CEO 81-37 -- June 18, 1981

CONFLICT OF INTEREST

COUNTY COUNCIL MEMBER OWNING INTEREST IN CABLE TELEVISION COMPANY GRANTED FRANCHISE BY COUNTY

To: Ms. Alice Cycler, Member, Volusia County Council

SUMMARY:

Section 112.313(7)(a), Florida Statutes, would prohibit a county council member from having an ownership interest in a cable television company which is subject to the regulation of the council by its control over the rates, service area, and competition of the company. However, no prohibited conflict of interest would be created were the council member to transfer her interest in the company to her spouse, child, or other relative.

QUESTION 1:

Does a prohibited conflict of interest exist where you, a member of a County Council, own a two percent interest in a cable television company which has been granted a nonexclusive franchise by the County Council?

This question is answered in the affirmative.

In your letter of inquiry and in a telephone conversation with our staff, you advised that prior to your election to the Volusia County Council you began working to have cable television made available in your area of the County. As a result of your work, you have received a two percent interest in a cable company which recently was awarded a nonexclusive franchise encompassing that area of the County. Under the terms of the franchise and the County's cable television ordinance, the franchise of your company is subject to cancellation by the County Council if the company has not made any improvements within 18 months. The County Council sets the geographic area for the franchises awarded to the various cable companies in the County and decides whether one company will be allowed to expand into the area of another company. The Council has control over the rates charged by the company and also at the present time has set a fee which is collected by the County based upon the gross income of each company.

The Code of Ethics for Public Officers and Employees provides in part:

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. 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 or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(d) Beginning public employment.

[Section 112.313(3), Florida Statutes (1979).]

This provision prohibits you from acting in an official capacity to purchase any goods or services for the County from a business entity of which you are an officer, partner, director, proprietor, or owner of more than a five percent interest. However, we find that this provision would not prohibit your interest in the cable television company, since the company is not selling any goods or services to the County. Rather, the cable company would be selling its services to its subscribers.

The Code of Ethics also provides:

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 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 private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), Florida Statutes (1979).]

This provision prohibits you from having any contractual relationship with a business entity which is subject to the regulation of your agency, the County Council. In our view, your ownership interest in the cable company constitutes a contractual relationship with that business entity. CEO 79-16, CEO 80-11, and CEO 80-13. We further find that the company is subject to the regulation of the County Council, which has control over the rates, service area, and competition of the company.

Accordingly, we find that a prohibited conflict of interest exists where you own a two percent interest in a cable television company which has been granted a nonexclusive franchise by the County Council of which you are a member.

QUESTION 2:

Would a prohibited conflict of interest be created were you, a County Council member, to transfer to your spouse, child, or other relative your interest in a cable television company which has been granted a franchise by the County Council?

This question is answered in the negative.

Section 112.313(7)(a), which is quoted above in our response to your first question, only limits your employment or contractual relationships. The provision does not address or contain any prohibition on the economic interests of your relatives.

Section 112.313(3), which also is quoted above, does prohibit a public officer from acting in his official capacity to purchase any goods or services for his own agency from a business entity of which the officer's spouse or child is an officer, director, proprietor, or owner of more than a five percent interest. However, as we noted in our response to your first question, this provision would apply only where the business entity is selling goods or services to the County. Again, the cable television company would be selling its services to its subscribers rather than to the County.

Accordingly, we find that no prohibited conflict of interest would be created were you to transfer to your spouse, child, or other relative your interest in the cable television company.