CEO 90-42 -- April 26, 1990

CONFLICT OF INTEREST

CITY MANAGER OWNING RENTAL REAL ESTATE

WITH SUBORDINATE EMPLOYEE

To: John J. Downes, City Manager, City of Safety Harbor

SUMMARY:

No prohibited conflict of interest is created where a city manager owns rental property with a supervised employee. The business would not be regulated by or doing business with the City under Section 112.313(7)(a), Florida Statutes. In addition, under the second clause of that section, no continuing or frequently recurring conflict would be created through this relationship.

QUESTION:

Does a prohibited conflict of interest exist where you, a City Manager, own and manage rental property with a City department head whom you supervise?

Your question is answered in the negative.

In your letter of inquiry, you advise that you are the City Manager of the City of Safety Harbor. You advise that you, along with the Director of Leisure Services for the City and another individual, own three single family homes which you manage as residential rental property. You note that the Director serves at the pleasure of the City Manager but that you have only limited discretion within City guidelines regarding his salary increases and he receives standard City civil service benefits. You inquire whether the acquisition and operation of this real estate with a supervised employee would create a prohibited conflict of interest.

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.

The outside business you describe would not be prohibited by the first part of this provision, as the partnership is not doing business with or regulated by the City. The second part of this provision would prohibit any contractual relationship which would create a continuing or frequently recurring conflict between your private interests and your public duties or which would impede the full and faithful discharge of those duties. In CEO 82-28, we advised that generally no such conflict would arise from a contractual relationship between a public employee and a subordinate employee. However, as noted in that opinion, we can envision circumstances where the authority of the employee over his subordinate in his 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 could impact his ability to impartially evaluate the subordinate's job performance. See also CEO 84-111 and CEO 84-112.

We do not see such a conflict in roles here. Although the Director of Leisure Services serves at the pleasure of the City Manager, you have only limited discretion within City guidelines regarding his salary increases and he receives standard City civil service benefits. In addition, we note that although the business is ongoing, the scope of the activity is comparatively limited and would appear to have little potential to influence the public duties of the persons involved. In support of this conclusion, we cite 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 public duties.

While we do not see an ongoing conflict under the above provision, we would point out the prohibition 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 official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31.

This provision provides protection from abuse in those situations where there is not a conflicting relationship, but yet there may be some potential for use of a public position to benefit a private interest. Application of this section would permit the suggested business relationship, while providing a safeguard for the subordinate employee and the public interest from this type of misuse. This is not to suggest that you in any way would attempt to use your position to benefit your private business, but rather only to point out that private business relationships such as you describe should not be prohibited where such safeguards exist.

Accordingly, we find that no prohibited conflict of interest would be created were you, a City Manager, to purchase and manage residential real property along with a supervised employee.