CEO 89-19 -- June 14, 1989

VOTING CONFLICTS OF INTEREST

COUNTY COMMISSIONER EMPLOYED BY PUBLIC UTILITY

VOTING ON MATTERS AFFECTING PUBLIC UTILITY

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

SUMMARY:

A county commissioner who is employed by an electric utility company generally would not be prohibited by Section 112.3143(3), Florida Statutes, from voting on the County budget which contains provisions for paying electrical service charges; on designs of county road projects; on authorization of street lights or traffic signals; or on policy, administrative, and budgetary decisions which involve only a small, incidental gain to the company. The commissioner would be prohibited from voting on decisions of whether certain facilities should be powered by electric energy or some other source, on street lighting district budgets, on agreements to repay the utility for the cost of relocating utility lines, and on matters concerning the initiation or settlement of litigation between the company and the county. CEO's 88-20, 86-41, 84-31, and 81-62 are referenced.

QUESTION:

Are you, a county commissioner who is employed by a public utility company, prohibited from voting on county policy, budgetary, and administrative decisions which incidentally feature a subsequent need to pay the company for electrical service, or from voting on matters concerning the initiation or settlement of litigation between the company and the county?

In your letter of inquiry you advise that recently you were elected to serve on the Board of County Commissioners of Sarasota County. You also are employed as a manager with a State-regulated public utility and have been so employed since 1957.

Your position with the utility company involves the daily supervision of all of its activities within the County. Your compensation and other terms of your employment are not predicated upon the volume of electricity sales or other quantitative measures of company sales or contracts. You further advise that you are a stockholder of the company.

The rates charged by the company are regulated by the Florida Public Service Commission and are essentially of uniform application within its service area. The County granted a thirty-year franchise to the company in 1977 which fixes the payments to be made by the company to the County and grants the use of County roads and rights-of-way to the company.

You advise that the company, as the exclusive provider of electrical service in the County, is affected by numerous routine dealings with the County. These include the County's authorizing budgets of street lighting districts, from which payments are made for installation and operation of residential street lights; policy decisions on features of County road projects, including decisions on whether to authorize street lights or traffic signals; decisions on County facilities and budgets, which include subsequent payment for electrical service as component parts; authorization of agreements with the company to cover the actual cost (pursuant to the franchise) of relocating utility lines and structures required by County road-widening projects or other County construction projects; and other policy, budgetary, and administrative decisions which may incidentally involve a need to pay the company. In a telephone conversation with our staff, you indicated that most of these decisions involve a very minimal financial benefit, if any, to the company.

For example, you state that with respect to authorization of budgets for street lighting districts, the benefit to the company is very small when compared to total county and statewide revenues. The County's total annual budget for street lighting districts is $308,000. In contrast, the company's revenues in the County are $194,851,000, and statewide revenues are $4,350,000,000. The authorization of a street lighting district is so small, you advise, that it would not have any influence on the value of the company's stock or dividends.

Similarly, you advise that regarding policy decisions on design features of County road projects, the company derives an extremely small benefit if a traffic signal is added. The benefit of the addition of a traffic signal or streetlight is so small that it is difficult to measure in relation to the volume of revenues. You also advise that measures involving traffic signals and street lights are questions of whether or not to offer the service, as there is no alternative provider of electricity. The compelling consideration in such decisions is the traffic safety benefit to the general public.

In regard to new street lights, the role of the Board of County Commissioners is essentially to accommodate citizens' requests by approval of a "street lighting district" millage rate. Specific recommendations as to number, size, and location of the street lights are made by citizens' advisory committees. Except for a small, rural area of the County, the company is the sole provider of electrical service, so that you do not believe that there are questions of conflict from that perspective.

You advise that the County budget also contains provisions for paying electrical service charges. This amounts to $1,925,000 annually and is necessary for the continuation of service. The approval of the County budget includes authorization for payment to the company, you advise.

In addition, the designs of County facilities include choices impacting the use of energy. Typically, these choices are made by staff working with designers and are not made by the Board of County Commissioners. It is conceivable that a situation could arise in which a decision would fall to the County Commission as to whether certain facilities should be powered by electric energy or some other source. An example would be whether heating would be provided by a gas fired boiler or electrically powered heat pump equipment. You advise that regardless of the strength of the recommendation of County staff, you would feel uncomfortable voting on such a decision. Once the equipment was selected, you advise, budgeting for payment of the necessary energy would provide no gain for you or anyone else.

