This happens to be something I looked into 8 or 9 years ago, with regard to community development corporations and the H Street Community Development Corporation specifically.
In 2002 the Washington Post ran some brutal articles about community development corporations in DC. Of course, nothing really happened. We had hoped that it would help us gain some power and countervailing force with the H Street CDC but it never did.
So the H St. CDC set up individual business groups, giving ownership percentages to various people, for each deal. And the executive director of the group owned a janitorial company that just happened to have the contract for cleaning some of the facilities owned by the CDC.
But the Federal Regulations concerning HUD, HUD funds, and conflict of interest are only specific to the U.S. Department of Housing and Urban Development. So HUD staff can't benefit from contracts. But personnel from subgrantees, e.g., the government agencies like the DC Department of Housing and Community Development, and their subsubgrantees like community development corporations don't have the same restrictions. As long as potential conflicts are disclosed and the relevant board/contracting officer signs off--no big deal.
• DC government officials getting sweetheart deals on houses renovated by CDCs (this happened with the Development Corporation of Columbia Heights);
• CDCs getting deals on property that gets immediately flipped with little community benefit;
• an executive director of a CDC having a Mercedes leased and provided to him as part of his employment
• a social services contractor paying for a leased vehicle for the organization's chairman;
• well-connected DC lawyer-lobbyist David Wilmot getting control of a local nonprofit with big city contracts and paying himself and his friends exorbitant amounts of money to run it.
Labels: ethics, government contracting, government oversight, provision of public services, public finance and spending