CITY ECONOMIC DEVELOPMENT COMMISSION MEMBER PARTNER
IN LAW FIRM WITH CLIENTS INTERACTING WITH COMMISSION

To: Jon Phillips, Ethics Counsel, City of Jacksonville

SUMMARY:

A person who is an attorney in a law firm would not have a prohibited conflict of interest under Section 112.313(7)(a), Florida Statutes, were he to become a member of a city's economic development commission, provided that his firm does not work on a client's application for an incentive from the commission; a prohibited conflict under Section 112.313(7)(a) would not be created were a client of the firm to apply to a subordinate board of the commission for a permit, provided a denial of the application by the subordinate board is not appealed to the commission and provided that the firm does not work on the permit application to the subordinate board; and a prohibited conflict would not be created were a client to apply to the subordinate board for a zoning waiver or variance, provided the firm does not work on the waiver/variance matter for the client. In addition, we find that the commission is not an "advisory board" for purposes of Section 112.313(12), Florida Statutes.  Also, the member must comply with Section 112.3143, Florida Statutes (the voting conflicts law), regarding votes/measures/matters of the commission concerning himself, his firm, his firm's clients, and certain others, whether or not his firm works on the matter for the client.  CEO 74-8, CEO 77-178, CEO 79-82, CEO 80-79, CEO 86-13, CEO 86-24, CEO 96-1, CEO 03-7, CEO 04-6, CEO 06-24, CEO 07-11, CEO 08-1, CEO 08-11, and CEO 10-20 are referenced, and CEO 87-60, CEO 89-29, and CEO 07-13 are distinguished.¹

QUESTION 1:

Would a prohibited conflict of interest be created were a client of a law firm of a member of a city's economic development commission to apply to the commission for or receive from the commission a waiver of part of the client's property taxes or other similar economic incentive?

Question 1 is answered in the negative, unless the firm provides work for the client regarding the incentive application.

By your letter of inquiry and additional information subsequently provided to our staff, we are advised that George Gabel (member) is considered to be a well-suited, possible appointment to the Jacksonville Economic Development Commission (JEDC), due to his partnership in a large, interstate, international law firm and other affiliations.²  Further, we are advised that the JEDC is the economic development agency and the community redevelopment agency (CRA) for the City³ and that its primary objectives are to recruit and expand higher-wage opportunities, to increase the growth and expansion of small businesses, to promote private capital investment in the City, to promote and leverage investment in economically-distressed areas, and to promote a healthy and vibrant downtown.⁴

Also, we are advised that one of the law firm's clients is a large, publicly-traded corporation, important to the City's overall economic health, which in the past applied for JEDC-related "incentives," such as a waiver of part of the corporation's property taxes for some portion of its property. Such a tax waiver, you advise, can be granted to businesses as part of either a City or State incentive program to keep large employers in the City. More particularly, you advise that applications for incentives are evaluated by JEDC staff and, if approved, are presented by the staff to the JEDC board (commissioners), but that JEDC board votes (decisions) on applications are advisory, with the final decision resting with the City Council.⁵ Additionally, you advise that another lawyer of the member's firm performs work for the corporation, but that the member personally does not, and that, in the past, the corporation also has retained the services of a non-lawyer, salaried employee of the firm (a former City Council member) for the purpose of providing political advice and guidance in applying to the JEDC for incentives. And we are advised that the member would recuse himself from voting on or participating in measures or matters of the JEDC involving any client of the firm.

Thus, pursuant to the foregoing information and history, you inquire whether, should the member be appointed to the JEDC, he would have a prohibited conflict of interest, were the corporation or another client of his firm to apply for such an incentive.

            Relevant to this question, is Section 112.313(7)(a), Florida Statutes,⁶ which 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 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.

Under the first part of Section 112.313(7)(a), a prohibited conflict of interest exists where a public officer (e.g., a city board member) holds employment or a contractual relationship with a business entity (e.g., a corporation) which is subject to the regulation of, or which is doing business with, the officer's public agency.  Under the second part of the statute, a prohibited conflict exists where the officer holds any employment or contractual relationship, if the employment/contractual relationship will create a continuing or frequently recurring conflict between the officer's private interests and the performance of his public duties or if it would impede the full and faithful discharge of his public duties.   

