DRAFT-12/28/17

Board & Association Operations Resolution 6

Conflict of Interest Policy & Annual Statement
of Key Economic and Affiliation Interests, for Board Members and Volunteer
Officers

WHEREAS, the Board of Directors is responsible for the administration and operation of the Association
consistent with the amended provisions of the Reston Documents; and

WHEREAS, Section III.2(f) of the Amended Reston Deed delineates that it is a purpose of the Association
to exercise the powers now or hereafter conferred by law on Virginia nonstock corporations and the
Property Owners Association Act (“POAA”), as may be necessary or desirable to accomplish the purposes
of the Association; and

WHEREAS, Section XI.2 of the Amended Bylaws of Reston Association (“Amended Bylaws”) specifies that
the conflict of interest provisions in Section 13.1-871 of the Nonstock Corporation Act, as may be
amended, shall apply to Directors, Volunteer Officers, and other specified officials of Reston Association;
and,

WHEREAS, the Board of Directors, recognizing its duty to serve the Reston community rather than the
material economic or affiliation interests of any Director or Volunteer Officer, desires to establish a
Conflict of Interest Policy consistent with existing statutory requirements, to assure that the members of
the Board of Directors and Volunteer Officers, in executing their official duties, serve the public rather
than their personal interests.

NOW, THEREFORE, BE IT RESOLVED that the following Conflict of Interest Policy shall govern any matter
to which the interests of the Reston Association may conflict with the material economic interests, direct
or indirect, or affiliation interests of any member of the Board of Directors or of any Volunteer Officer.

A. Definitions of Terms Used in this Resolution and in Its Attachment A (Annual Statement of Key
Economic and Affiliation Interests, for Board Directors and Volunteer Officers)

1. “Affiliation Interest” shall mean and refer to membership in an entity that either has a
contractual relationship with, or seeks to influence decisions of, the Association. Such entities
include, but are not limited to, other corporations, LLCs, clubs, charitable organizations, and
other similar associations. (See definition of “ Personal Interest.”

2. “Annual Statement” shall mean and refer to the “Annual Statement of Key Economic and
Affiliation Interests, for Board Directors and Volunteer Officers (Appendix A of this Resolution).
The Annual Statement is the form that each Director and Officer must complete annually, listing
those economic and affiliation interests with the realistic potential to create a conflict of interest

Board & Association Operations Resolution 6; Conflict of Interest Policy & Statement 1
- , 2017
 DRAFT-12/28/17
with his/her responsibilities to the Association. Each Director and Officer must submit the
completed form to the CEO prior to the first post-election meeting and timely update it with any
subsequent substantial changes in his/her interests.

3. “Association” shall mean and refer to the Reston Association.

4. “Board” shall mean and refer to the Association’s Board of Directors.

5. “CEO” shall mean and refer to the Chief Executive Officer of the Association.

6. “Close Economic Associate” shall mean and refer to a person (natural or legal) with whom a
Director or Officer has a substantial and special economic relationship, including but not limited
to that of a business, business partner, officer, trustee, employer, employee, customer, client,
supplier, creditor, or borrower. Customer-vendor relationships available to the general public do
not create a “Close Economic Associate” relationship.

7. “Code” shall mean and refer to the Reston Association Code of Ethics for Directors and Volunteer
Officials.

8. “Conflict” shall mean and refer to any Personal Interest of a Director or Officer of the Association
that would benefit that Director or Officer more than it would the typical Association member
and would also disadvantage the Association.
Commented [JM1]: The possibility of a “Declaration of
Objectivity” was removed on the advice of Ken Chadwick. Though
9. “Director” shall mean and refer to any duly elected or appointed member of the Board. such a declaration is permitted by VA state and local government law,
it is not clearly permitted by VA corporation law, which governs RA.

10. “Direct” shall mean and refer to a specific Economic Interest that benefits a Director or Officer
as an individual.

11. “Disinterested” mean and refer to a Director or Officer who does not have a Personal Interest
regarding the Official Action under consideration.

12. “Economic Interest” shall mean and refer to a monetary advantage to be gained or increased,
or a monetary loss to be avoided or minimized. Economic Interests can be Direct or Indirect,
Material or Immaterial, as further defined here. (See the definition of “ “Personal Interest”.)

