APPLICABILITY OF F.S. 112.3136 (STANDARDS OF CONDUCT
FOR OFFICERS AND EMPLOYEES OF ENTITIES SERVING AS CHIEF
ADMINISTRATIVE/EXECUTIVE OFFICER OF POLITICAL SUBDIVISION)

SPECIAL DISTRICTS MANAGEMENT SERVICES CORPORATION

To:       Bob Koncar, Severn Trent Services (St. Augustine)

SUMMARY:

This opinion answers questions regarding applicability of new F.S. 112.3136 to certain personnel of a particular corporation which manages many community development districts (CDDs) in Florida.

QUESTION 1:

Under the circumstances presented, which corporate personnel are subject to the standards and requirements, including financial disclosure filing requirements, flowing from Section 112.3136, Florida Statutes?

            Question 1 is answered as set forth below.

            By your letter of inquiry and additional information provided to our staff, we are advised that you inquire in behalf of a for-profit corporation which contracts with over 85 community development districts (districts, CDDs) in Florida, providing the full range of management services for the districts, and that you seek guidance for the corporation and its personnel as to the applicability of newly-created Section 112.3136, Florida Statutes,¹ which provides:

112.3136  STANDARDS  OF CONDUCT FOR OFFICERS AND EMPLOYEES OF ENTITIES SERVING AS CHIEFADMINISTRATIVE OFFICER OF POLITICAL SUBDIVISIONS.—The officers, directors, and chief executive officer of a corporation, partnership, or other business entity that is serving as the chief administrative or executive officer or employee of a political subdivision, and any business entity employee who is acting as the chief administrative or executive officer or employee of the political subdivision, for the purposes of the following sections, are public officers and employees who are subject to the following standards of conduct of this part:
(1)        Section 112.313, and their 'agency' is the political subdivision that they serve; however, the contract under which the business entity serves as chief executive or administrative officer of the political subdivision is not deemed to violate s. 112.313(3) or (7).
(2)        Section 112.3145, as a 'local officer.'
(3)        Sections 112.3148 and 112.3149, as a 'reporting individual.'

Continuing, you advise that the corporation has officers and a chief executive officer (CEO/President, CFO/Secretary, three Vice Presidents, and Treasurer/Assistant Secretary), and that it has a three-person governing board of directors.  Further, we are advised that the corporation has seven different corporate employees (district managers) who act as the chief administrative officer for various CDDs.

A threshold requirement for applicability of the statute is a business entity's (e.g., corporate) service as chief administrative or executive officer or employee of a political subdivision.  We find that the scenario you present establishes that the corporation is serving in that role for the various districts.²  That requirement established, we move to determination of which personnel of the corporation are subject to the standards and disclosures of the statute.  Plainly, the statute encompasses two classes of persons:  (1)the officers, directors, and chief executive officer of the corporation, because the corporation serves in the requisite role,  and (2) the corporation employees who act as the chief administrative or executive officer or employee of given district(s).  Thus, in the situation presented, we find that the personnel of the corporation subject to Section 112.3136 are its CEO/President, its CFO/Secretary, its Vice Presidents, and its Treasurer/Assistant Secretary, because they are officers of the corporation,³ its directors, because they are directors of the corporation, and its employees (district managers) who act as chief administrative officers for the district(s), because they act in that role.

Also, in herein construing the statute, we have not overlooked the fact that the corporation is part of a larger corporate structure.  However, in limiting our application of Section 112.3136 to certain of the personnel of the one corporation which contracts with the various districts, rather than expanding our application to include personnel of the corporation's parent, subsidiary, or siblings/affiliates, we are guided by the plain language of the statute and by our adjudicative history which prompted the statute's creation.  As to plain language, the statute's terms are clear and unambiguous (and singular, not plural):  ". . . of a corporation, partnership, or other business entity that is serving . . . ."  Previously, in instances of construing the Code of Ethics, we have recognized the separateness of one corporation, or other "business entity," from another, except in situations in which a parent company's only asset consisted of its subsidiaries.  See, for example, CEO 09-2 and decisions cited therein.  As to adjudicative history, the statute is a response to our decisions recognizing that provisions of the Code of Ethics (prior to inclusion of Section 112.3136) did not apply to persons operating, or personally providing services through, a particular business entity providing management (chief administrative or executive officer or employee) services to a local government entity.  See, among others, In re JOHN CANADA, Commission on Ethics Complaint Nos. 05-098 and 05-060 (Consolidated).  In other words, the basis for the creation of Section 112.3136 is closure of an "ethics loophole" previously available to persons of a particular business entity providing certain services; the basis is not inclusion within the scope of the new statute many different persons in many different companies merely because of their companies' structural connection to the particular (provider) business entity.⁴   

Question 1 is answered accordingly.

QUESTION 2:

What are the financial disclosure obligations of personnel of the corporation encompassed by Section 112.3136?

Question 2 is answered below.  

Initially, we note that CE Form 1 (Statement of Financial Interests), rather than the more detailed CE Form 6 (Full and Public Disclosure of Financial Interests), is applicable to the corporation's personnel, due to their designation, via Section 112.3136, as "local officers" under Section 112.3145, Florida Statutes.  Section 112.3145 requires an initial filing (Form 1) within 30 days of appointment or employment, an annual filing (Form 1) thereafter, and a final filing (Form 1F) within 60 days of leaving one's position, if another position requiring filing is not taken within the 60-day period.  Duplicate filings are not required for the same disclosure period, even if one holds multiple positions requiring disclosure.  Section 112.3145(8), Florida Statutes.

We find that the first annual filing for the personnel will be due on or before July 1, 2010, regarding each district the corporation was managing as of July 1, 2009, because Section 112.3136 went into effect on July 1, 2009.  Previously, in CEO 07-21, we concluded that a financial disclosure obligation created by a new law that went into effect on July 1st did not mandate the annual financial disclosure filing until the following July 1st.

We find that, for the first district the corporation becomes the manager of after July 2009, the personnel will have to file within 30 days of the corporation's entry into the contract with the district.⁵

As to final filings (Form 1F), which cover the period of time between January 1 and the date a person leaves a position requiring Form 1 filing, we find that personnel who leave their position, without taking within 60 days another position requiring filing, will be required to file the Form 1F.  Note that such persons would include corporation employees who cease to act as the chief administrative/executive officer for any district (employees who have ceased to act for all districts) and corporation officers/directors who cease to hold those positions in the corporation.  

As to where to file, personnel of the corporation who do not permanently reside in Florida should file with the Supervisor of Elections of the county in which their agency (CDD) maintains its headquarters.  Since it is likely that the corporation is the manager of districts in many different counties in Florida, you could select one where a corporation CDD client is located, which may be the county where the corporation's office is located.  Personnel who live in Florida should file with the Supervisor of Elections of the county in which they permanently reside.  Further, while it will not be necessary for a person to file in more than one county, it will be necessary for some, if not all, of the personnel to list on the Form filed many different districts (for the officers/directors of the corporation, all CDDs managed; for corporate employees, only the CDDs for which they serve as the chief administrative/executive officer).  This multiple CDD listing can be on a sheet attached to the Form.     

            Question 2 is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on February 26, 2010 and RENDERED this 3rd day of March, 2010.

                                                                                    ___________________________________
                                                                                    Roy Rogers, Vice Chair

 cc:       Mr. Bob Koncar

CCA/CF/mwf