CONFLICT OF INTEREST

CITY COMMISSIONER OR COMMISSIONER'S FIRM
CONTRACTING WITH RADIO STATION

To:        Jennifer S. Blohm (Tallahassee)

SUMMARY:

Section 112.313(7)(a), Florida Statutes, would prohibit a city commissioner from entering into a contract to provide local radio show hosting services for a radio station from which the city purchases broadcast air time, whether he contracts with the station personally or through his firm. However, the commissioner's firm would not be prohibited from entering into a more general consulting and advertising contract with the same radio station. CEO 12-7, CEO 06-21, CEO 03-13, CEO 88-65, CEO 82-78, and CEO 80-25 are referenced.¹

QUESTION 1:

Would a prohibited conflict of interest be created if a city commissioner were to be employed by a radio station as host of a local radio talk show, where the city utilities department purchases air time from that station?

Under the circumstances presented, this question is answered in the affirmative.

In your letter of inquiry and information provided to our staff, you relate that this opinion is sought on behalf of a member of the Tallahassee City Commission ("Commissioner").

You state that the Commissioner is considering an offer of a contract with a radio station to host a local radio talk show which would include guest interviews and local news reports, with the likelihood that political and local government topics would be discussed during the show. You explain that in this first scenario, the Commissioner contemplates entering into an individual contract with the station under which it would pay him a salary for hosting the show. You write that an additional contract is also contemplated, under which his advertising and public relations firm (of which he is sole owner) would sell advertising for the radio station, in general and for his show, as well as providing general consulting services to the radio station in the areas of community promotion, marketing, and training. The Commissioner's firm, which is registered as a corporation with the Florida Secretary of State, would be compensated on an hourly basis for such services and would be paid a commission for any advertising time the firm sold on behalf of the station. You further explain that the City Utilities Department currently purchases broadcast air time on the same radio station in order to inform utilities customers about topics including energy conservation and emergency preparedness. You state that the City Commission approves the overall budget for the Utilities Department but does not review or approve the City Utilities Department's purchases of broadcast air time. Individual radio air time purchases for the Utilities Department are, you advise, approved by the City Manager. The applicable provision of the Code of Ethics is Section 112.313(7)(a), Florida Statutes, which states:

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 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.

Section 112.313(7)(a) prohibits the Commissioner from having a contractual or employment relationship with a business entity that is doing business with his agency. It also prohibits employment and contractual relationships which create continuing or frequently recurring conflicts of interest, or which impede the full and faithful discharge of public duties.

By virtue of its purchases of broadcast air time from the radio station, the Commissioner's agency (the City) is "doing business with" the station.² Consequently, the Commissioner's employment by the station would fall squarely within the statutory prohibition, and as none of the possible exemptions in Section 112.313(12), Florida Statutes (sealed competitive bidding, sole source of supply, etc.) apply here, we find that the Commissioner's employment by the radio station would create a prohibited conflict under the first part of Section 112.313(7)(a), Florida Statutes.

Accordingly, we find a prohibited conflict of interest would be created were the Commissioner to contract with the radio station to provide his services as a talk show host.

This question is answered accordingly.

QUESTION 2:

Would a prohibited conflict of interest be created if, alternatively, the Commissioner's firm were to contract with the same radio station to provide his hosting services for a local radio talk show, where the city utilities department purchases air time from the station?

Under the circumstances presented, this question is answered in the affirmative.

In Question 1 above, we found that a contract between the radio station and the Commissioner under which the Commissioner would host a radio show would create a prohibited conflict of interest under the first part of Section 112.313(7)(a), because the Commissioner would have an employment or contractual relationship with a company (the radio station) that is doing business with his agency. In your alternative scenario, the Commissioner would instead be an employee of his advertising and public relations firm, of which he is sole owner, and his firm would provide his services to the radio station.

In analyzing whether a public officer or employee has a contractual relationship with a business entity doing business with his agency, we typically observe the separate "personhood" of corporate entities from each other and from their owners. For example, in CEO 82-78 we found a town mayor would have a prohibited conflict of interest if he were employed as a burglar alarm salesman for a company which had been granted a cable television franchise by the town, but would not have a conflict if the owner of the company formed a separate limited partnership for the operation of the cable television system. We reasoned that the separate partnership would be the entity regulated by the town, while the mayor would be employed by the original–and separate-corporation.