13. “Family Member” shall mean and refer to any person related by blood, marriage, or adoption to
a Director or Officer and who resides in the same household as, or is financially dependent upon,
a Director or Officer, as well as anyone who shares living quarters with such Director of Officer
under circumstances resembling either a marital or a roommate relationship. [From the current
Resolution 6]

14. “Indirect” shall mean and refer to a specific Economic Interest that benefits a Family Member,
Immediate Relative, or Close Economic Associate of a Director or Officer.

Board & Association Operations Resolution 6; Conflict of Interest Policy & Statement 2
- , 2017
 DRAFT-12/28/17
15. “Immaterial” shall mean and refer to a specific Economic Interest of negligible monetary value,
defined by this Resolution as having a fair market value of less than $500. [I left out “which has
existed at any time in the previous three years”].

16. “Immediate Relative” shall mean and refer to a Family Member, or any other child (natural,
adopted, or related by marriage), parent, grandparent, sibling (natural, adopted, or related by
marriage) of a Director or Officer. [From the current Resolution 6]

17. “Material” shall mean and refer to a specific Economic Interest of significant monetary value,
defined by the Resolution as having a fair market value of $500 or more.

18. “Officer” for purposes of this Resolution, shall mean and refer to only the President, Vice-
President, Treasurer, or Secretary of the Association – major volunteer positions of the
Association, and not the CEO..

19. “Official Action” shall mean and refer to any action of a Director or Officer by which the Director
or Officer, on his/her own or as part of the Board, has the power to commit or significantly
influence the Association on a matter of legal, financial, or policy importance. Such actions
include, but are not limited to: votes of the Board and Board deliberations leading up to such
votes; the negotiation and signing of Association contracts; the nomination, interviewing,
disciplining, hiring, or firing of Association Employees; and the preparation of critical official
documents such as budgets, financial reports, policies, and recommendations to the Board or
Officers.

20. “Personal Interest” shall mean and refer to either a Material Economic Interest or an Affiliation
Interest that would reasonably be expected to affect the objectivity of the Director or Officer
when participating in an Official Action. Thus, “Personal Interest” is contrasted with a “public
interest,” or the “common good.” [Yellow-highlighted words from Section 13.1-803 under
“Disinterested Director.” Commented [JM2]: Ken Chadwick, Cate, and John Mooney
decided to use the term “Personal Interest” instead of John’s newly
coined “SUBSTANTIVE Interest” since Personal Interest has a similar
21. “Recusal” and “Recuse” shall mean and refer to a public declaration by any Director that he/she and established meaning in the VA State and Local Government
Conflict of Interest Act.
will not participate in an Official Act in which he/she would normally participate because of
his/her real or perceived Conflict in that matter. Mere abstention from participating in the
Official Act does not suffice for disclosure or Recusal.

22. “Resolution” shall mean and refer to this “Board and Association Operations Resolution 6;
Conflict of Interest Policy and Annual Statement of Key Economic and Affiliation Interests, for
Board Members and Volunteer Officers.”

B. Rules Governing Official Acts Involving Personal Interests.

1. Dealing with Personal Interests in Board Votes.

Board & Association Operations Resolution 6; Conflict of Interest Policy & Statement 3
- , 2017
 DRAFT-12/28/17
i. Reminder to Disclose. Prior to any vote of the Board, the President of the Board shall
remind the Directors to disclose any Personal Interest regarding the matter under
consideration.

ii. Disclosure Obligation. In any matter scheduled to be considered at a Board meeting, any
Director who has Personal Interests in that matter shall disclose those Personal Interests
at that meeting before participating in discussions or voting on that matter.

2. Clarification About the Director Elected by Apartment Owners. The Director elected by
apartment owners under Section V.2(a) of the Bylaws shall not be deemed to have any Material
Economic Interest in any matter dealing with apartments in the Association solely by reason of
such Director's election

3. Insufficiency of Abstention When Disclosure Is Required. Mere abstention from participation

in an Official Act does not fulfill a Director’s obligation to disclose a Personal Interest prior to
that Official Act.1

4. Determination of Conflict Status After a Disclosure. If any Director makes such a disclosure, the
Board shall by vote make a finding whether or not that disclosed Personal Interest constitutes a
Conflict.

