CEO 92-27 -- June 5, 1992

CONFLICT OF INTEREST

CITY COMMISSIONER OWNER OF PUBLICATION

SELLING ADVERTISING SPACE TO CITY AND TO BUSINESS

GRANTED REGULATORY EXCEPTION BY CITY

To: Eugene M. Steinfeld, City Attorney, City of Margate

SUMMARY:

Absent the applicability of an exemption under Section 112.313(12), Florida Statutes, a prohibited conflict of interest exists where a publication partially owned by a city commissioner sells space to the city for refuse-collection announcements. The commissioner would be selling services to her political subdivision contrary to Section 112.313(3), Florida Statutes.

Section 112.313(7)(a), Florida Statutes, does not prohibit the publication from selling advertising to an automobile dealer granted a special zoning exception by the city. The commissioner has a contractual relationship with the publishing company and not with the dealer--the business entity arguably subject to the regulation of the city commission. CEO's 90-57, 89-64, 88-78, 84-108, and 80-49 are referenced.

QUESTION 1:

Does a prohibited conflict of interest exist where an incorporated publication which is partially owned by a city commissioner sells space to the city for announcements regarding the dates and times that the city's refuse-collection franchise holder will provide bulk collection?

This question is answered in the affirmative, subject to the exception discussed below.

By your letter of inquiry, telephone conversation between you and our staff, telephone conversation between the public officer for whom you are requesting this opinion and our staff, and telephone conversation between the director of the City's department of public works and our staff, we are advised that Pam Donovan, a City Commissioner of the City of Margate, owns together with her husband thirty-five percent of an incorporated weekly publication that is generally circulated within the City. TheCommissioner is the corporate president and a director, her husband is the corporate secretary and a director, and the remainder of the interest in the publication is owned by her mother, father, and brothers. The Commissioner also serves as publisher, a reporter, and a photographer; she is subject to receiving earnings on her stock interest in the newspaper but receives no salary or other compensation for her services. The publication retains commissioned salespeople and persons who are paid for each copy of the publication which they deliver. The publication gains its revenue through the sale of advertising, as there is no charge for copies; the publication does contain local news stories and editorial comment.

Three times yearly (formerly four times yearly), the City purchases space in the publication for running announcements regarding the dates and times that the City's solid-waste-collection franchise holder will provide bulk pickups of refuse from the City's residents. The announcements are not required by City ordinance or resolution or under the City's contract with the franchise holder and thus can be viewed as a "public service." No vote of the City Commission triggers the purchase of space/running of the announcements; personnel of the City's public works department telephone the publication and place the announcements by speaking with a commission-earning salesperson. The Commissioner does not act as a salesperson in the publication's dealings with the City. Currently, and prior to the City's use of the publication, the City uses and used a second publication for the announcements, resulting in announcements being run in both publications regarding the same refuse collections. A third weekly publication serving the City is not used. All three weekly publications are similar in that they are home-delivered without charge or the need for a subscription to all residents of the City, with the exception of the City's condominium residents, who receive the publications by "bulk delivery" without subscription to the condominiums. Many daily publications, in which announcements are not placed, also serve the City. The City's public works director advises that he has used the second publication because he felt the City's residents would read it due to its stability, availability, and longevity. The director represents further that he has held his public position for twenty years.

The Code of Ethics for Public Officers and Employees provides in relevant part:

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 or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(c) Appointment to public office.

(d) Beginning public employment.

[Section 112.313(3), Florida Statutes.]

Absent the applicability to the Commissioner's situation of an exemption under Section 112.313(12), Florida Statutes, the sale of space from the publication to the City is prohibited by Section 112.313(3).

The exemptions which you suggest might be applicable would negate a conflict if:

Within a city or county the business is transacted under a rotation system whereby the business transactions are rotated among all qualified suppliers of the goods or services within the city or county. [Section 112.313(12)(a), Florida Statutes.]

The purchase or sale is for legal advertising in a newspaper, for any utilities service, or for passage on a common carrier. [Section 112.313(12)(c), Florida Statutes.]

Another exemption which might apply negates a conflict if:

The total amount of the transactions in the aggregate between the business entity and the agency does not exceed $500 per calendar year. [Section 112.313(12)(f), Florida Statutes.]

Previously, each individual transaction was entitled to the $500 exemption, and the statutory language provided:

The total amount of the subject transaction does not exceed $500. [Section 112.313(12)(f), Florida Statutes (1989).]

In CEO 89-64, we emphasized that all "qualified" suppliers of the applicable goods or services would have to be included in the purchase-rotation pool in order for the exemption under Section 112.313(12)(a) to be applicable and opined that the pool of qualified suppliers could be determined by the imposition of reasonable conditions which did not have the effect of unduly limiting the pool or of unfairly benefiting the business of a public official. Under the scenario presented, home delivery without charge or the need for a subscription to all residents of the City might constitute such reasonable and objective criteria in that all residents would receive the announcements, as opposed to use of a paid subscription newspaper which, of course, is not received by all residents. However, we find that the rotation exemption is not present in the scenario before us because the City's purchases have been awarded to only two of the three comparable publications rather than rotated among the three.