Regarding authorization of agreements with the company to cover the actual cost of relocating utility lines pursuant to the franchise agreement, you do not believe that there is a benefit, per se, to the company or to any other person or entity. The arrangement is for reimbursement only of actual costs incurred by the company in moving utilities at the County's direction. You advise that such an arrangement is standard between local governments and regulated utilities of all types.

Finally, you ask whether it would be permissible for you to vote on measures involving the initiation or settlement of litigation between the County and the utility company which employs you.

The statutory section which is applicable to these situations is Section 112.3143(3), Florida Statutes, which states:

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 section prohibits you from voting on any measure which inures either to your special private gain or to the special private gain of the principal by whom you are retained (the utility company) and requires that certain disclosures be made.

In regard to votes concerning litigation between the County and your company, we advised in CEO 84-31 that a legislator would have a voting conflict of interest when voting on legislation that would settle litigation involving two of his legal clients. Similarly, in your situation a vote concerning the settlement or initiation of litigation between your employer and the County would inure to the special private gain of the utility company, and Section 112.3143(3) would require you to abstain from voting.

We are of the opinion that Section 112.3143(3) would not prohibit you from voting on the County budget. In CEO 88-20, we determined that a city commissioner, who was employed as executive director of a nonprofit corporation which sponsored a circus parade, was not prohibited from voting on a city budget containing funding for the parade, given the number of matters to be funded within the city budget, the amount of funds involved, and the particular services to be provided. We noted in that opinion that whether a matter would be considered to inure to the special private gain of an officer's principal turns in part on the size of the class of persons to be affected by a measure. Given that the entire city budget was $26 million, that the amount budgeted for circus week was only $9000, and that the funding was for police services and services by the public works department, we found that the commissioner was not prohibited from voting on the entire city budget. The circumstances in CEO 88-20 are somewhat analogous to your situation. We do not believe that you are prohibited from voting on the entire County budget simply because it contains provisions for paying electrical service charges, given the number of items addressed in the entire budget.

Similarly, decisions involving design of county road projects or the authorization of street lights and traffic signals affect a large class of persons. Any incidental benefit to the utility company resulting from these decisions would not be so distinct from the benefit to others affected or would not be so large as reasonably to be said to inure to the company's special private gain. They therefore do not require you to abstain from voting.

In contrast to a vote on the entire County budget, a vote concerning the budget for a street lighting district would affect a smaller class of persons and would involve a larger percentage of the total budget which is used to pay for electricity. We therefore are of the opinion that Section 112.3143(3) would require you to abstain from voting on a measure which solely concerns the budget for a street lighting district.

Decisions on County facilities which focus on whether electricity or some other source of energy should be used involve a benefit to the company that is not just an incidental feature of the measure upon which the vote is pending. The company would stand to benefit in a manner which is different from the benefit to others affected by the measure. In such cases, we are of the opinion that Section 112.3143(3) would require you to abstain, although it would not prohibit you from voting on decisions regarding other facets of the construction project, or on the project as a whole.

In regard to agreements to repay costs of relocating utility lines, in CEO 81-62 we determined that votes of a school board concerning contracts, agreements, bills, and other business the district might have with a utility company would inure to the special gain of that company. See also CEO 86-41. Likewise, a vote concerning an agreement to repay a utility company for the costs of relocating utility lines would inure to the company's special gain. In contrast, votes on County projects which incidentally involve a need to relocate a utility line would affect a larger class of persons, and you therefore would not be prohibited from voting.

Accordingly, we find that Section 112.3143(3), Florida Statutes, would not prohibit you from voting on the County budget, on authorization of street lights or traffic signals, or on the design of County road projects. Section 112.3143(3) would prohibit you from voting on measures involving the initiation or settlement of litigation between the County and the utility company, on budgets of street lighting districts, on decisions on whether County facilities should be powered by electricity or some other source of energy, and on agreements to repay the costs of relocating utility lines.