CEO 20-13—December 4, 2020
CONFLICT OF INTEREST
CITY COUNCIL MEMBER SERVING ON
BOARD OF CHAMBER OF COMMERCE
RECEIVING FUNDS FROM CITY
To: Kirby Oberdorfer, Deputy Director, City of Jacksonville Ethics, Compliance & Oversight Office
Under the circumstances presented, a prohibited conflict of interest does not exist under Section 112.313(3) or 112.313(7)(a) were a city council member to serve on the board of directors of a chamber of commerce receiving funds from the city to publicize the city. Although Section 112.313(3) prohibits the public officer from acting in her official capacity to purchase services for her agency from a business entity of which she is a director, the city council is not deemed to be purchasing services for itself from the chamber of commerce by virtue of its contract therewith. Rather, the contract requires the chamber to perform services on behalf of the city to the general public. Further, there is no conflicting employment or contractual relationship under Section 112.313(7)(a) because uncompensated service on the board of directors of a nonprofit organization does not constitute either employment or a contractual relationship with that organization. CEO 77-55, CEO 78-98, CEO 79-65, CEO 82-9, CEO 89-29, CEO 90-24, CEO 92-43, CEO 06-26, CEO 10-4, CEO 14-11, and CEO 19-3 are referenced. 1
Would a prohibited conflict of interest exist under Section 112.313(3) or 112.313(7)(a) were a member of the city council to serve on the board of directors of a chamber of commerce which has contracted with the city?
Under the specific circumstances presented, your question is answered in the negative.
In your letter of inquiry you state that you are requesting this opinion on behalf of a member of the City of Jacksonville City Council (City Council). You state that in her private capacity the member is a senior vice president and national agency counsel for the largest title insurer in the United States. In her role as senior vice president and national agency counsel, you relate that the member oversees commercial services.
You state that the title insurer is a Platinum member of the Jacksonville Regional Chamber of Commerce, Inc.2 (Jax Chamber) and has a designated seat on the Jax Chamber Board of Directors as part of its membership. The Jax Chamber Board of Directors develops policies and determines priorities for the operation of the Jax Chamber, including the approval of the overall budget. The Board of Directors is comprised of 72 members. You state that recently the title insurer selected the member to serve as its representative on the Jax Chamber Board of Directors. You state that the member does not receive any compensation for serving as a director on the Jax Chamber Board and her directorship is for a term of one year. You further explain that the City Council member does not have an individual membership in the Jax Chamber.
You relate that as part of its budget each fiscal year, the City of Jacksonville provides an annual lump sum contribution to the Jax Chamber to provide marketing services to companies and targeted industries the City desires to relocate to, or expand in, Jacksonville. The City's annual contribution has occurred for decades and is currently allocated to JAXUSA Partnership (JAXUSA), a division of the Jax Chamber. JAXUSA functions as the sole, premier regional economic development organization encompassing seven northeastern counties of Florida. It focuses on attracting jobs and capital investment in northeast Florida and in assisting companies that want to relocate to, or expand their operations in, Jacksonville and other counties in the region.
You state that the City Council votes to appropriate the annual lump sum contribution to the Jax Chamber as part of a series of budget bills each year. You relate that for fiscal year 2020-2021 the City has budgeted $400,000 for the Jax Chamber contribution, the same amount appropriated in the fiscal year 2019-2020. Following the City Council's annual approval and appropriation of the funds to the Jax Chamber, the City subsequently enters into a Memorandum of Understanding (MOU) with JAXUSA memorializing the intent of the funding and detailing the purposes for which the funding can be utilized by JAXUSA. Pursuant to the MOU the funds must be exclusively used by JAXUSA for website development, digital advertising, content marketing, public relations, outreach to potential talent, and global branding and awareness. You state that JAXUSA is required to provide an annual report to the City's Office of Economic Development, detailing how the funding has been used. The City's Office of Economic Development is charged with oversight and management of the funding to JAXUSA, including the execution of, and compliance with, the MOU. You relate that neither the City Council nor the Jax Chamber Board of Directors has any oversight or management of the annual contribution provided to JAXUSA.
The Code of Ethics for Public Officers and Employees (Code of Ethics) provides in relevant part:
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.
[Section 112.313(3), Florida Statutes.]
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), Florida Statutes.]
