CEO 80-15 -- February 21, 1980

CONFLICT OF INTEREST

MUNICIPAL DEVELOPMENT AUTHORITY MEMBER SERVING ON COMMITTEE TO WHICH DEVELOPMENT PROSPECTS ARE REFERRED

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

Prepared by: Phil Claypool

SUMMARY:

A prohibited conflict of interest would be created were a municipal development authority member who privately is a realtor to sit on a real estate committee of the authority, to which committee prospects for the purchase or lease or property within the authority's jurisdiction would be referred, so long as the committee member or his private real estate office stands to receive a commission in any way from any property within the authority's jurisdiction. Were his office in a position to benefit financially from downtown property, there is the opportunity for the committee member to use his public position to steer a prospect toward his interests and away from other available downtown property, in violation of s. 112.313(6), F. S., relating to misuse of public position, and (7)(a), in that his private employment would impede the full and faithful discharge of his public duties.

QUESTION:

Would a prohibited conflict of interest be created were a municipal development authority member who also is a realtor to sit on a real estate committee of the authority, to which committee prospects for the purchase or lease of property within the authority's jurisdiction would be referred?

In your letter of inquiry you advise that the City of Gainesville has created, as an agency of the city, a Gainesville Development Authority, composed of five members appointed by the city commission for the purpose of redeveloping the city's downtown area. City of Gainesville Ordinance No. 2399, May 3, 1979. In connection with its responsibilities under this ordinance, the administrative assistant to the authority advised our staff, in a telephone conversation, that the authority members and the administrative assistant regularly are contacted by persons desiring to establish businesses in the downtown area. In order to ensure that all prospects for downtown property receive attention and guidance from the authority, the authority has proposed the creation of a real estate committee composed of the two authority members who are realtors. Thus, the committee could provide its expertise, which the other commission members and the administrative assistant lack, in helping direct prospects to the downtown area.

In order to prevent the possibility of conflicts of interest or misunderstandings with other real estate brokers, the authority has proposed a policy on real estate referral. Under this policy, while all prospects for downtown property would be referred to the real estate committee, no member of the committee could receive a real estate commission or profit on a referred prospect except under four specific situations. The committee member could receive a commission or a profit when the member of his office has a prior written listing on property; when the member has an ownership interest in the property; when the member is requested specifically to provide his or her professional assistance in selling property listed by a real estate office, upon request of the listing office; or when the member is employed specifically by the referral to perform professional work. In the case of property listed with another brokerage office, an authority member is prohibited from participating in the commission on its sale, except as provided above. The member is to notify the listing office of the referral and indicate that he will not be participating in the commission but that he and the authority will provide whatever assistance is possible.

In our opinion, an authority member who is a realtor should not serve as a member of a real estate committee to which prospects for downtown property are referred for assistance so long as the committee member stands to receive a commission from any downtown property, whether a selling or listing commission or whether received directly or through the activities of an associate. The Code of Ethics for Public Officers and Employees provides in part:

MISUSE OF PUBLIC POSITION. -- No public officer or employee of an agency shall corruptly use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31. [Section 112.313(6), F. S.]

The term "corruptly" is defined in the Code of Ethics to mean

. . . done with a wrongful intent and for the purpose of obtaining, or compensating or receiving compensation for, any benefit resulting from some act or omission of a public servant which is inconsistent with the proper performance of his public duties. [Section 112.312(7), F. S.]

If a committee member were to receive a commission from a prior written listing of downtown property which is sold to a prospect who had been assisted by the member, the member would have used his official position and would have received a special benefit. The issue of whether the member had acted "corruptly" to secure the commission would depend on the particular circumstances of the transaction, circumstances within the peculiar knowledge only of the parties to the transaction. Such a situation strongly gives the appearance of a violation of the above-quoted provision. Similarly, were the member to be employed by the referral to perform professional work and to receive a commission on this basis, it would be easy for the public and the member's competitors to conclude that the member had used his position in order to obtain the client's business.

We do not mean to imply that either of the realtors would corruptly use their positions on the proposed real estate committee in order to benefit themselves, but we do wish to emphasize that the responsibilities of the proposed committee easily could be abused by an unscrupulous realtor who might serve on the committee. Clearly, a realtor's regard for his private interests, when he has a listing or otherwise would stand to receive a commission from the sale of downtown property, would tend to lead to disregard of his duties as a member of the real estate committee. See s. 112.312(6), F. S., defining "conflict of interest" as "a situation in which regard for a private interest tends to lead to disregard of a public duty or interest."

In addition, even if the prospect does not purchase downtown property from which the committee member stands to receive a commission, a conflict of interest still would be presented. So long as the committee member or his office stands to receive a commission from downtown property, there is the opportunity to use his public position to steer a prospect toward his interests and away from other available downtown property. This clearly would conflict with his public responsibility to assist in the redevelopment of the downtown area.

For these reasons, we believe that s. 112.313(7)(a), F. S., prohibits a real estate committee member from employment as a realtor when he or his office stands to participate in a commission from downtown property. That section provides in relevant part:

. . . [N]or 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 private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties.

Accordingly, we find that a prohibited conflict of interest would be created were an authority member who is a realtor to sit on a real estate committee to which prospects for the purchase or lease of property within the authority's jurisdiction would be referred, so long as the committee member or his private office stands to receive a commission in any way from any property within the authority's jurisdiction. We wish to point out that the particular functions of the real estate committee would present a prohibited conflict of interest for the subject realtors, not membership on the authority itself. While we appreciate the authority's attempt to utilize the expertise of its members for the benefit of the public, we must conclude that the method chosen presents too great an opportunity for private benefit through the use of public position, under the circumstances specified in this opinion.