Council reminded
of regulationsAn ethics question prompted
an official to forward a letter
outlining federal rules
A City Councilwoman's vote to provide federal money to three nonprofits she served as a director has prompted a U.S. government official to remind the council of federal conflict-of-interest regulations.
Mark Chandler, director of Housing and Urban Development's Office of Community Planning and Development in Honolulu, wrote to Council Chairman Donovan Dela Cruz and other council members, outlining federal rules that bar Council members who serve as directors of nonprofits from voting on federal funding for those organizations.
The Nov. 25 letter from HUD came after the Star-Bulletin reported that Councilwoman Ann Kobayashi voted to approve community development block grant funding for three nonprofit organizations she serves as a director. She voted on the measures without filing a required conflict of interest disclosure, which the city ethics executive director said may be a violation of ethics laws.
"Federal regulations require that Council members who receive payment or who are members of an organization's governing body, refrain from offering for consideration or voting on a funding measure for that organization," Chandler wrote to the council.
The City Council give final approval to HUD's Community Development Block Grant funding for projects for the needy.
Kobayashi said that she has since resigned from the boards of the three nonprofit organizations -- Moiliili Community Center, Windward Spouse Abuse Shelter and Seagull Schools -- that received a total of nearly $370,000 she voted on in the current capital improvement budget.
Kobayashi said the federal regulations go too far.
"If there's a financial interest then that's different," she said.
Kobayashi also noted that the City Charter allows Council members to vote unless there is a personal financial interest, as long they disclose the conflict of interest.
"I don't have a financial interest in any of the groups I'm involved in. I have no money in them, no one in my family has money in them and would not benefit from that vote," she said. "It doesn't benefit anyone but clients who use the spouse abuse shelter, children who go preschool and seniors who go to the Moiliili Center.."
Dela Cruz said he has asked for a legal opinion on what appears to be a conflict between the federal rule and the Charter.
"I think we need to get a clear understanding of really what's the rule and how we can resolve this conflict if (attorneys) find one," Dela Cruz said.
The regulations for community development block grant funds state that conflict of interest provisions "apply to any person is who is an employee, agent, consultant, officer or elected official or appointed official," according to Chandler's letter.
"Clearly, the federal regulations apply to the City Council," Chandler's letter said.
Chandler said in a telephone interview Friday the letter was intended to provide the Council with information on the regulations.
"I just wanted to remind folks of the conflict of interest requirements," Chandler said. "I'm not sure that they were aware of the rule because they don't get involved too much on the day-to-day programmatic pieces."
Chandler said that violation of the regulation could result in funding for an organization being pulled. "Right now, we're not planning to do anything like that," he said.
Chandler said the agency read newspaper reports of conflict of interest situations involving Kobayashi and other Council members.
"Once we became aware that this existed, then we thought we need to let them know what our regulations are," Chandler said.
Chandler said that the conflict of interest provisions are intended "to prevent financial gain for certain people that might have inside information."
His letter also said that the provisions not only pertain to community development block grants but other funds his office oversees.