With three more board members departing this week, a majority of the 15-member board of Central Oregon Veterans Outreach have resigned in just over two weeks in a dispute over the board president living in a house meant for low-income veterans.

Since January, board President Linda Heatley has lived in a COVO-owned house in Bend leased to Marine veteran Larry Burger, along with Kim Caldwell Burger, who is Larry Burger’s wife, Heatley’s niece and a paid employee of COVO.

In a statement issued last week, Heatley said she’s lived with her niece and her niece’s husband since late 2011, after knee surgery that prevented her from living alone.

The three pay $800 to rent the house on Wells Acres Road from COVO.

On July 22, then-executive director Alison Perry submitted a letter to Heatley, in which Perry indicated she would resign unless Heatley and Chuck Hemingway were removed from the board, according to Perry. Hemingway, until December 2012, preceded Perry as executive director and approved the agreement for Heatley and the others to move into the house.

Board members Liz Leeberg, Steven Wilkes, Kara Kelly, Dennis Merrill and Ray Wheeler sent letters offering Heatley and Hemingway a similar ultimatum that same day. They effectively resigned that day. Within the last week, board members Kevin Abel, Keegan Hodges and Laura Chan also resigned, according to Perry and the original five. The three could not be reached Tuesday for comment.

Tuesday, Hemingway said Larry Burger’s status as a veteran and the level of Larry and Kim Burger’s income qualify the family to live in the house. Larry and Kim Burger’s income since the first of the year projected to an annual figure of $36,185 when the application was processed, he said, below the eligibility limit of $59,500.

Because Kim Burger’s $35,000-a-year job with COVO was new at the time, as was Larry Burger’s job, the projection did not account for the family’s likely income over the next 12 months, Hemingway said.

He said he briefed Perry on who was living in COVO properties in December, including the arrangement with Heatley and the Burgers, who moved into the house Jan. 1. Perry said she received no such briefing and only learned the Burgers lived in the house later, when Hemingway asked her to sign off on taking $1,600 off their rent to compensate the family for the purchase of new appliances.

Perry and her defenders contend that regardless of Larry Burger’s eligibility to live in subsidized housing, doing so with a COVO employee and COVO board member is ethically problematic. They note a passage in the organization bylaws that states, “No director, officer, employee, committee member, or person connected with the corporation shall receive at any time any of the net earnings or pecuniary profit from the operations of the corporation.”

In an April vote of 10 board members, four voted that a conflict of interest existed, but no laws or policies were broken and no action should be taken; and three members voted that the arrangement was a conflict of interest and the lease should be immediately terminated.

Tuesday, Perry said that while she was uncomfortable with having COVO staff and board members living in a COVO-owned house, following the April vote, she let the issue rest.

“Ethically, I just wanted to disengage from the situation; the board voted, it’s their baby,” she said.

In late June, Perry was negotiating with an individual interested in assisting COVO in pursuing grant funding. She said she apprised the individual of the situation involving the Wells Acres house, and the offer of assistance was withdrawn citing the apparent conflict of interest.

Perry said the episode prompted her to raise the issue of Heatley and the Burgers’ occupancy of the Wells Acres house again, on the grounds the perceived conflict of interest could be damaging to the organization.