CEO 78-70 -- October 20, 1978

CONFLICT OF INTEREST

EMPLOYEES OF CITY URBAN REDEVELOPMENT DEPARTMENT SERVING ON BOARD OF NONPROFIT CORPORATION, RENTING PROPERTY TO RELOCATEE, AND ACTING AS REAL ESTATE SALESMAN

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

Prepared by: Phil Claypool

SUMMARY:

In previous advisory opinions it has been found consistently that membership on the board of directors of a nonprofit organization does not constitute an employment or contractual relationship within the terms of s. 112.313(7)(a), F. S. 1977. CEO's 77-164 and 77-16. Accordingly, no prohibited conflict of interest is deemed to be created where a municipal employee in the Department of Urban Redevelopment serves on the board of directors of a nonprofit corporation whose application for federal funds must be reviewed and approved by the city through the department.

Section 112.313(7)(a) also prohibits a public employee from having a 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. It is apparent from the terms of this provision that it is intended to prohibit a public employee from having a contractual relationship which would place him in a position from which he could benefit privately through his public position or through the performance of his official duties. Where employees of a municipal urban redevelopment department are employed during their off-duty time as real estate salesmen, they are in a position to refer relocatees to real estate agents or firms or to influence other department employees in this regard. However, so long as the subject employees are not retained by a real estate firm which does business with the department or with any department relocatee, no conflict of interest is deemed to exist in their outside employment as real estate salesmen.

A prohibited conflict of interest under s. 112.313(7)(a) would be created, however, were an employee of the department to lease to a department relocatee rental property which he privately owns. Such an arrangement provides the opportunity for and strongly suggests to the public that a department employee has benefited privately because of his public position, whereas the Legislature has recognized that "[i]t is essential to the proper conduct and operation of government . . . that public office not be used for private gain other than the remuneration provided by law." Section 112.311(1), F. S. 1977.

QUESTIONS:

1. Would a prohibited conflict of interest exist were a city employee, a planner III under the city department of urban redevelopment, to serve as a member of the board of directors of a nonprofit corporation whose application for federal funds must be reviewed and approved by the city through the urban redevelopment department?

2. Would a prohibited conflict of interest be created were a relocation officer employed by a city urban redevelopment department to be employed as a real estate salesman during his off-duty time?

3. Would a prohibited conflict of interest be created were a rehabilitation finance specialist with the urban redevelopment department to be employed as a real estate salesman during his off- duty hours?

4. Would a prohibited conflict of interest be created were a rehabilitation finance specialist within a city urban redevelopment department to lease rental property owned by him to a person who has been relocated by the department?

Question 1 is answered in the negative.

Through your letter of inquiry we are advised that ____ has been asked to serve as a member of the board of a nonprofit corporation which has been created to seek out housing and housing assistance opportunities for the handicapped with developmental disabilities who reside within ____ County. We also are advised that the corporation recently has filed an application for a federal grant which, in accordance with federal regulations, must be reviewed and approved by the city through its urban redevelopment department as being in compliance with the city's annual housing assistance plan. In addition, we are advised that this corporation is affiliated with another nonprofit social service organization which occasionally requests funding through the city's annual community development block grant program, which is administered by urban redevelopment.

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), F. S. 1977.]

In previous advisory opinions we have consistently found that membership on the board of directors of a nonprofit organization does not constitute an employment or contractual relationship within the terms of this provision of the Code of Ethics. Thus, in CEO 77-164, we found that a county commissioner could be a member of the board of directors of a nonprofit organization which contracted with the board of county commissioners to provide services under a grant; in CEO 77- 167, we found that a city commissioner could accept membership on the board of trustees of a nonprofit corporation which leased property from the city; and in CEO 77-16, we found that an employee of the Department of Health and Rehabilitative Services could serve as a director of a nonprofit mental health organization which received funds from the department.

Accordingly, we find that the Code of Ethics for Public Officers and Employees does not prohibit the subject urban redevelopment employee from serving as a member of the board of directors of a nonprofit corporation which has sought a grant which must be approved by urban redevelopment. Please note that we have no jurisdiction to interpret any city rule or regulation regarding conflict of interest. In addition, we wish to point out that s. 112.311(5), F. S. 1977, to which you have referred in your letter of inquiry, is part of the legislative intent section of the Code of Ethics and, as such, does not provide a substantive standard of conduct for public officers or employees in this state. However, the legislative intent provisions do serve as a guide to the interpretation of the standards of conduct provided in the Code of Ethics.

Question 2 is answered in the negative, subject to certain conditions specified below.

In your letter of inquiry you advise ____, as a relocation officer, does not perform real estate duties within the department, but he does perform day-to-day duties in dealing with redevelopment project relocatees who are seeking to rent or to purchase new housing. You also advise that, in doing so, the relocation officer only assists project relocatees in identifying affordable and available housing published in multiple listing books; he makes no recommendations or referrals concerning any particular real estate agent or firm.

