CEO 90-35 -- April 26, 1990

CONFLICT OF INTEREST

CITY PUBLIC WORKS DIRECTOR OWNING CORPORATION SELLING STREET SIGNS TO DEVELOPERS

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

SUMMARY:

A prohibited conflict of interest would be created under Section 112.313(7), Florida Statutes, were a city public works director, whose department is responsible for the erection and maintenance of street signs, to own 80% of the stock of a corporation which sells street signs to developers for use within the city. The public works director has regulatory powers over developments within the city which would conflict with his private interests in selling signs to the developers of these projects.

QUESTION:

Is a prohibited conflict of interest created where the Public Works Director of a city owns 80% of the stock of a corporation which sells street signs to developers for use within the city?

Your question is answered in the affirmative.

This letter of inquiry is submitted on behalf of . . . . the Public Works Director for the City of Ormond Beach. By letter and a subsequent telephone conversation with our staff, we have been informed that the Public Works Director supervises the Department of Public Works, which consists f a Sanitation Division and a Street and Draining Division. He supervises the activities involved in the maintenance of public streets, drainage, signs, and sanitation, and confers with contractors and other interested parties relative to programs and projects. He also sits on the Site Review Committee and makes recommendations concerning stormwater drainage systems and sanitation systems in developments. As Public Works Director, the rest of the Site Review Committee generally defers to his recommendations on these systems. He also makes recommendations concerning the location of signs within a development, although a representative of the Police Chief generally makes the final determination as to where and what type of signs are required.

The City's Site Plan Review Committee reviews all commercial site plans and residential subdivisions. The Committee will decide where and what type of signs will be needed in the manner described above. The City has a policy which requires private developers to initially purchase all needed signs, but if a sign later is damaged or destroyed, it will be replaced by the City at the City's expense. The Public Works Department physically erects signs purchased by a developer and thereafter is responsible for maintaining them.

The Public Works Director owns 80% of the stock of a Florida corporation which manufactures and sells street signs and other types of signs to public and private entities. The City does not purchase any signs from this corporation. If the Police Chief determines a given project will need certain street signs, however, the private developer of the project may purchase the signs from this corporation.

In regard to your question, 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 not apply, as you have stated that the corporation does not do business with the City.

Section 112.313(7)(a), Florida Statutes, 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.

This provision prohibits the Director from having a contractual relationship with a business entity which is subject to the regulation of his agency. Section 112.313(7)(a) therefore would prohibit the Director from personally contracting with a developer to provide signs. Since the developer would be contracting with the corporation to purchase signs, however, the first sentence of Section 112.313(7)(a) would not appear to apply. See CEO 88-43, in which we advised that a paving company owned by a water management district board member could subcontract to do paving work for the general contractor on a district project.

The second sentence of Section 112.313(7)(a) prohibits the Director from having a contractual relationship which creates a continuing conflict between his private interests and public duties. We believe that the Director's relationship with the corporation is sufficient to create a frequently recurring conflict between his private interests and public duties. The Public Works Director reviews the site plans of a developer for compliance with ordinances and codes concerning stormwater drainage and sanitation. He also supervises the erection and maintenance of the signs and makes recommendations concerning signage in the Site Plan Review Committee. Therefore, developers may feel pressure to purchase signs from his company in order to ensure that their plans are approved. In addition, the Public Works Director's duties and responsibilities place him in a unique position to recommend that a developer use his company, and the nature of his duties also presents the possibility that he may be placed in a position where he has the opportunity to sell signs for the corporation during his public working hours, which could create possible violations of Section 112.313(6), Florida Statutes, which states:

MISUSE OF PUBLIC POSITION.--No public officer or employee of an agency shall corruptly use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31.

In the past we have held that a public employee's placement in positions which could "tempt dishonor," even if the employee does not avail himself of any such opportunities, is sufficient to create a possible violation of Section 112.313(7)(a). We note that the prohibition would not be applicable to the corporation's sale of street signs to be located outside of the City.

In your letter of inquiry, you cite the following opinions as support for your conclusion that a prohibited conflict of interest does not exist in the described situation: CEO 89-44; CEO 89-61; CEO 87-87; CEO 87-52; and CEO 87-30. We do not believe these opinions support your conclusion for the following reasons.

In CEO 89-44 we determined there was no prohibited conflict of interest created under Section 112.313(7)(a), Florida Statutes, by the participation in the real estate industry by a city commissioner's spouse. The reason we found no conflict there is because Section 112.313(7)(a), Florida Statutes, only prohibits certain employment and contractual relationships of a public officer or employee. It does not apply to the spouse of a public officer or employee. By contrast, in the situation described in your letter of inquiry it is the public employee himself who has a contractual relationship with the corporation manufacturing signs, not his spouse. Therefore, CEO 89-44 does not appear to apply.

We determined in CEO 89-61 that no prohibited conflict of interest was created under Section 112.313(7)(a), Florida Statutes, by an employee of a city's division of stormwater management leasing dock space from the city's parks and recreation department. We found that a frequently recurring conflict of interest, or an impediment to the employee's public duties, was not created as the employee had no involvement in the City's decisions concerning leasing of dock space. In contrast, the Director of Public Works is involved in decisions concerning sign placement and also is involved in the erection and maintenance of signs. In addition, he is involved in regulating the developments, which may require signs, in the areas of stormwater draining and sanitation systems. Therefore, we do not believe CEO 89-61 is applicable.

Our opinion in CEO 87-87 addressed a situation where a city regional utilities employee wished to acquire a private water supply and distribution company which would serve only customers outside of the city. We found no frequently recurring conflict because under the circumstances described it was not likely that the private water company would compete with the employee's public employer. The city had no regulatory power over the company, since the company did not do business within the city. In contrast, the Public Works Director has regulatory power over developers in areas other than signage. In addition, we note that in the current situation the City's sign shop does not sell to private developers. Therefore, the issue of it competing with the private corporation has not been raised.

CEO 87-52 and CEO 87-30 deal with Section 112.313(3), Florida Statutes. Since you state that the corporation does not intend to sell to the City, we agree with your apparent conclusion that Section 112.313(3), Florida Statutes, is not applicable to the facts as described.

Accordingly, we find that a prohibited conflict of interest would be created were the Director of Public Works to own 80% of the outstanding stock of a corporation which sells signs to private entities for developments within the City but that no prohibited conflict of interest would be created were the corporation to sell signs to be located outside of the City.