Public Housing Commission Conflict-of-Interest Standards

LANSING, Mich. — This page documents the federal and Michigan rules that govern conflicts of interest involving public housing commission board members and executive staff, the conduct each rule prohibits, the disclosure or recusal each rule requires, and the body authorized to act when conditions covered by the rule are present in the public record. It is a reference page for the Lansing Housing Crisis series. The series posts cite this page rather than repeating the regulatory walkthrough each time.

The page documents what the rules say. It does not allege that any specific person has violated any specific rule. A finding of violation requires fact-finding by the body the rule names; this page describes the rules and identifies the body.

Federal: HUD mixed-finance development

24 CFR §905.604 (Other federal requirements applicable to mixed-finance development). When a public housing agency develops affordable housing through a mixed-finance partnership (typically a Low-Income Housing Tax Credit limited partnership in which the PHA is a participant), §905.604(h) applies the federal-award procurement standard at 2 CFR Part 200 to the PHA's selection of development partners. Subsection (h)(2) extends those same procurement standards to any "Owner Entity" where HUD determines that "the PHA or PHA instrumentality, or either of their members or employees, exercises significant decision making functions within the Owner Entity." HUD has case-by-case authority to approve an alternative procurement plan in lieu of full Part 200 compliance.

The applicability predicate sits at §905.602: §905.604 reaches mixed-finance development, defined as the development of public housing units owned in whole or in part by an entity other than a PHA. Whether a particular LIHTC partnership formed by a public housing agency falls within that predicate is a determination committed to HUD's Office of Public Housing Investments, working through the relevant HUD field office.

Body authorized to act: HUD's Office of Public Housing Investments and the relevant HUD field office (for Michigan public housing agencies, the HUD Detroit Field Office).

Federal: federal-award procurement

2 CFR §200.318(c) (General procurement standards, conflict of interest). The Uniform Guidance applies to every recipient of a federal award. Subsection (c) prohibits "any employee, officer, agent, or board member with a real or apparent conflict of interest" from participating in "the selection, award, or administration of a contract supported by the Federal award." Subsection (c) defines the conflict to exist when the employee, officer, agent, or board member, "any member of their immediate family, their partner, or an organization that employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from an entity considered for a contract." The recipient is also required to "maintain written standards of conduct covering conflicts of interest."

2 CFR §200.318(c) reaches procurement contracts the federal-award recipient enters using federal-award funds. Whether a particular transaction by a public housing agency is a "contract supported by the Federal award" within the rule's scope is a determination committed to the agency's federal cognizant office (for HUD recipients, the HUD field office or HUD's Office of the Inspector General).

Body authorized to act: the recipient's federal cognizant office and HUD OIG.

Federal: Section 8 Housing Choice Voucher conflict of interest

24 CFR §982.161 (Conflict of interest, Section 8 tenant-based assistance). §982.161 reaches PHA members and officers, employees, contractors, subcontractors, and agents who "formulate policy" or "influence decisions" in the Housing Choice Voucher program. It prohibits any such person from holding "any interest, direct or indirect, during tenure or for one year thereafter" in a covered HCV transaction, and requires those persons to "disclose their interest or prospective interest to the PHA and HUD." Under §982.161(d), the HUD field office may waive the prohibition for good cause where the conflict creates no apparent harm to the program.

§982.161 reaches HCV-program contracts: voucher-administration vendor contracts, landlord-side HAP contract decisions, and HCV procurement actions. By its terms it does not reach LIHTC partnership formation, which §905.604 reaches when the §905.602 mixed-finance predicate is met.

Body authorized to act: the relevant HUD field office.

Michigan: public-servant contracts statute

MCL 15.321–15.323 (P.A. 317 of 1968, contracts of public servants with public entities). MCL 15.321 defines "public entity" to include "any public body corporate within the state" and "any non-incorporated public body within the state of any type"; a Michigan city housing commission, established by a city under the Housing Facilities Act, is a public body within the state. MCL 15.321 defines "public servant" to include any person serving a public entity. MCL 15.322 prohibits a public servant from being a party to or having a direct or indirect interest in a contract with the public entity the servant serves.

MCL 15.323 sets out the path under which a public servant with a pecuniary interest in a contract may participate in the contract. The statute requires three things: (1) prompt disclosure of the pecuniary interest in the contract to the official body that has power to approve the contract, made part of the official record of that body; (2) recusal from the vote on the contract by the public servant making the disclosure; and (3) approval of the contract by a vote of not less than two-thirds of the full membership of the approving body in open session. A contract that would otherwise be prohibited by the public-servant statute is taken outside that prohibition only when the public servant has satisfied all three of the disclosure, recusal, and supermajority conditions on the official record.

