CONFLICT OF INTEREST

DEVELOPMENT COMPANY DONATING LAND TO
FLORIDA'S TURNPIKE ENTERPRISE

To: Nicola Liquori, Executive Director (Florida's Turnpike Enterprise)

SUMMARY:

The Executive Director of Florida's Turnpike Enterprise will not have a prohibited conflict of interest under Section 112.313(7)(a), Florida Statutes, if a development company that employs her husband donates land to her agency for the construction of an interchange on Florida's Turnpike, so long as she does not have employment or a contractual relationship with the development company or the investment group funding the development. Guidance is provided regarding the Executive Director's husband potentially joining the investment group. Referenced are CEO 79-16, CEO 81-47, CEO 82-13, CEO 92-43, CEO 99-13, CEO 04-17, CEO 05-14, CEO 08-12, CEO 10-9, CEO 11-5, CEO 12-2, CEO 14-4, CEO 15-11, and CEO 17-12.

QUESTION 1:

Will a prohibited conflict of interest exist for the Executive Director of Florida's Turnpike Enterprise if a property development company that employs her husband donates land to her agency for the construction of an interchange?

This question is answered in the negative.

In your letter of inquiry, you indicate that you serve as the Executive Director of Florida's Turnpike Enterprise (Enterprise). In your letter, you explain that, among your numerous responsibilities, you are tasked with the evaluation of new interchanges (access points) along the Florida's Turnpike Mainline. You also explain that your husband works for a real estate development company (Developer) that executed a purchase of land funded by an investment group that is organized as a limited liability company (the LLC). According to an article you attached to your letter, the land is known as Green Island Ranch and is approximately 6,000 acres; according to you, the land is adjacent to Florida's Turnpike Mainline in Osceola County.

You state that the construction of an interchange to Florida's Turnpike Mainline somewhere on Green Island Ranch is being contemplated and that you expect the Developer will likely discuss the matter with Osceola County and the Enterprise in the future. On the phone, you explained to Commission staff that the Osceola County Master Plan has accounted for an interchange to be built on Green Island Ranch since a time well before the Developer made the purchase. In your inquiry, you explain that, for the interchange to occur, there would not be a sale of land to the Enterprise; instead, the Developer would donate the land to the Enterprise and would not provide any remuneration or services to the Enterprise. The Enterprise would then facilitate the construction of an interchange.

With that background, you ask whether you will have a conflict of interest if the Developer donates land to the Enterprise for the construction of an interchange.

Relevant to this inquiry, Section 112.313(7)(a), Florida Statutes, states:

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.

The first clause of this statute prohibits a public officer or employee from having any employment or contractual relationship with a business entity or an agency that is regulated by or is doing business with his or her agency. The second clause of this statute prohibits a public officer or employee from having employment or a contractual relationship that would create a continuing or frequently recurring conflict of interest or would create an impediment to the full and faithful discharge of his or her public duties. Pursuant to Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982), the second clause is designed to prohibit a situation that creates a "temptation to dishonor" one's public responsibilities. The statute is entirely preventative and does not require an actual transgression to occur for a conflict of interest to be found. CEO 05-14.

We find that you will not have a conflict under the first clause of Section 112.313(7)(a) if the Developer donates land for the interchange to the Enterprise. Firstly, according to you, you currently do not have employment or a contractual relationship with the Developer or with the LLC. Secondly, the Commission has found that the donation of property to an agency does not constitute "doing business" for purposes of Section 112.313(7)(a). See CEO 82-13. For these two reasons, you will not have a conflict of interest under the first clause of Section 112.313(7)(a) if the Developer donates the land to the Enterprise. While your husband does have employment with the Developer, as we noted in CEO 12-2, "Section 112.313(7)(a) applies only to the official—not to his or her spouse." CEO 12-2 (citing CEO 92-43 and the opinions cited therein).

Additionally, because you do not have employment or a contractual relationship with the Developer or the LLC, the donation will not cause you to have a conflict of interest under the second clause of Section 112.313(7)(a), either.

