CEO 93-11 -- April 22, 1993

CONFLICT OF INTEREST

CITY COMMISSIONER EMPLOYED BY CORPORATION SELLING

ADVERTISING TIME FOR CITY'S CABLE

TELEVISION COMPANY FRANCHISEE

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

SUMMARY:

Section 112.313(7)(a), Florida Statutes, prohibits a city commissioner from holding an employment or contractual relationship with a cable television company franchisee which is subject to the regulation of his city. However, it does not prohibit the commissioner from being employed by or having a contractual relationship with a business entity which is doing business with the cable television franchisee. If the commissioner personally, rather than the corporation that employs him, sells to the city's cable television franchisee, then he may have a prohibited contractual relationship with a business entity which is subject to the regulation of his city or, at the very least, there would be an appearance of a conflict of interest that should be avoided.

Inasmuch as the day to day regulation of the cable television franchisee has been delegated to another agency of the city and the vote to renew the franchise has been the only matter to come before the city commission in the past three years, no continuing or frequently recurring conflict exists between the commissioner's private interests and the performance of his public duties and no impediment to the full and faithful discharge of his public duties. Any conflict that may infrequently present itself to the commissioner as a result of a matter concerning the franchisee coming before the city commission may be avoided through his abstaining from voting on the matter and following the procedures set forth in Section 112.3143, Florida Statutes.

QUESTION:

Would a prohibited conflict of interest be created were a city commissioner to be employed by a corporation which has a contract to sell advertising time for the city's cable television company franchisee and which, through a subsidiary corporation, owns 80% of the franchise?

Under the circumstances presented, your question is answered in the negative.

In your letter of inquiry and your conversation with our staff, you advise that you are requesting this opinion on behalf of Margate City Commissioner Mitch Anton. You advise that the Commissioner, who has fifteen years experience in radio sales and sales management, as a result of a "nationally classified advertisement" was hired by a Virginia corporation which owns a second Virginia corporation which owns 80% of the City of Margate's cable television franchisee. The "Application for Renewal of the Cable Television Franchise Between the City of Margate and [the franchisee]," a copy of which you enclosed with your letter of inquiry, indicates that the Commissioner is neither an officer nor director of either corporation. You advise that the first Virginia corporation, his employer, also sells advertising on various networks to retailers and advertising agencies. This corporation has a contract to sell advertising time for 12 networks that air on a cable company for a neighboring city and, in the near future, for the City of Margate's franchisee.

You advise that the Commissioner is employed as the local director of advertisement sales by the Virginia corporation. In that capacity, he supervises nine employees, i.e., four to five sales people, a technician, a traffic director, a secretary, and a creative services director, and he reports directly to his supervisor who is located in Virginia, you write. He is paid a salary and a commission for all advertising sold through the local office. You advise that all payments to him are made through the Virginia corporation.

You also advise that the corporation has similar offices in 18 other cities. The location of the Commissioner's office is different from the cable television company's offices. The cable company ("franchisee") had its franchise renewed by City ordinance in 1989. You advise that the franchise was granted pursuant to federal regulation, state law, and local ordinance. There is no direct relationship between the franchisee and the Commissioner, you write.

You advise that the City of Margate is a municipality with a Commission-City Manager form of government. You advise that the five elected City Commissioners are the legislators of the City, who, among other things, establish policy and perform other city charter functions. The Commissioners choose the City Manager, who functions as the professional administrator of the City. You advise that since the deregulation of cable television rates in the mid 1980's, the only issue that has been brought before the City Commission for formal action concerning cable television has been the renewal of the cable franchise, which was extended for another 15 years. No complaints have come before the City Commission for resolution pursuant to Section 6 3/4 - 9(6) of the Code of the City of Margate (Ordinance No. 89-9), which permits a person aggrieved by a decision of the agency of the City which is empowered, among other things, to adjust, settle, or compromise such controversies as quality of service and equipment malfunctions that arise from operation of the franchise, to appeal the matter to the City Commission for "hearing and determination."

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.]

The first part of Section 112.313(7)(a) prohibits the Commissioner from holding an employment or contractual relationship with a business entity which is either doing business with or is regulated by the City Commission. We previously have found that a cable television franchisee is subject to the regulation of the agency which has granted the franchise. See CEO 82-15, CEO 81-37, and CEO 79-1. We find here, as well, that the franchisee is subject to the regulation of the City through the franchise agreement (City Ordinance 89-10).

