CEO 92-43 -- September 3, 1992

 

CONFLICT OF INTEREST; VOTING CONFLICT OF INTEREST

 

CITY COUNCILMAN'S SPOUSE EMPLOYED AS EXECUTIVE DIRECTOR

OF NONPROFIT CORPORATION CONTRACTING WITH CITY, WHERE

MOST OF HER SALARY IS DERIVED FROM CITY'S

FUNDING OF THE CONTRACT

 

To:      Lisa C. Bennett, City Attorney, City of New Port Richey

 

SUMMARY:

 

No prohibited conflict of interest is created under Sections 112.313(3) and 112.313(7), Florida Statutes, by a city councilman's spouse's employment as executive director of a nonprofit corporation contracting with the city to perform services directed towards furthering the redevelopment and economic revitalization of the city's downtown area, where most of the funding for her salary is derived from the corporation's contract with the city.  Section 112.313(3) does not apply because the spouse is employed by the corporation, rather than being an officer, director, partner, proprietor, or owner of a material interest in the corporation, and, rather than providing services for the city, the corporation is performing services on behalf of the city.  Section 112.313(7) also does not apply to situations where a public officer may be presented with a conflict of interest on the basis of the activities or interests of his or her spouse.

 

The city councilman is prohibited by Section 112.3143(3)(a), Florida Statutes, from voting on a measure which would inure to the special private gain of his spouse, such as funding for and continuation of the city's contract with the corporation and contract performance reviews.  However, the councilman is not prohibited from voting on the city budget, which is likely to contain a provision for funding the contract.  CEO 88-20 and CEO 89-19 are referenced.

 

QUESTION 1:

 

Is a prohibited conflict of interest created where a city councilman's spouse is employed as executive director of a nonprofit corporation which contracts with the city to perform services directed towards furthering the redevelopment and economic revitalization of the city's downtown area, where most of the funding for her salary is derived from the corporation's contract with the city?

 

Your question is answered in the negative.

 

In your letter of inquiry and your response to our staff's questions, you advise that you are the City Attorney and that you seek this opinion on behalf of New Port Richey City Councilman Dell deChant.  Councilman deChant was elected to office in April 1989 and re-elected in April 1991.  You advise that the Councilman's spouse was selected in May 1992 by the board of directors of a nonprofit corporation to be its executive director.  From May 1990 until her resignation to assume the paid position of executive director, she had been a member of the board of directors, and prior to May 1990, she also had served as its executive director.  You advise that neither the Councilman nor his spouse were involved in her selection to be executive director.

You advise that the corporation derives most of its support from its contract with the City, although it does receive financial support from other sources.  The salary of the executive director is derived from the City's funding of the contract.  The office space which the corporation leases from the City also is part of the City's consideration for the services rendered.

You advise that the corporation's goals include assisting the City in furthering the redevelopment and economic revitalization of the downtown area.  Services provided under contract with the City include, but are not limited to, assisting in preparing a City newsletter, studies and reports on the types of downtown improvements needed in the City, a marketing plan, and other types of services designed to enhance the City's Downtown Redevelopment Project.  You advise that the corporation also takes formal positions on issues relating to downtown improvements and has offered recommendations to the City Council on public improvements and other policy issues relative to downtown revitalization.

Copies of the contract and amendments to the contract between the City and the corporation, which you submitted with your inquiry, indicate that the initial contract was entered into on October 8, 1990 and was to be a three year contract.  It was amended on August 6, 1991 to change the marketing plan due date.  It was amended a second time to incorporate new goals, to require that the corporation maintain a full-time executive director and two part-time assistants, and to provide that office space in City Hall, if available, would be provided as part of the City's compensation of the corporation.

You advise that the City Councilman is concerned whether his wife's acceptance of the executive director position creates a prohibited conflict of interest for him under the Code of Ethics.

In previous opinions, we have advised that Sections 112.313(3) and 112.313(4), Florida Statutes, are the only provisions of the Code of Ethics which specifically concern a conflict of interest for local public officials and employees based upon a spouse's interests or actions.  See CEO 85-5, CEO 86-48, CEO 87-94, and CEO 92-19.  These sections provide respectively:

 

DOING BUSINESS WITH ONE'S AGENCY.--No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee of his spouse or child, or any combination of them, has a material interest.  Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to his own agency, if he is a state officer or employee, or to any political subdivision or any agency thereof, if he is serving as an officer or employee of that political subdivision.  The foregoing shall not apply to district offices maintained by legislators when such offices  are located in the legislator's place of business.  This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a)  October 1, 1975.