In the instant situation, we find that the member would hold employment or a contractual relationship with the corporation (or with any other client of his law firm which might seek to receive a JEDC-based waiver of taxes or similar incentive), regardless of whether the member personally works on the client's matters.  See, for example, CEO 80-79 and CEO 10-20, in which we found, recognizing pertinent caselaw, that an attorney in a law firm (other than an "of counsel" attorney) has employment or a contractual relationship with all clients of the firm.  Further, we find that the corporation (and likely any other client of the firm which would seek an incentive) would be a "business entity" under the applicable statutory definition of Section 112.312(5), Florida Statutes, which includes ". . . any corporation . . . doing business in this state." 

However, we do not find that the corporation or other client of the firm would, by virtue of seeking or obtaining a waiver of taxes or similar incentive, be either regulated by or doing business with the JEDC or with the City.  In order for "regulation" to exist, we have found that a business's operations or modes of doing business must be subject to the control or authority of a public agency.  CEO 74-8.  Here, such control or authority is lacking; rather, the instant situation (granting of a partial property tax waiver—incentive) is analogous to that of CEO 04-6, in which we did not find "regulation" by a city council of a private economic development entity to exist where the city council appropriated funds for the entity's use.  Also, we have not found "regulation" where the government role was annexation (CEO 03-7) or where the government role was occupational tax licensing for revenue purposes (CEO 79-82).  Further, we do not find that the corporation or other client of the member's firm would be "doing business with" the JEDC by virtue of the tax waiver or similar incentive.  We have found "doing business" to exist where the parties have entered into a lease, contract, or other type of arrangement where one party would have a cause of action against the other in the event of a breach or default.  CEO 86-24 and CEO 07-11.  Assuming arguendo that the JEDC would be a "party" to a granting of a tax waiver or similar incentive by the City Council, nothing presented in your inquiry indicates that a potentially actionable arrangement would result from the waiver. Rather, we view the waiver of taxes as analogous to the appropriation of city funds to the economic development entity in CEO 04-6 (a situation in which we found neither "regulation" nor "doing business" to exist). 

Regarding the second part of the statute, we find that a prohibited conflict also would not be created for the member, provided that his firm does not represent the client in the client's JEDC incentive matter.  We have found the second part to prohibit a public officer, or other members of his professional firm, from representing clients before the officer's public board (see, among others, CEO 96-1 and opinions cited therein).  And while opinions of ours can be read to emphasize that such a prohibited conflict is based in the appearance of the public officer or a member of his private firm before the assembled public board, our decisions also recognize that such a prohibited conflict is grounded in the impediment to the objective performance of one's public duty occasioned by his firm's representation of its client intersecting the functions of the public board on which he sits, even if the officer's work for his firm does not involve advising the firm or its clients about matters of his public board.  See CEO 96-1 (Question 1), an opinion concerning a member of the Jacksonville Electric Authority (JEA) who had a "special counsel" or an "of counsel" relationship with a law firm which represented bond underwriters on JEA bond issues, in which we stated:

Therefore, we find that, because of the Board member's close, regular and continuing relationship with the law firm and duty of loyalty to the clients of the law firm, a prohibited conflict of interest under the second part of Section 112.313(7)(a) would exist when the law firm appears before the JEA on behalf of a client, notwithstanding that the Board member's special counsel position does not entail advising the firm about JEA bond issues, projects, or contracts. An impediment to public duties could exist for the Board member to favor the law firm or the client (his private interests) and to disregard his public duty to act independently and impartially in the best interests of the JEA, when the firm's representation of the client involves the JEA. [Emphasis supplied.]

Regarding the instant situation, there is no doubt that the member, as a partner in the firm, would have a close, regular, and continuing relationship with his law firm and a duty of loyalty to the firm's clients seeking JEDC incentives via the firm's efforts. And we find that such a reality would create the "wearing of the second hat" or the "inability to simultaneously serve two masters in relation to the same subject," which is the essence of a prohibited conflict under the statute. Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982). In other words, we are not persuaded that there is a meaningful difference under the second part of the statute between a situation in which a public board member's law firm undertakes representation of a client in a matter involving application to the member's public board, but stops short of appearing before the assembled board, and a situation where the firm goes on to appear before the assembled board, especially where the firm might communicate with staff of the board, prepare or strategize applications or paperwork submitted directly to the board or to its staff, and/or attend board meetings to be available for questions. Further, we find that the instant situation is distinguishable from that of CEO 89-29, in which we found that a city commission member's employment as executive director of a chamber of commerce lobbying the city commission was not conflicting if her chamber role was devoid of lobbying the city commission and devoid of chamber activities encompassing lobbying the city commission. Contrastingly, the current scenario would involve, were the firm to work on the incentive matter for its client, a licensed person (attorney) bound by professional duties to a client of his firm and would involve his firm's working for the client on a specific matter which simultaneously is a matter of his public board; it is not a situation involving an unlicensed person working generally for an umbrella organization of businesses.

