CEO 12-14

CEO 12-14 – May 9, 2012

CONFLICT OF INTEREST

CITY COMMISSIONER/CRA BOARD MEMBER AND REDEVELOPMENT AREA
BOARD MEMBER APPLYING FOR REDEVELOPMENT INCENTIVE GRANTS
FROM THE CITY; REDEVELOPMENT AREA BOARD MEMBER CATERING
MEALS FOR REDEVELOPMENT AREA BOARD MEETINGS

To: Name withheld at person's request (Daytona Beach)

SUMMARY:

A prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, where a city commissioner who also sits on the community redevelopment agency applies for redevelopment incentive grants from the city's redevelopment division. However, a redevelopment area board member would not violate Section 112.313(7)(a) if she applied for redevelopment incentive grants from the city's redevelopment division. A prohibited conflict of interest would not be created where the spouse of the city commissioner/CRA member applies for redevelopment incentive grants from the city's redevelopment division, where the city commissioner/CRA member has no interest in her husband's property. Nor would a prohibited conflict of interest be created where tenants of the city commissioner/CRA member apply for redevelopment incentive grants from the city's redevelopment division. A prohibited conflict of interest would be created under Sections 112.313(3) and 112.313(7)(a), Florida Statutes, where the redevelopment area board member's café caters meals for meetings of the redevelopment area board on which the member serves, absent the applicability of one of the exemptions listed in Section 112.313(12), Florida Statutes. No prohibited conflict of interest would be created where other city boards or departments purchase food from the redevelopment area board member's café, as long as neither she nor her board have any involvement in the purchasing decision.

QUESTION 1:

Is a prohibited conflict of interest created were a City Commissioner who also sits as a Community Redevelopment Agency (CRA) Board member, or a Redevelopment Area Board member, to apply for and receive redevelopment incentive grants administered by City staff?¹

Question 1 is answered in the affirmative for the City Commissioner/Community Redevelopment Agency Board member, and in the negative for the Redevelopment Area Board member.

In your letter of inquiry, you explain that you are seeking this opinion on behalf of Daytona Beach City Commissioner …, who, along with other members of the City Commission, serves on the City's Community Redevelopment Agency (CRA), and …, an appointed member of one of the City's three Redevelopment Area Boards—the Downtown/Ballough Road Redevelopment Area Board.

You explain that the City Commission has designated itself as the CRA. You further explain that the City's Land Development Code (LDC) provides for the creation of three Redevelopment Area Boards. These Boards have no spending authority or budget, and their members are appointed by the City Commission to perform advisory functions for both the City and the CRA. The Redevelopment Area Boards have final authority in certain zoning matters for properties located within their respective boundaries, but do not exercise any final authority in matters under the jurisdiction of the CRA.

The CRA, with advice from the Redevelopment Boards, created various grant programs as incentives to encourage private redevelopment of properties within the targeted redevelopment areas. These grants are available to owners or lessees for residential, commercial, and business façade improvements, leasehold improvements, lease subsidies, upper floor residential conversions, historic preservation, and landscape improvements. The grant programs are administered by staff within the City's Development Services Department, and applications are received on a first-come, first-served basis. If the application meets established criteria, staff approve it without any vote or action by the City Commission, the CRA, or the Redevelopment Area Boards.

With regard to the City Commissioner/CRA member, you indicate that she is a real estate broker with an office located in one of the City's redevelopment areas and she owns interests in properties in other redevelopment areas, including a building leasing space to commercial tenants. The Downtown/Ballough Road Redevelopment Area Board member operates a small café and bakery in leased commercial space in the Downtown/Ballough Road Redevelopment Area, and she may wish to expand her business in the future.

With this preface, you ask whether the City Commissioner/CRA member and the member of the Redevelopment Area Board are eligible to apply for and receive any of the various redevelopment incentive grants to improve properties they own or have interests in, in the targeted redevelopment areas.

Section 112.313(7)(a), Florida Statutes, 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.

The first part of Section 112.313(7)(a) prohibits a public officer from having an employment or contractual relationship with a business entity or agency which is subject to the regulation of, or which is doing business with, the public officer's agency. The second part of Section 112.313(7)(a) prohibits a public officer from having an employment or contractual relationship which creates a continuing or frequently recurring conflict between private interests and the performance of public duties, or which impede the full and faithful discharge of public duties.