5. Permissible Actions After Disclosure A Director who has disclosed a Personal Interest in any
matter before the Board, whether or not that Personal Interest is found (in accordance with
Section B.1.c above) to constitute a Conflict, may legally participate in the discussion of that
matter, recuse himself/herself from voting, or vote on that matter. A Director with a Conflict is,
however, strongly encouraged to Recuse himself/herself from both discussion and voting. 6.
Effect of a Conflict on Board Voting.

6. Effect of a Timely Disclosed Conflict. No action shall be taken on such matter except by
affirmative vote of a majority of the DISINTERESTED DIRECTORS then serving. [Should it be
“voting” rather than “serving”?]

7. Effect of a Conflict Not Timely Disclosed but Subsequently Discovered. In such case, the
provisions of Section 13.1-871 of the Virginia Nonstock Corporation Act shall govern.

8. Recordation in Board Minutes. The minutes of any meeting of the Board at which the disclosure
of any Personal Interest is made by a Director as to any matter under consideration shall note
such disclosure and note whether such Director was present for the vote on such matter and, if
present, abstained or voted aye or nay on such matter.

1See Kathleen Dooley (Fredericksburg City Attorney), “Overview of Rules Pertaining to Transactions: Code of Virginia §§ 2.2-
3112 + 2.2.3115, The Virginia State and Local Government Conflict of Interest Act” (September 29, 2014), p. 4. Accessible at
http://docplayer.net/15007189-Overview-of-rules-pertaining-to-transactions-code-of-virginia-2-2-3112-2-2-3115-the-virginia-state-
and-local-government-conflict-of-interests-act.html

Board & Association Operations Resolution 6; Conflict of Interest Policy & Statement 4
- , 2017
 DRAFT-12/28/17
9. Failure to Disclose a Conflict Prior to Voting.

i. A Conflict of Material Economic Interest. As established by Section III.5(d)(2) of the Amended

Reston Deed, if any Director, prior to a Board vote, fails to disclose a Conflict of Material
Economic Interest that he/she knows or should have known himself/herself to have in that
matter he/she is ipso facto deemed to have resigned from the Board, effective from the
moment of his/her vote.. If, when an apparent failure to disclose becomes known, the Commented [JM3]: Ken agreed that that, while that section of
the Amended Deed clearly applies to a conflict of MATERIAL
Director in question disputes that his/her action qualifies as a deemed resignation, then the ECONOMIC INTEREST, it is not clear whether/how it applies to
rest of the Board shall apprise itself of the relevant facts and make a finding on the deemed AFFILIATION INTERESTS.

resignation. An affirmative vote of two-thirds of the Disinterested Directorsvoting shall be

required to confirm a finding of deemed resignation. Should the interested Director not
accept that finding, the Board is authorized to enforce its finding judicially. Commented [JM4]: On 12-20-17, ken Chadwick advised that this
was not a settled area of law. However, he believes that RA could
strongly assert its power to enforce its own Amended Deed.
ii. A Conflict of other Personal Interests. If a Director, prior to a Board vote, fails to disclose a
Conflict of any Personal Interest other than a Material Economic Interest that he/she knows
or should have known himself/herself to have in that matter, this constitutes a violation of
the Resolution and the Code and is subject to the penalties for such violations.

C. Conflicts in Official Acts Other than Board Votes.

1. Any Director or Officer aware of any contract proposed to be executed by the Association, in
which any other Director or Officer has an Personal Interest, shall immediately disclose such
interest in writing to the President and Chief Executive Officer of the Reston Association.
2. Prior to participating in any Official Action of the Association, a Director or Officer with a
Personal Interest that constitutes a Conflict shall disclose such interest in writing to the
President of the Board and to the CEO. Failure to make such a disclosure is a violation of this
Resolution and of the Code and thus subject to the penalties for such violations.
Commented [JM5]: 1) As discussed at the BGC meeting of 12-
12-17, this section will need to be reconciled with the new
Purchasing Resolution.
2) After discussion on 12-20-17, Ken, Cate, and John concluded
that the intent of this section from the current Resolution 6 was to
enforce a kind of RA Honor Code about contracts, when Director
or Officer A learns about a possible conflict of interest with
Director or Officer B.

