CEO 85-31 -- April 11, 1985

CONFLICT OF INTEREST; VOTING CONFLICT

COUNTY HOUSING FINANCE AUTHORITY MEMBER EMPLOYED BY BROKERAGE FIRM INDIRECTLY OWNING INTEREST IN DEVELOPMENT PARTNERSHIP SEEKING AUTHORITY FUNDS

To: Mr. Richard B. Stephens, Jr., Attorney, Lakeland

SUMMARY:

No prohibited conflict of interest would be created under Section 112.313(7), Florida Statutes, where a county housing finance authority member is employed as a broker by a national brokerage firm which, through a succession of subsidiary corporations and partnerships, owns an interest in a developer seeking funds from the authority for a development project. The authority member owns an interest in a developer seeking funds from the authority for a development project. The authority member is employed by a different business entity than the one which is doing business with his agency, and no frequently recurring or continuing conflict of interest would be created.

A county housing finance authority member is not prohibited by Section 112.3143, Florida Statutes, from voting on measures pertaining to the sale of bonds to finance a development project proposed by a developer, where the brokerage firm which employs him indirectly owns an interest in the developer. Here, the ownership interest that the brokerage firm has in the developer is so attenuated that it cannot be concluded that matters relating to the bond issue would inure to the special gain of the brokerage firm which employs the authority member.

QUESTION 1:

Would a prohibited conflict of interest be created where a county housing finance authority member is employed as a broker by a national brokerage firm which, through a succession of subsidiary corporations and partnerships, owns an interest in a limited partnership seeking funds from the authority for a development project?

This question is answered in the negative.

In your letter of inquiry you advise that Mr. Jack Frahmann is a member of the Lee County Housing Finance Authority, which has been created under the provisions of Part IV, Chapter 159, Florida Statutes, to issue tax exempt bonds to finance multi-family housing projects in the County. You also advise that the Authority member is a broker employed in the local office of a national brokerage firm. As a broker, he is compensated on a commission basis and does not participate in any profit sharing of the firm which may be derived from investments or activities or from any subsidiary or affiliated organization unrelated to its brokerage services.

Through an extensive succession of subsidiary corporations and partnerships, the brokerage firm proposes to become a sixty percent general partner in a limited partnership which is seeking to develop a multi-family housing project in the County. The partnership has appeared before the Housing Finance Authority several times in connection with its request for the issuance of bonds to finance the project, and will appear again before the Authority to obtain approval of the sale of bonds to finance the project after the 60% interest in the partnership is sold. The bonds issued by the Authority will not be sold to the brokerage firm.

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

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. [Section 112.313(7)(a), Florida Statutes (1983).]

This provision prohibits a public officer from being employed by a business entity which is doing business with his agency. A county housing finance authority member is a "public officer," as that term is defined in Section 112.313(1), Florida Statutes. However, the Authority member is employed by the brokerage firm rather than by the development partnership. In previous opinions we have treated each corporate subsidiary as a separate "business entity" in applying the Code of Ethics. See CEO 83-11, CEO 80-89, CEO 79-55, and CEO 78-20.

Under the circumstances presented, we find no basis to conclude that the Authority member's employment with the brokerage firm would present him with a continuing or frequently recurring conflict of interest, or would impede the full and faithful discharge of his public duties. In this regard, we note particularly that the member does not participate in any profits which may be derived by the brokerage firm from its subsidiary or affiliated organizations.

Accordingly, we find that no prohibited conflict of interest would be created where the subject Housing Finance Authority member is employed as a broker by a brokerage firm which indirectly owns an interest in a development partnership seeking funds from the Authority.

QUESTION 2:

Is a county housing finance authority member prohibited by Section 112.3143, Florida Statutes, from voting on measures pertaining to the sale of bonds to finance a development project proposed by a limited partnership, where the brokerage firm which employs him indirectly owns an interest in the partnership? This question is also answered in the negative.

Section 112.3143(3), Florida Statutes (Supp. 1984), provides as follows:

Voting conflicts. -- (3) No county, municipal, or other local public officer shall vote in his official capacity upon any measure which inures to his special private gain or shall knowingly vote in his official capacity upon any measure which inures to the special gain of any principal, other than an agency as defined in s. 112.312(2), by whom he is retained. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of his interest in the matter from which he is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his 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. However, a commissioner of a community redevelopment agency created or designated pursuant to s. 163.356 or s. 163.357 or an officer of an independent special tax district elected on a one- acre, one-vote basis is not prohibited from voting.

This provision prohibits a local public officer from voting on a measure which inures to his special private gain and from knowingly voting on a measure which inures to the special gain of a principal by whom he is retained.

Under the circumstances presented, there does not appear to be any reason to believe that matters relating to the issuance of bonds requested by the development partnership would inure in any way to the special gain of the subject Authority member. Nor do we find that matters relating to the issuance of the bonds would inure to the special gain of a principal by whom the Authority member is retained. We previously have advised that a public official's employer is a "principal by whom he is retained." See CEO 84-108. Therefore, the Authority member is prohibited from voting on measures which would inure to the special gain of the brokerage firm which employs him as a broker. Clearly, the issuance of bonds by the Authority for the partnership's project would inure to the special gain of the developer. However, given the attenuated ownership interest that the brokerage firm has in the partnership, we find that under the circumstances presented matters relating to the bond issue would not inure to the special gain of the brokerage firm which employs the Authority member.

Accordingly, we find that Section 112.3143, Florida Statutes, does not require the subject Authority member to abstain from voting on measures relating to the issuance of bonds for the project proposed by the limited partnership. Nevertheless, we are the opinion that the Authority member would be permitted to abstain from voting by Section 286.012, Florida Statutes, which authorizes a public officer to abstain from voting where there is, or appears to be, a conflict of interest under one of the provisions of the Code of Ethics.