CONFLICT OF INTEREST
CITY COUNCILMEMBER A SALES ASSOCIATE WITH A BROKER
SPACE FROM THE CITY
To: Name withheld at person's request, Clearwater City Council
No prohibited conflict of interest would be created under Section 112.313(7), Florida Statutes, were a member of a city council to serve as a real estate sales associate contracting with a broker who leases office space at the city marina. Although Section 112.313(7), Florida Statutes, prohibits the councilmember from having a contractual or employment relationship with a business entity doing business with the city, given the council's lack of involvement with the leasing of space at the marina, Section 112.316, Florida Statutes, operates to negate the conflict.
Would a prohibited conflict of interest exist were you, a member of a city council, to be a sales associate with a broker leasing space at the city marina?
Your question is answered in the negative.
You advise that you are a member of the Clearwater City Council and are also a licensed real estate sales associate. The real estate broker with whom you are affiliated, you relate, plans to lease office space at the City Marina. You inquire whether Section 112.313(7) will prohibit you from continuing to affiliate with the broker if it enters into a lease with the City.
Section 112.313(7)(a), Florida Statutes, provides:
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…; 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.
The first part of Section 112.313(7) prohibits you from having a contractual or employment relationship with any business entity which is doing business with your agency. You advise that the City Marina is an "Enterprise Fund"—a business operated for-profit by the City. If the broker, a corporate entity, enters into a lease with the City for space at the City Marina, the two will be "doing business" as we have previously defined the term. See, CEO 86-24 ("a business entity is doing business with an agency where the parties have entered into a lease, contract, or other type of legal arrangement under which one party would have a cause of action against the other in the event of a default or breach"). Therefore, if you have a "contractual or employment relationship" with the broker, you will have a contractual or employment relationship with a business entity which is doing business with your agency, a relationship that is prohibited by the first part of Section 112.313(7), unless some exemption or exception applies.
The first question we must address is whether you have a contractual or employment relationship with the broker. You advise that you are "affiliated" with the broker, and "hang" your license there, as required by law. You also relate that you have a recently-restructured Independent Contractor Agreement with the broker, under which a variety of matters are addressed.
Florida law defines a "sales associate," as a "person who performs any act specified in the definition of 'broker,' but who performs such act under the direction, control, or management of another person." Section 475.01(1)(j), Florida Statutes. Pursuant to Section 475.42(1), Florida Statutes, a person licensed as a sales associate:
- may not operate as such for any person not registered as his employer;
- may not collect any money in connection with any real estate transaction, whether as a commission, deposit, payment, rental, or otherwise, except in the name of the employer and with the express consent of the employer; and,
- may not commence or maintain any action for a commission or compensation in connection with a real estate transaction against anyone except a person registered as his employer at the time the sales associate rendered the service for which the commission or compensation is due.
Finally, Section 475.25(1)(u), Florida Statutes, creates a rebuttable presumption that a broker associate or sales associate is employed by a broker, if the records of the Department of Business and Professional Regulation establish that the sales associate is registered with that broker.
In view of the foregoing, it appears that a sales associate cannot perform services in that capacity in the absence of a relationship with a broker—what you appear to refer to as "hanging" your license, and that a contractual or employment relationship between broker and sales associate is created or imputed by operation of law.
In addition, beyond any relationship created or implied by law, there is an explicit Independent Contractor Agreement between you and the broker. Certain parts of the standard, pre-printed Agreement, have, we note, been modified to reduce interaction between you and the broker; among other modifications, the broker will not provide you office space, and the sections relating to shared office and other expenses have been deleted, as have certain provisions regarding nonpayment remedies. Nevertheless, the Agreement clearly reflects consideration, responsibilities, and rights on behalf of both parties, and provides for remedies in the event of breach. Thus, it is a contract. See, CEO 91-31, "A 'contract' is defined as a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty, or as an agreement upon a sufficient consideration to do or refrain from doing a particular lawful thing." [Citations omitted.] For this reason as well, we find you have a contractual relationship with the broker.
The question then becomes whether any exception may apply to negate the application of Section 112.313(7). Section 112.316, Florida Statutes, states:
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 or her duties to the state or the county, city, or other political subdivision of the state involved.
We have applied Section 112.316 to negate conflict occasioned by matters in which the public officer had no material role, in his public capacity, regarding his private business or secondary employer. For example, in CEO 76-38, we found no prohibited conflict would exist were a county property appraiser who was one-third owner of a building, to lease the building to the county supervisor of elections for use as a voting precinct, based on the rationale that the property appraiser had no input into policymaking decisions of the elections supervisor and made no recommendations as to purchasing or rental arrangements of that office. In contrast, in CEO 12-9 we found application of Section 112.316 was not appropriate to negate the conflict of a mayor employed by a waste management company contracting with his city, because the company was a major vendor of services to the city, and the mayor's very high office made his actions and views particularly influential and compelling. Here, you advise that the City Council has no responsibilities related to the leasing of the Marina, and that those responsibilities are managed by the Director of the Marine and Airport Department, a position that reports to the City Manager, rather than the Council. Under these circumstances, we find that Section 112.316 works to negate the prohibition that would exist under a literal application of Section 112.313(7)(a), Florida Statutes.
Accordingly, we find that no prohibited conflict of interest is created under Section 112.313(7), Florida Statutes, where you are a sales associate to a broker leasing office space from the City.
ORDERED by the State of Florida Commission on Ethics meeting in public session on May 4, 2012 and RENDERED this 9th day of May, 2012.
Robert J. Sniffen, Chairman