CEO 92-37 -- September 3, 1992

CONFLICT OF INTEREST; VOTING CONFLICT OF INTEREST

CITY COMMISSIONER'S CORPORATIONS OWNERS OF HOTELS IN AREA

PROPOSED FOR INCLUSION IN HISTORIC PRESERVATION DISTRICT

To: David T. Pearlson, City Commissioner, City of Miami Beach

SUMMARY:

A city commissioner is prohibited by Section 112.3143(3)(a), Florida Statutes, from voting on whether to include an area containing properties owned by closely-held corporations which retain him in a local historic district. Since local historic designation would increase the allowable number of dwelling units in a structure and would complicate structure demolition, the commissioner, his principals, and relatives stand to gain or lose under a measure proposing such inclusion. CEO's 92-20 and 90-71 are referenced.

QUESTION:

Are you, a city commissioner, prohibited by the voting conflicts law from voting on a measure to increase the size of a local historic preservation district where the area proposed for addition to the district includes five hotel/apartment buildings owned by closely-held corporations which retain you?

Your question is answered in the affirmative, under the circumstances recited herein.

By your letter of inquiry, other written information provided by you, and written information provided through the City Attorney's Office, we are advised that you serve as a member of the Board of City Commissioners of the City of Miami Beach. We further are advised that the City Commission is expected to vote in the near future on whether to expand the size of the existing historic preservation district(s) via three additional historically-designated areas. In addition, we are advised that five corporations owned by you and members of your family own three hotel and two apartment buildings located in an area proposed for inclusion within the Museum Historic Preservation District.

Each corporation owns one building, and you are employed by each corporation as its salaried general manager. You own twenty-eight percent of the stock in four of the corporations and thirty-three percent in the fifth corporation. You have a vested right to receive an additional ten percent of stock from three of the corporations, which stock will be distributed to you imminently through probate proceedings. The balance of the stock in the corporations is owned by your brothers, sisters, mother, nieces, and nephews. The corporations are all "closely-held," and their shares are not traded on any regional or national exchanges.

The buildings are in an area proposed for addition to the Museum Historic Preservation District. The other two districts for which additions are proposed are the Flamingo Park Historic Preservation District and the Ocean Drive/Collins Avenue Historic Preservation District. In full, we are advised, the five properties comprise approximately eight percent of the land area, exclusive of public rights-of-way, proposed for inclusion in the Museum District, and approximately two percent of the area proposed for inclusion in all three Districts combined. Approximately 60 total sites are proposed for addition to the Museum District and approximately 168 total sites are proposed for addition to all three Districts combined. If similar calculations were done based upon the number of rental units contained in properties within the areas proposed for addition rather than upon land area, the percentages of units owned by your corporations would not differ greatly from the percentages of land area so owned. A City Historic Preservation Department employee advises that he believes your properties are comparable to the other properties in the area proposed for addition to the Museum District. We are advised that the City Commission may consider the total area proposed for inclusion as one matter, or it may consider each of the three areas under separate measures coming before it for consideration.

Your properties are already under a federal historic district designation. Under the federal designation, individual properties are assigned classifications ("significant," "contributing," "non-contributing") describing their historical value to the district. As listed in the City's Historic Properties Database, three of your properties are "historic" and two are "non-historic/conforming." Inclusion in the federal district already allows hotels in the district which have fifty rooms or more being guaranteed the right to have an establishment with a liquor-by-the-drink beverage license. The existing federal designation results in the ability to apply for federal income tax credit. Your properties are all contiguous and currently are under a "mixed use entertainment" (MXE) zoning classification.

The overlay of a local historic district designation would not affect the zoning of land development that may occur on property, with the exception that the size of dwelling units inside of a hotel or apartment building may be reduced (thus resulting in the possibility of an increased number of units within that particular structure). The main effect of local historic designation would be the imposition of a requirement that demolition of a building in a district must be reviewed by the City's Historic Preservation Board with a majority vote of the City Commission affirming the Board's recommendation, or by a five-sevenths vote of the City Commission reversing the Historic Preservation Board's recommendation. Under existing zoning regulations, in order to achieve substantial renovation of a building in the district, approval must be obtained from the Design Review Board which is supplemented by the three members from the Historic Preservation Board; local historic district designation will not affect this review process. The demolition control is important because, you relate, at some time the highest and best use of your properties, economically, may be their value as vacant land available for expansion of a convention center hotel and/or parking near your properties. A local historic designation causes no abatement of local, State, or federal taxes. You relate further that preservation-minded persons or groups in the community put forth the argument that local designation would generate more business and economic activity in the area proposed for addition to the Museum District, because the "popularity" and excitement of an area nearby already so designated would expand into your area.

The voting conflicts law portion of the Code of Ethics for Public Officers and Employees provides in relevant part:

No county, municipal, or other local public officer shall vote in his official capacity upon any measure which would inure to his special private gain; which he knows would inure to the special private gain of any principal by whom he is retained or to the parent organization or subsidiary of a corporate principal by which he is retained, other than an agency as defined in s. 112.312(2); or which he knows would inure to the special private gain of a relative or business associate of the public officer. 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. [Section 112.3143(3)(a), Florida Statutes.]

'Relative' means any father, mother, son, daughter, husband, wife, father-in-law, mother-in-law, son-in-law, or daughter-in-law. [Section 112.3143(1)(b), Florida Statutes.]

Section 112.3143(3)(a) would prohibit you from voting on any measure which would inure to your special private gain or to the special private gain of your relatives or certain other enumerated persons or entities. Since you and your relatives are owners of the corporations which own the properties and since the corporations retain you, we must focus on whether the historic preservation measures would result in "special gain." "Special gain" turns in part on the number of persons who would be affected (size of the class) and in part on whether the gain would be remote or speculative. Regarding class size, under our precedent, we find that two percent or eight percent of the property to be affected (or 5 of 60 sites and 5 of 168 sites), as set forth in your factual scenario herein, is of sufficient size to result in special gain. See, for example, CEO 92-20, CEO 90-71, and our opinions cited therein. Therefore, we must turn in our analysis to the issue of whether gain from the measures would be sufficiently tangible and definite (not remote and speculative).

While the popularity of a nearby historically-designated area might spread to the proposed additional areas, with resulting economic benefit to the additional areas, were they designated locally historic, the facts present in this scenario do not negate the remote and speculative nature of such possible gain. However, we find that the ability to increase the number of dwelling units in a structure is certainly gain of a tangible nature, as is freedom from an additional or more onerous step or process in order to demolish a structure to allow a more profitable use of the property.

In addition, we do not find a prohibited conflict under Section 112.313(7)(a), Florida Statutes, under the scenario presented herein. Your properties do not appear to be "regulated" by the City Commission, and neither you nor your corporations appear to be doing business with the City. Further, the scenario herein does not appear to be one that would create a continuing or frequently recurring conflict between your private interests and the performance of your public duties or one that would impede the full and faithful discharge of your public duties, under Section 112.313(7)(a). That statutory section 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.

The fact that your corporations have retained an attorney to represent their interests regarding the historic designation issue does not change our opinion or in and of itself create a prohibited conflict for you. However, you should not personally represent the corporations or their interest before the City Commission.

Accordingly, we find that you are prohibited by the voting conflicts law from voting on whether to increase the size of historic district(s) when the measure voted upon includes properties owned by corporations which retain you or which are owned by you and your relatives.