CEO 90-9 -- January 24, 1990

CONFLICT OF INTEREST

COUNTY HOSPITAL BOARD MEMBER'S SPOUSE PARTICIPATING IN JOINT VENTURE TO CONSTRUCT OFFICE BUILDING ON HOSPITAL PROPERTY

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

SUMMARY:

No prohibited conflict of interest would be created under the Code of Ethics for Public Officers and Employees were a hospital board member's spouse to participate in a joint venture to build an office building on hospital property. Neither Section 112.313(3) nor 112.313(4), Florida Statutes, applies here, where the board member would not be purchasing realty, goods, or services for her agency from the business entity in which her husband holds an interest and any compensation her spouse may receive was not given to influence a vote or other official action of the board member.

QUESTION:

Would a prohibited conflict of interest be created were you to serve as a member of a county hospital board where your spouse is a physician and limited partner in a joint venture to construct an office building for physicians on hospital property?

Your question is answered in the negative.

In your letter of inquiry, you advise that you have served as a member of the Sarasota County Public Hospital Board since 1982. You state that this is an elected, uncompensated position, although you may receive money for reimbursement of travel expenses. You also advise that the Hospital has developed a side-by-side corporation called Community Health Corporation (CHC), which is currently developing a joint venture with physicians to construct an office building on hospital property. You state that CHC is acting as the developer because the Hospital Board is not permitted to enter into a joint venture of this nature. In order to secure working capital for the project, CHC borrowed funds from the Hospital Board on two occasions at prime rate, to be paid back from the proceeds of the project. The corporation also has entered into a lease for about one acre of hospital-owned land for 60 years. At the end of this time, the land, building and all improvements will revert to the Hospital Board.

Your husband is a physician and would like to participate in this joint venture as a limited partner to secure office space near the hospital for his practice. You estimate that of 100 partnership units, your husband's practice probably would be offered four. Your husband currently owns 50% of his medical practice, though at the time he would occupy the new building, you envision his interest would be less. You inquire whether this partnership interest would create a prohibited conflict of interest with your service on the hospital board.

The Code of Ethics for Public Officers and Employees contains only two provisions which prohibit conflicts of interest arising out of the activities of the spouse of a public officer or public employee at a local government level. Those provisions are as follows:

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.

[Section 112.313(3), Florida Statutes.]

UNAUTHORIZED COMPENSATION.--No public officer or employee of an agency or his spouse or minor child shall, at any time, accept any compensation, payment, or thing of value when such public officer or employee knows, or, with the exercise of reasonable care, should know, that it was given to influence a vote or other action in which the officer or employee was expected to participate in his official capacity. [Section 112.313(4), Florida Statutes.]

We are of the opinion that neither of these provisions would prohibit the situation which you have described.

Under Section 12.313(3), you are prohibited from acting as a public officer to purchase or lease any realty, goods, or services for your agency from a business entity of which your spouse is a partner. However, in this case the hospital is leasing land and lending money to the corporation for the benefit of the joint venture rather than leasing or purchasing land, goods, or services from the corporation or the joint venture. Therefore, this provision is inapplicable. See CEO 86-14, where we advised that a city council member could serve on the board of directors of a corporation leasing a hospital facility from the city where the corporation was not leasing or selling any realty, goods, or services to the City.

With respect to Section 112.313(4), there is no indication that your husband's participation in the joint venture is designed to influence a vote or other action taken in your capacity as a public officer. Further, it appears that your husband primarily will be contributing funds toward the office building project for the purpose of securing office space rather than accepting a thing of value from the corporation.

As an aside, you mention in your letter of inquiry that you have abstained from voting where you perceived a conflict based on a possible benefit to your spouse's interests. This is appropriate based on our decisions under Section 112.3143(3), Florida Statutes, which advise that a measure which benefits a public officer's spouse also benefits the public officer where the spouse contributes to that officer's support. See CEO 85-42 and CEO 83-29. Whether a particular measure represents such a special private gain to your spouse is dependent on the nature of the measure under consideration and the size of the class of persons to be benefited. In CEO 83-49, we advised that a city council member could vote on matters affecting a hospital employing her spouse, as none of the measures considered would inure to the special private gain of the council member through benefit to her spouse. We suggest that if you have a question regarding a particular vote, you may wish to contact our office for further guidance.

Accordingly, we find that no prohibited conflict of interest would be created were your spouse's medical practice to become a limited partner in a joint venture with a corporation under contract to the Hospital while you continue to serve as a member of the Hospital Board.