Ombudsman Jerry White said Mr Heptonstall had 'not acted in bad faith', but his failure to declare an interest had resulted in maladministration.
Residents complained the council had mishandled a planning application for developing a quarry site as Mr Heptonstall knew the developer.
Mr Heptonstall was a council-appointed director of a local racecourse company in which the developer had a controlling interest, and through this had the use of a car for private use, the report says. He had also been invited to functions 'of a private social nature, albeit with public overtones'.
Mr White found no injustice was caused, as Mr Heptonstall 'did not seek to influence matters outside the formal decision making process'. Mr Heptonstall could not be reached for comment.