CEO 81-20 -- April 2, 1981

CONFLICT OF INTEREST

CITY BUILDING OFFICIALS DEVELOPING PROPERTY LOCATED WITHIN CITY

To: Andrew Maurodis, City Attorney, Deerfield Beach

SUMMARY:

Section 112.313(7)(a), F. S., prohibits a public employee from having a contractual relationship with a business entity which is subject to the regulation of his public agency. In the Commission's view, this statute is intended to prohibit a public employee with regulatory authority from transacting business with persons whose interests are regulated by him, whether the business transacted is subject to his regulation or not. Thus, the statute would prohibit the chief building inspector of a city from contracting with building contractors and subcontractors to construct a warehouse complex on property located within the city so long as the work of the contractors and subcontractors is subject to inspection by the building inspector's agency, either because of their work on the warehouse complex or because of other work they may be doing in the city. The Commission was of the opinion that this conflict of interest would be eliminated in this case if two conditions were met. First, the conflict inherent in having the subject inspector or his subordinates inspect work being done for himself would be eliminated if building inspection services independent of the city could be provided, for example, through a county board or through a building inspector of another city. Secondly, if the contractor and subcontractors are not doing other work within the city which would subject them to the regulation of the building inspector at the time he has contracted with them, the contractor and subcontractors would not be subject to the regulation of the building inspector's agency. The same conditions would apply to the director of a city department of community development which exercises building and zoning regulatory powers, who wishes to contract for the construction of a duplex on property owned by him within the city.

QUESTION 1:

Would a prohibited conflict of interest be created were the chief building inspector of a city to contract for the construction of a warehouse complex on property owned by him within the city?

Question 1 is answered in the negative, subject to the conditions noted below.

In your letter of inquiry you advise that the Chief Building Inspector of the City of Deerfield Beach, Ray Cannady, owns a parcel of property within the City. You also advise that he has submitted a development plan for a warehouse complex on the property; that plan will be reviewed by the City Planning and Zoning Board before being submitted to the City Commission for its approval. Although the Building Inspector is a licensed contractor, you advise, he intends to hire a contractor to build the proposed warehouse complex.

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 employee from having a contractual relationship with a business entity which is subject to the regulation of his public agency. In our view, this statute is intended to prohibit a public employee with regulatory authority from transacting business with persons whose interests are regulated by him, whether the business transacted is subject to his regulation or not.

Here, the subject Chief Building Inspector is in a position to regulate, either directly or through his subordinates, the contractor and various subcontractors who will be constructing his warehouse complex. This situation clearly comes within the literal language and intent of Section 112.313(7)(a). So long as the work of the contractor and subcontractors who are constructing the warehouse complex is subject to inspection by the Building Inspector's agency, either because of their work on the warehouse complex or because of other work they may be doing in the City, the situation is prohibited by the statute.

However, we have been advised by the Director of the City's Department of Community Development that within Broward County all municipal building inspectors are licensed and regulated by the Broward County Board of Rules and Appeals, to which all municipal building code disputes may be appealed. He also has advised that it is possible that the Broward County Board or a building inspector of another city could provide building inspection services which would be independent of the City. If this were done, it would eliminate the conflict inherent in the subject Inspector or his subordinates inspecting work being done for himself.

Still, if the contractor and subcontractors were doing other work within the City, they would be subject to the regulation of the City Building Inspector as to that work. See CEO 81-10. Therefore, even if independent inspections were made through the Broward County Board, or by a building inspector of another city, the contractor and subcontractors doing work on the warehouse complex may not also be doing work within the City which would subject them to the regulation of the Building Inspector at the time he has contracted with them.

When a public employee assumes his public position, he sacrifices some of the economic freedom he otherwise would possess as a citizen in order to faithfully and impartially perform his responsibilities to the public. We recognize that

[p]ublic officials should not be denied the opportunity, available to all other citizens, to acquire and retain private economic interests except when conflicts with the responsibility of such officials to the public cannot be avoided. [Section 112.311(2), F. S.]

We also are aware that the Legislature has provided that

[i]t is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his duties to the state or the county, city, or other political subdivision of the state involved. [Section 112.316, F. S.]

In our view, conflicts with the responsibilities of the Building Inspector cannot be avoided if he is transacting business with persons who are subject to his regulatory authority, or if he is inspecting work that has been done for him or asking his subordinates to do so. On the other hand, the conditions set forth above would assure the public that inspections of the subject Building Inspector's property and inspections by his agency of the property of others would be handled independently and impartially, while still allowing him the opportunity to acquire private economic interests available to other citizens.

Accordingly, subject to the conditions expressed above, we find that no prohibited conflict of interest would be created were the subject Chief Building Inspector to contract for the construction of a warehouse complex on property owned by him within the City.

QUESTION 2:

Would a prohibited conflict of interest be created were the director of a city department of community development to contract for the construction of a duplex on property owned by him within the city?

Your second question also is answered in the negative, subject to the conditions noted below.

In your letter of inquiry you advise that Steven G. Shullaw is the Director of the Deerfield Beach Department of Community Development, the City agency which exercises building and zoning regulatory powers. You also advise that, although the Director supervises the City's Building Inspector, he is not permitted to interfere with the professional judgment of the Building Inspector.

We are advised by the Director that he owns two lots within the City upon which he wishes to have constructed duplexes. For this construction, you have advised, only a building permit is needed, as there is no requirement of review by the City Planning and Zoning Board.

Section 112.313(7)(a), F. S., is the relevant provision of the Code of Ethics under this situation, also. The Director's "agency" as defined in Section 112.312(2), F. S., is the Department which he heads and which would be responsible for regulating the building contractor and subcontractors who would construct the duplexes.

We perceive no significant distinction between the situation of the Director and the situation of the Building Inspector as addressed in our response to your first question above. Although the Director may not interfere with the professional judgment of the Building Inspector, nevertheless, the Director is responsible for supervising his work and, presumably, is accountable for the performance of all personnel within the Department. Therefore, the Director would be prohibited from transacting business with persons whose interests are regulated by his agency, either because of their work for him or because of other work they may be doing within the City. Again, however, this conflict would be obviated if independent inspections were made through the Broward County Board of Rules and Appeals or by a building inspector of another city and if the contractor and subcontractors constructing the duplexes were not otherwise engaged in work within the City which would subject them to the regulation of the Department of Community Development at the time he has contracted with them.

Accordingly, subject to these conditions, we find that no prohibited conflict of interest would be created were the subject Director to contract for the construction of duplexes on property owned by him within the City.