CONFLICT OF INTEREST
COMMUNITY REDEVELOPMENT AGENCY BOARD MEMBERS
DOING BUSINESS WITH COMMUNITY REDEVELOPMENT AGENCY
THROUGH COMMERCIAL LOAN SUBSIDY PROGRAM
To: Mr. Lonnie Groot, Attorney for the City of Sanford Community Redevelopment Agency (Lake Mary)
SUMMARY:
A prohibited conflict of interest would be created were community redevelopment agency (CRA) board members to apply for and receive commercial loan subsidies from the CRA to make improvements to property they own within the designated CRA redevelopment area. Section 112.313(7)(a), Florida Statutes, prohibits contractual relationships with business entities doing business with one's own agency, as well as contractual relationships which would create a continuing or frequently recurring conflict between private interests and the performance of public duties, or which would impede the full and faithful discharge of public duties. CEO 98-3 and CEO 88-65 are referenced.
QUESTION:
Is a prohibited conflict of interest created where community redevelopment agency (CRA) board members apply for and receive funds from the CRA to make improvements to property they own within the designated CRA redevelopment area?
Your question is answered in the affirmative.
In your letter of inquiry and in supplemental information provided to our staff, you relate that the City of Sanford has, by ordinance, created a Community Redevelopment Agency (CRA), which is governed by a Board of five appointed by the City Commission. Board members must own property within the designated CRA redevelopment area, where they either reside or engage in a business, practice a profession, or perform a service. From the CRA's website,1 we understand that the CRA offers several types of programs that fund activities in the designated area. One program is a façade grant that provides up to $10,000 for improvements to the exteriors of buildings located in the area, and another program (which is the subject of your inquiry) is a commercial loan subsidy program that provides funds for renovations to businesses located within the area. The CRA also provides funding to organizations for special events held in the area. You question whether the Code of Ethics would be violated were Board members to apply for and receive funds from the CRA through its commercial loan subsidy program.
We have dealt with a similar issue before. In CEO 98-3, we opined that a prohibited conflict of interest would be created where a board member of a community redevelopment agency sought a low-cost loan through a program offered by his agency. That opinion concluded that the board member's real estate partnership would be doing business with his agency, a relationship prohibited by the first part of Section 112.313(7)(a). In Complaint No. 09-081, In re Wendall Hannum (COE Final Order No. 10-132 (2010)) we found a violation of Section 112.313(7)(a), where a member of a tourist development council applied for and received funding from his own agency.
We have consistently found that an entity is "doing business" with an agency for purposes of Section 112.313(7)(a), Florida Statutes, when the parties have entered into a lease, contract, or other type of legal arrangement under which one party would have a cause of action against the other in the event of a default or breach. See CEO 88-65 and the opinions cited therein. Based upon the sample documents you provided that purport to create enforceable obligations between the parties to the documents, including a lienhold interest on property when the CRA subsidizes commercial loans for business owners in the redevelopment area, we believe that this arrangement constitutes "doing business" for purposes of Section 112.313(7)(a), Florida Statutes, and would thus be prohibited were CRA Board members to enter into these arrangements with their own agency.
You have suggested that such a view would create an inconsistency in the Code of Ethics since, pursuant to Section 112.3143(3)(b), Florida Statutes,2 members of community redevelopment agencies are allowed to vote when voting in their capacity as CRA Board members and could, therefore, legally vote to award themselves a grant. An exemption to a prohibition must be narrowly construed, (State v. Nourse, 340 So. 2d 966 (Fla. 3d DCA 1976)), and we do not construe the exception to the voting conflict law as a negation of the applicability of Section 112.313(7)(a), Florida Statutes. If anything, the placement of the exemption in Section 112.3143(3)(b), Florida Statutes, suggests that the Legislature specifically intended to create an exemption only in that context.
Your question is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on March 30, 2012 and RENDERED this 4th day of April, 2012.
____________________________________
Robert J. Sniffen, Chairman
[1] http://sanforddowntown.com/cra-services/programs-and-grants/
[2] Section 112.3143(3)(b), Florida Statutes, provides:
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, when voting in said capacity.