CEO 90-26 -- March 8, 1990

CONFLICT OF INTEREST

COMMUNITY COLLEGE TRUSTEE'S LAW FIRM ACTING AS BOND COUNSEL FOR CITY ISSUING BONDS FOR DORMITORY CONSTRUCTION

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

SUMMARY:

No prohibited conflict of interest would be created were the law firm of a community college trustee to act as bond counsel to a city issuing bonds on behalf of a foundation constructing housing for students attending the college. Section 112.313(7)(a), Florida Statutes, would not apply where the trustee holds no contractual relationship with the foundation doing business with the college, the college and foundation are independent entities, and the college is in no way involved in the construction or operation of the housing facilities.

QUESTION:

Would a prohibited conflict of interest be created were the law firm of a community college trustee to act as bond counsel to a city issuing bonds on behalf of a foundation seeking to construct housing for students attending the college?

Your question is answered in the negative.

In your letter of inquiry, you advise that . . . . has been appointed to be a Trustee of Tallahassee Community College. You further advise that the Tallahassee Community College Foundation is a direct support organization to the College under Section 240.331, Florida Statutes. It is a nonprofit corporation and has been determined to be a tax exempt organization under Section 501(c)(3) of the Internal Revenue Code. The Foundation exercises independent control over its affairs, and there is no connection between the Board of Trustees of the Foundation and that of the College.

The Foundation seeks to construct and operate student housing for students of the College, as well as other universities in the area. The College will have no connection with the construction or operation of these facilities. To accomplish this, the Foundation has filed an application requesting that the City issue revenue bonds under Chapter 159, Part II, Florida Statutes, on behalf of the Foundation to finance construction. You advise that the subject Trustee's law firm has an existing contract to serve as bond counsel to the City of Tallahassee. You inquire whether this service by the firm would present a prohibited conflict of interest.

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.

This provision would prohibit the Trustee from having a contractual relationship with an agency which is doing business with his agency. In CEO 89-36, we found that this provision prohibited the law firm of a community college trustee from acting as bond counsel to the college's direct support organization. In that case, the trustee, as a member of the firm, had a contractual relationship with the direct support organization which was doing business with the community college.

However, we find that the situation you present differs in three respects which indicate that no prohibited conflict would exist. First, you note that the law firm involved would represent the City in issuance of the bonds, rather than the foundation as in the cited opinion. Therefore, the firm's contractual relationship is with the City rather than with the Foundation which is doing business with the College. Secondly, the college and foundation in the prior opinion were interrelated, while in your case there is no connection between the two in terms of common control or overlapping boards of trustees. Thus, the City only could be considered to be "doing business" with the Foundation, a nonprofit corporation, rather than with the Trustee's agency, the College. Thirdly, the foundation in the cited opinion proposed to lease the property financed under the bonds to the college, while in your case the Foundation would retain full control of the dormitories constructed with the bond money and all proceeds accruing from operation of those facilities. Again, this would indicate that the City only is doing business with the Foundation rather than with the College. On this basis, the Trustee would not have a contractual relationship with an entity doing business with the College, which is his agency.

Accordingly, we find that no prohibited conflict of interest would be created were the law firm of the subject Community College Trustee to act as bond counsel to a city which has been asked to issue revenue bonds on behalf of a foundation which is a direct support organization to the College.