Accordingly, we find that a prohibited conflict of interest would not be created for the member under Section 112.313(7)(a), Florida Statutes, were a client of his law firm to seek a JEDC incentive, provided the firm does not work on the incentive, including but not limited to not appearing for the client before the JEDC board.

QUESTION 2:

Is the JEDC an "advisory board" such that a conflict, if any were present, under Section 112.313(7)(a), Florida Statutes, is susceptible to waiver under Section 112.313(12), Florida Statutes?

Question 2 is answered in the negative.

Section 112.313(12) provides,⁷ in relevant part:

(12) EXEMPTION.—The requirements of subsections (3) and (7) as they pertain to persons serving on advisory boards may be waived in a particular instance by the body which appointed the person to the advisory board, upon a full disclosure of the transaction or relationship to the appointing body prior to the waiver and an affirmative vote in favor of waiver by two-thirds vote of that body. In instances in which appointment to the advisory board is made by an individual, waiver may be affected, after public hearing, by a determination by the appointing person and full disclosure of the transaction or relationship by the appointee to the appointing person.

Section 112.312(1), Florida Statutes, defines "advisory body" as follows:

'Advisory body' means any board, commission, committee, council, or authority, however selected, whose total budget, appropriations, or authorized expenditures constitute less than 1 percent of the budget of each agency it serves or $100,000, whichever is less, and whose powers, jurisdiction, and authority are solely advisory and do not include the final determination or adjudication of any personal or property rights, duties, or obligations, other than those relating to its internal operations.

However, for purposes of waiver under Section 112.313(12), we have found that the Legislature intended this exemption to apply to boards (in a generic sense) whose powers and authority are advisory, without regard to the size of a board's budget. See CEO 77-178.

We find that the JEDC is not an "advisory board" and thus that waiver, if waiver were needed, is not available.  Notwithstanding that we found in CEO 87-60 that a predecessor entity of the JEDC [the Economic Development Council of the City of Jacksonville (EDCCJ)] was advisory and, thus, that waiver was available, we find that the JEDC is different.  The entity at issue in CEO 87-60 was created by executive order of the Mayor and operated through ad hoc committees.  In contrast, the JEDC's existence is more "institutionalized" via provisions of the City Charter, and its powers and duties do not appear to us to be merely advisory in nature, especially given the fact that it functions, inter alia, as the community redevelopment agency (CRA) for the City and given the fact that it has combined powers of several predecessor entities.⁸  City Charter provisions provide, in part:

There is created and established an autonomous body within the office of the mayor which shall be known as the Jacksonville Economic Development Commission. The commission is designated as the sole community redevelopment agency for the city according to part III, chapter 163, Florida Statutes. The commission shall serve as the city's only countywide industrial development authority with authority over all economic development functions within the City of Jacksonville. [Section 24.01, Jacksonville, Florida, Code of Ordinances.]

The commission shall operate with all the powers and authority of a community redevelopment agency under part III, chapter 163, Florida Statutes, as an industrial development authority under part III, chapter 159, Florida Statutes, and is authorized to function throughout all of the territorial limits of the City of Jacksonville, Florida, as its only community redevelopment agency and only industrial development authority. As the city's sole community redevelopment agency, the commission shall be successor to and hereafter exercise all authority, power and responsibility which has heretofore been vested by resolution or ordinance of the council in either the Jacksonville Downtown Development Authority or the Jacksonville International Airport Community Redevelopment Authority. While it is intended that the commission shall have city-wide authority as both the city's industrial development authority and community redevelopment agency, the commission must secure council approval consistent with those powers and duties specifically retained by the council in Section 30.705 of the code and as required by part III of chapter 159 and part III of chapter 163, Florida Statutes. [Section 24.07, Jacksonville, Florida, Code of Ordinances.]

Further, Chapter 163, Florida Statutes, itself supports the view that a CRA is not just advisory,⁹ providing in part:

Upon a finding of necessity as set forth in s. 163.355, and upon a further finding that there is a need for a community redevelopment agency to function in the county or municipality to carry out the community redevelopment purposes of this part, a county or municipality may create a public body corporate and politic to be known as a 'community redevelopment agency' . . . . [Section 163.356(1), Florida Statutes.]

