CEO 00-10 -- August 29, 2000

 

CONFLICT OF INTEREST

 

COMMUNITY REDEVELOPMENT AGENCY EMPLOYEE OWNER OF TELEVISION STATION SELLING ADVERTISING TO CRA

 

To:       Name withheld at person's request (Sebring)

 

SUMMARY:

 

Under the circumstances herein, a local television station is a "sole source" of supply of advertising for a community redevelopment agency (CRA) targeting a county's populace for attendance at a CRA-sponsored event, for purposes of exempting an employee of the CRA who is an owner of the station from the proscriptions of Sections 112.313(3) and 112.313(7)(a), Florida Statutes.  CEO's 77-125, 77-127, 78-17, 78-24, 81-2, 92-28, and 98-6 are referenced.

 

QUESTION:

 

Does a broadcast television station owned by an employee of a community redevelopment agency and her spouse qualify as a "sole source" of supply under Section 112.313(12)(e), Florida Statutes, thereby exempting transactions for CRA advertising on the station from the proscriptions of Sections 112.313(3) and 112.313(7)(a), Florida Statutes?

 

Under the circumstances described herein, your question is answered in the affirmative.

 

By your letter to our staff and accompanying information,[1] we are advised that ("employee") is employed as the executive assistant to the executive director of the Sebring Community Redevelopment Agency ("CRA"), and that she owns in excess of five percent of a television station (corporate in form), of which she also is vice president and a compensated worker,[2] from which the CRA desires to purchase advertising.[3]  The CRA's executive director (not the employee) is the CRA's purchasing agent and the employee is not the station's salesperson selling advertising to the CRA, you advise.

Further, you advise that the CRA is responsible for the economic revitalization of historic downtown Sebring ("City"), that an annual festival is part of the revitalization effort, and that the advertising to be purchased (for the purpose of attracting people to the festival) is targeted at the general population of Highlands County (the County in which the City and the CRA are located).  In addition, you advise, although the CRA has sponsored the festival for only the past two years, it organized the event for the previous sponsor, including marketing the event via cable television, radio, newspapers, shopping guides, trade papers, and magazines, since 1984.

Further, you advise that the employee's station has been on the air for three years, that broadcast television stations (with advertising rates considerably higher than the employee's station) located in Tampa, Orlando, and Ft. Myers broadcast within the County, but that only the employee's station has its offices and studio located within the CRA's boundaries.[4]  Also, you advise that broadcast television has the potential to reach one hundred percent of the CRA's target audience who own television sets, as the employee's station also is carried on the cable system,[5] that cable penetration within the County is around forty percent to fifty percent, that radio has the potential to reach one hundred percent of those who own radios, and that newspaper circulation reaches fifty percent to seventy-five percent of households within the County.

Within the Code of Ethics for Public Officers and Employees, the following statutes provide:

 

DOING BUSINESS WITH ONE'S AGENCY.--No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's spouse or child, or any combination of them, has a material interest.  Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision of any agency thereof, if he or she is serving as an officer or employee of that political subdivision.  The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business or when such offices are on property wholly or partially owned by the legislator.  This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a)  October 1, 1975.

(b)  Qualification for elective office.

(c)  Appointment to public office.

(d)  Beginning public employment.

[Section 112.313(3), Florida Statutes.]

 

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 or she 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 or her private interests and the performance of his or her public duties, or that would impede the full and faithful discharge of his or her public duties. [Section 112.313(7)(a), Florida Statutes.]

 

EXEMPTION.--. . . .  In addition, no person shall be held in violation of subsection (3) or subsection (7) if:

(e)  The business entity involved is the only source of supply within the political subdivision of the officer or employee and there is full disclosure by the officer or employee of his or her interest in the business entity to the governing body of the political subdivision prior to the purchase, rental, sale, leasing, or other business being transacted. [Section 112.313(12)(e), Florida Statutes.]

 

Absent the applicability of the "sole source" exemption of Section 112.313(12)(e), violations of Sections 112.313(3) and 112.313(7)(a) would exist were the employee's station to sell advertising to the CRA, inasmuch as the employee would be acting in a private capacity to provide services to the CRA (her public agency)[6] and inasmuch as the employee (by virtue of her ownership of a material interest[7] in and/or compensated work for the station) would hold a contractual relationship and/or employment with a business entity doing business with her public agency.  However, we find that the "sole source" exemption would be applicable to the proposed purchases from the employee's television station under the circumstances you describe.

