CEO 83-48 -- July 28, 1983

CONFLICT OF INTEREST

CITY MANAGER SERVING ON ADMINISTRATIVE BOARD OR OWNING STOCK OF BANK DOING BUSINESS WITH CITY

To: (Name withheld at the person's request.)

SUMMARY:

No prohibited conflict of interest would be created were a city manager to serve as a member of the administrative board of a local bank which does business with the city, so long as the terms of the exemption contained in Section 112.313(12)(g), Florida Statutes, enacted by Chapter 83-282, Laws of Florida, are met. CEO's 77-184, 77-49, and 76-20 are referenced. No prohibited conflict of interest would be created were a city manager to own stock in a local bank. Should the bank seek to act as a depository for the city, compliance with Section 112.313(12)(g) would be required.

QUESTION 1:

Would a prohibited conflict of interest be created were you, a city manager, to serve as a member of the administrative board of a local bank which does business with the city?

Your question is answered in the negative, subject to the condition noted below.

In your letter of inquiry and in a telephone conversation with our staff, you have advised that you are the City Manager of the City of Kissimmee and that you have been approached about serving on the administrative board of a local bank. This board, you advised, acts like a board of directors and has the authority to approve loans within certain ranges, to request the removal of the president, and to become involved in the local administration of the bank. For this service, you would receive an honorarium for monthly meetings and, if you were to serve on the loan committee of the board, an additional amount of compensation.

You also advised that the bank has served as a depository for City funds. Every two years, the City bids out its major business through a system of sealed, competitive bidding. Day-to-day investments are made on a telephone quotation basis through the Finance Director of the City. As City Manager, you review the Finance Director's request and make a recommendation to the City Commission, as you are authorized to recommend and administer fiscal policies.

Section 112.313(3), Florida Statutes, of the Code of Ethics for Public Officers and Employees, prohibits a public employee from acting in an official capacity to purchase services for his agency from a business of which he is an officer or director and prohibits a public employee from acting in a private capacity to sell any services to his agency. In addition, Section 112.313(7)(a), Florida Statutes, prohibits a public employee from having any employment or contractual relationship with a business entity which is doing business with his agency.

In previous opinions we have advised that no prohibited conflict of interest would be created where an officer or employee of an agency is an officer, director, or stockholder of a bank which serves as a depository of that agency's funds. See, for example, CEO's 77-184, 77-49, and 76-20. These opinions were based on Section 136.02(5), Florida Statutes, which provided:

The fact that a county or municipal officer or member of a public board or body, including a district school officer and an officer of any district within a county is a stockholder or an officer or director of a bank will not bar such banks from qualifying as a depository of funds coming under the jurisdiction of any such county or municipal officer, provided it shall appear in the records of the state or county agency that the governing body of such agency has investigated and determined that such county officer or member of a public board or body as aforesaid has not favored such bank or banks over other qualified banks and that there is no violation of subsection (1).

The Legislature repealed this exemption effective January 1, 1982. Chapter 81-285, Section 11, Laws of Florida. However, the 1983 Legislature sought to remedy this situation by reenacting the exemption as Section 112.313(12)(g), Florida Statutes:

The fact that a county or municipal officer or member of a public board or body, including a district school officer and an officer of any district within a county is a stockholder or an officer or director of a bank will not bar such banks from qualifying as a depository of funds coming under the jurisdiction of any such public board or body, provided it shall appear in the records of the agency that the governing body of such agency has determined that such officer or member of a public board or body as aforesaid has not favored such bank or banks over other qualified banks. [Chapter 83-282, Section 6, Laws of Florida.]

This provision became effective on June 24, 1983. Under these circumstances, we are of the opinion that the rationale of our prior opinions remains valid and would apply to your proposed service on the administrative board of the bank.

Accordingly, we find that no prohibited conflict of interest would be created were you to serve as a member of the administrative board for a local bank, so long as the governing body of the City has determined that you have not favored that bank over other qualified banks as provided in Section 112.313(12)(g), above.

QUESTION 2:

Would a prohibited conflict of interest be created were you, a city manager, to own stock in a local bank?

This question is answered in the negative.

In your letter of inquiry you advise that a bank is being formed in your area and that you would like to own stock in the bank as a charter member. You also advise that you would not own a controlling share in the bank, and would not serve as a member of the board of trustees or as an administrative officer of the bank.

The Code of Ethics for Public Officers and Employees provides in relevant part:

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 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 private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), Florida Statutes (1981).]

We previously have advised that a stockholder of a corporation has a contractual relationship with that corporation. See CEO 80-11. However, we do not perceive that the ownership of shares of stock in a local bank would create a conflict of interest prohibited by this section of the Code of Ethics. Should the bank seek to act as a depository for the City, of course, it would have to be done subject to the condition expressed in our response to your first question.

Accordingly, we find that no prohibited conflict of interest would be created were you to own stock in a local bank.