. . . . the members of the agency . . . constitute the head of a legal entity, separate, distinct, and independent from the governing body of the county or municipality . . . .  [Section 163.357(1)(b), Florida Statutes.]

Accordingly, we find that the JEDC is not an advisory board regarding which waiver, if waiver were needed, is available under Section 112.313(12), Florida Statutes¹⁰.

QUESTION 3:

Would a prohibited conflict be created were a client of the member's law firm to apply to a subordinate board of the JEDC for a permit?

Question 3 is answered in the negative, provided that there is no appeal to the JEDC of the application decision of the subordinate board and provided that the firm does not provide work for the client regarding the application to the subordinate board.

In addition to the information set forth above, you advise that the Downtown Development Review Board (DDRB) is a subordinate board of the JEDC, that the DDRB has some permitting and zoning functions limited to the downtown area of the City (e.g., operating a sidewalk café downtown would require a permit from the DDRB), and that the permitting functions of the DDRB are "carried out entirely by its staff." Further, you advise that an appeal of a denied permit application could go from the DDRB to the JEDC board (the board the member would hold a seat on), but that such an appeal is "theoretical," in that it only has happened once in several years and in that it is not anticipated that any of the firm's clients would have any reason to apply for a DDRB permit or any reason to appeal denial of a permit to the JEDC. Additionally, you advise that any vote by the JEDC on an appeal would be advisory only, with the final decision on the matter resting with the City Council (under a de novo standard of review by the Council with no presumption of correctness attaching to the JEDC's handling of the matter).

Again, Section 112.313(7)(a), Florida Statutes, quoted above, is relevant.

Concerning permits from the DDRB, for example, to operate a sidewalk café, were we to consider Section 112.313(7)(a) in isolation, we could find that a prohibited conflict would be created for the member under the first part of the statute were a client of his firm to apply for or receive such a permit. In this circumstance, the member (a public officer) would hold a contractual relationship with the client (a business entity operating the café), and the client would be subject to the regulation of the JEDC (via the functioning of its subordinate board, the DDRB). See CEO 08-1, recognizing that a city's board of adjustment regulated a developer via the board's ability to grant conditional uses and variances sought by the developer, a situation analogous to the ability to grant a café permit.¹¹

However, we believe it is not appropriate to consider Section 112.313(7)(a) in isolation regarding this Question, but, rather, to consider the statute in conjunction with Section 112.316, Florida Statutes, also a part of the Code of Ethics, which provides:

CONSTRUCTION.—It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his or her duties to the state or the county, city, or other political subdivision of the state involved.

Unless there is an appeal of a client of the firm's subordinate board matter to the JEDC, or unless the firm does work for the client on the subordinate board matter, we find that it is appropriate to find, in regard to this Question, that Section 112.316 applies to negate the conflict, given the separation, in the main, between the functions of the JEDC and the functions of its subordinate board regarding such permits.

Question 3 is answered accordingly.

QUESTION 4:

Would a prohibited conflict be created were a client of the member's firm to apply to the DDRB for a zoning waiver or variance?

Under the circumstances presented and the conditions noted herein, Question 4 is answered in the negative.

Further, we are advised that the DDRB also functions similar to the City Planning Commission within the geographical area of the DDRB, in that, for example, DDRB staff handle applications for zoning waivers and variances, but that appeals from DDRB zoning variance or waiver decisions go straight to the City Council (for de novo review) and that they do not go to the JEDC.

Section 112.313(7)(a) is relevant. We find that a prohibited conflict would not be created under the first part of the statute were a client of the member's firm to seek or obtain a zoning waiver or variance from the DDRB. Notwithstanding the sharing of the permitting function by the DDRB and the JEDC (see Question 3, above), the scenario presented does not indicate that the JEDC has any function regarding zoning waivers and variances. Thus, we find no prohibited conflict under the first part of the statute, relying on Section 112.316, Florida Statutes, due to the JEDC's lack of an actual role regarding waivers and variances. Again, Section 112.316 provides:

CONSTRUCTION.—It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his or her duties to the state or the county, city, or other political subdivision of the state involved.

Under the second part of Section 112.313(7)(a), we also find no prohibited conflict, provided that the firm does not provide work for the client regarding the zoning waiver/variance¹².

Question 4 is answered accordingly.¹³

ORDERED by the State of Florida Commission on Ethics meeting in public session on December 3, 2010 and RENDERED this 8th day of December, 2010.

^[1]Prior opinions of the Commission on Ethics may be obtained from its website (www.ethics.state.fl.us) or may be obtained directly from the Commission.