In CEO 12-07, we opined that a prohibited conflict of interest would be created under Section 112.313(7)(a) were a member of a CRA to obtain a commercial loan subsidy from the CRA, because he would have a contractual relationship with a business entity doing business with his agency, a prohibited conflict of interest under the first part of Section 112.313(7)(a). Similarly, in CEO 98-3, we concluded that a CRA member could not apply for and receive a façade grant from his own agency. In another opinion, CEO 00-12, we concluded that a prohibited conflict of interest would be created where a county commissioner obtained funding to renovate duplexes through an affordable housing program administered by a county department because he would have a contractual relationship with a county department overseen by the county commission, his agency. Based upon this precedent, we believe that a prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, for the City Commissioner/CRA member to participate in the various grant programs administered by the City's Redevelopment Division.

However, the situation of the Redevelopment Area Board member is not the same as that of the City Commissioner/CRA member. You have indicated that the Redevelopment Area Boards perform advisory functions for both the City Commission and the CRA, and while Redevelopment Area Boards do participate in zoning matters for properties located in their respective redevelopment areas, they do not oversee any City departments or have any formal role in the incentive grants program. In CEO 85-67, we opined that a city heritage conservation board member would not have a prohibited conflict under Section 112.313(7)(a) if a partnership in which he was the general partner applied to the city for a loan to move a historic structure, as long as the board on which he served did not regulate the partnership's activities through the issuance of a certificate of appropriateness. Under this precedent, we find Section 112.313(7)(a) would not be violated by the Redevelopment Area Board member's application for and receipt of an incentive grant since Redevelopment Area Boards play no role in the incentive grants program.

Question 1 is answered accordingly.

QUESTION 2:

Is a prohibited conflict of interest created where the spouse of a City Commissioner/CRA member applies for and receives redevelopment incentive grants from the City's Redevelopment Division?

Question 2 is answered in the negative.

In your letter of inquiry, you explain that the spouse of the City Commissioner/CRA member is a real estate developer who owns an interest in certain property in one or more of the redevelopment areas, and that his spouse, the City Commissioner/CRA member, does not have an interest in the property. You ask whether a prohibited conflict of interest would be created if he or tenants in a building in which he has an interest apply for and receive redevelopment incentive grants.

We have consistently advised that Section 112.313(7)(a), Florida Statutes, does not apply to situations where the spouse of the public official (but not the public official) has an employment or contractual relationship. See CEO 12-02, CEO 92-43, and opinions cited therein. Although the City Commissioner/CRA member would be prohibited from voting on a matter that benefited her spouse and would be prohibited from corruptly using her office to benefit her spouse, neither Section 112.313(6) nor 112.3143(3), Florida Statutes, create a bar akin to that of Section 112.313(7)(a).

Accordingly, no prohibited conflict of interest is created where the spouse of the City Commissioner/CRA member or his tenants apply for and receive redevelopment incentive grants from the City's Redevelopment Division.

QUESTION 3:

Is a prohibited conflict of interest created where tenants in the building owned by the City Commissioner/CRA member apply for and receive redevelopment incentive grants?

Question 3 is answered in the negative.

You explain that the City Commissioner/CRA member owns an interest in a commercial building in one of the redevelopment areas and leases space in the building to various commercial tenants. You ask whether a prohibited conflict of interest would be created were her tenants to apply for and receive redevelopment incentive grants from the City's Redevelopment Division.

Section 112.313(7)(a) prohibits a public officer from having a contractual relationship with a business entity doing business with or regulated by her agency. In CEO 87-63, we opined that this provision would not be violated where a city councilwoman leased a building she owned to a non-profit corporation, where that non-profit corporation received a grant from the city's department of housing and urban development. We were of the view that it was the department of housing and urban development which was "doing business" with the corporation, not the city council, which only approved the appropriation of grant funds in the city budget. No conflict of interest was found to be present under the second part of Section 112.313(7)(a) either, as the matter only came before the city council once.

Applying this rationale to the situation involving the City Commissioner/CRA member, the tenants of the City Commissioner/CRA member are "doing business" with the City's Redevelopment Division, not the City Commission. Therefore, no conflict would be created under the first part of Section 112.313(7)(a). Nor do we believe that a conflict would be created under the second part of this statute. In CEO 87-63, the matter only came before the city council once; here, we would not expect it to come before the City Commission at all, since staff in the Redevelopment Division apparently administer the incentive grants program in its entirety.

