CONFLICT OF INTEREST

CITY COMMISSIONERS CO-OWNING INTERNET COMPANY
WHICH RAISES ADVERTISING REVENUE FROM CITY VENDORS

To: Ms. Michelle Gomez and Ms. Julie Fishman (Tamarac)

SUMMARY:

Section 112.313(7)(a), Florida Statutes, will prohibit city commissioners from soliciting city vendors to advertise on their company's website, as such activity could impede their responsibility to make impartial decisions in their public capacity about the vendors. While Sections 112.313(2), 112.313(4), 112.313(6), and 112.313(8), Florida Statutes, will not necessarily be violated were their company to solicit advertising from sources other than city vendors, the commissioners should be mindful of their provisions. Referenced are CEO 15-6, CEO 13-16, CEO 12-8, CEO 11-18, CEO 96-7, and CEO 94-47.

QUESTION:

Would a prohibited conflict of interest be created were members of a city commission to solicit advertising revenue from city vendors for their Internet start-up company?

Your question is answered in the affirmative.

In your letter of inquiry and additional information provided to our staff, you state that you are both city commissioners and that you are co-owners of an online (Internet start-up) company (an LLC). You relate the intent of the company is to integrate the city's calendar with the calendars of nonprofit and civic organizations in the community, allowing users to access information about a multitude of community events in one centralized location. You state your interest in creating the company was to provide a community service for individuals and nonprofits, explaining that nonprofits often schedule events on the same date as each other or on the same date as a charity event, and that the success of such events is thereby diminished as they all draw from the same pool of participants. You emphasize that neither of you intend to accept any salary or compensation from the company and that no stock will be issued for it; the company will be focused upon assisting nonprofits and the individuals who support them.

However, you indicate the company's website will need revenue to operate. You state you anticipate raising such revenue by soliciting businesses in the community to advertise on the website. You explain that once the company is operational, you intend to appoint a five-member advisory board who will craft corporate bylaws. These bylaws will detail the types of businesses that the company will solicit for advertising or sponsorships.¹ You indicate you will not be voting members of the advisory board, and that you will not be directly involved in the solicitation of advertising or sponsorships, although you apparently will continue to be "principals" and "co-owners" of the business. You also state that any revenue generated from advertisers will be used solely to fund the website's operating and maintenance costs.

Your specific inquiry is whether you will be in violation of any provision in the Code of Ethics if the company solicits advertising from city vendors. You explain that while it is not your intention to specifically target city vendors for solicitations, you would like to clarify whether the company will be precluded from asking a vendor for support.

The statute most relevant to your inquiry is Section 112.313(7)(a), Florida Statutes, which states:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIOSHIP.—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, any 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.

In part, Section 112.313(7)(a) prohibits a public officer or employee from having a contractual relationship or employment that will create a "continuing or frequently recurring" conflict of interest or that will "impede the full and faithful discharge" of her public duties. This portion of the statute requires that a public officer's or employee's official responsibilities be compared to her private interests "to determine whether the two are compatible, separate, and distinct, or whether they coincide to create a situation which tempts dishonor." Zerweck v. State, Commission on Ethics, 409 So. 2d 57, 61 (Fla. 4th DCA 1982) (internal quotations omitted). Importantly, the statute is preventative in nature; there need not be any actual corruption for it to apply, the potential for an objective incongruence of private interests and public responsibilities is sufficient. CEO 15-6 and CEO 13-16.

The fact that you are both owners of the company is sufficient to constitute an employment or contractual relationship. See CEO 96-7 and CEO 94-47. The question thus becomes whether your relationship with your company could tempt you to compromise your duties as city commissioners were the company to begin soliciting revenue from city vendors.²

We addressed a similar question in CEO 89-13, where a county property appraiser was operating a private business which provided consulting and data processing services to property appraisers in other counties, as well as to governmental entities outside of the county. He questioned whether his business could hire a consultant to provide data processing services to private clients while the consultant was, at the same time, providing similar services as an outside contractor to his property appraiser's office.

