CEO 97-21 -- December 5, 1997

CONFLICT OF INTEREST

ASSISTANT SCHOOL SUPERINTENDENT LEASING PROPERTY

TO CLERICAL EMPLOYEES SUPERVISED BY HER

To: (Name Withheld At Person's Request)

SUMMARY:

No prohibited conflict of interest under Section 112.313(7)(a), Florida Statutes, is created by an Assistant School Superintendent and her husband leasing residential property to two clerical employees whom she supervises. The Assistant School Superintendent would not have a contractual or employment relationship with a business entity doing business with or regulated by the School Board. Nor would her and her husband's private business relationship with the clerical workers create a situation where her interest in keeping their business relationship "harmonious, productive, and profitable" impact on her ability to impartially evaluate their job performances so as to create a prohibited conflict of interest under the second part of Section 112.313(7)(a), Florida Statutes. CEO 90-42 is referenced.

QUESTION:

Does the leasing of residential property owned by an Assistant School Superintendent and her husband to clerical employees supervised by her create a prohibited conflict of interest?

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

In your request for an opinion, which you are making in behalf of the Assistant Superintendent of Human Resources for the St. Lucie County School Board, you advise that the Assistant Superintendent owns and leases with her husband residential property on an annual basis. You write that in approximately July 1996, two different clerical employees signed written lease agreements in which they agreed to lease property from the Assistant Superintendent and her husband pursuant to the terms of the agreements. You advise further that the Assistant Superintendent's husband handles the rent payments and discharges the duties of lessor under the terms of the agreements. No disputes have arisen regarding the leases, you advise.

You write that until recently, the Assistant Superintendent directly supervised the two employees. However, as a result of questions raised by the School Superintendent concerning the ethical implications of the relationship between the Assistant Superintendent and the employees, direct supervision of the employees was transferred temporarily to the Director of Personnel until the questions are resolved.

You advise that the clerical employees' performance evaluations and salary increases are guided largely by a "designated career path of jobs," as well as designated guidelines for step increases in salary. Final determinations as to employee promotions and salary increases are made by the Superintendent. Relevant to your inquiry is Section 112.313(7)(a), Florida Statutes, which provides as follows:

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, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, county, or other political subdivision of the state; 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 provision prohibits the Assistant Superintendent from having an employment or contractual relationship with a business entity which is regulated by or is doing business with the School Board, her agency. For purposes of this provision, the term "business entity" has been defined at Section 112.312(5) to mean

any corporation, partnership, limited partnership, proprietorship, firm, enterprise, franchise, association, self-employed individual, or trust, whether fictitiously named or not, doing business in this state. [E.S.]

Thus, for purposes of the application of Section 112.313(7)(a), as owners and lessors of residential property, we find that the Assistant Superintendent and her husband are a "business entity" under this definition. Neither lessee would constitute a "business entity," under the rationale of CEO 77-88. However, inasmuch as the Assistant Superintendent, acting in her private capacity, would not have a contractual or employment relationship with her agency, the School Board, and would not be regulated by the School Board, we are of the opinion that the first part of Section 112.313(7)(a) does not apply.

The second part of Section 112.313(7)(a) prohibits the Assistant Superintendent from having an employment or contractual relationship which creates a continuing or frequently recurring conflict between her private interests, as property owner and landlord, and her public duties, as Assistant Superintendent of Human Resources for the School Board, or creates an impediment to the full and faithful discharge of her public duties. For purposes of the Code of Ethics, a "conflict of interest" is defined at Section 112.313(8), Florida Statutes, to mean "a situation in which regard for a private interest tends to lead to disregard of a public duty or interest." Based upon this definition, the Court in Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982), held that Section 112.313(7)(a) "establishes an objective standard which requires an examination of the nature and extent of the public officer's [or employee's] duties together with a review of his private employment to determine whether the two are compatible, separate, and distinct or whether they coincide to create a situation which 'tempts dishonor.'"

Under the circumstances presented, we do not believe that a continuing or frequently recurring conflict between the Assistant Superintendent's private interests and the performance of her public duties, or one which would impede the full and faithful discharge of her public duties, would be created by her and her husband leasing their residential property to the clerical workers whom she supervises. In an analogous situation in CEO 90-42, we found that no prohibited conflict of interest was created where a city manager owned rental property with a supervised employee, the city's director of leisure services, because of the limited discretion that the city manager could exercise within city guidelines with respect to granting salary increases. The supervised employee also received only the standard city civil service benefits. The fact that the business between the city manager and the city's director of leisure services was ongoing, and the scope of activity was comparatively limited and appeared to have little potential to influence their public duties, was found by us to be significant. As further support for our conclusion, we cited Section 112.316, Florida Statutes, which provides that the Code of Ethics should not be construed to prohibit a public employee from following any pursuit which does not interfere with the full and faithful discharge of his or her public duties.

In an earlier opinion, CEO 82-28, we also advised that generally no prohibited conflict would arise from a contractual relationship between a public employee and a subordinate employee. However, we indicated that we could envision circumstances where the authority of the employee over his or her subordinate in his or her public capacity and the ongoing nature of a business relationship could create a situation where the employee's interest in keeping the business relationship harmonious, productive, and profitable could impact his or her ability to impartially evaluate the subordinate's job performance. See also CEO 84-111 and CEO 84-112.

However, we do not believe that that situation exists here. The only relevant private interests that the Assistant Superintendent and the clerical employees have is making sure that the terms of the lease are adhered to. We believe that these interests are not such that either the Assistant Superintendent's ability to impartially evaluate the clerical employees' performances would be impeded or the full and faithful performance of the clerical workers' public duties would be impeded.

We also noted in CEO 90-42 that while we did not see an ongoing conflict under Section 112.313(7)(a), Florida Statutes, the city manager should be aware of Section 112.313(6), Florida Statutes, which provides:

MISUSE OF PUBLIC POSITION.--No public officer or employee of an agency shall corruptly use or attempt to use his or her official position or any property or resource which may be within his or her trust, or perform his or her official duties, to secure a special privilege, benefit, or exemption for himself, herself, or others. This section shall not be construed to conflict with s. 104.31. [Section 112.313(6), Florida Statutes.]

For purposes of this provision, the term "corruptly" is defined as follows:

'Corruptly' means done with a wrongful intent and for the purpose of obtaining, or compensating or receiving compensation for, any benefit resulting from some act or omission of a public servant which is inconsistent with the proper performance of his or her public duties. [Section 112.312(9), Florida Statutes.]

As we noted in CEO 90-42, Section 112.313(6) provides protection from abuse in those situations where there is not a conflicting employment or contractual relationship, but yet there may be some potential for use of a public position to benefit a private interest.

Accordingly, we find that no prohibited conflict of interest is created by an Assistant School Superintendent and her husband leasing residential property to clerical workers whom she supervises.

ORDERED by the State of Florida Commission on Ethics meeting in public session on December 5, 1997 and RENDERED this 9th day of December, 1997.

__________________________

Kathy Chinoy

Chairman