CEO 76-6 -- January 16, 1976

CONFLICT OF INTEREST

MUNICIPAL BOARD MEMBERS OWNING MATERIAL INTEREST IN FIRM DOING BUSINESS WITH THE CITY

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

Prepared by: Gene Rhodes

SUMMARY:

Florida Statute s. 112.313(3)(1975) prohibits a local officer from acting in a private capacity to rent, lease, or sell any realty, goods, or services to his own agency or to any agency within the political subdivision of his own agency. Where one owns a material interest in a business, such interest is deemed to constitute "acting in a private capacity" when that business contracts for sales or services. Accordingly, s. 112.313(3) would prohibit a firm in which a municipal board member owns a material interest from contracting with the subject municipality or any agency therein. In this instance, however, primary importance is given to s. 112.316, which provides that it is not the intention of the Code of Ethics to prohibit private interests which do not interfere with the discharge of public duty. Where a member of a municipal parking authority and a member of a municipal board of appeals each own a material interest in an engineering firm which provides engineering services to the subject city, no interference with public duty is deemed to be created inasmuch as neither board member is in a position to either supervise or regulate city agencies other than their own boards. Accordingly, no conflict of interest is found to exist where their engineering firm contracts with agencies of the city other than the boards on which they serve.

QUESTION:

Does a prohibited conflict of interest exist where a member of a municipal parking authority and a member of a municipal board of appeals each own a material interest in an engineering firm which provides engineering services to the city on whose boards they serve?

Your question is answered in the negative in both instances.

You advise us in your letter of inquiry and in subsequent communications with our staff that the parking authority member holds 31 1/2 percent of the stock in the aforementioned engineering firm while the board of appeals member owns 27 percent of the corporate stock in the firm. As members of municipal boards, both men are public officers subject to the standards of conduct provisions of the Code of Ethics for Public Officers and Employees. See Fla. Stat. s. 112.313(1), as amended by Ch. 75-208, Laws of Florida.

The applicable section of the Code of Ethics is as follows:

DOING BUSINESS WITH ONE'S AGENCY. -- No employee of an agency acting in his official capacity as a purchasing agent or public officer acting in his official capacity shall either directly or indirectly for his own agency purchase, rent, or lease any realty, goods, or services from any business entity of which he, his spouse, or child is an officer, partner, director, or proprietor, or in which such officer or employee, his 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 his own agency if he is a state officer or employee, or if he is serving as an officer or employee of any political subdivision, to that subdivision or to any agency thereof. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business. This subsection shall not affect nor be construed to prohibit contracts entered into prior to:

(a) The effective date of this act;

(b) Qualifications for elective office;

(d) Beginning public employment.

[Emphasis supplied; Fla. Stat. s. 112.313(3), as amended by Ch. 75-208, Laws of Florida.]

In a previous opinion of this commission, CEO 75-196, we held that ownership of a material interest in a business entity is sufficient to constitute "acting in a private capacity" on the part of the interest holder when the firm contracts for sales or services to a political subdivision or any agency thereof. "Material interest" is defined by the current law as "direct or indirect ownership of more than five percent of the total assets or capital stock of any business entity." Fla. Stat. s. 112.312(8)(1975).

Accordingly, the subject engineering firm may do business with neither the parking authority nor the board of appeals, the board members' agencies.

It appears that the engineering firm is also prohibited from doing business with any agency of the city so long as either or both the board members hold a material interest in the firm. However, in construing the provisions of this code as they apply to other pursuits we must place primary importance on the construction provision of the Code of Ethics which states:

It is not the intent of this part; nor shall it be construed, to prevent any officer or employee of a . . . city . . . from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer [or] employee of his duties to the . . . city . . . involved. [Fla. Stat. s. 112.316(1975).]

The above-quoted provision makes it clear that the Code of Ethics shall not be construed to prohibit a public officer from following any pursuit which does not interfere with the full and faithful discharge of his duties. Each standard of conduct must be read with this qualification in mind. These board members are not in a position either to supervise or regulate city agencies other than the parking authority and the board of appeals, nor do their public duties in any way involve approval of or the giving of advise or recommendations as to the contracts which the engineering firm enters into with other city agencies. This being the case, the engineering firm doing business with city agencies other than the parking authority and the board of appeals does not in our view interfere with the full and faithful discharge of public duties by the subject officials and is therefore permissible under the Code of Ethics.