CONFLICT OF INTEREST

LIMITED LIABILITY COMPANY OF CITY COUNCIL MEMBER
SELLING SOLE-SOURCE REAL PROPERTY TO THE CITY

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

SUMMARY:

Under the particular circumstances presented and limited to the facts of this opinion only, due to the applicability of the "sole source" exemption found in Section 112.313(12)(e), Florida Statutes, a prohibited conflict of interest would not be created under Section 112.313(3) or 112.313(7)(a), Florida Statutes, were a member of a city council to sell a parcel of real property to the city from his limited liability company. CEO 91-31, CEO 10-4, and CEO 11-2 are referenced.

QUESTION:

Would a prohibited conflict of interest be created were the limited liability company of a member of a city council to sell real property to the city?

Under the particular circumstances presented and limited to the facts of this opinion only, your question is answered in the negative.

In your role as City Attorney, you inquire on behalf of a member of the City Council. You aver that the City seeks to acquire additional property in its downtown area to expand its offering of public parking in service of several specific, City-owned buildings and other common gathering sites, including: (1) Highlands Art League, (2) Highlands Little Theater, (3) Jack Stroup Civic Center, (4) Rotary Park, (5) City Pier, (6) City Pier Beach, (7) Sebring Historical Society, and (8) Highlands County Library (collectively, "specified sites"). A member of the City Council is the managing member of a limited liability company (LLC) that owns a parcel of land in close proximity to the specified sites and the Council member is interested in selling the parcel to the City so that it may convert the parcel to public parking.¹

The City Administrator and related City staff have reviewed the situation and have concluded that the member's property presents unique circumstances that distinguish it from all others for acquisition by the City. In response to questions from our staff, the City Administrator identified criteria for evaluating potential properties—"location, access points and cost to convert are all criteria used in evaluating the properties"—and explained, "[i]n the staff's opinion, the property in question is the only property that satisfies all of the criteria," and that "there is no other property currently on the market that is as conveniently located as this property" to the specified downtown buildings and attractions.² The City Administrator also noted, "[t]here is currently no other real property within the immediate vicinity of the [specified buildings] that could serve as a parking lot." The City Administrator and City staff identified this property as uniquely advantageous because it already is a parking lot and, due to its proximity to the specified sites, it will allow the City to better accommodate large events at the specified sites. It is under these circumstances that you ask whether the member of the City Council may sell the parcel to the City.

Relevant to your inquiry, Section 112.313(3), Florida Statutes, 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 first part of this provision operates to prevent a public employee from acting in his or her public capacity as a purchasing agent, or a public officer acting in his or her official capacity, to “purchase, rent, or lease any realty, goods, or services” for his or her agency from any business entity in which he or she is an officer or director or in which the employee or officer or his or her spouse or child owns more than a five-percent interest. The second part of this subsection prevents a public employee or officer from acting in his or her private capacity to rent, lease, or sell any realty, goods, or services to his or her political subdivision or any agency of his or her political subdivision.

Without the benefit of an exemption, the application of this statute to the facts you provide would prohibit the City Council member from selling realty to the City. An exemption, however, provided in Section 112.313(12)(e), Florida Statutes, would make the sale permissible, so long as the member's LLC is the sole source of supply. In this regard, Section 112.313(12)(e) states:

. . . no person shall be held in violation of subsection (3) or subsection (7) if: . . .

(e) [t]he 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.

The Commission has applied this exemption in the past to negate facially-apparent conflicts of interest under Section 112.313(3). In CEO 10-4, the Commission applied the exemption to negate the application of Section 112.313(3) where a county commissioner's husband owned a material interest in a property, so long as the county had determined that "there [was] a need for the specific property to be acquired." See CEO 10-4 (citing CEO 91-31). In CEO 11-2, the Commission again applied the exemption in a land sale/use context to allow a member of the governing board of a water management district to sell the rights to water storage, water release, and related water management activities on his more-than-15,000-acre property after the staff of the water management district determined that the property presented specific and unique circumstances that made this property preferable to all others. See CEO 11-2, Footnote 5.

In this case, where the City Administrator and related City staff have concluded that the member's parcel, as compared to other properties in the City, presents unique advantages due to its proximity to specified sites and its present status as a parking lot, we find that the "sole source" exemption of Section 112.313(12)(e) negates the conflict of interest for the member of the City Council that otherwise would arise from Section 112.313(3). However, the City Council member must complete and file CE Form 4A (Disclosure of Business Transaction, Relationship, or Interest) prior to the sale. Also, the City Council member must comply with Section 112.3143(3)(a), Florida Statutes, which will include abstaining from votes relating to this matter, announcing his conflict prior to abstaining, and completing and filing CE Form 8B, whenever such votes occur.

We also note that, due to the application of Section 112.313(12)(e), we do not find the prohibition against conflicting employment or contractual relationships in Section 112.313(7)(a), Florida Statutes,³ to present a prohibited conflict of interest.⁴

Your inquiry is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on January 24, 2020, and RENDERED this 29th day of January, 2020.

____________________________________

Kimberly B. Rezanka, Chair

^[1]This parcel, when converted to public parking, would add over 140 public parking spots to the City's current offering of 70 spots in the downtown area. The City Council member had previously executed a $200,000 lease-purchase agreement for the property with a lessee, but the lessee ultimately decided not to purchase the property during the lease. The City recently commissioned an appraisal of the property, which revealed a $202,000 appraised value. The City and the City Council member have agreed in principle to a $200,000 purchase price for the parcel. This information was supplied during our consideration of this matter on January 24, 2020.