CEO 88-27 -- April 28, 1988

VOTING CONFLICT OF INTEREST

CITY COMMISSIONERS EMPLOYED BY COMPANY PURCHASING PROPERTY

CONTINGENT UPON REZONING, EMPLOYED BY WHOLLY-OWNED

SUBSIDIARY OF COMPANY, AND EMPLOYED AS BUILDING CONTRACTOR

FOR OTHER POTENTIAL PURCHASERS OF PROPERTY

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

SUMMARY:

A city commissioner is prohibited by Section 112.3143, Florida Statutes, from voting on the rezoning of property where the company which employs him has entered into a contract to purchase the property contingent upon rezoning. A commissioner who is employed by a wholly- owned subsidiary of that company which operates on the premises of the parent company and which receives 40 percent to 50 percent of its business from the parent company also would be prohibited from voting on the zoning amendment. However, another commissioner who is a building contractor would not be prohibited from voting on the rezoning of the property, where he probably would be the building contractor for construction on the property if rezoning is denied and if another group of purchasers is able to buy the property from the existing owner.

QUESTION 1:

Is a city commissioner prohibited by Section 112.3143, Florida Statutes, from voting on the rezoning of property where his employer has contracted to purchase the property contingent upon its receiving a particular zoning designation from the city?

This question is answered in the affirmative.

In your letter of inquiry you advise that .... a member of the Lake Wales City Commission, is employed as an officer of a company which has entered into a contract to purchase certain property within the City adjacent to property on which the company operates. The contract is contingent upon the property's receiving a particular zoning designation from the City which would allow the company to build a warehouse on the property. Under the terms of the agreement, the present owner of the property has applied to have the zoning of the property changed.

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

No county, municipal, or other local public officer shall vote in his official capacity upon any measure which inures to his special private gain or shall knowingly vote in his official capacity upon any measure which inures to the special gain of any principal, other than an agency as defined in s. 112.312(2), by whom he is retained. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of his interest in the matter from which he is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes. However, a commissioner of a community redevelopment agency created or designated pursuant to s. 163.356 or s. 163.357 or an officer of an independent special tax district elected on a one- acre, one-vote basis is not prohibited from voting. [Section 112.3143(3), Florida Statutes (1987).]

This provision prohibits a public officer from knowingly voting on a measure which would inure to the special gain of any principal by whom he is retained.

We previously have advised that an official's employer is a principal by whom he is retained. See CEO 78-27. As the rezoning of the property would inure to the benefit of the subject Commissioner's employer, which stands to purchase the property with appropriate zoning if the measure passes, we find Section 112.3143(3) to be applicable here.

Accordingly, we find that the subject Commissioner is prohibited from voting on the rezoning of property which his employer has contracted to purchase contingent upon rezoning.

QUESTION 2:

Is a city commissioner prohibited by Section 112.3143, Florida Statutes, from voting on the rezoning of property where he is employed by a wholly-owned subsidiary of the company which has contracted to purchase the property contingent upon rezoning by the city?

This question is answered in the affirmative.

In your letter of inquiry you advise that .... is employed by a wholly-owned subsidiary of the company which has contracted to purchase the subject parcel of property. In a conversation with our staff, you advised that the subsidiary engages in trucking and cold storage of citrus products, especially those of the parent company. Approximately 40 percent to 50 percent of the subsidiary's business comes from the parent company, you advised. You further stated that the subsidiary's management works in the same complex as the parent company, although its trucks are housed elsewhere.

We have considered questions relating to voting conflicts of interest where parent and subsidiary corporations are involved only in two opinions. In CEO 78-20 we found that the measure under consideration would benefit the parent company, but that the subsidiary which had contracted to manage the dissolution of a partnership in which the official was a partner was not a "principal" by whom the officer was retained. In CEO 85-31 we advised that a county housing finance authority member was not prohibited from voting on measures relating to the sale of bonds to finance a development project proposed by a limited partnership, where the national brokerage firm which employed him indirectly owned an interest in the partnership through a succession of subsidiary corporations and partnerships.

Under the circumstances presented, we perceive no basis to distinguish between the parent company and its subsidiary. It is clear that the subsidiary is not independent of its parent, but is dependent to a large degree upon the parent company for its business and its office space. Equally important is the fact that the subsidiary is wholly-owned by the parent, thus allowing the parent company to control the Commissioner's employment to the same extent that the subsidiary controls his employment. Therefore, we conclude that for purposes of applying the voting conflicts law the Commissioner's "principal" includes the parent company, which would benefit from the rezoning.

Accordingly, we find that the Commissioner is prohibited from voting on the rezoning of the subject property because of his employment by a wholly-owned subsidiary of the company which has contracted to purchase the property contingent upon its rezoning.

QUESTION 3:

Is a city commissioner prohibited by Section 112.3143, Florida Statutes, from voting on the rezoning of property which is being sold contingent upon rezoning, where the commissioner supports a group that is interested in purchasing the same property and the commissioner probably will be the building contractor who supervises and performs the construction for that group in the event that they purchase the property?

This question is answered in the negative.

In your letter of inquiry you advise that .... a member of the Lake Wales City Commission, is a building contractor. The Commissioner supports a group that is interested in purchasing the subject property in the event that the existing contract to sell the property becomes void. The Commissioner probably will be the building contractor who supervises and performs the construction for the group, in the event that the group purchases the property. The Commissioner's involvement includes his active participation in contacting representatives of the present property owner and in communicating offers to purchase from the group he supports.

We have advised that where a fee or commission would be earned as a result of a rezoning decision, that decision would inure to one's special private gain. See CEO 85-37, regarding the issuance of title insurance where the sale of a parcel of property was contingent upon rezoning, and CEO 82-53, regarding a real estate commission resulting from the sale of property contingent upon its rezoning. Similarly, in CEO 85-42 we advised that a city planning and zoning member would be prohibited from voting on development projects drawn by her spouse, an architect, where city approval of the project was necessary for the architect to earn a fee for preparing the full construction drawings of the project. Here, however, the failure of the rezoning measure is not the only contingency which would have to occur in order for the Commissioner to benefit from the development of the property. The existing property owner still would have to agree to sell the property to the group which the Commissioner has represented. The Commissioner clearly would not be entitled to vote on matters affecting the development if the property is sold to this group, so long as he would be the contractor for the development. Under the present circumstances, however, the present owner of the property is an intervening party who is not within the control of the Commissioner. For this reason, we do not conclude that the rezoning measure would inure to the special gain of the Commissioner.

Accordingly, we find that the subject Commissioner is not prohibited from voting on the rezoning of the property, where he supports a group that is interested in purchasing the same property and probably will be the building contractor supervising and performing construction for the new group in the event the group purchases the property. However, we are of the opinion that the appearance of a conflict of interest in this situation is sufficient to permit the Commissioner to abstain from voting as provided in Section 286.012, Florida Statutes, which authorizes a public officer to abstain from voting where there is or appears to be a conflict of interest under one of the provisions of the Code of Ethics.