CEO 14-14 - April 30, 2014
CONFLICT OF INTEREST; VOTING CONFLICT
CITY COUNCILPERSON EMPLOYED BY BANK WHOSE DIRECTOR OWNS
A COMPANY DOING BUSINESS WITH THE CITY
To: Name withheld at person's request (Ocala)
A conflict of interest does not exist under Section 112.313(7)(a), Florida Statutes, where a city councilperson is employed by a bank, and a member of the bank's board of directors owns a company that has a development agreement with the city. Under the first part of the statute, the councilperson's employment relationship is with the bank, not the company that has the redevelopment agreement, and no prohibited conflict is created under the second part of the statute. However, because the councilperson and the owner of the company both own stock in the bank's holding company, and the stock is not listed on a national or regional stock exchange, the councilperson and the owner are "business associates," necessitating his abstention from voting and compliance with Section 112.3143(3)(a), Florida Statutes, regarding measures involving the company or its owner. CEO 77-142 is referenced.
Would a city councilperson have a conflict of interest where he is employed by a bank, and one of the bank's directors owns a company that has entered into a development agreement with the city?
Under the circumstances presented, Question 1 is answered in the negative.
We are advised through your letter of inquiry and other information provided to our staff that you represent an Ocala City Councilperson, and he has authorized you to seek this opinion on his behalf. You explain that the Councilperson is employed by a bank where he is a senior vice president, senior credit officer, and senior lender. Although he reports directly to the bank's chief executive officer, his employment and compensation are approved annually by the bank's board of directors. One of the directors on the board is an individual who owns a company that has entered into an agreement with the City to convert an existing, abandoned building owned by the City into a residential condominium. Under the terms of the redevelopment agreement, which has been amended a number of times, the property will be conveyed to the company after it meets certain benchmarks. The City also is providing other incentives to the company to redevelop the property, and it is anticipated that the redevelopment agreement will be further amended to incorporate other stipulations and concessions. You question whether the Councilperson's employment with the bank creates a conflict of interest for the Councilperson, in view of the company's agreement with the City.
The Code of Ethics provides in pertinent 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 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. [Section 112.313(7)(a), Florida Statutes.]
The first part of Section 112.313(7)(a) would prohibit the Councilperson from having an employment or contractual relationship with a business entity that is doing business with or regulated by the City. The second part of Section 112.313(7)(a) would prohibit an employment or contractual relationship by the Councilperson that would create a continuing or frequently recurring conflict of interest or an impediment to the full and faithful discharge of his public duties.
The Councilperson has an employment relationship with the bank, but it is not the bank that has entered into the development agreement with the City. Instead, it is a corporation owned by a member of the bank's board of directors that has entered into the agreement with the City.
In CEO 77-142, we opined that no prohibited conflict was created where a Florida Game and Freshwater Fish Commission member also was a member of a bank's board of directors, and where another member of the board of directors owned a company whose land the commission was considering purchasing. Although the company would be doing business with the commissioner's agency, neither the commissioner himself nor the bank on whose board he served had any interest in the property. We also found no impediment to the discharge of the commissioner's public duties as a result of his service on the bank's board of directors.
Similarly, under the first part of the statute, in the situation you have described, we note that the Councilperson's employment relationship is with the bank, not the company that has the agreement with the City; and the situation is not indicative of a prohibited conflict of interest under the second part.
Accordingly, under the circumstances presented, we find that a prohibited conflict of interest under Section 112.313(7)(a), Florida Statutes, is not created where a bank employee serves on the City Council, and where a member of the bank's board of directors owns a company that has entered into a redevelopment agreement with the City.
Would the Councilperson be presented with a voting conflict of interest regarding measures to amend the redevelopment agreement between the bank director's company and the City, where he and the bank director both own stock in the bank's holding company that is not listed on any national or regional stock exchange?
Question 2 is answered in the affirmative.
You advise that the Councilperson owns stock in the holding company that owns the bank where he is employed and, for purposes of this opinion, you have asked us to assume that the bank director whose company has entered into a redevelopment agreement with the City also owns stock in the holding company. Further, you advise that the holding company's stock is not listed on any national or regional stock exchange.
The voting conflict statute-Section 112.3143(3)(a), Florida Statutes-provides in pertinent part:
No county, municipal, or other local public officer shall vote in an official capacity upon any measure which would inure to his or her special private gain or loss; which he or she knows would inure to the special private gain or loss of any principal by whom he or she is retained or to the parent organization or subsidiary of a corporate principal by which he or she is retained, other than an agency as defined in s. 112.312(2); or which he or she knows would inure to the special private gain or loss 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 the officer's interest in the matter from which he or she is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his or her 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. [Emphasis added.]
The term "business associate" is defined in Section 112.312(4), Florida Statutes, to mean
any person or entity engaged in or carrying on a business enterprise with a public officer, public employee, or candidate as a partner, joint venturer, corporate shareholder where the shares of such corporation are not listed on any national or regional stock exchange, or coowner of property. [Emphasis added.]
In the situation you have related, both the Councilperson and the member of the bank's board of directors own stock in the holding company that owns the bank, a common commercial endeavor, and the stock is not listed on a national or regional stock exchange. Thus, the bank director and the Councilperson are "business associates" as the term is defined in the statute. As you have represented that the new development agreement will benefit the bank director, the Councilperson would be prohibited from voting on that measure.
Question 2 is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on April 25, 2014, and RENDERED this 30th day of April, 2014.
Morgan R. Bentley, Chairman