(b)  Qualification for elective office.

(c)  Appointment to public office.

(d)  Beginning public employment.

 

UNAUTHORIZED COMPENSATION.--No public officer or employee of an agency or his spouse or minor child shall, at any time, accept any compensation, payment, or thing of value when such public officer or employee knows, or, with the exercise of reasonable care, should know, that it was given to influence a vote or other action in which the officer or employee was expected to participate in his official capacity.

 

Section 112.313(3) prohibits the Councilman from acting in his official capacity to purchase any goods or services for his agency, the City Council, from a business entity of which his spouse is an officer, partner, director, or proprietor or in which she owns more than a five per cent interest.  We previously have advised that a member of a governing board acts in an official capacity whenever official action is taken by the group.  See CEO 75-201, CEO 79-65, and CEO 82-65.  Here, we are asked to address the situation where the Councilman's spouse is the executive director of the corporation.  The term "business entity" as used in Section 112.313(3) is defined broadly in Section 112.312(5), Florida Statutes, to include "any corporation . . . [or] association . . . doing business in this state."  This definition makes no distinction based upon whether a corporation or association has been organized as a profit making enterprise.  See 82-9.  Therefore, the corporation is a business entity under Section 112.313(3).  However, the Councilman's spouse, having resigned from the Board of Directors to assume the position of Executive Director, is not an officer, partner, director, or proprietor; nor does she own a material interest in the corporation.  She is an employee of the corporation, which is under contract to the City to provide specified services.  Therefore, we conclude that Section 112.313(3), Florida Statutes, does not apply to create a prohibited conflict of interest.  See CEO 91-26.

Additionally, we note that the Councilman's wife was a member of the board of directors when the corporation first contracted with the City and each time the contract was amended.  We find that this situation also did not create a prohibited conflict of interest in violation of Section 112.313(3), Florida Statutes, as the City Council does not appear to be purchasing services for itself from the corporation.  We find that the contract, rather than requiring the provision of services to the City, requires the corporation to perform services directed towards furthering the redevelopment and economic revitalization of the City's downtown area on behalf of the City and directed towards the public, businesses, local trade associations, civic groups, and other service clubs.  This is the same distinction that we have made in advisory opinions CEO 79-65 (chamber of commerce performing publicity services on behalf of city under contract with the city, held not be providing services to the city); CEO 78-98 (nonprofit corporation established to attract industry to county and municipalities held not to be selling services to county or to municipalities); and CEO 77-55 (nonprofit corporation promoting economic development for county held not to be selling services to the county).

Section 112.313(4), Florida Statutes, prohibits the Councilman's spouse from accepting compensation, payment, or anything of value if the Councilman knows or should know that it was given to influence his official action.  The primary focus of this section is on the intent of the giver and the knowledge of the recipient or the spouse of the recipient for purposes of determining whether the compensation, payment, or thing of value is prohibited.  Because we have no reason to believe that the offer of the executive director position to the Councilman's wife by the corporation's board of directors was contingent upon any action or inaction expected of the Councilman or was offered to influence any action in which he was expected to participate, there does not appear to be any violation of Section 112.313(4).

Two other provisions of the Code of Ethics of possible relevance are:

 

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.]

 

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.  [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 public duties.  [Section 112.312(9), Florida Statutes (1991).]

 

Section 112.313(7)(a) prohibits the Councilman from having certain employment or contractual relationships.  As we have not considered the marital relationship to constitute an "employment or contractual relationship" within the meaning of this prohibition, and as the statute by its terms addresses only employment or contractual relationships of the official, and not those of his or her spouse, we have advised that Section 112.313(7) does not apply to situations where a public official may be presented with a conflict of interest on the basis of the activities or interests of his or her spouse.  See, for example, CEO 92-19, CEO 90-77, CEO 89-44, CEO 88-35, CEO 88-33, and CEO 87-50.  This section limits the employment and contractual relationships of a public officer or employee and not those of his or her spouse.  See also CEO 86-5, CEO 80-80, and CEO 80-20.  Therefore no conflict of interest in violation of Section 112.313(7)(a), Florida Statutes, is created by the Councilman's spouse's employment as executive director of the corporation.

