CONFLICT OF INTEREST

COMPANY OWNED BY CITY COUNCIL MEMBER
DOING BUSINESS WITH COMMUNITY REDEVELOPMENT AGENCY

To: Robert S. Swaine, Esq. (Sebring)

SUMMARY:

Due to applicability of the "sole source" exemption of Section 112.313(12)(e), Florida Statutes, under the circumstances presented, a prohibited conflict of interest would not be created under Section 112.313(3), Florida Statutes, were a community redevelopment agency to enter into a contract for electronic advertising with a company owned by a member of the city council. CEO 81-2, CEO 09-1, CEO 00-10, and CEO 06-28 are referenced. ¹

QUESTION:

Would a prohibited conflict of interest be created were a member of a city council to sell, through a company that he owns, advertising services to the same city's community redevelopment agency?

Under the circumstances presented, your question is answered in the negative due to the applicability of the "sole source" exemption.

In your request for an advisory opinion and in additional information provided to our staff, you state that you are requesting this opinion on behalf of a member of the Sebring City Council (Requestor). You state that the Requestor is the owner of an advertising business that has electronic billboards at multiple sites throughout Highlands County. You further state that the Sebring Community Redevelopment Agency (CRA) wishes to undertake electronic billboard advertising for its functions. In particular, the CRA Board recently made the decision to switch its advertising mechanisms from static to electronic billboards to enable the CRA to change its messaging throughout the course of the year. The Board then evaluated digital billboard location options based upon their ability to direct traffic along the most common thoroughfares to the downtown area. Thereafter, the Board selected three electronic billboards located at optimal locations in closest proximity to both the downtown district and the CRA's existing static billboards, to notify motorists of the CRA's functions and to direct them to the downtown district. You state that all three billboards are owned by the Requestor's advertising business.

You indicate that the CRA is a dependent special district created pursuant to Part III, Chapter 163, Florida Statutes. You relate that the City Council has delegated to the CRA all community redevelopment powers as provided under Chapter 163, with the exception of the powers reserved to the City Council as set forth in Section 163.358, Florida Statutes. The CRA is governed by a board of seven commissioners appointed by the City Council which also designates the Chairman and Vice Chairman.² You state that the CRA's board acts as a separate governing body, although the City Council votes to approve the payment of all CRA bills. Thus, you inquire whether a prohibited conflict of interest would arise under the Code of Ethics for Public Officers and Employees (Code of Ethics) were the CRA to engage in a contract with the Requestor's company for the provision of advertising services on the three electronic billboards selected.

Section 112.313(3), Florida Statutes, relevant to your inquiry, provides:

DOING BUSINESS WITH ONE'S AGENCY.—No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's 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 the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she 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 or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(c) Appointment to public office.

(d) Beginning public employment.

The first part of Section 112.313(3) prohibits a public officer from acting in an official capacity to purchase, rent, or lease any realty, goods, or services for his own public agency from any business entity (e.g., a corporation or a company) of which the public officer holds certain ownership or leadership positions. We find that the prohibition of the first part of Section 112.313(3) is not applicable in the instant case since the Requestor, as a member of the City Council, is not seeking to purchase advertising services for the City Council from his company. Rather, his company is contemplating the sale of advertising services to the CRA (a separate agency from the City Council).

The second part of Section 112.313(3), Florida Statutes, prohibits a public officer from acting in a private capacity to sell goods or services to his political subdivision or to any agency of the political subdivision. In previous opinions of this Commission we have found that either owning a material interest in or being a director of a business entity selling goods or services constitutes "acting in one's private capacity" to sell within the meaning of the second part of Section 112.313(3), Florida Statutes. See e.g., CEO 81-2 and CEO 09-1. Accordingly, absent the application of an exemption to Section 112.313(3), the second part of the statute would prohibit the Requestor's company from engaging in the sale of billboard advertising services to the CRA—an agency of the political subdivision of which he is a public officer.

Section 112.313(12)(e), states, in pertinent part:

. . . no person shall be held in violation of subsection (3) or subsection (7) if:
The business entity involved is the only source of supply within the political subdivision of the officer or employee and there is full disclosure by the officer or employee of his or her interest in the business entity to the governing body of the political subdivision prior to the purchase, rental, sale, leasing, or other business being transacted.

In prior opinions of this Commission we have opined that the "sole source" exemption may be applicable to obviate a conflict of interest when the official's business is the only source of supply within the political subdivision or, as here, where the official's business offers a uniquely advantageous or optimal source of supply to reach a specifically targeted audience. See CEO 00-10 and 06-28. In CEO 00-10 we considered a question from a community redevelopment agency which wished to purchase advertising from a local television station in which one of its employees owned a material interest. While there were other stations which could reach at least part of the community redevelopment agency's target audience, those stations addressed much larger audiences and were concomitantly more expensive. In that analysis, we found the station to be a "sole source," adding in a footnote, "[w]e do not believe it is our role to seek to micromanage or second-guess the CRA's decision to choose television over radio or some other medium or its decision to target via its advertising the County's populace rather than another demographic group."

Similarly, in the instant matter we decline to second-guess the CRA's decision that the three digital billboards identified are the optimal mechanism for achieving the CRA's advertising goals. While you have represented that the Requestor's company is not the only business entity within Sebring that provides billboard advertising services, you have thoroughly supported your contention that the three digital billboards selected by the CRA are uniquely positioned in locations optimal to reach motorists and direct them to CRA activities transpiring in the downtown area.

Accordingly, we find that the "sole source" exemption of Section 112.313(12)(e), Florida Statutes, would apply to negate a conflict of interest for the member arising under Section 112.313(3), Florida Statutes, were his company to enter into a contract for electronic advertising services with the CRA.³

Your question is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on December 7, 2018, and RENDERED this 12th day of December, 2018.

____________________________________

Guy W. Norris, Chair

^[1]Prior opinions of the Commission on Ethics can be viewed at www.ethics.state.fl.us.

^[2]See Article II, Section 8-31 to 8-35, of the Sebring Code of Ordinances setting forth the powers, duties, and authority of the CRA.

^[3]The Requestor must complete the CE Form 4A (Part B) prior to his company entering into a contract with the CRA. Further, the Requestor must comply with the requirements of Section 112.3143(3)(a), Florida Statutes, and satisfy all procedures set forth in CE Form 8B, should any measures regarding the CRA's advertising campaign or the payment of CRA bills come before the City Council which would inure to the Requestor's special private gain or loss, to that of his company, or to that of other persons or entities listed in the statute.