Body authorized to act: the Michigan Attorney General. MCL 15.327 makes a willful violation a felony.

Michigan nonprofit director conflicts (post-2015)

Michigan Nonprofit Corporation Act, conflict-of-interest section. The conflict-of-interest section that previously governed Michigan nonprofit director transactions, MCL 450.2545, was repealed by Public Act 557 of 2014, effective January 15, 2015, and was not replaced with a successor section in the Nonprofit Corporation Act. After repeal, a Michigan nonprofit director's conflict-of-interest obligations run through the IRS Form 990 disclosure rules and the corporation's adopted bylaws.

IRS Form 990 disclosure of insider transactions. Form 990 Part VI Section B, line 12a asks whether the organization has a written conflict-of-interest policy. Form 990 Schedule L Part IV reports business transactions involving "interested persons" as defined in the Schedule L instructions. The instructions specify that an interested person includes a current or former director or officer, a person with substantial influence over the organization, and an entity 35% or more owned by an interested person. A "Yes" on Schedule L Part IV requires the organization to disclose the transaction's nature, the parties, and the dollar amounts.

Body authorized to act: the Internal Revenue Service Tax Exempt and Government Entities Division.

HUD OIG institutional precedent

HUD OIG Report 2008-CH-1008. In 2008, HUD's Office of Inspector General audited the Lansing Housing Commission and found that the agency's prior administration "had not always followed HUD's requirements when it organized and used limited liability companies and limited partnerships to develop and operate Federally subsidized housing." Specifically, OIG found that LHC's prior administration created two private entities (the original Oliver Gardens LLC and Oliver Gardens LDHA LP) without the HUD prior approval required for a public housing agency to form such entities, and pledged approximately $1,400,000 in federal assets as guarantees on those entities' obligations. The full report is published on the HUD OIG website.

The 2008 report named the LHC executive director and board in office at the time. None of the persons named in the 2008 report serve on the current LHC board. The legal-instrument category the report addressed (private LP/LLC structures in which a public housing commission is a participant or guarantor) is the legal-instrument category through which LHC's current LIHTC pipeline is organized.

Body authorized to act: HUD OIG. A 2026 follow-up audit on the same agency, on the same legal-instrument category, is within OIG's published mandate.

What this page does and does not document

This page documents what the rules say and identifies the bodies authorized to act on them. It does not document a finding that any specific person has violated any specific rule. A finding of violation requires fact-finding by the body the rule names. The Lansing Housing Crisis series posts that cite this page document conditions present in the public record and identify which rule each set of conditions matches; whether the matched rule has been violated, and whether a covered exception applies, is a determination for the body authorized to act.

Series-post usage

Series posts in the Lansing Housing Crisis series link to this page in place of repeating the regulatory walkthrough. When a series post documents a structural arrangement (a board member's outside paid employment that intersects a deal before the board, an executive director's organization of a private partner entity, a procurement decision that names a related party), the post names the conditions, identifies the matching rule on this page, and identifies the body authorized to act. The post does not adjudicate.

Updates to this page

This page is updated when the underlying regulations change, when HUD or the Michigan Attorney General publishes interpretive guidance that bears on a cited rule, or when an oversight body issues a finding that bears on a series post. The most recent update date is at the top of the page.

Series posts that cite this page

What Is the Lansing Housing Commission? covers the institutional intro to the LHC, the dual-role pattern on the current board, the 833-to-66 disposition trajectory, the inverse trajectory of LHC and Capital Area Housing Partnership, and the Schor Lansing Fund context.

LHC Executive Director's Five LLCs documents the LHC executive director's five private Michigan business entities, the August 21-22, 2025 dual-signature transaction in which the executive director signed both sides of the Oliver Gardens II LDHA LP Certificate of Limited Partnership, and the relationship of the entity structure to the 2008 HUD OIG record on the original Oliver Gardens entities.

Federal Housing Dollars in Lansing: The Network Around the LHC maps the entities and people positioned on both sides of LHC's contracting and governance decisions: the federal money flows entering and leaving LHC, the both-sides table for individuals and entities (Fleming, Henry, Barker, CAHP, Cinnaire, Fleming's GP LLCs, Lapka's law firm, the SK Lansing chain), the 92% reduction in LHC's owned public-housing apartments since 2020, and the gap between LHC's stated mission and the documented record.