HUD to rule on McHenry Corporation funding conflict of interest

The Department of Housing and Urban Development will determine whether a nonprofit headed by the son of McHenry County Board Chairman Ken Koehler should receive federal funding through the county or if a conflict of interest prevents that.

Kris Koehler is the executive director of the McHenry County Attainable Housing Corporation, which applied for $13,000 in HOME investment partnership program funds to conduct a feasibility study for a proposed senior-living facility in McHenry.

Because of the Koehlers’ relationship, the McHenry County Board voted 17-5 Tuesday to disclose the conflict of interest to HUD, which will make a final determination.

As part of the disclosure, Ken Koehler filled out a questionnaire in which he stated that he has no financial ties to his son’s nonprofit and that he will recuse himself from any board decisions regarding its funding. On Tuesday, Koehler left the room while the board deliberated the matter.

Kris Koehler also filled out the questionnaire and stated he has no authority in financial matters regarding the nonprofit, which is governed by an independent board of directors.

The McHenry County state’s attorney’s office submitted an opinion stating that granting the funding would not violate any local laws as long as board chairman Ken Koehler has no financial interest at stake.

Board member John Hammerand, however, said even the appearance of a conflict of interest poses a problem.

“It cheapens the county board in many ways,” he said.

Board members Donna Kurtz, Ersel Schuster, Randall Donley and Diane Evertsen also voted against the motion. Board member Bob Nowak was out of the room when the vote took place. Altogether, McHenry County gets about $480,000 yearly in HOME money from HUD and then disburses it to local agencies that apply for funding, said Jeff Harris, McHenry County community development administrator. The county does the same with about $1.2 million in community development block grant money it gets from HUD every year, he said.

In the past, county board members with ties to the disbursement of HUD funds recused themselves from voting, but no formal disclosures of conflicts of interest had been made until now, county board member Tina Hill said. The board will be doing that in each instance moving forward, she said.

Harris said he’s not certain how long it will take for HUD to make a decision. “I would say expect at least two months, but I really have no idea,” he said.