At the same time, we have recognized that the corporate form, while useful and necessary in a variety of contexts, cannot be allowed to "thwart the intent and effectiveness of the Code of Ethics." CEO 80-25. Thus, in CEO 06-21, we found that for purposes of the voting conflicts law, a town councilman's "principal" was the owner of a number of companies which had extensive interests in the town, despite the fact that the council member's paycheck came from one of the companies, rather than from the owner himself. In that opinion, we said:

For the most part, we have recognized the separation of legal identities of corporations from their officers, owners, or parents. We have specifically rejected this approach, however, where the facts require it. For example, in CEO 03-13, we found a voting conflict of interest would be created were a city council member to vote on measures concerning expansion of a medical center owned by a corporation that was owned by another corporation which owned yet another corporation which owned still another corporation which employed the member.

Similarly, in CEO 80-25, we found Section 112.313(7)(a) would be violated were a county commissioner to be a stockholder and officer of a corporation which was merely a holding company for a wholly owned subsidiary which acted as a promoter to book shows into an arena owned and operated by the county. In that opinion, we said:

. . . [W]e have seen no indication that the corporations involved here have been created in order to cover any fraud or injustice. However, in the context of conflict of interest laws, we also observe that it would appear to be no less of a conflict of interest for a public officer or employee to own an interest in and be an officer of a parent, holding company than for him to own and be an officer of a wholly owned subsidiary. Thus, if we were to observe the strict, legal formalities of the corporate form, a public officer or employee could circumvent the Code of Ethics in order to own a corporation doing business with or subject to the regulation of his agency merely by adding a holding company to insulate him from the Code of Ethics.

In the instant scenario, it is clear that the radio station specifically seeks the services of the Commissioner himself, rather than services of his firm generally, to host the radio show, particularly since the show is to contain political and governmental content inextricably woven into the Commissioner's service on the Tallahassee City Commission. In In re James K. Gordon, 13 FALR 1864, 1891-1893 (Commission on Ethics 1990), aff'd in part and rev'd on other grounds, 609 So. 2d 125 (Fla. 4th DCA 1992), we found that a city commissioner for the City of Coral Springs violated Section 112.313(7)(a) when two franchisees of the City retained him to perform certain public relations services himself, notwithstanding the fact that he was paid for those services through his public relations firm. This was because, although the franchisees paid Gordon's company, the facts made clear that the franchisees were "retaining Respondent to personally perform the services and that Respondent was agreeing to personally perform those services." Id. at 1893.

As in Gordon, under the instant facts the radio station desires the services of the Commissioner himself, and payment to him through his firm, rather than directly by the radio station, does not change the underlying relationship. Therefore, we find a prohibited conflict of interest would be created under the first part of Section 112.313(7)(a) were the Commissioner's firm to contract with the radio station to provide his services as a talk show host.

Accordingly, we find a prohibited conflict of interest would be created were the Commissioner's firm to contract with the radio station to provide his services as a talk show host.

This question is answered accordingly.

QUESTION 3:

Would a prohibited conflict of interest be created if the Commissioner's firm were to contract with the same radio station to provide consulting services and advertising sales, where the city utilities department purchases air time from the station?

Under the circumstances presented, this question is answered in the negative.

The radio station's potential employment of the Commissioner's firm to provide consulting services and advertising sales to the radio station presents facts that differ from those of Question 2 in an important way: there is no indication that the radio station is specifically seeking the Commissioner's personal services or that he has agreed to personally perform the services they seek. In other words, here the radio station appears to be seeking the services of the firm generally, rather than of the Commissioner himself. Under such a scenario, observance of the corporate form is appropriate, and the contract would not be prohibited under the first part of Section 112.313(7)(a). Nor would this scenario create a conflict under the second part of Section 112.313(7)(a), because nothing in the facts presented suggests that the firm's work in promotion, marketing, and training for the station will interfere with any responsibility the Commissioner has as a member of the City Commission. However, the Commissioner would be required to comply with the voting conflicts law, Section 112.3143(3)(a), Florida Statutes, as to any measures related to the radio station that may come before the City Commission.

This question is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on March 7, 2014, and RENDERED 12th day of March, 2014.

____________________________________

Morgan R. Bentley, Chairman

^[1] Opinions of the Commission on Ethics may be obtained from its website www.ethics.state.fl.us.

^[2] 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. CEO 12-7; CEO 88-65.