Section 112.313(3) prohibits, in part, the City Council member from acting in her official capacity to purchase goods or services for her own agency from a business entity in which she serves as an officer, director, or proprietor, or has a material interest.3 The Commission has found that a public officer acts in her "official capacity" for purposes of this prohibition when her board acts collegially to purchase, rent, or lease, regardless of whether the public officer abstains from voting on the matter. See CEO 14-11, CEO 10-4, and CEO 90-24. Further, the term "business entity" as used in Section 112.313(3) is defined broadly in Section 112.312(5), Florida Statutes, to include "any corporation . . . [or] association . . . doing business in this state." This definition makes no distinction based upon whether a corporation or association has been organized as a profit-making enterprise. See CEO 82-9 and 92-43, among many. Therefore, the Jax Chamber is a business entity under Section 112.313(3).
However, in advisory opinions involving analogous facts, the Commission has found that the prohibitions of Section 112.313(3) were not implicated by virtue of the public officer's agency having formed a contract or MOU with a chamber of commerce or economic development entity as the agency is not purchasing services for itself from the corporation, but rather requiring the provision of services to the public, local businesses, and regional industries. For example, in CEO 79-65 the Commission found that Section 112.313(3) would not prohibit a city council member from serving on the board of directors of a chamber of commerce which had formed a marketing contract with the city because the city was not purchasing services from the chamber. Rather, the Commission opined that the marketing contract between the city and the chamber of commerce required "the chamber to perform publicity services on behalf of the city to the general public, and not to provide services to the city." See also CEO 77-55 (nonprofit corporation promoting economic development for county found not to be selling services to the county); CEO 78-98 (nonprofit corporation established to attract industry to county and municipalities found not to be selling services to county or to municipalities); CEO 89-29 (chamber of commerce found not to be selling services to the city commission or any agency of the city commission); and CEO 92-43 (nonprofit corporation contracting with the city to perform services directed towards furthering the redevelopment and economic revitalization of the downtown area found not to be selling services to the city).
In addition, Section 112.313(7)(a) prohibits the City Council member from holding employment or a contractual relationship with a business entity if the business entity is subject to the regulation of, or is doing business with, her public agency4 and further prohibits the member from having a contractual relationship which would create a continuing or frequently recurring conflict between her private interest and the performance of her public duties or which would impede the full and faithful discharge of her public duties. The Commission has found that uncompensated directors of a nonprofit organization, such as the Jax Chamber, who are not also personally themselves members of the corporation,5 have no employment or contractual relationship with the organization. See CEO 79-65, CEO 06-26, and CEO 19-3. As the member indicates that her service on the Jax Chamber Board of Directors is uncompensated and that she personally does not maintain an individual membership in the Jax Chamber, we find no prohibited conflict under Section 112.313(7)(a).
Accordingly, under the specific circumstances of your inquiry,6 we find that no prohibited conflict of interest would be created under Section 112.313(3) or 112.313(7)(a) were the City Council member to serve as an uncompensated director of the Jax Chamber, a nonprofit corporation.
Your question is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on December 4, 2020, and RENDERED this 9th day of December, 2020.
Daniel Brady, Chair
Prior opinions of the Commission on Ethics can be viewed at www.ethics.state.fl.us.
You relate that the Jax Chamber is a nonprofit 501(c)(6) organization and that Platinum membership is the highest level of membership in the Jax Chamber.
YA "material interest" is defined in Section 112.312(15), Florida Statutes, to mean a direct or indirect ownership of more than five percent of the total assets or capital stock of any business entity.
As previously determined, a city council member's agency for the purposes of Section 112.313(7)(a), Florida Statutes, is the city council. See CEO 08-1.
The facts contained in your request and responses to staff's request for additional information confirm that the member does not maintain any personal membership in the Jax Chamber and she is not employed by, and does not receive any form of compensation from, the Jax Chamber or JAXUSA.
This advisory opinion is predicated upon the specific facts and circumstances contained herein. Thus, were any of the material facts to change, including but not limited to, factors affecting the City Council member's private employment relationship or circumstances wherein she would glean any pecuniary benefit resulting from her service on the Jax Chamber Board of Directors, we ask that you seek further guidance from this Commission regarding any conflicts of interest issues that might arise in such a scenario.