We also find that the City Commissioner is employed by a company which, sometime in the future, may be doing business with a business which is regulated by the City. In that event, it is the first Virginia corporation, not the City Commissioner personally, that would have a contractual relationship with the franchisee, through the sale of advertising on behalf of the franchisee. While the City Commissioner has employment with the first Virginia corporation, it is not that corporation which is subject to the regulation of or is doing business with the City Commission. We previously have treated parent and subsidiary corporations as separate business entities in applying Section 112.313(7)(a), Florida Statutes. See CEO 86-12, CEO 82-78, and CEO 80-89. We also have advised that Section 112.313(7)(a) does not prohibit a public officer from being employed by or having a contractual relationship with a business entity which is doing business with another business entity, which in turn is doing business with or is regulated by the officer's public agency. See CEO 91-19, CEO 88-43, CEO 85-18, and CEO 84-8. See also CEO 79-13, where we found that Section 112.313(7)(a) does not prohibit a port authority member's employment as a salesman for a company which sells products to a franchise holder of the authority, and CEO 79-1, where we found that Section 112.313(7)(a) does not prohibit a county commissioner from being employed by a company that sells tires to a franchise holder of his county. Accordingly, we find that the first part of Section 112.313(7)(a), Florida Statutes, would not apply here.

In CEO 79-1 and CEO 79-13, we also felt obligated to point out that were the public officer, personally, rather than the corporation that employs him, to sell to his agency's franchise holder, he would have a contractual relationship with a business entity which is subject to the regulation of his agency in violation of Section 112.313(7)(a), Florida Statutes. As a result, under the circumstances presented in both opinions, we felt that at the very least there would be an appearance of a conflict of interest if the public officer on behalf of his employing corporation were to personally approach or make sales to businesses which do business with, or are subject to the regulation of, his agency. We believe that the same holds true here; we suggest that the City Commissioner avoid personally contacting or making sales on behalf of the cable television company and that all sales and contact be made through one or more of the salespersons whom the Commissioner supervises.

Our findings here are distinguishable from our findings in In re: James K. Gordon, 13 FALR 1864, 1891-1893 (Commission on Ethics 1990), wherein we found that Mr. Gordon had violated Section 112.313(7)(a), Florida Statutes, by virtue of his employment with two City of Coral Springs franchisees, including a cable television franchisee. [Although overturned on other grounds, these findings were upheld by the appellate court in Gordon v. State Commission on Ethics, 609 So. 2d 125 (Fla. 4th DCA 1992)]. We found that although Gordon was employed by another company, the cable television company retained Gordon to personally perform certain services and Gordon agreed to personally perform those services. In addition, one of the factors relevant to the cable television company's choosing Gordon was the good relationship that he had with the residents of a condominium development located outside the corporate limits of his City. Therefore, we concluded that no exemption applied that would permit Gordon's contractual relationship with the cable company. Here, however, should the corporation that employs the City Commissioner contract with the City of Margate's cable television franchisee for the sale of advertising on the networks carried on its cable system, the personal services of the Commissioner would not be a key factor in the contractual arrangement.

The second part of Section 112.313(7)(a), Florida Statutes, also prohibits the Commissioner from holding an employment or contractual relationship that would create a continuing or frequently recurring conflict between the Commissioner's private interests and the performance of his public duties or would impede the full and faithful discharge of his public duties. As a City Commissioner and an employee of a corporation which may, in the future, pay him commissions on the sale of advertising made on behalf of his City's franchisee, he could be faced with competing interests that may on occasion conflict. However, inasmuch as the day to day regulation of the cable television franchise has been delegated by the City Commission to another agency of the City and, although the City's Code provides for appeals of decisions of that agency by persons aggrieved by its decisions, the only matter coming before the Commission has been the renewal of the nonexclusive cable franchise in 1989, we do not find that a continuing or frequently recurring conflict exists between the Commissioner's private interests and the performance of his public duties or that there is an impediment to the full and faithful discharge of his public duties. Should, for example, regulation of cable rates or any other matter concerning the franchisee or its system come before the Commission with more frequency, we would advise that the City Commissioner seek another opinion. Otherwise, any conflict that may infrequently present itself to the Commissioner, as a result of a matter concerning the cable television company coming before the City Commission, may be avoided through his abstaining from voting on the matter and following the procedures set forth in the voting conflicts law, Section 112.3143(3), Florida Statutes.

Accordingly, under the circumstances presented, we find that no prohibited conflict of interest is created if the City Commissioner is employed by a corporation which has a contract to sell advertising time for the City's cable television company franchisee, but we suggest that the City Commissioner not personally conclude the sales or otherwise personally contact the franchisee on behalf of his employer.