CEO 76-195 -- October 25, 1976

CONFLICT OF INTEREST

STORE SELLING TO CITY WHILE LEASING PROPERTY FROM CITY COUNCILMAN

To: (Name withheld at the person's request.)

Prepared by: Bonnie Johnson

SUMMARY:

Florida Statute s. 112.313(3)(1975) prohibits a public officer from acting in his official capacity to purchase goods from any business entity in which he owns a material interest, and it has been previously determined that being a member of a voting body constitutes acting in one's official capacity in relation to any action taken by that body. See CEO 75-201. Where a city councilman owns a store which is leased to a business entity selling to the city, no conflict is constituted under subsection (3), as the councilman holds no interest in the business, but rather in the building which the business occupies. However, the Code of Ethics further prohibits a public officer from having a contractual relationship with any business entity which does business with the officer's agency. Florida Statute s. 112.313(7)(a)(1975). As rental of property constitutes a contractual relationship, the above-cited provision appears to be breached by the instant situation. However, the essential purpose of s. 112.313(7) is to prohibit those situations in which a public officer could obtain preferential treatment from, or award public business to, a business entity with which he is associated. Inasmuch as the subject association between the councilman and the store is solely that of landlord/tenant, with the actual business conducted by the store having no effect on the particular contractual relationship, such lease of property does not fall within the contemplation of s. 112.313(7). Pursuant to s. 112.316, therefore, which provides that it is not the intent of the code to preclude private pursuits which do not interfere with the discharge of public duty, no conflict is deemed to be created where a city councilman owns a building which is leased to a business entity doing business with the city.

QUESTION:

Would a prohibited conflict of interest exist were the city of which I am a councilman to purchase goods from a store which leases its building from me?

Your question is answered in the negative.

You state in your letter of inquiry that you are a Councilman of the City of ____ and that you rent a building which you own to a general merchandise store located in ____. You further inform us that, except for the rent, you receive no compensation from or have any interest in the business occupying your building.

The Code of Ethics for Public Officers and Employees provides in relevant part as follows:

DOING BUSINESS WITH ONE'S AGENCY. -- No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or his spouse or child, or any combination of them, has a material interest . . . . [Fla. Stat. s. 112.313(3)(1975).]

Accordingly, a public officer is prohibited from acting in his official capacity to purchase goods from any business in which he owns a material interest, and we have previously determined that being a member of a voting body constitutes acting in one's official capacity in relation to any action taken by that body. See CEO 75-201. However, the prohibition set forth above is inapplicable in the instant case, as ownership of the building in which the store is located does not constitute ownership of the business occupying the building.

The Code of Ethics further provides as follows:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. -- No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee . . . ; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Fla. Stat. s. 112.313(7)(a)(1975).]

A public officer thus is prohibited from having a contractual relationship with a business entity which does business with his public agency. As rental of property constitutes a contractual relationship, the situation about which you inquire would appear to breach the above-quoted prohibition. However, Florida Statute s. 112.316 provides as follows:

Construction. -- It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his duties to the state or the county, city, or other political subdivision of the state involved.

This section in effect imposes a "rule of reason" upon the application of the Code of Ethics, as it provides that the code is not intended to preclude practices which do not interfere with one's public duty.

One of the essential purposes of s. 112.313(7) is to prohibit those situations in which a public officer could obtain preferential treatment from, or award public business to, a business entity with which he is associated. Inasmuch as your association with the subject merchandise store is solely that of landlord, with the actual business conducted by the store having no effect on the particular contractual relationship between you and the store, we do not believe that your leasing property to the store falls within the contemplation of the prohibition cited above.

We therefore find that the Code of Ethics for Public Officers and Employees does not prohibit the city from doing business with a merchandise store which rents its building from you, a city councilman.