We found in that situation that the property appraiser's private business relationship with the consultant could impede his impartiality in ensuring the county would receive the best possible terms when the consultant's public contract was ripe for renewal.

Your situation is analogous to CEO 89-13, as your company's relationship with a city vendor could affect your impartiality when the city is asked to review the terms of its contracts with that vendor, or otherwise act regarding the vendor. Your company's private relationship with city vendors could affect your view of those vendors in your capacity as city commissioners, and, consequently, your decisions regarding them. Accordingly, we find your relationship with your company while it solicits advertising revenue from city vendors would create a prohibited conflict of interest under Section 112.313(7)(a).³

The reach of this opinion covers only situations in which your company solicits advertising from city vendors. Section 112.313(7)(a) does not prohibit you from having an ownership interest in the company, per se. Moreover, the statute will not be triggered if your company solicits advertising from sources other than city vendors. We are addressing here only the narrow question of whether Section 112.313(7)(a) prohibits your relationship with your company if solicitations are made of a city vendor.⁴

Should you decide to solicit revenue from sources other than city vendors, though, you need to be aware of several other provisions in the Code of Ethics. While such solicitations will not necessarily violate these provisions, you must stay within their limitations. Section 112.313(6), Florida Statutes, will prohibit you from using your official position or public resources within your trust to secure a special privilege, benefit, or exemption for a person or entity who provides advertising revenue to the company, where your actions are undertaken with a wrongful intent and are inconsistent with the proper performance of your public duties. In addition, Section 112.313(2), Florida Statutes, will prohibit you from soliciting or accepting any advertising revenue based on an understanding that the revenue contribution will influence some vote, official action, or judgment you will make in your public position. Similarly, Section 112.313(4), Florida Statutes, will prohibit you from accepting anything of value on behalf of the company when you know, or with the exercise of reasonable care should know, that it is being given to influence some official action that you or the city might take. And Section 112.313(8), Florida Statutes, will prohibit you from disclosing or using any information which is not available to members of the general public and which was gained due to your public position, when the purpose of disclosing or using such information is to provide a personal benefit or gain to yourself, your website, or any other person or business entity.

Your question is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on June 9, 2017, and RENDERED this 14th day of June, 2017.

____________________________________

Matthew F. Carlucci, Chair

^[1]You relate that until such advertising revenue is raised, you will use personal funds to cover the company's start-up costs, and will volunteer your own time and experience to create the website and its logo.

^[2]Section 112.313(7)(a) also prohibits a public officer employee from having a contractual relationship or employment with a business entity that is regulated by or is doing business with the officer's or employee's agency. It does not appear your scenario will trigger this part of the statute as you are asking about your company—not yourselves personally—establishing a contractual relationship with the vendors. We have found that a public officer does not hold an employment or contractual relationship with a company that is doing business with her public agency merely because a company of which she is an owner has a contractual relationship with the other company. See, among others, CEO 12-8 and CEO 11-18.

^[3]We do not mean to imply by this decision that you would intentionally misuse your position or your resources as a city commissioner. We simply are finding that if your company solicits advertising from vendors doing business with the city, you will be placed in a position which could "tempt dishonor." As previously described, Section 112.313(7)(a) is preventative in nature and is intended to prevent situations in which private economic considerations could override the faithful discharge of public responsibilities. See CEO 13-16.

^[4]Nor will Section 112.313(3), Florida Statutes, be violated if your company solicits advertising from sources other than city vendors. Section 112.313(3) in part prohibits a public officer or employee, acting in a private capacity, from renting, leasing, or selling any realty, goods, or services to her agency or to any agency of her political subdivision. Here, you do not indicate that the company will be selling any services to the city, but, instead, will be developing its website independent from the city and its professional staff. Because the company will not be marketing its website or any services to the city, we find Section 112.313(3) will not apply. Also, because city vendors who contribute revenue will receive equal or greater consideration in return—namely advertising on the website—their contributions cannot be considered a “gift” as that term is defined in Section 112.312(12), Florida Statutes.