CEO 82-80 -- October 29, 1982

CONFLICT OF INTEREST; VOTING CONFLICT OF INTEREST

COUNTY COMMISSIONER OWNING REALTY COMPANY TOGETHER WITH DEVELOPMENT COMPANY WHICH IS SEEKING TO HAVE ROADS ACCEPTED BY COUNTY AND TO SELL UTILITY SYSTEM TO COUNTY

To: Mr. Hugh C. McGeehan, Member, Hernando County Board of County Commissioners

SUMMARY:

No prohibited conflict of interest exists where a county commissioner owns stock in a realty company together with a development company which is seeking to have roads approved and accepted by the county. Although a shareholder in a corporation has a contractual relationship with the other shareholders of that corporation, the development company here is not subject to the regulation of or doing business with the county commission. Complaint No. 79-74, In re John Zerweck, final order entered June 26, 1980, affirmed, Zerweck v. Commission on Ethics, 409 So. 2d 57 (Fla. 4th D.C.A. 1982), is referenced. Nor does it appear that a continuing or frequently recurring conflict of interest exists based upon the county's acceptance of roads from the development company.

No voting conflict of interest was created under Section 112.3143, Florida Statutes, where the county commissioner voted regarding the approval and acceptance of roads built by a development company which owns stock in a realty company in which he also owns stock. Here, the county's acceptance of the development company's roads would not inure to the commissioner's personal gain, and the developer is not a principal by whom he is retained. CEO's 81-8, 79-33, and 78-58 are referenced.

No voting conflict of interest was created under Section 112.3143, Florida Statutes, where the county commissioner voted regarding the issuance of bonds by the county for the purchase of a utility system from the development company. The issuance of bonds by the county for the purchase of the utility system would not benefit the commissioner personally, and the developer is not a principal by whom he is retained.

QUESTION 1:

Does a prohibited conflict of interest exist where you, a county commissioner, own stock in a realty company together with a development company which is seeking to have roads approved and accepted by the county?

This question is answered in the negative.

In your letter of inquiry you advise that you have been appointed by the Governor to serve the remainder of a term as County Commissioner and that you presently are a candidate for election to the County Commission. You also advise that you and your wife are minority shareholders in a realty company, the majority interest in which is owned by a real estate development company. You are employed as manager of the realty company, you advise, and you own no interest in the development company.

In addition, you advise that recently the development company appeared before the County Commission to have certain roads in a subdivision approved and accepted by the County. At that time, the County Engineering Department and representatives of the company could not agree on what action to take. You made a motion that the Engineering Department and the County Attorney meet with the developer's engineers and attorney to inspect the roads and to determine what was necessary to bring the roads to the required standards of the County. Following that, the necessary work was to be done; the work was to be reinspected; and, if accepted, the one- year post-acceptance maintenance of the roads as agreed upon in an original contractual agreement was to begin. This motion passed unanimously.

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), Florida Statutes (1981).]

We previously have advised that a shareholder in a corporation has a contractual relationship with the other shareholders of that corporation. See CEO 80-11. However, we do not find that the development company is subject to the regulation of, or is doing business with, the County Commission. See Complaint No. 79-74, In re John Zerweck, final order entered June 26, 1980, affirmed, Zerweck v. Commission on Ethics, 409 So. 2d 57 (Fla. 4th D.C.A. 1982), in which we found that a city commission did not regulate a developer doing business in the city within the contemplation of Section 112.313(7), Florida Statutes.

Nor do we find that under the circumstances you have presented your contractual relationship with the development company through the ownership of the realty corporation would present a continuing or frequently recurring conflict of interest or would impede the full and faithful discharge of your public duties. As the only circumstance you have presented relates to the County's acceptance of roads from the developer, we do not find that this instance is sufficient to create such a substantial conflict of interest as to be prohibited by this provision. However, without examining all of the other activities of the developer within the County we cannot conclude that there is no possibility that your relationship with the developer would be prohibited.

Accordingly, under the circumstances presented, we find that no prohibited conflict of interest exists where you own stock in a realty company together with a development company which is seeking to have roads approved and accepted by the County.

QUESTION 2:

Was a voting conflict of interest created where you, a county commissioner, voted regarding the approval and acceptance of roads built by a development company which owns stock in a realty company in which you also own stock?

This question is answered in the negative.

Regarding voting conflicts of interest, the Code of Ethics provides:

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 (1981).]

We find that this provision does not apply here. First, it does not appear that the County's acceptance of the development company's roads would inure to your personal gain. Secondly, although the County's acceptance of the roads would benefit the developer, the developer is not a principal by whom you are retained. See CEO 81-8, CEO 79-33, and CEO 78-58, in which we advised that no voting conflict of interest is created under this provision where an official votes on the interest of a business partner.

Accordingly, we find that no voting conflict of interest was created under Section 112.3143, Florida Statutes, where you voted regarding the approval and acceptance of roads built by a development company which owns stock in a realty company in which you also own stock.

QUESTION 3:

Was a voting conflict of interest created where you, a county commissioner, voted regarding the issuance of bonds by the county for the purchase of a utility system from a development company with which you own stock in a realty company?

This question is answered in the negative.

We do not find that a voting conflict of interest was created under Section 112.3143, Florida Statutes, quoted above, by your vote regarding the issuance of bonds to fund the purchase of the utility system. As we found in our response to your second question, the developer is not a principal by whom you are retained; nor would the issuance of bonds by the County for the purchase of the utility system appear to benefit you personally.

Accordingly, we find that no voting conflict of interest was created by your vote regarding the issuance of bonds by the County for the purchase of a utility system from the development company.