CEO 90-54 -- July 27, 1990

CONFLICT OF INTEREST

CITY COUNCIL MEMBER CONTRACTING WITH CITY FOR CITY'S SOLID WASTE COLLECTION AND RECYCLING

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

SUMMARY:

Sections 112.313(3), and 112.313(7), Florida Statutes, prohibit a city council member, who is also the President and majority stockholder of a solid waste disposal company, from purchasing waste disposal services from his company for the city. While Section 112.313(12), Florida Statutes, provides exceptions to this rule, there is no indication that the exceptions apply in this situation. Additionally, the council member is prohibited from voting on any proposed purchase of solid waste disposal services from his company because such a measure would inure to the council member's special private gain.

QUESTION 1:

Would a prohibited conflict of interest exist were a city council member who is also President and majority stockholder of a solid waste disposal company to purchase solid waste disposal services from his company for the city?

Under the circumstances presented, your question is answered in the affirmative.

In your letter of inquiry and in your subsequent letter, you advise that . . . . is the president and majority stockholder of All Counties Recycling Systems, Inc. The corporation is based in Jacksonville, Florida. On August 10, 1989, prior to Mr. Ilnyckyj's becoming a Council member, the City Council of the City of Crystal River decided to offer a contract to All Counties Recycling Systems for the handling of the City's solid waste disposal. On August 14, 1989, the company made a counter offer to the City. No final agreement was reached by the parties, and the City Council never executed a contract with the company. The City currently handles its own solid waste disposal using the County landfill.

The President of All Counties Recycling Systems qualified as a candidate for the City Council on October 26, 1989, was elected to the Council on December 12, 1989, and took office as a Council member on January 1, 1990. The City would like to obtain outside services for its solid waste disposal and recycling programs, and the Council is considering the Council member's company for this purpose.

The Code of Ethics for Public Officers and Employees provides in pertinent part:

DOING BUSINESS WITH ONE'S AGENCY.--No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee of his 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 his own agency, if he is a state officer or employee, or to any political subdivision or any agency thereof, if he 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. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(d) Beginning public employment.

[Section 112.312(3), Florida Statutes (1987).]

This provision prohibits a public officer from purchasing any services for his own agency from any company of which he is an officer or director or in which he has a material interest, unless a contract for the services was entered into prior to appointment to public office, or prior to the public officer's beginning public employment. Because no contract was actually entered into by the City and the company in August of 1989, or at any time thereafter, none of the four exceptions listed above apply to this situation. Even if the Councilman steps down as President of the company or places his ownership interest in a trust, he would still have a material interest in the company which would prohibit his doing business with the company in his capacity as City Council member.

The Code of Ethics for Public Officers and Employees further 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. [Section 112.313(7)(a), Florida Statutes 1987).]

This provision prohibits a public officer, such as the City Council member, from having an employment or contractual relationship with a business entity which is doing business with his agency. The Council member's agency would be the City in this case. [See Section 112.312(2), Florida Statutes.]

However, Section 112.313(12), Florida Statutes, contains a number of exceptions to the prohibitions of Sections 112.313(3) and 112.313(7). Of those exceptions, the following three may apply if:

The business is awarded under a system of sealed, competitive bidding to the lowest or best bidder and:

1. The official or his spouse or child has in no way participated in the determination of the bid specifications or the determination of the lowest or best bidder;

2. The official or his spouse or child has in no way used or attempted to use his influence to persuade the agency or any personnel thereof to enter such a contract other than by the mere submission of the bid; and

3. The official, prior to or at the time of the submission of the bid, has filed a statement with the Department of State, if he is a state officer or employee, or with the supervisor of elections of the county in which the agency has its principal office, if he is an officer or employee of a political subdivision, disclosing his interest, or the interest of his spouse or child, and the nature of the intended business. [Section 112.313(12)(b), Florida Statutes (1987).]

An emergency purchase or contract which would otherwise violate a provision of subsection (3) or subsection (7) must be made in order to protect the health, safety, or welfare of the citizens of the state or any political subdivision thereof. [Section 112.313(12)(d), Florida Statutes (1987).]

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 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 (1987).]

If the City Council seeks bids and awards the contract to the lowest or best bidder, pursuant to Section 112.313(12)(b), it is possible that the prohibitions of Sections 112.313(3) and 112.313(7) would not apply. Similarly, if the City's solid waste disposal situation becomes an emergency, requiring a contract to be made with the Council member's company in order to protect the health, safety, or welfare of the citizens of the City, Sections 112.313(3) and 112.313(7) would not prohibit the contract. Finally, if the Council member's company is the only source of solid waste disposal and recycling services available to the City, and the Council member discloses his interest in the company to the Council prior to the purchase of the services, the "sole source" exemption would apply. While All Counties Recycling Systems is currently the only company offering the solid waste disposal service to the City, your inquiry and subsequent letter do not indicate that the services are unavailable to the City from any other company. Likewise, there is no indication that the City's solid waste disposal situation is an emergency at this time, or that the City has accepted bids from competing companies.

QUESTION 2:

Is a city council member prohibited by Section 112.3143(3), Florida Statutes, from voting on the proposed purchase of solid waste disposal services from the company of which the Council member is President and majority stockholder?

This question is answered in the affirmative.

Regarding voting conflicts of interest, the Code of Ethics provides:

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 (1987).]

In light of the foregoing, the Council member would be prohibited from voting on any measure which inures to his special private gain. Because the Council member is the President and majority shareholder in the company, he may not vote on any bid selection or proposed contract between the City and the company, and he must make the oral and written disclosures required by Section 112.3143(3).

Accordingly, we find that a prohibited conflict of interest would be created were a City Council member who is also the President and majority stockholder of a solid waste disposal company to purchase waste disposal services from his company for the City. In addition, 112.3143(3), Florida Statutes, prohibits the City Council member from voting on any proposed purchase of solid waste disposal services for the City from the company in which he has a material interest, because such a purchase would inure to the City Council member's special private gain.