Finally, Section 112.313(6), Florida Statutes, prohibits the Councilman from using or attempting to use his official position to secure a special privilege, benefit, or exemption for himself or others, where his actions are undertaken with a wrongful intent for the purpose of obtaining some benefit resulting from his actions which are inconsistent with the proper performance of his public duties.  We are generally reluctant to address this provision in the context of an advisory opinion because it necessitates an examination of intent.  However, it is appropriate that we make the Councilman aware of this statute and caution him to let it guide his conduct.  Although you advise that neither the Councilman nor his spouse had any involvement in her selection as executive director, we still lack sufficient information of the circumstances surrounding the funding of the contract, the contract's amendment requiring the employment of a full-time executive director, and the contract performance reviews to enable us to reach any conclusion about a possible misuse of position, and we decline to do so.

Accordingly, under the circumstances outlined above, we find that no prohibited conflict of interest is created by the City Councilman's spouse's employment as executive director of a corporation which contracts with the City to provide specified services, where most of her salary is derived from the contract with the City.

 

QUESTION 2:

 

Does the Code of Ethics prohibit a city councilman whose spouse is employed as executive director of a nonprofit corporation contracting with the city from voting on any measure affecting the nonprofit corporation, including the city's budget which is likely to include a line item on funding the corporation, where most of the spouse's salary is derived from the corporation's contract with the city?

 

Question 2 is answered in the negative.

 

Regarding voting conflicts for local officials, Section 112.3143(3)(a), Florida Statutes, provides:

 

No county, municipal, or other local public officer shall vote in his official capacity upon any measure which inures to his special private gain; which he knows would inure to the special private gain of any principal by whom he is retained or to the parent organization or subsidiary of a corporate principal by which he is retained, other than an agency as defined in s. 112.312(2); or which he knows would inure to the special private gain of a relative or business associate of the public officer.  Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of his interest in the matter from which he is abstaining  from voting and, within 15 days after the vote occurs, disclose the nature of his interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes.

 

This provision prohibits the Councilman from voting on a measure which inures to his special private gain or to the special private gain of a relative.  "Relative" is defined at Section 112.3143(1)(b), Florida Statutes, to include a public officer's wife.  We find that any measure coming before the City Council respecting a contract performance review or the funding or continuation of the City's contract with the corporation requiring a vote of the City Council would inure to the special private gain of the City Councilman's spouse, because either her salary or her continued employment would most likely be directly affected by the City Council's vote.  Therefore, the City Councilman must abstain from voting on such a measure and follow the procedures set forth in this section, including the filing of a Memorandum of Voting Conflict, CE Form 8B, with the person responsible for recording the minutes of the meeting within 15 days of the meeting.

We also are of the opinion that Section 112.3143(3)(a) would not prohibit the Councilman from voting on the City budget despite the likelihood that it will include a line item funding the contract with the City.  In CEO 88-20, we determined that a city commissioner who was employed as executive director of a nonprofit corporation which sponsored a circus parade was not prohibited from voting on a city budget containing funding for the parade, given the number of matters to be funded within the city budget, the amount of funds involved, and the particular services to be provided.  Similarly, in CEO 89-19, we found that a County Commissioner was not prohibited from voting on the county budget because it contained provisions for paying electrical service charges to a utility company which employed the county commissioner, given the number of items addressed in the entire budget.  In both opinions, we noted that whether a matter would be considered to inure to the "special" private gain of the public officer's principal turns in part on the size of the class of persons affected by the measure.   Therefore, given that the contract is funded at approximately $30,000 per year, and, when compared to the probable size of the entire City budget, we find that the Councilman is not prohibited from voting on the entire City budget.

Accordingly, we find that the City Councilman would be prohibited from voting on any measure that comes before the City Council respecting the corporation, such as funding of the contract, continuation of the contract, and contract performance review;  However, because the size of the class affected by the City's budget is quite large when compared to those directly affected by a line item in the City's budget funding the contract, the Councilman is not prohibited from voting on the City budget.