For these reasons, if you do not hold employment or a contractual relationship with the LLC or the Developer, then you will not have a conflicting contractual relationship under Section 112.313(7)(a) should the Developer donate land to the Enterprise for the construction of an interchange.

Question 1 is answered accordingly.

QUESTION 2:

Will a prohibited conflict of interest exist for the Executive Director of Florida's Turnpike Enterprise if a property development company that employs her husband donates land to the agency for the construction of an interchange while the Executive Director is an investor in the subject property?

This question is answered in the affirmative.

Although you currently are not an investor in the LLC that is funding the development of Green Island Ranch, you contemplate in your inquiry that you might have the opportunity in the future to become an investor in the LLC. As noted above, the Developer may eventually donate land to the Enterprise for the construction of an interchange and you, as Executive Director of the Enterprise, are responsible for approving new interchanges to Florida's Turnpike Mainline.

We have found in the past that those who own stock in a business entity have a contractual relationship with that business entity. See CEO 79-16, CEO 99-13, and CEO 11-5. If you, as the Executive Director of the Enterprise, become an investor in the LLC, then you will be considered to have a contractual relationship with the LLC.

We have found prohibited conflicts of interest to exist under the second clause of Section 112.313(7)(a) when a public officer or employee has employment or a contractual relationship with a business entity and the exercise of their official judgment could affect the business entity. In CEO 04-17, Question 3, we found that a school teacher would have a prohibited conflict of interest under this provision if he privately tutored his own students for compensation outside of school. In CEO 14-4, where a former FDOT employee had a pension fund with a former employer and the pension fund was at least partially invested in the former employer's own stock, we found that the FDOT employee would have a prohibited conflict of interest under the second clause of Section 112.313(7)(a) if he participated in the selection process for an engineering consulting firm and if the former employer was an applicant for the contract. There, we reasoned that the employee would be tempted to dishonor his public responsibilities because he stood to gain from FDOT awarding the contract to his former employer.

In your situation, you will have a contractual relationship with an entity (the LLC) and your investment in that entity could potentially benefit from the execution of your public responsibility as Executive Director to favorably evaluate a new interchange to Florida's Turnpike Mainline on the Green Island Ranch land donated by the Developer and funded by the LLC. As was the case in CEO 14-14, the potential benefit to your investment could tempt you to dishonor your public responsibilities or otherwise affect your objectivity in the evaluation of a proposed interchange on the donated land. For that reason, we find that you will have a prohibited conflict of interest under the second clause of Section 112.313(7)(a) if you invest in the LLC and the Developer donates land to the Enterprise to construct an interchange.

Question 2 is answered accordingly.

QUESTION 3:

Will a prohibited conflict of interest exist for the Executive Director of Florida's Turnpike Enterprise if a property development company donates land to the agency for the construction of an interchange and the Executive Director's husband becomes an equity partner in the development company or an investor in the subject property?

This question is answered as follows.

You relate that, currently, your husband is an employee of the Developer and not an equity partner. Also, at present, you state that he is not an investor in the LLC. You note, however, that he may soon become an equity partner in the Developer and may be presented with an opportunity to invest in the LLC.

If your husband becomes an equity partner in the Developer or if he invests in the LLC, that will not change the above analysis for Section 112.313(7)(a). The prohibitions of Section 112.313(7)(a) pertain to conflicting employment or contractual relationships that a public officer or public employee may have, but it does not apply to those relationships maintained by one's spouse. See CEO 12-2 and CEO 15-11.

However, a discussion of Section 112.313(3), Florida Statutes, is warranted by this question. Section 112.313(3) states in the relevant part:

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.

Section 112.313(3) is a statutory provision with two separate prohibitions. The first prohibition concerns a public officer or employee who is purchasing, renting, or leasing realty, goods, or services for his or her own agency from a business entity of which he or she, or his or her spouse or child, is an officer, partner, director, proprietor, or the owner of a greater-than-five-percent interest in the business entity. The second prohibition concerns a public officer or employee who is essentially acting on behalf of a business entity to sell, rent, or lease realty, goods, or services to his or her own agency or any agency of his or her political subdivision. In CEO 17-12, Question 1, we found that a donation of land to an agency would not constitute purchasing/selling, renting, or leasing under Section 112.313(3) and, thusly, the donation would not create a prohibited conflict of interest under either of the statute's prohibitions.

