CEO 89-45 -- September 14, 1989

CONFLICT OF INTEREST

CITY COMMISSIONER OWNING STEEL COMPANY WHICH BIDS ON

PROJECTS BROUGHT BEFORE CITY COMMISSION

To: Paul E. Rosenthal, City Attorney, City of Ocoee

SUMMARY:

A City Commissioner does not have a prohibited conflict of interest under Section 112.313(7)(a), Florida Statutes, where 10 percent of the income of a steel company which he owns is generated by projects located within the City. The Commissioner is not required by Section 112.3143(3), Florida Statutes, to abstain from voting on projects for which he has not submitted proposals to provide steel, provided that he has not begun any negotiations or had any contact with the developer or contractor in regard to submitting a proposal.

QUESTION 1:

Does a City Commissioner who owns a steel company which derives an estimated 10 percent of its income from projects within the City have a prohibited conflict of interest pursuant to Section 112.313(7)(a), Florida Statutes?

Your first question is answered in the negative.

In your letter of inquiry, you advise that City Commissioner Vern Combs is the owner and operator of a steel company which has its principal place of business in the City of Ocoee. The company designs and bids steel packages to general contractors and developers, who generally appear before the City Commission prior to the Commissioner's having submitted a bid on a proposed project. The Commissioner estimates that 10 percent of the company's gross income is generated from projects located within the City.

A "bid" to provide a "steel package" encompasses every piece of steel that the contractor or developer will need to complete a project. This may include bolts, columns, steel staircases, or any other product made of steel. The Commissioner basically is a broker who buys steel from the manufacturer and sells it to the contractor.

The "steel package" also includes the erection and installation of the steel pieces, for which the Commissioner hires a subcontractor. The subcontractor's work has to pass City and County inspections, and the Commissioner is responsible for ensuring that it does. Usually, this is accomplished by the hiring of a private inspection firm. The inspection firm will inspect the steel in its testing lab and review how it is installed. A copy of the test results are sent to the City and County. If the test results indicate that something is not satisfactory, the inspection firm will write a list of the necessary adjustments. Generally, the City and County do not conduct their own inspections but, rather, rely on the results of the private labs, although occasionally a building inspector may be sent to a site. Therefore, although the Commissioner personally does not interact with local officials, he contracts with subcontractors, developers, and contractors over which the City has regulatory powers.

The actual "bid" consists of estimating the job and submitting a proposal to the contractor of what the Commissioner proposes to do. Then the Commissioner goes to the contractor and negotiates a price. The contractor has the discretion to select which proposal prefers; he is not required to select the lowest proposal.

Section 112.313(7)(a), Florida Statutes, provides:

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.

In In re John Zerweck, 2 FALR 1097-A (1980), affirmed, Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982), we stated that the subject city commission did not "regulate" developers within the meaning of this prohibition, as the active enforcement of ordinances specifying the manner and mode of land development and building construction within the city had been delegated to the various boards and departments of the city. See also CEO 84-1. Presumably, the same would be true in the present case. Therefore, the fact that the Commissioner may have contractual relationships with a developer or contractor, by itself, would not constitute a violation of Section 112.313(7)(a), Florida Statutes.

If the Commissioner has contractual relationships with entities which frequently are required to come before the City Commission in one capacity or another, it may be that his relationships would create a continuing or frequently recurring conflict between his private interests and public duties and could impede the full and faithful discharge of his public duties. In order to determine whether such a conflict exists, we will consider the nature of the Commissioner's interest in projects brought before the Commission and the nature of his duties or responsibilities in connection with the contracts, in addition to how frequently he may be required to abstain from voting. See Zerweck v. State Commission on Ethics, above; CEO 84-1. We also believe that a conflict could be created were City employees, such as a building inspector, to inspect the work of a subcontractor employed by the Commissioner, as the Commissioner will not be paid for installation of the steel package unless it passes inspection.

Based upon the information that you have provided, we conclude that the selling of steel packages to contractors and developers within the City would not create a prohibited conflict of interest pursuant to Section 112.313(7)(a), Florida Statutes. You indicate that the Commissioner’s interest in a matter concerning a development brought before the Commission is likely to be speculative, as he would not have submitted a proposal at that time. After the Commissioner is awarded a contract regarding a developer, it appears that his duties primarily would be limited to the provision and installation of the steel for the project. Although he also is responsible for ensuring that the steel and its installation complies with the applicable City and County codes, you indicate that this is handled primarily by an independent inspection firm, which minimizes the Commissioner's contacts with the City. Therefore, from the given facts, we do not believe that the Commissioner would be prohibited from selling steel to developers and contractors within the City.

We must, however, bring to your attention Section 112.313(6), Florida Statutes, which states:

MISUSE OF PUBLIC POSITION.--No public officer or employee of an agency shall use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31.

An attempt by the Commissioner to use his position to harass those who do not use his company, to reward those who do, or to influence the actions of a City employee regarding inspections on which the payment for his steel package depends, could be determined to be in violation of this Section.

QUESTION 2:

If a vote concerns a development on which the Commissioner's company may submit a bid, but has not submitted a bid at the time of the vote, is the Commissioner required to abstain?

Your second question is answered in the negative.

Section 112.3143(3), Florida Statutes, 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. [Section 112.3143(3), Florida Statutes.]

This provision prohibits the Commissioner from voting on a measure which either inures to his special private gain or inures to the special private gain of a principal by whom he is retained at the time of the vote. If the Commissioner has not submitted a proposal at the time of the vote, then any perceived gain to him is too speculative to require him to abstain. However, if he has contacted or is in the process of negotiating with a contractor or developer, but has not submitted a proposal, then he would be required to abstain. Under our rationale in CEO 87-86, if the Commissioner is negotiating at the time of the vote, he may gain from the contractor's or developer's willingness to contract with him, as well as from any action by the Commission favoring the development.

Accordingly, we find that the Commission member is not required to abstain from voting on a measure involving a development on which he has not submitted a proposal, provided that he has not already contacted or begun negotiations with the developer or contractor in regard to the project.