CEO 93-35 -- December 2, 1993

CONFLICT OF INTEREST

CITY HOUSING AUTHORITY EMPLOYEE'S COMPANY

BIDDING ON CITY PROJECTS

To: Ronald Bassett, Employee, Fort Myers Housing Authority

SUMMARY:

No prohibited conflict of interest would be created were a city housing authority employee's company to bid on city projects. Because a housing authority is a political subdivision separate and distinct from the city, Section 112.313(3), Florida Statutes, would not prohibit a fencing and contracting business, 49 percent of which is owned by an employee of a housing authority, from contracting with or bidding on projects of the city.

Section 112.313(7)(a), Florida Statutes, also would not prohibit the housing authority employee's business from contracting with or bidding on projects of the city because the employee's business, with which he has a contractual relationship, is not regulated by or doing business with his agency. In addition, because the housing authority functions separately and independently from the city, no frequently recurring conflict of interest or impediment to the full and faithful discharge of his public duties would be created were his business to bid on or contract with the city on its projects.

QUESTION:

Does a prohibited conflict of interest exist where a fence and contracting business partly owned by you, an employee of a city housing authority, performs work on and bids on city projects?

Your question is answered in the negative.

Through your letter of inquiry, we are advised that you are employed by the federally funded Fort Myers Housing Authority, which originally was established by the City of Fort Myers. You advise that your position has no connection to the City of Fort Myers Purchasing Department or to any other agency of the City that awards bids and makes "decisions" relative to construction bidding. You advise that you coordinate Housing Authority projects; however, in your capacity as employee for the Housing Authority, you have nothing to do with any City of Fort Myers project.

You also advise that you are a 49 percent shareholder in a fence and contracting business which was begun by your wife in 1983. When you married your wife two years ago, you obtained your interest in the business, while your wife retained a 51 percent interest. You advise, however, that you neither draw money from the business nor are employed by the business. You advise that since the business was established, it has engaged in numerous projects for the City and has been on the City's bid list. You are concerned because a question now has been raised about the possible existence of a conflict of interest should the business continue to perform work for the City in view of your employment with the Housing Authority. Because of these questions, the business is not being permitted to submit bids on projects, you advise.

The Code of Ethics for Public Officers and Employees provides 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 purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee of 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 to any political subdivision or any agency thereof, if he 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. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(d) Beginning public employment.

[Section 112.313(3), Florida Statutes.]

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.]

Section 112.313(3), Florida Statutes, prohibits you from acting in your official capacity as a purchasing agent to purchase goods or services for your agency and from being an officer or director of, or owning more than five percent of, any business entity which is doing business with your agency. We previously have found that for purposes of this prohibition the Housing Authority is not an agency of the City but a political subdivision separate and distinct from the City. See CEO 79-46, CEO 81-25, CEO 81-77, CEO 82-40, CEO 83-38, CEO 83-83, and CEO 90-38.

In CEO 83-83 we analyzed whether a conflict of interest was created where a city commissioner agreed to act as a real estate broker for the city housing authority in the purchase of property located within the city, where he would have received a commission on property purchased by the authority. In finding that Section 112.313(3) would not be violated, we stated:

In CEO 81-25 we referenced the statutory independence of a city housing authority from control by the city under Chapter 421, Florida Statutes. It was this degree of independence as granted in the statutory predecessor to Chapter 421, F.S. (Chapter 17981, Acts of 1937), which led the Supreme Court to find that the Jacksonville Housing Authority was not a 'mere agency' of the city, but was a 'separate and distinct corporate entity from that of the municipality . . .' State ex rel. Burbridge v. St. John, 197 So. 131, 134 (Fla. 1940). Similarly, the Attorney General has advised that housing authorities are 'special districts' under the Uniform Local Government Financial and Reporting Act, Part III, Chapter 218, Florida Statutes, and that such authorities are 'political subdivisions' subject to the Consultant's Competitive Negotiation Act, Section 287.055, Florida Statutes. AGO 074-234, AGO 074-367, and AGO 078-19.

Therefore, while the Housing Authority is an 'agency' as defined in Section 112.312(2), Florida Statutes, for purposes of the Code of Ethics, it is not an agency of the City. . . .

We find that you are not a purchasing agent for the City of Fort Myers and that your "agency," as that term is defined in Section 112.313(2), Florida Statutes, is the Housing Authority. Therefore, because your company is doing business with the City rather than the Housing Authority, we find that your business is not prohibited by Section 112.313(3), Florida Statutes, from contracting with or bidding on projects of the City of Fort Myers.

Section 112.313(7)(a), Florida Statutes, prohibits you from having any employment or contractual relationship with a business entity which is doing business with or is subject to the regulation of your agency, the Housing Authority. By virtue of your 49 percent ownership interest in the fencing and contracting business, you have a contractual relationship with the business. See CEO 82-65 and CEO 86-36. However, you have not indicated that the business would be contracting to perform work for the Housing Authority, and we see no basis for concluding that the business would be regulated by your agency for purposes of Section 112.313(7)(a).

The second part of Section 112.313(7)(a) prohibits you from having any employment or contractual relationship that will create a continuing or frequently recurring conflict of interest or that would impede the full and faithful discharge of your public duties. Because the Housing Authority functions separately and independently from the City, we do not perceive any frequently recurring conflict of interest or impediment to the full and faithful discharge of your public duties as an employee of the Housing Authority were your company to contract with the City of Fort Myers on its projects.

Accordingly, under the circumstances presented we find that no prohibited conflict of interest would be created were your business to either contract with or bid on projects for the City of Fort Myers while you continue to be employed by the City Housing Authority. We note that, even if our conclusion had been otherwise, the exemption provided under Section 112.313(12)(b), Florida Statutes, for contracts awarded through sealed competitive bids would permit you to contract with the City of Fort Myers as long as the conditions set forth in that section were met.