Although we have had relatively few occasions to opine as to the applicability of the "sole source" exemption, early on (in CEO 78-24) we recognized that

 

[t]he apparent legislative purpose behind this exemption is to alleviate the hardships which otherwise would be imposed by the Code of Ethics upon political subdivisions where an agency might have to forego some services or might have to purchase goods at additional cost in order to avoid creating conflicts of interest for its officers or employees.

 

See, for example, CEO 77-125 (exemption applicable to allow athletic supply company owned by a school district employee to sell to schools within the district types of athletic equipment not stocked by other stores in the county), CEO 77-127 (exemption applicable where a fire district wished to use a telephone answering service owned by the district's legal counsel because the answering service was the only provider of 24-hour service in the county), CEO 78-17 (exemption applicable where a fire district purchased items from a hardware store owned by a district board member so long as the store remained the only source of supply of the particular items within the district), and CEO 92-28 (school director and teacher receiving royalties from sale of textbooks required for their courses).

In the situation you describe, such hardships indeed would be imposed by the Code upon the City/CRA were the CRA to have to forego the purchase of advertising from the employee's station or were the CRA to have to purchase television advertising at additional cost from stations located outside of the CRA whose rates are geared to much larger audiences than the CRA's target audience.  While you have represented that stations other than the employee's broadcast into the County and are carried on cable in the County, it also is represented that the other stations charge  considerably higher rates than the employee's station, and that advertising on the cable channels in the County carrying the other stations is based on rates applicable to the whole of a large urban television market (e.g., the Tampa market) rather than on rates (much less expensive) applicable to the County market.  Such a situation supports a determination that County-targeted advertising on a County-targeted station at lower broadcast and cable rates is a qualitatively different item to be purchased by the CRA than is advertising on a large, urban-market-targeted station at higher broadcast and cable rates.[8]

Accordingly, we find that the "sole source" exemption contained in Section 112.313(12)(e), Florida Statutes, is available to the CRA's executive assistant, should the CRA purchase advertising from her television station under the circumstances you describe.[9]

 

ORDERED by the State of Florida Commission on Ethics meeting in public session on August 24, 2000 and RENDERED this 29th day of August, 2000.

 

_________________________________

Howard Marks, Chair


[1]Your letter dated May 15, 2000 (responding to our staff's letter dated March 17, 2000).

[2]The employee's husband also is an owner of the station, you advise.

[3]You describe the advertising as a 30-second television commercial, aired multiple times throughout the day, to attract people to a festival connected to the revitalization of historic downtown Sebring (an area located within the CRA's territorial jurisdiction).

[4]You advise that the employee's television station is the only local station, that broadcasts from other television stations (located outside the County) can be received over the air with outside antennas and via cable, that there is no broadcast television station other than the employee's located within eighty miles of the City of Sebring, that one can receive the nonlocal stations with "rabbit ears" or other forms of antennas, but that good over-the-air reception of the nonlocal stations requires rotor-turned antennas or power boosters.  

[5]By a telephone conversation with our staff subsequent to receipt of your May 15 letter and accompanying information, you stated and emphasized that the nonlocal stations also are carried on the cable system, but that one cannot purchase advertising on the applicable cable channels without purchasing advertising for a large urban market (e.g., the Tampa market), which is extremely expensive.  In contrast, you emphasize that the employee's station offers a different product in that it offers advertising (at a much lower price) oriented to a much smaller market (Highlands County).

[6]It is our view that one "acts in a private capacity" for purposes of the second part of Section 112.313(3) when he or she is an officer, director, or material interest holder of a corporation that is selling an item to his or her public agency.  See CEO 81-2.

[7]Defined at Section 112.312(15), Florida Statutes, to mean "direct or indirect ownership of more than 5 percent of the total assets or capital stock of any business entity."

[8]We do not believe it is our role to seek to micromanage or second-guess the CRA's decision to choose television over radio or some other medium or its decision to target via its advertising the County's populace rather than another demographic group.  See, for example, CEO 98-6, in which we did not question a city's choice of a magazine (distributed free within the city) targeting transient tourist over other types of media (i.e., newspapers, television, and radio) in attempting to attract tourist to its municipal fishing pier; rather, in that opinion we found that the "sole source" exemption was not applicable because there were two such magazines.

[9]For the exemption to be applicable, the executive assistant must complete and file CE Form 4A (Disclosure of Business Transaction, Relationship or Interest), Part B (Disclosure of Interest in Sole Source of Supply), with the governing body of the City of Sebring, prior to the sale of the advertising from her station to the CRA.