We find that your husband's elevation to an equity partner of the Developer will not create a prohibited conflict for you under Section 112.313(3) because that prohibition is not applicable when the transaction between the business entity and the agency is a donation, as is the case here.

Although you will not incur a prohibited conflict of interest under either Section 112.313(3) or Section 112.313(7)(a) if your husband becomes an equity partner in the Developer or an investor in the LLC, we caution you that his status as an equity partner in the Developer or as an investor in the LLC could be rife with ethically complex scenarios for you, and may make your ethical obligations and stewardship of the public trust even more complicated to manage. The construction of an interchange on Green Island Ranch is a market maker that creates immense value in the surrounding land, and amounts to an inherent profit to all stakeholders in the development deal; in that light, we deem it prudent to highlight your other ethical obligations under the Code of Ethics.

We draw particular attention to the prohibitions in Article II, Section 8(g)(2), Florida Constitution,¹ and Section 112.313(6), Florida Statutes,² which essentially operate to prohibit you from misusing or abusing your public position or the resources of your position to benefit yourself or your husband, among others. If your husband becomes an equity partner in the Developer or joins the investment group of the LLC, then every official action you take to advance the construction of the interchange will have an attendant, pecuniary benefit to your husband; an official action and a benefit to your husband are two of the three elements necessary to prove prohibited conduct under these provisions. The third element is a wrongful or corrupt intent. We caution you to ensure that every official decision that you make as Executive Director related to Green Island Ranch is firmly rooted in a valid public purpose and is consistent with the proper performance of your public duties. Absent an articulable public purpose, this third element will be met and a violation of these provisions could be found. We experience discomfort that this guidance rests solely on the intent motivating your official actions, given that the presence of a public purpose often hinges on dynamic factors and can quickly dissipate. We also are aware of the great financial benefit for your husband if the interchange proceeds with his involvement. We cannot say at this point, however, that a corrupt intent can be presumed. As we have said before concerning the proper use of advisory opinions:

[I]ntent generally is determined from an examination of all relevant circumstances. We are able to do this on the basis of evidence presented through investigation and hearing when a complaint is filed, but in rendering an advisory opinion we are [subject to] a lack of access to information concerning all circumstances of the situation as well as information concerning the credibility of the individuals involved.

CEO 81-4781-47. For this reason, we can only caution you again that, while the situation presented in this Question does not automatically present a prohibited conflict of interest, without a valid public purpose, your actions concerning the interchange may be found to be for the sole benefit of your husband, and a violation of the prohibitions in Article II, Section 8(g)(2), Florida Constitution, and Section 112.313(6), Florida Statutes, may be found.

Additionally, we also highlight the following additional standards.

Section 112.313(8), Florida Statutes,³ will operate to prohibit you from sharing any nonpublic information you obtain by means of your public position that relates to Green Island Ranch with your husband, the LLC, the Developer, or anyone else, if it might benefit you or any other person or business entity.

Section 112.313(2), Florida Statutes,⁴ will operate to prohibit you from soliciting or accepting anything of value based on an understanding that your official action or judgment will be influenced.

Further, Section 112.313(4), Florida Statutes,⁵ will operate to prohibit you or your husband from accepting anything of value where you know or should know that it is being given in an effort to influence you. See generally CEO 10-9. If, for example, the equity partnership in the Developer or the investment opportunity in the LLC were offered to your husband to influence your official decision making, or if either opportunity were offered to him at less than "arm's length," then Section 112.313(4) would operate to prohibit his acceptance. See CEO 08-12, Question 2.

Question 3 is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on June 3, 2022, and RENDERED this 8th day of June, 2022.

____________________________________

John Grant, Chair

^[1]Article II, Section 8(g)(2), Florida Constitution, states:

A public officer or public employee shall not abuse his or her public position in order to obtain a disproportionate benefit for himself or herself; his or her spouse, children, or employer; or for any business with which he or she contracts; in which he or she is an officer, a partner, a director, or a proprietor; or in which he or she owns an interest.