3. A Director or Officer who has disclosed a Personal Interest in any Official Action may legally
participate in the discussion of such matter, recuse himself/herself from voting, or vote on such
matter. However, if that Personal Interest constitutes a Conflict, that Director or Official is
strongly encouraged to Recuse himself/herself from all Official Action related to that matter,
to the extent that this is in the best interest of the Association.

D. Dissemination and Acknowledgement of this Resolution; Filing of Annual Statement of Key

Economic And Affiliation Interests, For Directors And Officers.

1. Prior to the May Regular Meeting of the Board of Directors, the CEO shall provide each Board
Director and Officer a copy of this Resolution and specifically ask them to read, complete and
execute the Annual Statement (Attachment A).

Board & Association Operations Resolution 6; Conflict of Interest Policy & Statement 5
- , 2017
 DRAFT-12/28/17
2. Each Director and Officer shall submit an amended version of the Annual Statement to the CEO
as soon as reasonably possible after any material changes in that Director’s or Officer’s
Affiliation Interests or key Economic Interests.

3. Any Director or Officer who submits an Annual Statement that he/she knows or should have
known to be materially erroneous or incomplete, or who fails to update that Annual Statement
as prescribed in Section D.2 above, violates Section 2.2.3 of the Reston Association Code of
Ethics for Directors and officers and is liable to the penalties under that Code.

4. Signed copies of the ANNUAL STATEMENT shall be maintained by the ASSOCIATION’S Secretary
and shall be retained as part of the ASSOCIATION’s official books and records.

ATTEST: Resolution was adopted at a regular meeting of the Reston Association’s Board of Directors held
on October 26, 2006; and, amended on , 2018.

_____________________________________
Assistant Secretary

Board & Association Operations Resolution 6; Conflict of Interest Policy & Statement 6
- , 2017
 DRAFT-12/28/17
Addendum A

Reston Association
Annual Statement of Key Economic and Affiliation Interests, For Directors and Officers
(For definition of terms, see Section A of the Board & Association Operations Resolution 6: Conflict of Interest
Policy & Annual Statement of Key Economic and Affiliation Interests, for Directors and Officers.)

NAME:

ADDRESS:

POSITION IN THE ASSOCIATION:

As required by Board & Association Operations Resolution 6, I submit the following information:

a. Employer(s) of any Family Members over age 16:

b. All real-property assets of the Director or Officer or his/her Family Members that are located in Reston,
whether these are owned or leased.

c. All business interests located in Reston or involved in Reston-based activities in which the Director or Officer or
his/her Family Members have an ownership interest over xx%. Such business interests include, but are not
limited to, sole proprietorships, partnerships, or corporations

d. Loans from Reston based persons or entities on terms more favorable than those available to the general
public. Loans from Immediate Relatives or under $500 are exempted from this reporting requirement.

e. In addition to income from employers reported under Section a, any other income over $500 per year from a
legally recognized Reston-based entity or any other entity doing business with or impacting the Reston Commented [CF6]: Added when Irwin Stayed with MJ and CLF.
Association.
f. Any Affiliation Interest, as described in Resolution 6:

g. Any material fact about any other Personal Interest that has a likelihood to create a Conflict.

By signing this Statement I certify that:

I have read the Reston Association’s Board & Association Operations Resolution 6: Conflict of Interest Policy
& Annual Statement of Key Economic and Affiliation Interests, for Directors and Officers. ,

I understand that it is my responsibility to disclose in the required manner any Personal Interest prior to
participating in any Official Act.. I understand that failure to make such timely disclosure is a violation of
Resolution 6 and is subject to the penalties for such violations.

Board & Association Operations Resolution 6; Conflict of Interest Policy & Statement 7
- , 2017
 DRAFT-12/28/17
Specifically, if a Director, I understand that my failure to disclose a Conflict of Material Economic Interest
prior to voting on that matter, by that very fact and from the moment of my voting, constitutes my
resignation from the Board, in accordance with Section B.1.g of Resolution 6 and Association Documents. Commented [CF7]: Check refernce.

I understand that it is my responsibility to report any materials changes to this statement as soon as
reasonably practicable and that failure to do so is a violation of Resolution 6 and the Code and is subject to
the penalties for such violations.

_____________________________________________ ______________________
Signature Date

Board & Association Operations Resolution 6; Conflict of Interest Policy & Statement 8
- , 2017