CEO 06-21 -- October 25, 2006



To: Name withheld at person's request (Town of Marineland)


No voting conflict of interest would be created under Section 112.3143(3)(a), Florida Statutes, were a member of the Marineland Town Commission to vote on land use matters where the applicant purchased the land in question from the member's employer, who has extensive contractual relationships with the applicant and who also plans to engage in development in the Town complementary to that of the applicant.


Would a voting conflict of interest exist were a member of the Marineland Town Commission to vote on a PUD/rezoning application brought by a developer, where the member's employer sold the property to the applicant, has extensive contractual relationships with the applicant, and plans to develop his own property in complement to the development of the applicant.

Your question is answered in the negative, under the particular circumstances provided.

You write on behalf of a member of the Marineland Town Commission, .... , to request guidance as to whether the member may vote on matters related to Centex Destination Properties ("CDP"), a developer having certain agreements with the member's employer. Specifically, you ask whether the member may vote on an application filed by CDP to rezone property it owns to a Planned Unit Development and for a site plan approval related to the rezoning.

Information you have provided by letter, e-mail, and telephone conversations with our staff, as well as public records reviewed by our staff, reflect that Marineland is a town of six persons and 151 acres. Five registered electors form the pool from which the three member Town Commission is elected.

Marineland originated as Marine Studios, a place in which oceanic life could be filmed for use in movies. The Marineland Attraction followed, with its "Oceanarium," the prototype for future marine theme parks. The Town was formed in 1940 essentially to provide services for the attraction.

After the founding members died, the property was sold and became Marineland Inc. In the 1970's and 80's the attraction waned in popularity and was sold to Marineland Ocean Resort (MOR), which split off another entity, Marineland Foundation, to manage the attraction.

These entities too fell on hard times and filed for bankruptcy protection. The Trust for Public Land bought 90 acres from MOR's holdings, and the University of Florida Whitney Marine Lab also purchased property. You advise that James Jacoby, or companies owned or controlled by him ("the Jacoby companies"), purchased about 46 acres, including the Oceanarium property, now also the site of a Dolphin Conservation Center.

You relate that Mr. Jacoby later sold 40 acres to CDP, which plans to develop residential units. He retained six acres: two which he plans to develop for commercial use and four related to the Dolphin Conservation Center/Oceanarium facilities. The two acre parcel is planned to become a Town Center; it is surrounded on three sides by CDP property (north, west and south), with the fourth side the State Road A1A right of way. The Dolphin Conservation Center/Oceanarium lands are bounded by CDP on the south perimeter, with the north perimeter public land of the River to Sea Preserve, the west perimeter State Road A1A right of way, and the east perimeter the Atlantic Ocean beach.

You advise that the Town developed a Master Plan under the auspices of the Department of Community Affairs' "Remarkable Coastal Place" initiative, under which it was given technical assistance to create a strategic vision statement based on the input of stakeholders including the Jacoby companies, the Town Commission, the planning departments of Flagler and St. John's counties, the National Estuarine Research Reserve, and other entities. As a result of this initiative, the Town began the process of adopting a new Comprehensive Plan, a process which was completed in 2005. As a part of this process, the Town adopted a conceptual land use plan addressing both the residential and Town Center developments. You liken this conceptual land use plan to a non-engineered site plan - more detailed than a conceptual site plan, but insufficient for use in a permit application.

The Commission member in question, you write, is an employee of one of the Jacoby companies, as are three of the Town's other five electors. He serves as the Director of Maintenance and Engineering for the Oceanarium, but, you advise, does much more than that. Although he is not an engineer, his extensive familiarity with sea pumps, water and utility systems, utility placement and infrastructure, surveying, and heavy equipment make him indispensable to the Jacoby companies' current operations and future development plans.

You advise that all sales of property to CDP have been finalized. However, the Jacoby companies continue to have contractual agreements with CDP. These include:

•Retention of an easement for utility lines. The Jacoby companies operate the water and sewer utility in the Town and serve all the property owners. There is a plan to transfer the service to the City of Palm Coast, and the agreement calls for the parties to work together on that transfer. There is also a contingency in the agreement that if the transfer is not effected, CDP is obligated to build a wastewater plant to serve the Town.

•Cross easements between the residential and commercial development to allow sharing of infrastructure.

•A license from CDP to maintain existing structures until they are razed or recycled by the companies according to a contractual schedule.

•A license to CDP to use the Marineland name. You advise that this transaction is completed and that the Jacoby companies will not be paid royalties for the use.

•An agreement addressing the handling of dredging or construction materials.

•An option for Mr. Jacoby to purchase a condominium and boat slip from CDP. You advise that the option has been transferred to a third party with no obligation to refund the purchase price in the event CDP's rezoning and site plan are not approved.

