CEO 76-12 -- January 16, 1976

CONFLICT OF INTEREST

DIRECTOR OF BANK LENDING MONEY TO HIS AGENCY

To: George T. Dunlap III, Attorney for Bartow Municipal Airport Development Authority

Prepared by: Gene Rhodes

SUMMARY:

An executive director of a municipal airport authority who is a director of a bank making loans to city for the benefit of said authority is not judged to be in violation of Fla. Stat. s. 112.313(3)(1975). The holding of a directorship in a corporation is deemed to constitute "acting in a private capacity" where that corporation transacts business, and such transactions with one's own agency are prohibited pursuant to the above-cited statute. However, another section of the Code of Ethics, s. 112.316, stipulates that it is not the intent of the code to prohibit private interests which do not interfere with the full and faithful discharge of public duty. The subject executive director is not in a position to supervise, regulate, or advise the city council, which transacts for these loans. And, although the city council sits as the authority board, the director's responsibility in this regard is simply to gather information relative to loan terms for presentation to the council, offering no recommendations. His bank directorship therefore is not deemed to interfere with his public responsibilities and loans from that bank accordingly are permissible under the Code of Ethics.

QUESTION:

Does a prohibited conflict of interest exist where the executive director of a city airport authority is a director of a bank that makes loans to the city for the benefit of the airport authority?

Your question is answered in the negative.

Your letter of inquiry advises us that the executive director of the city airport authority is a director of and owns approximately 1 percent of the outstanding stock in a local bank. This bank and the other local banks are depositories of airport authority funds. The authority has no power to borrow money, and in a few instances the city commission has borrowed money for airport authority purposes. These loans are repaid by the authority, and one loan is presently outstanding with the subject bank.

We feel that this question turns on whether the airport authority is a political subdivision in its own right or is an agency of the city. The Florida Legislature did not create the airport authority, but rather passed a special act authorizing the city to create the authority. Instead of having an independent governing body, the members of the city commission sit as the airport authority. Also, the city owns the property over which the airport authority exercises its function. Further, the special act authorizing the city to create the airport authority states that the city commission may establish procedures governing the authority for the purpose of establishing its independent operation from other functions of the city. Section 1, Ch. 67-1097, Laws of Florida. This provision seems to express an intent to establish the authority as an agency of the city carrying out a city function. Given these facts, we find that the authority is an agency of the city rather than a separate and distinct political subdivision.

The Code of Ethics for Public Officers and Employees states in relevant 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 for his own agency purchase, rent, or lease any realty, goods, or services from any business entity of which he, his spouse, or child is an officer, partner, director, or proprietor, or in which such officer or employee, 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, if he is serving as an officer or employee of any political subdivision, to that subdivision or to any agency thereof. 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 nor be construed to prohibit contracts entered into prior to:

(a) The effective date of this act;

(b) Qualifications for elective office;

(c) Appointment to public office;

(d) Beginning public employment.

[Emphasis supplied; Fla. Stat. s. 112.313(3)(1975).]

We are of the view that being a director of a corporation selling services to an agency in one's political subdivision constitutes "acting in a private capacity" to sell to that agency within the meaning of s. 112.313(3). Accordingly, it would appear that the executive director of the airport authority may not continue to hold that public position while the bank of which he is a director lends money to any agency in the city. However, in construing the provisions of this code as they apply to a public official's private business interests we must give careful consideration to that provision of the Code of Ethics which states:

CONSTRUCTION. -- It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of . . . from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, [or] employee . . . of his duties to the . . . city . . . involved. [Fla. Stat. s. 112.316(1975).]

Pursuant to this provision, the issue before us is whether the holding of a bank directorship under the facts you have described would interfere with the full and faithful discharge of the executive director's public duties. The executive director is not in a position either to supervise or regulate the city council, which makes these loans. Nor do his public duties in any way involve approval of or the giving of advice or recommendations as to where these loans should be made. Rather, he reports to the authority information he has gathered relative to loan terms available at various banks. This being the case, the bank directorship would not in our view interfere with the full and faithful discharge of the executive director's public duties and is therefore permissible under the Code of Ethics.