CEO 89-54 -- October 26, 1989

CONFLICT OF INTEREST

COUNTY TAX COLLECTOR OWNING STOCK IN BANK PROVIDING INVESTMENT SERVICES TO AND SERVING AS DEPOSITORY OF COUNTY FUNDS

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

SUMMARY:

No prohibited conflict of interest would be created were a county tax collector to own stock in a local bank which acts as a depository for the tax collector's office, so long as the terms of the exemption contained in Section 112.313(12)(g), Florida Statutes, are met. To the extent that services rendered by the bank exceed acting as a depository for the office, they would not be exempted under this provision. Also, it must appear in the records of the agency that the governing body of the agency has determined that the tax collector has not favored the bank over other qualified banks.

QUESTION:

Would a prohibited conflict of interest be created were you, a county tax collector, to own stock in a bank which serves as the depository of general funds of the tax collector's office and which provides investment services to the tax collector's office?

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

In your letter of inquiry and in a telephone conversation with our staff, you advise that you serve as the Tax Collector for Santa Rosa County. You also hold $25,000 in stock in a bank in your County. This bank serves as the depository for the General Fund account for your office and provides investment services for excess fees and tax receipts collected by your office. When such excess receipts are received, members of your staff check the rates and terms available at local banks and select the bank offering the best rates and terms available. Several local banks may be used, depending on the rates and terms offered. You inquire as to whether your ownership of this stock creates a prohibited conflict of interest.

The Code of Ethics for Public Officers and Employees contains two sections which potentially could be applicable to this situation. Section 112.313(3), Florida Statutes, provides:

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.

This section would prohibit you from purchasing services for the Tax Collector's Office from the bank if you have a material interest in that bank. "Material interest" is defined at Section 112.312(12), Florida Statutes, as

direct or indirect ownership of more than 5 percent of the total assets or capital stock of any business entity. For purposes of this act, indirect ownership does not include ownership by a spouse or minor child.

In a telephone conversation with our staff, you advised that the amount of stock held by you and your husband does not exceed five percent of the bank's capital stock. Therefore, we conclude that you do not hold a material interest in the bank and that this section would not apply.

The second provision which may be applicable is Section 112.313(7), Florida Statutes, which provides:

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.

We previously have advised that a stockholder of a corporation has a contractual relationship with that corporation. See CEO 80-11. Therefore, this section would prohibit you from holding stock with the bank if it is doing business with the Tax Collector's Office. Because this is the case, your situation would appear to present a prohibited conflict of interest. However, the Code of Ethics also contains an exemption to this prohibition at Section 112.313(g), Florida Statutes, which provides:

The fact that a county or municipal officer or member of a public board or body, including a district school officer or an officer of any district within a county, is a stockholder, officer, or director of a bank will not bar such bank from qualifying as a depository of funds coming under the jurisdiction of any such public board or body, provided it appears in the records of the agency that the governing body of the agency has determined that such officer or member of a public board or body has not favored such bank over other qualified banks.

In CEO 83-48, we advised that this exemption would permit a city manager to serve on an administrative board of a bank where that bank acted as a depository of city funds. In CEO 85-40, we advised that this exemption may apply, but only insofar as the services rendered by the bank constituted acting as depository. Other services provided by the bank in that opinion included acting as a trustee for bond issues and providing a line of credit. On the basis of these decisions, your stock ownership would not preclude the bank from acting as depository for your general fund account or other funds from your office. However, to the extent that services received from the bank exceed serving as a depository of funds, a prohibited conflict would be created. Note that in situations where the exemption would be applicable, it must appear in the records of your agency that the governing body of the agency has determined that you have not favored the bank over other qualified banks. For purposes of this provision, we are of the opinion that the County Commission would be the appropriate body to make this determination.

Accordingly, we find that subject to the condition noted above no prohibited conflict of interest would be created were you to hold stock in a bank acting as the depository for the general fund account or excess tax and fee receipts from the tax collector's office. A prohibited conflict would be created were the office to utilize services of the bank beyond acting as a depository of funds.