CONFLICT OF INTEREST; VOTING CONFLICT

BOARD OF GOVERNORS OF STATE UNIVERSITY SYSTEM
MEMBER CHIEF EXECUTIVE OFFICER OF COMPANY
MAKING DONATIONS TO STATE UNIVERSITY

To: Vikki R. Shirley, General Counsel, Board of Governors (Tallahassee)

SUMMARY:

Under the circumstances presented, no prohibited conflict of interest would be created were a company of which a member of the Board of Governors of the State University System is the chief executive officer to donate land, money, or construction services to a State University; nor would a prohibited conflict be created were the University to contract with a health care provider providing services in the company's residential community. However, the member is required to comply with the voting and participation conflicts laws regarding matters concerning the donations and other matters affecting the economic interests of his company or its related entities. CEOs 13-13, 08-14, and 78-12 are referenced.¹

QUESTION 1:

Would a prohibited conflict of interest be created were a company employing a member of the Board of Governors of the State University System to donate land to a State University?

Under the circumstances presented, Question 1 is answered in the negative.

You write in behalf of a member of the Board of Governors of the State University System (Board) who also is employed as the chief executive officer of several companies, one of which is a large landowner/developer (BPH) in southwest Florida; and you specify that the Board does not do business with, and has no regulatory authority over, BPH, its parent entity, or any of its subsidiaries. BPH would like to donate to a State University seventy acres within its larger property that is being developed as a residential community. You relate that the donated property would be used solely by the University for conducting research, that the University would be responsible for all mitigation costs relating to any improvement of the property for its use, and that, because the donation will not involve the construction of a facility funded through either appropriations, university debt financing, or a public-private partnership financing arrangement, the donation is not a matter that would be required to come before the Board for approval.

Primarily relevant to this Question are Sections 112.313(3) and 112.313(7)(a), Florida Statutes, which provide:

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.]

We find that the situation described would not be prohibited by Section 112.313(3). As to the first part of the statute, there is no indication that the Board would be acting to purchase, rent, or lease the land; rather the land would be donated or gifted by BPH. See CEO 13-13 and decisions cited therein. Similarly, we find that there would be no rental, lease, or sale by BPH or the Board member in a private capacity under the second part of the statute.

As to the first part of Section 112.313(7)(a), we find that while the Board member would hold employment and/or a contractual relationship with BPH and that BPH is a business entity, we find that the donation would not constitute "doing business." See, for example, CEO 82-13, in which we found that "doing business" contemplates an exchange of consideration (e.g., land for money). And, we are aware of no "regulation" of BPH by the Board. Under the second part of Section 112.313(7)(a), we see no indication of a prohibited conflict.

Question 1 is answered accordingly.

QUESTION 2:

Would a prohibited conflict be created were the company to donate money, or land and construction, to the University for a facility to be owned by the University?

Under the circumstances presented, Question 2 is answered in the negative.

Continuing, you state that BPH would like to donate to the University, pursuant to the University's choice, $3 million in cash, or an equivalent value in land and construction services, for construction of a facility in the company's residential community. The facility would be owned by the University and would be used as an instructional and research site.

As in Question 1, Sections 112.313(3) and 112.313(7)(a) are primarily relevant. Here, too, we find that a prohibited conflict would not be created under either statute. As discussed under Question 1, the donation would not meet the required element of a sale, lease, purchase, or rental under either part of Section 112.313(3). Regarding the first part of Section 112.313(7)(a), assuming in argument that we were to view the situation as "doing business" between BPH and the University, despite the donative/gift nature of the matter (see CEO 78-12), and assuming in argument that we were to view your "agency" as being the University as well as the Board (see CEO 08-14), such that, without more, the elements of the first part's prohibition seemingly would be met, we find it appropriate to apply Section 112.316, Florida Statutes, to negate the literal elements of the statute. See CEO 13-13, among others. This is appropriate because, under the circumstances presented, the University's board of trustees and personnel, rather than the Board,² obviously hold the overwhelmingly share of actual decisionmaking regarding the facility and related matters. Section 112.316 provides:

CONSTRUCTION.—It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his or her duties to the state or the county, city, or other political subdivision of the state involved.

And, we find that the facts underpinning application of Section 112.316 support there being no continuing or frequently recurring conflict or impediment for the Board member under the second part of Section 112.313(7)(a).

Question 2 is answered accordingly.³

QUESTION 3:

Would a prohibited conflict be created were the University to enter into an agreement with a health care provider which has a contract with BPH to provide services to residents of BPH's community?

Under the circumstances presented, Question 3 is answered in the negative.

Additionally, you state that BPH is building a wellness center in its residential community and looks to enter into a relationship with a health care provider for provision of services to residents; and that the University would enter into a separate agreement with the provider to create clinical experience and fieldwork opportunities for University students.

We find that this scenario would not create a prohibited conflict for the Board member under either Section 112.313(3) or Section 112.313(7)(a). The elements of Section 112.313(3) would not be met because BPH would not be renting, leasing, or selling to the Board or to the University. Under the first part of Section 112.313(7)(a), the health care provider (not the Board member's company, BPH) would be doing business with the University. As to the second part of Section 112.313(7)(a), the Board's very limited potential involvement as to this scenario supports there being no prohibited conflict; in this regard, you write:

[I]t is . . . unlikely that the Board of Governors could be presented with a policy decision that would reach down to the level of an affiliation agreement between a health care provider and [the University] that is entered into for the purpose of providing clinical experience and fieldwork opportunities for [University] students. The Board does not regulate such agreements and would have no involvement in the implementation of the agreement or the relationship between [the University] and the health care provider.

Question 3 is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on October 20, 2017, and RENDERED this 25th day of October, 2017.

____________________________________

Michelle Anchors, Chair

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

^[2] You relate that the University's board of trustees must seek Board approval prior to acquiring real property for an additional campus or special purpose center; however, the University would be responsible for the cost of operating and maintaining the facility gifted to it by BPH.

^[3] Regarding Section 112.3143(2), Florida Statutes, which applies to the Board member as a state public officer, and Section 112.3143(4), Florida Statutes, which applies to the member as an appointed public officer (see CE Form 8A), the member should continue to be mindful of these laws. Both are triggered by a vote/measure/matter of one's public board (i.e., the Board of Governors) which would affect the economic interests of the public officer, those of his employer, or those of other persons or entities standing in a relationship to him as listed in the statutes. Since donation of land (inherently a valuable item) unquestionably affects the economic interests of the donor (here, the member's employer company), we find that the member must comply with these laws, using CE Form 8A, regarding items, if any, of the Board which concern the donations or similar interests of BPH or of BPH's related entities.