CEO 76-118 -- July 26, 1976

CONFLICT OF INTEREST

CITY COUNCILMAN AN OFFICER OF A BANK WITH AN OUTSTANDING LOAN TO THE CITY

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

Prepared by: Bonnie Johnson

SUMMARY:

The Code of Ethics for Public Officers and Employees prohibits a public officer from holding employment with a business entity doing business with his agency. Fla. Stat. s. 112.313(7)(a)(1975). The commission has previously found no violation of this provision, however, where a prohibited loan transaction had been entered into prior to the time that the subject public officer assumed office. In the instant case, a city councilman is employed as an officer of a bank which has an outstanding loan to the city, negotiated prior to the councilman's election to office, and the terms of which are renegotiated annually. As the essential purpose of s. 112.313(7) is to prevent a public officer from using his official position to secure business for his private employer, no conflict of interest is deemed to exist while the contract is in its executory stage, so long as the annual renegotiation of terms remains substantially the same as those in the original contract.

QUESTION:

Does a prohibited conflict of interest exist where I, a city councilman, am employed as an officer of a bank which has an outstanding loan to the city?

Your question is answered in the negative.

Your letter of inquiry advises us that, in late 1973, prior to your becoming a city councilman, the city negotiated the purchase of a 10-acre parcel of property and obtained a verbal commitment from the bank of which you are an officer to borrow the sum of $95,000 to buy the property. On January 2, 1974, the day you were seated on the council, the city council passed a resolution to buy the property. The promissory note pertaining to this transaction indicates that the loan was entered into on February 26, 1974, and was due on February 26, 1975. That document does not indicate that anything other than a 1-year loan was contemplated. However, on February 26, 1975, the loan was renegotiated for another year. In February of 1976 the loan was renegotiated for another 1-year period.

The version of the Code of Ethics for Public Officers and Employees which was in force at the time the original note was made did not prohibit the situation you describe. However, the following provision took effect on July 1, 1974.

OTHER EMPLOYMENT. -- No public officer or employee of an agency shall accept other employment with any business entity subject to the regulation of, or doing business with, an agency of which he is an officer or employee, nor shall an officer or employee of an agency accept other employment that will create a conflict between his private interests and the performance of his public duties or impede the full and faithful discharge of his public duties. . . . [Fla. Stat. s. 112.313(5)(1974 Supp.).]

This provision prohibits a public officer from having employment with a business entity doing business with his agency. On October 1, 1975, an amended version of the above took effect, providing as follows:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. --

(a) 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. [Fla. Stat. s. 112.313(7)(1975).]

The above-quoted provision similarly prohibits a public officer from having employment with a business entity doing business with his agency.

In a previous opinion of this commission, CEO 75-195, we found no violation of the above-quoted s. 112.313(7) where a prohibited loan transaction had been entered into prior to the time that the subject official took office. We take a similar view in the instant case. The essential purpose of s. 112.313(7) is to prevent a public officer from using his official position to secure business for his private employer. Inasmuch as the original loan transaction was negotiated prior to your assuming a seat on the city council, no such influence could have been exerted in the securing of the loan. Accordingly, we find no conflict of interest to exist while the contract is in its executory stage so long as the annual renegotiation of terms remains substantially the same as those in the original contract.