict of interest, it’s wise to review Tenets 3, 5, 7, and 12 of the ICMA Code of Ethics and consult with ICMA’s ethics staff.

MARTHA PEREGO, ICMA-CM, is director of member services and ethics director, ICMA, Washington, D.C. (mperego@icma.org).