The board was considering the Cromwell and Districts Promotions Group's marketing plan for the coming year.
The plan included details on the group's income , which involved a $95,000 grant from the board.
Board member Terry Emmitt is the paid secretary of the group and declared an interest in the item, but was invited by board chairman Neil Gillespie, "as the group's secretary, to give us any comments or observations."
Nigel McKinlay objected, saying it was inappropriate for Mr Emmitt to make any comments.
"He's hopelessly conflicted as an employee of that organisation and I fail to see how he can be part of the discussion."
The Central Otago District Council's corporate services manager, Susan Finlay, said when a similar situation arose at a recent Maniototo Community Board meeting, the board member concerned declared an interest, presented a report on behalf of a community organisation and then left the council chambers while the board made its decision.
"I think that's a Clayton's response to this situation," Mr McKinlay said.
In the interests of transparency, it was not "appropriate or correct" for Mr Emmitt to answer any questions about the promotions group marketing plan.
It was a clear conflict of interest and another member of the promotions group, such as the chairman, should have been present to answer any questions, he said.
Mr Gillespie said in small communities, board members and councillors were often in the situation where they had to declare an interest and it would be impractical if they were prevented from answering questions when "wearing their other hat."
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"This situation is no different from when I have to be before the board as a Contact employee and present a report or answer questions wearing my Contact hat.
I don't see that as a conflict of interest, if you declare an interest and withdraw from the decision-making, but each case has to be taken on its merits."
Helen Hucklebridge said the board received great value for the money it gave to the promotions group.
"They cater for the whole community and do something no other group does.
Over the years their efforts have bought hundreds of thousands of dollars of money back into the town," she said.
When the board later considered a grant of $95,111 to the promotions group as part of its discussion on estimates, Mr Emmitt declared an interest and left the room.
The board approved the grant.
