CEO 89-7 -- March 2, 1989

CONFLICT OF INTEREST

COUNTY SCHOOL BOARD MEMBER

RENTING EQUIPMENT TO SCHOOL DISTRICT

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

SUMMARY:

No prohibited conflict of interest is created where a school board member's equipment rental business rents equipment to the school district, when his equipment rental business is the only such business in the county in which the school district is located and the majority of rental transactions are below $500.00. Although Sections 112.313(3) and (7), Florida Statutes, generally prohibit a school board member from doing business with the school district, Section 112.313(12)(e) exempts transactions with the sole source of supply within the political subdivision, provided that appropriate disclosure is made, and Section 112.313(12)(f) exempts a transaction which is less than $500. CEO's 87-17 and 85-75 are referenced.

QUESTION:

Is a prohibited conflict of interest created if a District School Board member, who also privately owns the only equipment rental business in the County, rents equipment to the School District?

Your question is answered in the negative, under the circumstances presented.

In your letter of inquiry you advise that . . . , a member of the Taylor County School Board, owns a private, incorporated equipment rental business and in the past has rented equipment to the School District. You advise that the Board member made full and public disclosure of his business to the Board prior to any rental transactions with the District. You further advise that the Board member's equipment rental business is the only business which rents such equipment in the County. Attachments to your letter of inquiry indicate that the majority of transactions concerning rental of equipment were less than $500.00. You also have stated in a telephone conversation that there is no contractual agreement between the School District and the business to the effect that equipment must be rented from the latter, but equipment is rented on a voluntary, as needed basis. You ask whether the School Board member can continue to allow his business to rent equipment to the School Board without creating a prohibited conflict of interest.

Section 112.313(3), Florida Statutes, states:

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 of 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

In addition, Section 112.313(7)(a), Florida Statutes, states:

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.

These statutory sections would appear to prohibit the School Board member from renting equipment to his own agency, the School District. See CEO 87-17 and CEO 85-75. Section 112.313(12), Florida Statutes, however, provides for certain exemptions to the prohibitions of Sections 112.313(3) and (7)(a). Section 112.313(12)(e) and (f) provide exemptions when:

The business entity involved is the only source of supply within the political subdivision of the officer or employee and there is full disclosure by the officer or employee of his interest in the business entity to the governing body of the political subdivision prior to the purchase, rental, sale, leasing, or other business being transacted.

The total amount of the subject transaction does not exceed $500.

Section 112.313(12)(f) would exempt any transactions which are less than $500. Furthermore, since you have stated that the business in question is the only business renting this type of equipment in the County, if the Board member discloses his business interest on Commission on Ethics Form 4A, Disclosure of Business Transaction, Relationship, or Interest, as required by Section 112.313(12)(e), it appears that Section 112.313(12)(e) would exempt any other rental transactions. See CEO 87-17. Please note that, pursuant to Section 112.3143(3), Florida Statutes, the member would be precluded from voting on any matters concerning the rental of equipment from his business.

We note that there was one purchase by the School District from the Board member's business of a paint sprayer for $1,692.50. Section 112.313(12)(f) will not apply to exempt transactions where the purchase price is more than $500. In order for Section 112.313(12)(e) to exempt this or similar purchases, the business in question would have to be the sole source of supply within the County for the item purchased.

Your letter of inquiry states that the Board member's rental business is the only such business in the County, but it is not clear if it is the only business in the County from which purchases of certain equipment, such as the paint sprayer, can be made. If it is not the only business in the County for purchasing such equipment, the Board member would violate Section 112.313(3) and (7)(a) if he were to sell items in amounts over $500 to the School District.

Accordingly, we find that no prohibited conflict of interest has been or would be created when the subject Board member rents equipment to the County School District, so long as the member's equipment rental business is the sole source of supply in the County and appropriate disclosures are made; or so long as each transaction does not exceed $500.00.