• A pledge to cooperate in construction of the various projects and in the development review process. This includes the right of each party to receive an advance proposal of any development proposal made by the other, and the right to disapprove any proposal which contains any material change (with the term "material" being defined in the agreement) from the conceptual land use plan already approved by the Town. Each entity is required to submit its own permitting applications.

Section 112.3143(3)(a), Florida Statutes, states, in relevant part:

VOTING CONFLICTS.--No county, municipal, or other local public officer shall vote in an official capacity upon any measure which inures to his or her special private gain or loss; which he or she knows would inure to the special private gain or loss of any principal by whom the officer is retained or to the parent organization or subsidiary of a corporate principal by which he or she is retained, other than an agency as defined in s. 112.312(2); or which he or she knows would inure to the special private gain or loss of a relative or business associate of the public 1officer. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of the officer's interest in the matter from which he or she is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his or her interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes.

Section 112.3143 prohibits an official from voting whenever the matter under consideration would work to his own special gain or loss or that of a relative, employer, principal, or business associate. As none of the facts you have provided suggest that the Commission member here stands to benefit personally from the rezoning/site plan, the issue is whether approval would inure to the special private gain of a principal by whom the Commission member is retained.

We first address the question of who is the member's employer. You advise that the Jacoby companies are comprised of Marineland Research Resort, LLC, an entity wholly owned by Mr. Jacoby; Marine Park G.P., Inc., also wholly owned by Mr. Jacoby; and Marine Park of Flagler Limited Partnership, whose general partner is Marine Park G.P., Inc. The Commission member, you advise, receives his paycheck from Marine Park of Flagler Limited Partnership, the entity that operates the Oceanarium property, but, as you have also informed us, his responsibilities go far beyond that entity.

For the most part, we have recognized the separation of legal identities of corporations from their officers, owners, or parents. We have specifically rejected this approach, however, where the facts require it. For example, in CEO 03-13, we found a voting conflict of interest would be created were a city council member to vote on measures concerning expansion of a medical center owned by a corporation that was owned by another corporation which owned yet another corporation which owned still another corporation which employed the member. There we said:

For purposes of business, contracts, torts/lawsuits, and similar matters the paramount tenet is that each corporation is a separate business entity, separate from other corporations or natural persons who own it, irrespective of any 'wholly owned' status, whose distinct legal identity will not be ignored or 'pierced' absent fraud, disregard of the corporate form in operations, and/or similar factors, in order to promote passive investment/lack of personal liability and the growth of industry and commerce. In our view, the ethical context is markedly different. In the instant situation, for example, the member's 'bread is buttered,' via her nurse's pay, by and through a business organization or structure which is headed by a company/corporation/organization that will be affected by the expansion of the medical facility and the City Council votes necessary to the expansion. In reality, this parent organization owns the member's employer, which, as is common to all employers, holds great sway over the views, actions, and decisions of its employees in a variety of contexts.
(footnotes omitted.)

Accordingly, we find that the "principal" by whom the member is retained is Mr. Jacoby.

The question then becomes whether the matters under consideration will inure to Mr. Jacoby's special private gain or loss. Strictly speaking, the PUD zoning and site plan applications affect only CDP property. In addition, although CDP and the Jacoby companies have numerous remaining contractual obligations toward each other, you have indicated that the Jacoby companies' rights and obligations are not contingent on approval of the application, and nothing in the materials you have provided suggests otherwise. Further, disapproval will not foreclose Mr. Jacoby's ability to develop or otherwise use his own property.

Nevertheless, Mr. Jacoby clearly has an interest in the course of development of CDP's property in the Town. You write, "On a broader basis, Mr. Jacoby and his companies do benefit by the approval of the CDP PUD and site plan in that this is another step toward the Town becoming a sustainable community." You add that "this interest of Mr. Jacoby in developing a sustainable community is important to his vision of not just the Town, but of the future significance and financial success of the Dolphin Conservation Center." Therefore, approval of the rezoning/site plan, which Mr. Jacoby apparently has already sanctioned, is plainly in his interest.

But the Code of Ethics does not prohibit every vote that inures to the benefit of an official's employer, only those that inure to its "special private" gain. In a number of opinions, we have found that some benefits are too "remote and speculative" to meet that description and have found that no voting conflict exists under such circumstance.

