CEO 81-41 -- June 18, 1981

CONFLICT OF INTEREST; VOTING CONFLICT OF INTEREST

MEMBER OF CITY HOUSING AUTHORITY EMPLOYED AS OFFICER OF LOCAL BANK

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

SUMMARY:

Reference is made to CEO 76-73 and CEO 80-42, in which it was advised that the Code of Ethics would not prohibit a municipal officer from serving as officer or director of a bank which acts as a depository of municipal funds, when the governing board of the agency has made an investigation and determined that there has been no favoritism of the part of the municipal officer. A voting conflict of interest requiring the filing of a memorandum of voting conflict under Section 112.3143, Florida Statutes, would be created were a housing authority member to vote to invest surplus funds of the authority in certificates of deposit with the bank which employs him. However, no voting conflict of interest would be created if the vote were to invest funds with another bank, since the matter would not inure to the benefit of the authority member's bank, even though it would benefit a competing bank. CEO 80-3, Question 2, is referenced. In addition, the Code of Ethics would not prohibit a housing authority member employed by a local bank from discussing the investment of surplus funds of the authority, except to the extent that his discussion would constitute a deliberate attempt to favor the bank which employs him over all other banks, without regard for the interests of the authority.

QUESTION 1:

Would a prohibited conflict of interest be created were a city Housing Authority, of which you are a member of the Governing Board, to invest surplus funds of the Housing Authority in certificates of deposit with the bank which employs you as Executive Vice-President?

This question is answered in the negative, subject to the condition expressed below.

In your letter of inquiry you advised that you are the Chairman of the Tallahassee Housing Authority Commissioners and that you are employed as Executive Vice-President of a local bank, in which capacity you exercise a degree of judgment and control over all activities at the bank. You also advise that from time to time the Housing Authority invests temporarily surplus funds. In a telephone conversation with our staff, you advised that routinely the Auditor of the Housing Authority contacts three banks to obtain quotations on interest rates and then places the surplus funds of the Authority with the highest bidder. This action, you advised, is subject to discussion and approval of the governing board of the Housing Authority after the fact.

In previous opinions we have advised that the Code of Ethics for Public Officers and Employees would not prohibit a municipal officer from serving as officer or director of a bank which acts as a depository of municipal funds, when the governing body of the agency has made an investigation and determined that there has been no favoritism on the part of the municipal officer. See CEO 76-73 and CEO 80-42, copies of which are enclosed.

Accordingly, we find that no prohibited conflict of interest would be created were the Housing Authority to invest its surplus funds in certificates of deposit with your bank, so long as the Housing Authority Commissioners have investigated and determined that you have not favored your bank over other qualified banks.

QUESTION 2:

Would a voting conflict of interest be created were you to vote to invest surplus funds of the Housing Authority in certificates of deposit with the bank which employs you?

This question is answered in the affirmative.

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

Voting conflicts. -- No public officer shall be prohibited from voting in his official capacity on any matter. However, any public officer voting in his official capacity upon any measure in which he has a personal, private, or professional interest and which inures to his special private gain or the special gain of any principal by whom he is retained shall, within 15 days after the vote occurs, disclose the nature of his interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes. [Section 112.3143, Florida Statutes (1979).]

Under this provision, you would be required to file a memorandum of voting conflict if you vote on a measure before the Housing Authority in which you have a personal, private, or professional interest and if that measure inures to your special private gain or to the special gain of a principal by whom you are retained. As an alternative in such situations, Section 286.012, Florida Statutes, would allow you to abstain from voting. See CEO 78-96, a copy of which is enclosed. We are of the opinion that if you vote to invest surplus funds of the Housing Authority with the bank which employs you, you would have a private or professional interest in the matter and the matter would inure to the special gain of a principal by whom you are retained (the bank). However, if the measure before the Housing Authority were to invest surplus funds with another bank, you would not be presented with such a voting conflict of interest since the matter would not inure the benefit of your bank, even though it would benefit a competing bank. See CEO 80-3, Question 2, a copy of which is enclosed.

Accordingly, if a measure comes before the Housing Authority Commission to invest surplus funds of the Authority with the bank which employs you, you have the alternatives either of voting on the measure and filing the appropriate memorandum of voting conflict or of abstaining at the time of the vote. If the measure pertains to the investment of surplus funds with another bank, you may vote on the measure without having to file a memorandum of voting conflict.

QUESTION 3:

Would a prohibited conflict of interest be created were you to participate in discussion as a member of the Housing Authority Commission concerning the investment of surplus funds by the Commission?

There is no provision in the Code of Ethics which would prohibit altogether your participation in discussion of the investment of surplus funds of the Housing Authority with local banks. As a general prohibition, the Code of Ethics contains the following provision:

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), Florida Statutes (1979).]

As used within this provision, the term "corruptly" is defined as meaning

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), Florida Statutes (1979).]

Taken together, these provisions are directed toward prohibiting the use of one's official position to favor one's employer in derogation or disregard of the general public welfare.

Accordingly, the Code of Ethics for Public Officers and Employees does not prohibit you from discussing the investment of surplus funds of the Housing Authority, except to the extent that your discussion would constitute a deliberate attempt to favor the bank which employs you over all other banks, without regard for the interests of the Housing Authority. As indicated in our response to your first question, it appears that a similar determination would be made by the governing body of the Housing Authority in determining whether, if your bank receives surplus funds from the Authority, there has been any favoritism on your part.