Accordingly, no prohibited conflict of interest would be created where tenants of the City Commissioner/CRA member apply for and receive redevelopment incentive grants from the City's Redevelopment Division.

QUESTION 4:

Is a prohibited conflict of interest created where tenants in the buildings owned by the City Commissioner/CRA member's spouse apply for and receive redevelopment incentive grants?

Question 4 is answered in the negative.

Where tenants of the City Commissioner/CRA member's husband apply for and receive redevelopment incentive grants from the City's Redevelopment Division, we do not believe that a prohibited conflict of interest would be created for the City Commissioner/CRA member. You have represented that the City Commissioner/CRA member has no ownership interest in the building; therefore, she would have not have a contractual relationship with her husband's commercial tenants.

Question 4 is answered accordingly.

QUESTION 5:

Is a prohibited conflict of interest if the Redevelopment Area Board member caters meals for meetings of the Redevelopment Area Board on which she serves?

Question 5 is answered in the affirmative for catering meetings of the Downtown/Ballough Road Development Area Board unless an exemption is applicable, and in the negative for catering meals for other City Boards or departments as long as neither the Downtown/Ballough Road Redevelopment Area Board member nor her Board have any involvement in the purchasing decision.

You explain that the Downtown/Ballough Road Redevelopment Area Board meets at noon and that the City's Redevelopment Division staff typically purchases a "take-out" lunch for the meeting from a restaurant or café located with the redevelopment area. You ask whether a prohibited conflict of interest is created where the café owned by the Redevelopment Area Board member caters meals for her Redevelopment Area Board meetings.

Section 112.313(3), Florida Statutes, provides:

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 or 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) prohibits a public officer from selling any goods or services to the political subdivision in which she serves or to any agency of that political subdivision. Additionally, Section 112.313(7)(a) prohibits a public officer from having a contractual relationship with a business entity doing business with her agency.

You indicated that the purchase of food is made by staff in the Redevelopment Divsion, not the Downtown/Ballough Road Redevelopment Area Board. This notwithstanding, we are of the view that Sections 112.313(3) and 112.313(7)(a) prohibit the Redevelopment Area Board member from selling to the City the food that will be consumed at her own Board's meetings absent one of the exemptions listed in Section 112.313(12), Florida Statutes. However, meals purchased by other City boards or departments would not violate Sections 112.313(3) or 112.313(7)(a), Florida Statutes, as long as neither the Downtown/Ballough Road Redevelopment Area Board nor the Development Area Board member have any involvement in the purchasing decision. In a number of opinions, we have opined that Section 112.313(3), Florida Statutes, does not prohibit a member of a subordinate board from selling goods or services to other boards or departments in the same agency or political subdivision, as long as neither the member nor the member's board has any say in the purchasing decision. See CEO 85-55, where we opined that a city arts advisory committee member could sell photographic supplies to the city, and CEO 85-85, where we opined that a city planning and zoning board member could contract with the city to clear lots located within the city.

With regard to statutory exemptions that may be applicable to negate the conflict regarding the Downtown/Ballough Road Redevelopment Area Board, you ask whether the "advisory board" exemption in Section 112.313(12) would be available because Redevelopment Area Boards serve in an advisory function to the City Commission, the City Planning Board, and the CRA. However, according to the information provided, Redevelopment Area Boards do not serve in an advisory capacity on zoning matters; for this reason, we find that they do not meet the definition of "advisory body" in Section 112.312, Florida Statutes.² See CEO 10-24, Note 10. Nonetheless, it is possible that other exemptions in Section 112.313(12) may be applicable, particularly Section 112.313(12)(f), Florida Statutes, that allows transactions, in the aggregate, which do not exceed $500 per calendar year.

Accordingly, a prohibited conflict of interest would be created where the Redevelopment Area Board member caters meals for the meetings of the Redevelopment Area Board on which she serves unless one of the exemptions in Section 112.313(12), Florida Statutes, is applicable. Selling food to other City departments or boards would not violate the Code of Ethics as long as neither the Redevelopment Area Board member nor the Redevelopment Area Board on which she serves are involved in the purchasing decision.

ORDERED by the State of Florida Commission on Ethics meeting in public session on May 4, 2012 and RENDERED this 9th day of May, 2012.

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Robert J. Sniffen, Chairman