Section 112.313(7)(a), quoted above in response to your first question, prohibits a public employee from being employed by a business entity which is doing business with his agency. Therefore, the subject employee may not be employed by a real estate firm which does business with the urban redevelopment department.

That provision of the Code of Ethics also prohibits a public employee from having a 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. It is apparent from the terms of this provision that it is intended to prohibit a public employee from having a contractual relationship which would place him in a position from which he could benefit privately through his public position or through the performance of his official duties. As we view the subject employee situation, although it is not part of his official duties to refer relocatees to real estate agents or firms, he is in a position to do so. Thus, as a real estate salesman, he could refer relocatees to the real estate firm which employs him. Additionally, we perceive the possibility that the subject employee could use his position with the department to influence others in the department to steer redevelopment relocatees to the real estate firm which employs him. Whether any influence had been exerted or not, the fact that a relocatee was doing business with the subject employee's real estate firm would provide the appearance of such a conflict of interest. We think these potential problems would be obviated if the real estate firm which employs the subject department employee does not do business with any urban redevelopment relocatee. See CEO 77-74.

Accordingly, so long as the subject employee is not retained by a real estate firm which does business with any urban redevelopment relocatee or with the urban redevelopment department, we find that the Code of Ethics for Public Officers and Employees would not prohibit his employment as a real estate salesman.

Question 3 is answered in the negative, subject to the conditions specified below.

In your letter of inquiry you advise that ____ does not perform any real estate duties within the department; nor does he perform any official duties which are in any way related to the real estate activities of urban redevelopment. In a telephone conversation with our staff ____, the director of urban redevelopment, advised that a rehabilitation finance specialist basically is a loan officer, responsible for assisting people in the determination of whether they would be eligible financially to participate in a home improvement program and for arranging financing for home improvement if the person is eligible.

Despite the difference in responsibilities of a rehabilitation finance specialist and a relocation officer (see question 2), we are of the opinion that s. 112.313(7)(a) would prohibit the subject redevelopment employee from being associated with a real estate firm which does business with any redevelopment relocatee because of the potential for use of his position with the department as well as the appearance of such use. Accordingly, as in question 2, so long as the subject employee is not associated as a real estate agent with a real estate firm which is doing business with the urban redevelopment department or with any redevelopment relocatee, we find that the Code of Ethics for Public Officers and Employees would not prohibit his employment as a real estate salesman.

Question 4 is answered in the affirmative.

We are advised that the department's project implementation section solicits on a regular basis rental units throughout the city to be used as relocation referrals, either on a permanent or temporary basis, as required by federal regulations. ____, who owns a one-unit rental property within the city, has requested that his property be considered for use in conjunction with the relocation program. In a telephone conversation with our staff ____ advised that a relocation officer assists a person being displaced by giving that person three or four referrals for relocation. He also advised that referrals are made by the relocation officer on the basis of his knowledge of rental conditions in the city; no master list of potential rental properties is kept by the department. In addition, he advised that the referral process does not involve a contract or formal agreement between the landlord and the department and that no rent subsidies are given under the relocation program, although federal law requires that persons who are relocated be paid a certain amount of money based upon a federally established schedule for the inconvenience of being relocated. As was explained in reference to question 3, a rehabilitation finance specialist is basically a loan officer, responsible for assisting people in the determination of whether they would be eligible financially to participate in a home improvement program and for arranging financing for home improvement if the person is eligible.

Section 112.313(3), F. S. 1977, prohibits a public employee from privately leasing any realty to his own agency. This section would not be applicable because the subject employee would not be renting his property to the department, but instead to the tenant. Section 112.313(7)(a), quoted in our response to your first question, prohibits a public employee from having any contractual relationship with a business entity which is subject to the regulation of or is doing business with his agency. While the subject employee would have a contractual relationship with his tenant, we previously have found that a residential tenant is not a business entity for purposes of the Code of Ethics. See CEO 77-88.

As we advised in response to your second and third questions, s. 112.313(7)(a) has the effect of prohibiting employees of the redevelopment department from being employed by a real estate firm which is doing business with any relocatee. Similarly, we are of the opinion that this provision would prohibit an employee of the redevelopment department from leasing a residence to a person who has been relocated by his department. Such an arrangement provides the opportunity for and strongly suggests to the public that a department employee has benefited privately because of his public position, whereas the Legislature has recognized that "[i]t is essential to the proper conduct and operation of government . . . that public office not be used for private gain other than the remuneration provided by law." Section 112.311(1), F. S.

Accordingly, we find that the Code of Ethics for Public Officers and Employees prohibits a rehabilitation finance specialist within the urban redevelopment department from leasing rental property owned by him to a person who has been relocated by the department.