CEO 76-191 -- October 25, 1976

CONFLICT OF INTEREST

CITY COUNCILMAN DOING BUSINESS WITH CITY

To: W. R. McGuffin, City Councilman, Apopka

Prepared by: Roger Merriam

SUMMARY:

Florida Statute s. 112.313(3)(1975) prohibits a public officer from privately selling goods to any agency of the political subdivision of which he is an officer. In a previous opinion, CEO 75-196, it has been determined that ownership of a material interest in a business entity constitutes acting in one's private capacity to sell where that business sells. Accordingly, an office supply store in which a city councilman owns a material interest may not sell goods to that city or to any of its departments, regardless of whether or not the councilman derives direct compensation from the business. As the language of s. 112.313(3) is unequivocal, no exceptions are found to exist for substantial savings to the city or for emergency purchases. See also s. 112.311(1) relating to the spirit and intent of the law.

QUESTIONS:

1. Would a prohibited conflict of interest exist were an office supply retail store owned by me and my spouse to sell office supplies to the city of which I am a councilman?

2. Would the city's ability to realize a substantial saving by dealing with my office supply store alter the response to question 1 above?

3. Would a prohibited conflict of interest be created were purchases described in question 1 above to be made only in cases of emergency?

Question 1 is answered in the affirmative.

You advise us in your letter of inquiry that you and your spouse jointly own an office supply store but that you personally receive no compensation from the business. The store, which is operated by your wife and daughter, is the only office supply house in town. You further advise that the city has a designated purchasing agent who does not come under the control or supervision of the city council. Further, council members do not initiate any action relative to city departments' obtaining routine operating supplies.

The Code of Ethics for Public Officers and Employees provides in relevant part 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 purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or 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 to any political subdivision or any agency thereof, if he is serving as an officer or employee of that political subdivision . . . . [Fla. Stat. s. 112.313(3)(1975); emphasis supplied.]

The italicized language above precludes a public officer from privately selling goods to any agency of the political subdivision of which he is an officer. In a previous opinion of this commission, CEO 75-196, we found that ownership of a material interest in a business entity constitutes acting in one's private capacity to sell where that business sells. Your joint ownership constitutes the ownership of a material interest in the subject office supply business pursuant to Florida Statute s. 112.312(10), which defines "material interest" as "direct or indirect ownership of more than 5 percent of the total assets or capital stock of any business entity . . . ." The fact that you derive no direct compensation from the business does not alter the situation, as that is not a criterion on which the restriction is based. Therefore sales by the office supply business constitute your privately selling for purposes of s. 112.313(3). As you are a member of the city council, the city's governing body, your office supply store accordingly is prohibited from selling goods to the city or to any of its agencies.

Question 2 is answered in the negative.

You maintain in your letter of inquiry that the city could realize approximately a 19 percent savings if it were to purchase office supplies from your store rather than from a business in nearby Orlando.

In answering question 1 above, we took into account the fact that the application of s. 112.313(3) may impose hardships on the city. In its statement of legislative intent and declaration of policy, however, the Code of Ethics provides that

[i]t is essential to the proper conduct and operation of government that public officials be independent and impartial and that public office not be used for private gain other than remuneration provided by law. . . . [Fla. Stat. s. 112.311(1)(1975).]

Pursuant to the spirit and intent of the law, we previously have felt obliged to impose similar hardships on other municipalities. See CEO's 76-15, 76-31, and 76-91. Given the clear and unequivocal language of the applicable statute, we are compelled to rule consistently with the above-cited opinions. Your question is answered accordingly in the negative.

Question 3 is answered in the affirmative.

You state in your letter of inquiry that the office supply businesses in nearby Orlando are closed on weekends and holidays, but that the office supply house jointly owned by you and your spouse could be opened at any time to supply emergency needs of the city. Although this commission has found no conflict to exist where a public official privately provides his agency with goods or services not available elsewhere (see CEO 76-2), we perceive a significant distinction in the instant case. The nonavailability you describe is of a transient nature and could be avoided by prudent purchasing of supplies. Moreover, the discretion necessary for determining what constitutes an emergency situation would provide opportunities for circumvention of the law. This question is answered accordingly in the affirmative.