For example, in CEO 05-15, we advised a city commissioner whose private legal client was a potential developer of affordable housing within the city that he was not required to abstain from voting on measures to amend the city's affordable housing ordinance to raise the value/price of affordable housing. We noted that if changes to the ordinance were approved by the city commission, in order to become effective the changes also would have to be approved by the Department of Community Affairs (DCA) inasmuch as the city had been statutorily designated as an area of critical state concern; all land development regulations, as well as building permits, would also have to be approved by the DCA; any specific permit application would have to be reviewed and approved by the city's development review committee and the city's planning board and, depending on the size of the project, would have to be reviewed and approved by the city commission; and, finally, factors not determinable at the time of the votes, such as whether property suitable for development as affordable housing could be acquired, whether financing could be arranged for such projects, whether any proposed project would meet the requirements of the land development regulations, and whether a proposed project will receive approval of local and state regulatory bodies, would affect any possible gain to the developer. Observing these many contingencies, we said, "Given the events, in addition to mere passage of the amendments, that would have to occur in order for the client-developer to engage a project, any gain or loss to the client-developer (a principal by whom the commissioner is retained) would be 'remote and speculative.'" However, we also advised that the commissioner would have to comply with the voting conflicts law regarding measures more insular to his client, such as votes on his client's particular projects or permits.

In CEO 91-7, the question concerned a school board member who owned a construction business which had subcontracted with builders working on school district projects. At issue was a vote on whether the district should engage in a building or remodeling project. We said the member could vote on that measure, noting, "the determination of whether to build or remodel cannot be said to inure to anyone's special gain." (emphasis supplied) Again, we further advised that once the project reached the point at which a general contractor would be selected, the board member would have to abstain from voting if his corporation might submit a bid to subcontract on the project.

CEO 85-17 and CEO 85-46 perhaps best illuminate the zone in which a "special private" gain changes into one which is "remote and speculative." In CEO 85-17, we found that a city mayor and a city commissioner were prohibited by Section 112.3143 from voting on a petition for annexation of property owned by the developer who employed them. The petition had been filed by a separate group planning to develop the property, and even though the developer had granted this group an option to purchase with no contingencies regarding annexation, it joined in the petition. We found that there would be a special private gain to the developer, saying, "We presume that the developer would not have joined in the petition unless it felt that action would be to its benefit, and it appears possible that the option to purchase the developer's property might not be exercised if the property is not annexed." In CEO 85-46, the circumstances had changed. The developer had sold the property, although it retained a mortgage and in addition owned adjoining property. Under those circumstances we found that any gain or loss derived by the commissioner's employer from the annexation would be too remote and speculative to create a voting conflict. We said:

Here, the developer has not petitioned for annexation and does not own the property which was annexed. In our view, the developer does not stand to gain or lose as a direct result of the annexation, either in terms of the value of its adjacent property or in terms of its security interest in the subject property. Under the circumstances presented, whether the developer stands to gain or lose either from owning adjacent property or from its mortgage interest ultimately will be the result of many factors, with annexation of the property not even being the predominant factor. In essence, we conclude that any gain or loss derived by the developer from the annexation would be too remote and speculative for us to conclude that annexation 'inures to the special gain' of the Commissioner's employer.

As in CEO 05-15, assuming that the Town Commission approves CDP's application, the Jacoby companies still face innumerable hurdles before any profit could be realized on their own developments. As in CEO 85-46, while Mr. Jacoby may in the long term benefit as a consequence of CDP's ability to develop its property, he does not stand to benefit in any direct way as a result of the measure under consideration. As such, it cannot be said that the matter would inure to his special private gain or loss.

In addition, we find that any benefit to the Jacoby companies would not be a "special private" one, as all the Town's residents will be equally affected.

Typically, a "size of the class" analysis involves a review of the impact on the voting official or his principal of the matter being voted on relative to its impact on all persons or entities affected. The test recognizes that "where the class of persons is large, a special gain will result only if there are circumstances unique to the officer or principal under which he stands to gain more than the other members of the class." CEO 77-129. However, the test also has applicability in situations such as the instant case, where the class of persons affected, while very small, constitutes the entire population.

For example, in CEO 87-27, we found that town council members were not prohibited by Section 112.3143 from voting to rezone all of the single-family residential property within the town to commercial property in order to sell the property to a single purchaser, where the commission members were homeowners in the town. The opinion recognized that while the commission members would receive a distribution from any sale, the rezoning would affect all of the residents of the town, who would be compensated based on an equitable formula. Similarly, in a series of complaints filed against officials of the Town of Weeki Wachee, we found no probable cause to believe a violation of Section 112.3143 had occurred when members of the Town Council who had contractual relationships with the attraction voted to accept the attraction as a donation, where all eight persons living in the Town either were employed by the attraction or lived in housing rented from or provided by the attraction.

Given the size of the Town of Marineland, and the fact that the rezoning vote will impact each of the small number of residents similarly, it cannot be said that the member's principal will enjoy a "special private" gain.

Accordingly, we find that no voting conflict of interest would exist were a member of the Marineland Town Commission to vote on the PUD/rezoning application of a property owner while employed by the Town's other primary developer.

ORDERED by the State of Florida Commission on Ethics meeting in public session on October 20, 2006 and RENDERED this 25th day of October, 2006.

Norm M. Ostrau, Chairman