It is obvious that the item (space in the publication) being purchased is not passage on a common carrier, and it is also obvious that while refuse-collection itself may constitute a utilities service, an announcement regarding the collection does not. In addition, we find that the announcement does not constitute "legal advertising in a newspaper" because it is not advertising required by law or ordinance. See, for example, CEO 90-57. Further, since the publication is not printed and published "for sale to the public generally," which is a statutory requirement for publications in which legal advertisements or notices can be run (see Section 50.011, Florida Statutes, and AGO 73-149), an announcement in it would not constitute "legal advertising."

The application of the $500 exemption during calendar year 1992 should be plain from its wording. However, it is our view that a full $500 of aggregate business is exempted if it occurred from October 1, 1991 (the effective date of the current wording of the exemption) through December 31, 1991, regardless of the amount of business transacted prior to October 1, 1991, because the only portion of the calendar year 1991 for which the Commissioner and the City could have conformed their conduct to the new statutory language was October 1 through December 31.

Accordingly, absent the applicability of an exemption under Section 112.313(12), Florida Statutes, the Code of Ethics for Public Officers and Employees prohibits the City from purchasing announcements regarding solid waste collection in a publication in which the Commissioner and her husband own a material interest and for which she and her husband serve as officers and directors.

QUESTION 2:

Does a prohibited conflict of interest exist where the Commissioner's publication sells advertising space to a business which has been granted a special zoning exception by the City?

This question is answered in the negative.

In addition, we are advised that the publication sells weekly advertising space to an automobile dealership which has been granted a special exception by the City to stage outdoor promotional events at its location. The Commissioner advises that her publication runs approximately fifty to sixty advertisements per week, usually including two or three other dealerships besides the one granted the exception, that about seven advertisements of similar size to the dealership's advertisement are run each week, and that the dealership's advertisement amounts to a small percentage of the publication's business.

The City Attorney describes the special exception as a "conditional use" whereby the dealership is allowed to conduct certain activities outdoors at its location under a zoning classification that requires all such activities to be conducted indoors. The exception is renewable yearly by the City Commission, at which time the situation is examined to determine whether the exception is justified, under such objective criteria as whether the outdoor activities are creating excessive noise or traffic problems, and whether the activities constitute a nuisance. This review may be conducted more often than yearly, "depending upon any input by the administrative staff" of the City.

Section 112.313(7)(a), Florida Statutes, which is applicable to this inquiry, 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.

Even though the situation you describe could constitute "regulation" for purposes of the first prohibition of Section 112.313(7)(a), depending on facts and circumstances not fully apparent in your scenario, the Commissioner's contractual relationship would be with her corporation, a business entity separate and distinct from the dealership--the business entity arguably subject to the regulation of the City Commission. See, for example, CEO 91-42 and our many other opinions cited therein. Therefore, we find that the Commissioner would not have a contractual relationship with a business entity that is subject to the regulation of her agency.

Further, we find that the Commissioner's contractual relationship with the publication would not create a continuing or frequently recurring conflict between her private interests and the performance of her public duties or impede the full and faithful discharge of her public duties. In our view, the relatively small amount of advertising being purchased from the publication by the dealership is not sufficient to cause the Commissioner to be tempted to compromise the performance of her public duties in favor of the interests of the dealership. See, for example, CEO 88-78 and CEO 80-49.

In addition, please be advised that the voting conflicts law provides in relevant part:

No county, municipal, or other local public officer shall vote in his official capacity upon any measure which would inure to his special private gain; which he knows would inure to the special private gain of any principal by whom he is retained or to the parent organization or subsidiary of a corporate principal by which he is retained, other than an agency as defined in s. 112.312(2); or which he knows would inure to the special private gain of a relative or business associate of the public officer. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of his interest in the matter from which he is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes. [Section 112.3143(3)(a), Florida Statutes.]

While, under the scenario before us, the dealership is not a principal retaining the Commissioner, a parent organization or or subsidiary of a corporate principal retaining the Commissioner, or a business associate of the Commissioner, requiring her abstention from voting, disclosure, and compliance with filing requirements, there may be public concern that a vote regarding the dealership might have sufficient repercussions or effects such that the publication would benefit from the vote. For example, a vote regarding the dealership could have the effect of enabling the dealership to continue or expand the amount of advertising it purchases from the publication. See, for example, CEO 84-108, Question 2. Therefore, to avoid even the appearance of impropriety, the Commissioner might want to abstain from votes involving the dealership, as would be permitted under Section 286.012, Florida Statutes.

This question is answered accordingly.