CEO 91-30 -- June 7, 1991

CONFLICT OF INTEREST

CITY COUNCILMAN OR SPOUSE SUBLEASING PROPERTY TO BINGO

OPERATORS REGULATED BY CITY

To: Samuel S. Goren, City Attorney, City of North Lauderdale

SUMMARY:

A prohibited conflict of interest exists under Section 112.313(7)(a), Florida Statutes, where a City Councilman, either in his individual capacity or through some form of business entity, subleases facilities to operators of bingo games, as the City extensively regulates bingo owners, operators, and lessors. Under the facts presented, the Code of Ethics would also prohibit the spouse of the City Councilman from subleasing facilities to bingo operators and owners. CEO's 89-47, 89-44, 89-24, 88-35, 88-33, 88-24, 87-50, 82-9, and 78-18, are referenced.

QUESTION 1:

Does a prohibited conflict of interest exist where a city councilman contemplates the lease of property in the city limits in either his individual capacity or through some form of business entity for the express purpose of subleasing the space for bingo operations and banquet hall uses, where the city council has enacted an ordinance which extensively regulates bingo operations in the city?

Your question is answered in the affirmative.

In your letter of inquiry, you have advised that Mr. Steve Hillebrand is an elected member of the North Lauderdale City Council. Further, you advise that the Councilman contemplates engaging in the lease of property in the city limits of North Lauderdale either in his individual capacity or through some form of business entity for the express purpose of subleasing space to qualified charities and operators for bingo operations, all of whom would be subject to the regulation of the City in accordance with City Ordinance No. 90-12-775. The property also would be available for lease as a banquet hall.

City Ordinance No. 90-12-775 institutes a regulatory program wherein both lessors of facilities for bingo games, as well as operators of bingo games, are required to obtain permits from the City. Although the permitting requirements for operator's permits and lessor's permits are different, ultimately the City Council makes the final decision to issue the operator's permit, and serves in an appellate function when either type of permit is suspended.

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. [Section 112.313(7)(a), Florida Statutes (1989).]

This provision would prohibit the Councilman from having a contractual relationship with entities which are subject to the regulation of the City of North Lauderdale. It also prohibits the Councilman from having a contractual relationship which would create a continuing or frequently recurring conflict between his private interests and the performance of his public duties, or which would impede the full and faithful discharge of his public duties.

We are of the view that Section 112.313(7), Florida Statutes, would be violated whether the Councilman subleases space in his individual capacity or through some form of business entity. We adopt this view because if the Councilman in his individual capacity subleases space to bingo operators, he has a contractual relationship with the operators which are subject to the regulation of the City Council. If the Councilman forms a business entity, he then has a contractual relationship with the business entity which is subject to the regulation of the City as a lessor of bingo operations. Either way, the result would be prohibited under the Code of Ethics, as it is clear from the information that has been provided to us that the City has adopted a comprehensive regulatory scheme over both bingo operators and lessors located within the City. Further, it appears that the City Council itself is involved in the regulatory process, and has not delegated the regulation to an agency of the City. Nor is the regulatory program ministerial in nature. Instead, it is one which requires the exercise of discretion by departments within City government, as well as by the City Council. Based upon these factors, it is our opinion that the proscriptions contained in the first portion of Section 112.313(7)(a), Florida Statutes, would be implicated were the Councilman in his individual capacity or through a business entity to sublease facilities to bingo operators. See CEO 89-47 and CEO 89-24. Although the information provided to us indicates that in some cases the bingo operators may be charitable organizations, we believe that the definition of the term "business entity" contained in Section 112.312(3), Florida Statutes, is sufficiently broad to encompass nonprofit, charitable organizations. See CEO 88-24, CEO 82-9, and CEO 78-18.

Accordingly, we find that a prohibited conflict of interest under Section 112.313(7)(a), Florida Statutes, precludes the Councilman from acting either in his individual capacity or through a business entity to sublease facilities to operators of bingo games within the City limits.

QUESTION 2:

Would a prohibited conflict of interest exist were the spouse of the City Councilman to sublease space to qualified charities and/or operators of bingo games?

Question 2 is answered in the affirmative, under the circumstances presented.

You have advised that in the alternative to the scenario outlined above, the spouse of the City Councilman may herself engage in the lease of property in the City limits for the express purpose of subleasing space for bingo operations to bingo operators as defined by City Ordinance No. 90-12-775. As a lessor, she also would be subject to the regulatory scheme the City has enacted regarding bingo operations. You question whether the activities of the City Councilman's spouse are precluded by the Code of Ethics for Public Officers and Employees.

As noted previously, Section 112.313(7)(a), Florida Statutes, prohibits a public officer from having a contractual relationship with a business entity which is subject to the regulation of his agency, and also prohibits the officer from having any employment or contractual relationship that will create a continuing or frequently recurring conflict of interest or that would impede the full and faithful discharge of public duties.

Generally, we have advised that this provision applies only to the activities of the public officer and not to those of a spouse. See CEO 89-44, CEO 88-35, CEO 88-33, and CEO 87-50. However, in this situation, it appears that the Councilman contemplates doing business as a lessor of bingo facilities, and that his spouse's involvement may be a subterfuge to conceal his interests. Moreover, there is nothing to suggest that jointly owned marital assets will not be used in the business operation. Therefore, we are of the view that the Code of Ethics prohibits the spouse of the City Councilman from subleasing bingo operations in the City of North Lauderdale, where the City Council has enacted ordinances which regulate bingo operations.

Accordingly, under the facts presented, the Code of Ethics which would prevent the spouse of the City Councilman from being a lessor of facilities for bingo operations.