CEO 82-27 -- April 8, 1982

CONFLICT OF INTEREST

WATER CONTROL DISTRICT SUPERVISOR EMPLOYED BY CORPORATION CONTRACTING WITH BOARD OF SUPERVISORS TO PERFORM MAINTENANCE WORK REQUIRED BY THE DISTRICT

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

SUMMARY:

No prohibited conflict of interest would be created were a water control district to contract for the performance of maintenance work required by the district with a corporation which employs the president of the district's board of supervisors. Section 112.313(7)(a)1, Florida Statutes, would exempt the employment of a member of a water control district's board of supervisors with a business entity which is subject to the regulation of or which is doing business with the water control district. As the supervisor is merely an employee of the corporation and is not an officer, director, or owner of the corporation, Section 112.313(3), Florida Statutes, would not apply to prohibit the sale of services from the corporation to the district. In addition, it appears that the transaction between the corporation and the district would be exempted as being the only source of supply within the district. See Section 112.313(12)(e), Florida Statutes.

QUESTION:

Would a prohibited conflict of interest be created were a water control district to contract for the performance of maintenance work required by the district with a corporation which employs the president of the district's board of supervisors?

Your question is answered in the negative.

In your letter of inquiry you advise that .... is the President of the Board of Supervisors of the Joshua Water Control District, a Chapter 298, Florida Statutes, taxing district consisting of approximately 28,000 acres predominantly devoted to citrus groves. Under Chapter 298, the Board of Supervisors of a water control district is empowered to tax landowners in order to maintain district work installed under the plan of reclamation. Within the Joshua Water Control District, the Board is required to maintain hundreds of miles of canals and roads, bridges and culverts and must conduct periodic herbiciding and mechanical cleaning to keep the canals functioning. Section 298.35, Florida Statutes, authorizes the Board to employ personnel or to contract with outside sources to continue implementation of the District's reclamation plan and to maintain the work of the District.

Under Section 298.11, Florida Statutes, the three-member District Board of Supervisors is elected on a one acre/one vote principle. A particular corporation presently owns the majority of land within the District, you advise. At present, the subject Supervisor and the two other Supervisors are employees of a division of that corporation; the division is responsible for the management of the groves of the corporation. The division, which controls extensive heavy equipment and which retains employees for the purpose of maintaining groves and associated facilities, is the only agricultural maintenance service entity located within the District, you advise. Although the subject Supervisor and the other two Supervisors hold official titles as Vice President of the division, they are not officers of the corporation as they hold no official title within the corporation, perform no duties created or prescribed by corporate charter or by-law, are not elected by stockholders' or Board of Directors' vote, and are not paid a salary fixed by the stockholders, the Board of Directors, or corporate charter or by-laws. In addition, you advise, none of the Supervisors, their spouses, or children are officers of the corporation or hold more than five percent of the stock of the corporation.

In your correspondence and in a telephone conversation with our staff, you have advised that previously the corporation maintained the roads and canals within the District using corporation equipment and manpower, as there were no District employees. No tax was levied by the District and paid to the corporation for work involved in maintaining roads, canals and other District works. Subsequently, the District hired the employees of the corporation who formerly had done the maintenance work and began to perform maintenance on the roads and canals using in part heavy equipment belonging to the corporation. However, problems have arisen in that the employees were hired on a full-time basis while the work needed to maintain the roads and canals is seasonal. In addition, the employees hired from the corporation could not participate in the corporation's retirement plan, which they felt was better than the retirement benefits available to employees of the District. The Board of Supervisors has determined that it would be cost effective to contract with the corporation for the grove management division to provide on an "as needed" basis for the personnel necessary to perform the maintenance work required by the District. Such a contract would eliminate the necessity to maintain a full-time staff of employees.

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

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), F. S.]

This provision prohibits a public officer from being employed by a business entity which is doing business with his agency. However, Section 112.313(7)(a)1, Florida Statutes, provides:

When the agency referred to is that certain kind of special tax district created by general or special law and is limited specifically to constructing, maintaining, managing, and financing improvements in the land area over which the agency has jurisdiction, or when the agency has been organized pursuant to chapter 298, then employment with, or entering into a contractual relationship with, such business entity by a public officer or employee of such agency shall not be prohibited by this subsection or be deemed a conflict per se. However, conduct by such officer or employee that is prohibited by, or otherwise frustrates the intent of, this section shall be deemed a conflict of interest in violation of the standards of conduct set forth by this section.

Since the Water Control District functions under Chapter 298, Florida Statutes, this provision would apply to exempt the subject Supervisor's employment with a business entity which is subject to the regulation of or which is doing business with the Water Control District.

However, we must determine whether the subject Supervisor's conduct is prohibited by or otherwise frustrates the intent of "this section," which includes numerous prohibitions in addition to those contained in subsection (7)(a). Under the circumstances you have presented, we do not find that any other prohibition of Section 112.313 would be violated if the District were to enter into the proposed contract. In particular, Section 112.313(3) prohibits a public officer acting in his official capacity from purchasing any services for his agency from a 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." Although the subject Supervisor is employed as a Vice President of the division of the corporation, as noted above he does not hold an office in the corporation. Nor does it appear that his spouse or any of his children are officers of or own a material interest in the corporation. Therefore, we find that Section 112.313(3) also is inapplicable.

Finally, even if the proposed contract would result in a violation of subsection (7)(a) or (3), it appears that the corporation is the only entity in the area of the District with the capability of providing the manpower and equipment to undertake the maintenance of District roads and canals. Section 112.313(12)(e) provides an exemption from subsections (7)(a) and (3) where:

The business entity involved is the only source of supply within the political subdivision of the officer or employee, and there is full disclosure of the officer's or employee's interest in the business entity to the governing body of the political subdivision.

Please note that we have promulgated CE Form 4A for use in making the disclosure required by this provision. As this exemption would apply, we find that the intent of Section 112.313, Florida Statutes, would not be frustrated by the subject Supervisor's employment with a corporation doing business with the District.

Accordingly, we find that no prohibited conflict of interest would be created were the Water Control District to enter into a maintenance contract with the corporation which employs the subject Supervisor.