CEO 16-07 — June 8, 2016
CONFLICT OF INTEREST
WATER MANAGEMENT DISTRICT BASIN BOARD
MEMBER OWNER OF COMPANY PROVIDING
GROWTH MODELING TO DISTRICT
To: David Farmer, Basin Board Member, South Florida Water Management District
Absent an exemption, Sections 112.313(3) and 112.313(7)(a), Florida Statutes, would prohibit a member of a basin board of a water management district from selling, through his company, growth modeling data or services to the district. CEOs 81-2, 81-28, 89-48, 00-10, 01-15, 06-28, 09-1, and 11-2 are referenced.1
Would a prohibited conflict of interest be created for a member of a basin board of a water management district were his company to provide growth modeling to the district
Your question is answered as set forth below.
You write that a member of a basin board2 of the South Florida Water Management District (WMD) is part owner of a company that owns a copyrighted and trademarked Interactive Growth Model (IGM). The IGM consists of software, algorithms, code, and other intellectual property, and has been used by various government entities to help guide them on land-use and planning issues. Your inquiry describes IGM as "a unique forecasting tool,"3 that forecasts population growth, housing unit demand, demand for commercial space, schools, and libraries, demand for police and fire stations and potable water and sewer services, and increases in impervious area due to residential and commercial development, all in five-year increments from the baseline year through build-out. In response to our staff, the member writes that his company anticipates the WMD using IGM data to help understand the changes in impervious area of an area, city, or county over time, and what impact that may have on WMD facilities or projects permitted by the WMD, and using forecast data to identify future demand for water use permits by water and sewer utilities. The member advises that his basin may want to use IGM impervious area data for local modeling and determinations of levels of service of structures and canals within his basin.
Within the Code of Ethics for Public Officers and Employees (Part III, Chapter 112, Florida Statutes), prohibitions relevant to your inquiry provide:
DOING BUSINESS WITH ONE'S AGENCY. — No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's 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 the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she 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 or when such offices are on property wholly or partially owned by the legislator. 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.
[Section 112.313(3), Florida Statutes.]
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.]
Absent applicability of an exemption, Section 112.313(3) would prohibit the sale of IGM to the WMD, in that the member would be acting in a private capacity to provide IGM to the WMD--the political subdivision of which he is a public officer. See, among others, CEO 81-2 and CEO 09-1, in which we have stated that one acts in a private capacity to sell to an agency when a business in which he or she holds certain ownership or a leadership position acts to sell to the agency. Similarly, we find that, absent an exemption, a prohibited conflict would be created for the member under Section 112.313(7)(a), were the WMD to utilize IGM, in that the member would hold employment or a contractual relationship with his company, a business entity which would be doing business with his public agency.
As to possible exemptions, we find that the "competitive bidding" exemption of Section 112.313(12)(b), Florida Statutes,4 can negate the conflict under both Section 112.313(3) and Section 112.313(7)(a), provided that all of its requirements are met, including timely filing of CE Form 3A. However, note that the exemption requires sealed, competitive bidding to the lowest or best bidder; requests for proposals (RFPs), invitations to negotiate (ITNs), or other methods of procurement sometimes referred to as "bidding" do not satisfy the requirements of the exemption. CEO 81-28, CEO 89-48, CEO 01-15
As to the "sole source of supply" exemption of Section 112.313(12)(e), Florida Statutes,5 the issue, as to the member, is whether IGM is the only forecasting modeling product that will meet the needs of the WMD.6 We have not had occasion to consider a "sole source" exemption regarding a growth modeling product, and have relatively few advisory opinions concerning the exemption at all. However, in those opinions, we have emphasized that determinations by an agency as to what item is needed by the agency weigh heavily as to whether the item will qualify for the exemption. For example, in CEO 06-28, we found that real property owned by an assistant school principal qualified as a sole source of property for a new school; in that circumstance, the school district had undergone a detailed process to ascertain its needs and identify potential sites. In CEO 00-10 (note 8), we expressed that it was not our role to seek to micromanage or second-guess a CRA's decision to choose television over radio or some other medium, or to second-guess its decision to target its advertising to a particular county's populace rather than to another demographic group. Finally, in CEO 11-2 (note 5), we relied on a sole source justification document, generated by staff of a WMD and stating that a landowner employing a member of the governing board of the WMD was the only source of a water project agreement with the WMD, to find the exemption applicable.
Thus, in the instant situation, we find that should the WMD determine, through logical analysis including diligent input of its staff, that IGM is the only product that will satisfy the WMD's modeling needs, that, due to the exemption,7 its provision to the WMD will not create a prohibited conflict of interest for the member.8
Your question is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on June 3, 2016, and RENDERED this 8th day of June, 2016.
Stanley M. Weston, Chair
Prior opinions of the Commission on Ethics may be obtained from its website (www.ethics.state.fl.us).
You state that the WMD has two basins, that the basin board member is not also a member of the governing board of the WMD, and that the WMD is a special district, a political subdivision of the State. Section 1.01(8), Florida Statutes, provides:
The words "public body," "body politic," or "political subdivision," include counties, cities, towns, villages, special tax school districts, special road and bridge districts, bridge districts, and all other districts in this state.
The member provided additional information at the request of our staff. The member states that IGM is a web-based software that generates data for clients to use for planning, budgeting, and other modeling (e.g., metropolitan planning organizations use the data to run traffic models, engineers use the data to run hydrologic/hydraulic models) and that some of his company's clients buy only the data and others buy licensing agreements for long-term access to model updates as new data is added to the model (e.g., new homes, subdivisions, and commercial projects built since the initial data generation).
Section 112.313(12)(b) provides:
. . . no person shall be held in violation of subsection (3) or subsection (7) if:
(b) The business is awarded under a system of sealed, competitive bidding to the lowest or best bidder and:
1. The official or the official's spouse or child has in no way participated in the determination of the bid specifications or the determination of the lowest or best bidder;
2. The official or the official's spouse or child has in no way used or attempted to use the official's influence to persuade the agency or any personnel thereof to enter such a contract other than by the mere submission of the bid; and
3. The official, prior to or at the time of the submission of the bid, has filed a statement with the Commission on Ethics, if the official is a state officer or employee, or with the supervisor of elections of the county in which the agency has its principal office, if the official is an officer or employee of a political subdivision, disclosing the official's interest, or the interest of the official's spouse or child, and the nature of the intended business.
Section 112.313(12)(e) provides:
The business entity involved is the only source of supply within the political subdivision of the officer or employee and there is full disclosure by the officer or employee of his or her interest in the business entity to the governing body of the political subdivision prior to the purchase, rental, sale, leasing, or other business being transacted.
In this regard, the member writes:
We are not aware of other models that forecast the data produced by the IGM from baseline through build-out of given study area. The IGM uses disaggregated primary data from the property appraiser and other government sources to produce the baseline data for the model. The IGM is a copyright software program and is a registered trademark by the US Patent Office. Collier County Florida and Auburn Alabama researched other firms and/or products that could provide similar forecast data and found none. This resulted in the IGM being a sole source product for both of these governments.
We do not know of other products/models that provide disaggregated forecast data from baseline through build-out for study area.
The sole source exemption requires use of CE Form 4A.
Of course, the member must be mindful of Section 112.313(6), Florida Statutes, and govern his interactions, if any, with WMD staff regarding WMD modeling needs accordingly. Also, should any measures/votes of the basin board of the member which would inure to his special private gain or loss, to that of his company, or to that of other persons or entities listed in Sections 112.3143(3)(a) or 112.3143(4), Florida Statutes, present themselves, he should govern himself accordingly, following CE Form 8B.