CEO 88-52 -- July 28, 1988

CONFLICT OF INTEREST

CITY RENTAL REHABILITATION PROGRAM EMPLOYEE

APPLYING FOR REHABILITATION LOAN THROUGH PROGRAM

To: Mr. John C. Wolfe, Chief Assistant City Attorney, City of St. Petersburg

SUMMARY:

A prohibited conflict of interest would be created under Section 112.313(7), Florida Statutes, where an employee in a city's rental rehabilitation program applies for a loan to rehabilitate rental property through the program in which he works. The employee's contractual relationship with his agency would impede the full and faithful discharge of his public duties.

QUESTION:

Would a prohibited conflict of interest be created were an employee in a city's rental rehabilitation program to apply for a loan to rehabilitate rental property through the program in which he works?

Your question is answered in the affirmative.

In your letter of inquiry you advise that Henry Webb, Jr., is employed by the City of St. Petersburg within the City's Rental Rehabilitation Program. That Program provides low interest loans and deferred principal loans from federal grant funds to allow rental property owners to repair their property. The rental property must be located within certain targeted areas in the City. The employee owns rental property within one of the targeted areas and would like to apply for a rehabilitation loan.

In a telephone conversation with our staff the Director of the City Housing and Construction Services Department, which operates the Rental Rehabilitation Program, advised that until recently there was not enough demand for these loans to use the entire amount available; therefore, if an individual met the basic criteria for a loan the City would approve the loan. Recently, however, there has been an increase in demand for these loans, so each project is evaluated based on certain additional criteria, including the total amount of funds requested, the ratio of private versus public funding involved, and the number of bedrooms in the dwelling. The subject employee is responsible for taking the pertinent information from the applicant and for transposing it onto an evaluation form. His supervisor is responsible for evaluating each request.

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 (1987).]

This provision prohibits a public employee from having a contractual relationship which would create a continuing or frequently recurring conflict of interest or which would impede the full and faithful discharge of his public duties.

We previously have reviewed a public officer's or employee's participation in a subsidy program operated by his agency on several occasions. In CEO 77-88 we advised that a county commissioner could not participate in a rent subsidy program sponsored by the county. In CEO 81-87 we advised that a housing authority member should not be employed by a corporation which has contracted with the authority as a landlord under a rent subsidy program. In a somewhat similar vein, we advised in CEO 78-70 that a relocation officer with a city urban redevelopment department should not lease property to a person who has been relocated by the department.

On the other hand, in two opinions we have concluded that participation in these types of programs by a public officer or employee would not violate the Code of Ethics. In CEO 86-60 we advised that housing authority employees could live in housing subsidized by the authority where the employees served only in clerical positions and where they participated in the housing programs before their employment with the authority, so that their employment served to reduce the total benefits which otherwise would have been paid to them. In CEO 84-95 we advised that the law firm of a junior college trustee could contract with the junior college to hire a student under the college's career work experience program, which involved reimbursement by the college for one-half of the student's wages. There, we advised that although the trustee would have a contractual relationship with the college, that contract would not require continuing oversight by the trustees, the trustee's law firm would not be competing with other businesses to participate in the program because of a surplus of funds, and the program would benefit primarily the student rather than the trustee's law firm.

We conclude that the subject employee's contractual relationship with his agency through a low interest or deferred principal loan from his agency would impede the full and faithful discharge of his public duties. Here, the employee is directly involved in the administration of the program under which he would obtain the loan. Unlike the situations in CEO 86-60 and 84-95, the loan would not predate the employee's city employment, he would be competing with other applicants for loan proceeds, and the loan clearly would benefit the employee through enabling him to rehabilitate his property.

Accordingly, we find that a prohibited conflict of interest would be created were the subject employee to obtain a low interest or deferred principal loan through the City Rental Rehabilitation Program in which he works.