CEO 96-15 -- June 3, 1996
CONFLICT OF INTEREST
CITY MANAGER CONTRACTOR WHOSE COMPANY IS
IMPROVING PROPERTIES WITHIN CITY
To: Mr. Paul J. Cates, Acting City Manager, City of Key West
SUMMARY:
A prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, were a city manager=s company to improve properties within the city, when such improvements are subject to city permitting. The manager would hold a contractual relationship with a business entity which is subject to the regulation of his agency, and a continuing or frequently recurring conflict or impediment to duty would be created. CEO=s 79-16, 81-10, 93-31, 94-10, and 95-28 are referenced.
QUESTION:
Would a prohibited conflict of interest be created were a city manager=s corporation to improve properties within the city, when such improvements are subject to city permitting?
Your question is answered in the affirmative.
By your letter of inquiry, we are advised that you serve as Acting City Manager of the City of Key West, that you are a candidate for the position of City Manager, and that the City Commission will shortly fill that post. As City Manager, you advise, you would be in charge of administrative affairs of the City, as the City operates under a Acity manager@ form of government. Under this form of government, you relate, you would have executive authority over the City=s building and planning department (but would not become involved in its day-to-day decisionmaking concerning construction permits), and you would provide input to the City Commission and other City agencies (which would nevertheless retain their own decisionmaking authority). Also, you advise, actual approval of development projects is made by the City=s planning board, the City Commission, and other City entities.
In addition, you advise that you are a licensed contractor and that your license is registered with a corporation of which you are a minority shareholder. You relate that the corporation will apply for various permits to construct improvements on real properties within the City and that applying for the permits Awill require that [you] sign certain documents when an application is made to the City [of] Key West Building and Planning Department for the permits to make the improvements.@
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 or she 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 or her private interests and the performance of his or her public duties, or that would impede the full and faithful discharge of his or her public duties. [Section 112.313(7)(a), Florida Statutes.]
The first part of this statute would prohibit your simultaneously serving as City Manager and holding a contractual relationship with a business entity (i.e., the corporation)[1] which is subject to the regulation of your public agency.
We previously have found that the building/construction permitting/inspection process does constitute Aregulation@ for purposes of Section 112.313(7)(a). See, for example, CEO 81-10. Therefore, the question becomes whether the City=s building and planning department, or other City entities involved in the regulation, are your Aagency@ for purposes of the first part of Section 112.313(7)(a). AAgency@ is defined at Section 112.312(2), Florida Statutes, to mean
any state, regional, county, local, or municipal government entity of this state, whether executive, judicial, or legislative; any department, division, bureau, commission, authority, or political subdivision of this state therein; or any public school, community college, or state university.
We have interpreted this definition to identify a public officer=s or employee=s Aagency@ as the lowest governmental unit within which the officer=s or employee=s influence might reasonably be considered to extend. See, for example, CEO 93-31. In adherence to this interpretation, we find that your Aagency@ for purposes of Section 112.313(7)(a) includes the City=s planning and building department and other City entities which would be regulating the corporation via the permitting/inspection process, notwithstanding that the City Manager=s Office may be, for City organizational purposes, a separate part or entity of City government. Notwithstanding that City building inspectors or personnel other than you play a larger or more day-to-day role in the regulation, you, as the chief executive officer of the City, would nevertheless possess influence with these personnel or other entities of the City.[2]
In addition, under the second part of Section 112.313(7)(a), you would have a prohibited conflict of interest by virtue of your contractual relationship to the corporation, regardless of whether it would be subject to the regulation of your public Aagency,@ if the contractual relationship would create a continuing or frequently recurring conflict between your private interests and the performance of your public duties or would impede the full and faithful discharge of your public duties.
We find that your situation would create such a conflict or impediment. For example, you might be tempted to refrain from supplying input to the City Commission, the planning and building department, or other City entities regarding the corporation, its permit applications, or construction activities; you might be tempted to color that input; or you might be tempted not to objectively exercise executive/administrative authority over City entities or personnel in an effort to favor your private interests or those of the corporation over those of the public.[3] However, there would be no conflict if your corporation=s work (and the work of any other business entity with which you hold employment or a contractual relationship) is restricted to jobs outside of the City=s jurisdiction. See CEO 81-10.
Accordingly, we find that a prohibited conflict of interest would exist under both the first and second parts of Section 112.313(7)(a), Florida Statutes, were your corporation to seek permits from, or otherwise be subject to the regulation of, the City while you serve as acting or permanent City Manager.
ORDERED by the State of Florida Commission on Ethics meeting in public session on May 30, 1996, and RENDERED this 3rd day of June, 1996.
____________________________________
William J. Rish
Chairman
[1] The ownership of stock creates a contractual relationship between the shareholder and the corporation. See CEO 79-16. In addition, inasmuch as one can hold a contractual relationship by virtue of performing a licensed, professional function (see CEO 94-10 and CEO 95-28), a contractual relationship would also exist between you and the corporation if you are acting as its contractor in making applications for City permits.
[2] Put another way, while a lower level municipal employee in a particular department or division likely would not have a function or influence within a city manager=s office, and while such an employee almost certainly would not have any function or influence within another department, thereby limiting what parts of the city=s government could be considered an Aagency@ of his, the same cannot be said of a city manager who possesses at least managerial/ executive authority or Ainput@ over or in regard to many, if not all, municipal entities.
[3] This finding does not mean that we believe that you would actually compromise your public duties in favor of private interests. A temptation to compromise the objective performance of one=s public duties, whether succumbed to or not, is all that is required in order for a violation of the second part of Section 112.313(7)(a) to exist. The statute is entirely preventative in nature. See Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982).