CEO 86-26 -- April 3, 1986

CONFLICT OF INTEREST; FINANCIAL DISCLOSURE

CITY TREASURER PERSONALLY BANKING WITH BANK SERVING AS PRINCIPAL DEPOSITORY FOR CITY

To: Mr. Mark Ben-Asher, City Treasurer, Pompano Beach

SUMMARY:

No prohibited conflict of interest exists where a city treasurer holds personal accounts at the same bank that serves as the principal depository of operating funds and investments for the city. Although the treasurer has a contractual relationship with a business entity which is doing business with his agency, his accounts with the bank predate his employment with the city and involve standard terms and conditions available to any person who wishes to open those types of accounts. Therefore, the treasurer's relationship with the bank would be grandfathered in under the rationale of previous opinions CEO 84-8, CEO 82-10, and CEO 80-88. The city treasurer is not a "local officer" subject to the requirement of filing a statement of financial interests annually under Section 112.3145, Florida Statutes, as he does not have the authority to purchase any goods, services, or real property.

QUESTION 1:

Does a prohibited conflict of interest exist where you, a City Treasurer, maintain two accounts at the same bank that holds the city's deposits?

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

In your letter of inquiry and in telephone conversations with our staff, you have advised that you recently were appointed City Treasurer for the City of Pompano Beach. As Treasurer, you are responsible for receiving loan funds, making deposits into appropriate accounts, and making investments of all surplus cash. You also have advised that prior to your employment with the City you had opened a checking account and a money market investment account with a local bank, which you since have learned serves as the City's principal depository of operating funds and investments. The terms and conditions of the accounts are standard for any person who wishes to open a similar account with the bank.

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 (1985).]

This provision prohibits a public employee from having a contractual relationship with a business entity which is doing business with his agency.

We previously have advised that a supervisor of elections may hold personal accounts with the same bank that holds his office's accounts without creating a prohibited conflict of interest. That decision, CEO 84-13, was based on the following provision of the Code of Ethics:

Construction. -- It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his duties to the state or the county, city, or other political subdivision of the state involved. [Section 112.316, Florida Statutes (1985).]

We also have read this provision to imply a "grandfather clause" which would exempt from Section 112.313(7) business relationships begun prior to the time the subject official took office. See, for examples, CEO 84-8, CEO 82-10, and CEO 80-88. As your accounts with the bank predate your employment with the City and involve standard terms and conditions available to any person who wishes to open those types of accounts, we find that Section 112.316 is applicable here.

Accordingly, we find that the Code of Ethics for Public Officers and Employees does not prohibit you from maintaining your private accounts with the bank which serves as the principal depository for City funds.

QUESTION 2:

Are you, a City Treasurer, a "local officer" subject to the requirement of filing a statement of financial interests annually?

This question is answered in the negative.

The Code of Ethics requires each " local officer" to file a statement of financial interests annually. Section 112.3145(2)(b), Florida Statutes. The term "local officer" is defined to include:

Any person holding one or more of the following positions: mayor; county or city manager; chief administrative employee of a county, municipality, or other political subdivision; county or municipal attorney; chief county or municipal building inspector; county or municipal water resources coordinator; county or municipal pollution control director; county or municipal environmental control director; county or municipal administrator, with power to grant or deny a land development permit; chief of police; fire chief; municipal clerk; district school superintendent; community college president; or purchasing agent having the authority to make any purchase exceeding $1,000 for any political subdivision of the state or any entity thereof. [Section 112.3145(1)(a)3, Florida Statutes (1985).]

It is apparent that the only category within this definition which might apply to your position is that of a "purchasing agent." This term is defined as

a public officer or employee having the authority to commit the expenditure of public funds through a contract for, or the purchase of, any goods, services, or interest in real property for an agency, as opposed to the authority to request or requisition a contract or purchase by another person. [Section 112.312(16), Florida Statutes (1985).]

In a telephone conversation with our staff you advised that you do not have the authority to purchase interests in real property for the City. You also advised that typically any contract which the City enters must be signed by the Mayor and the City Manager, so that you are not authorized to contract for banking services, for example, in behalf of the City. Finally, you advised that your authority to purchase investments for the City under the City's current investment policy is limited to treasury bills, certificates of deposit, and repurchase agreements (but only when a master repurchase agreement has been signed by the Mayor and the City Manager).

The term "goods" is not defined in the Code of Ethics. Black's Law Dictionary 624 (5th ed. 1979) indicates that the term is "of variable content and meaning," and provides the following general definition:

Items of merchandise, supplies, raw materials, or finished goods. Sometimes the meaning of 'goods' is extended to include all tangible items, as in the phrase 'goods and services.'

The Uniform Commercial Code Article on sales defines "goods" as specifically excluding investment securities. Section 672.105(1), Florida Statutes (1985). The U.C.C. Article on secured transactions also excludes documents, instruments, accounts, and general intangibles from its definition of "goods." Section 679.105(1)(h), Florida Statutes (1985).

On the whole, therefore, we are of the opinion that the use of the term "goods" in the definition of "purchasing officer" was not intended to include such items of intangible property as you are authorized to invest in for the City.

Accordingly, we find that as City Treasurer you are not a "local officer" and therefore are not required to file a statement of financial interests.