CEO 92-46 -- September 3, 1992
CONFLICT OF INTEREST; VOTING CONFLICT
NAVIGATION DISTRICT COMMISSIONER PRESIDENT AND OWNER
OF ENGINEERING FIRM CONTRACTING WITH MUNICIPALITY
RECEIVING FUNDING FROM DISTRICT
To: (Name withheld at the person's request.)
No prohibited conflict of interest would be created under Sections 112.313(3) and 112.313(7)(a), Florida Statutes, were the engineering firm of a member of the Board of Commissioners of the Florida Inland Navigation District to provide services to a municipality receiving funding assistance from the District. The Commissioner's firm would not be selling services to the District, he would not have a contractual relationship with a business entity or agency subject to the regulation of or doing business with the District (his agency), and no continuing or frequently recurring conflict or impediment to duty would be present.
The Commissioner should be mindful of the voting conflicts law and restrictions on the "participation" of appointed officers, under Section 112.3143, Florida Statutes, if measures implicating special private gain to him, his firm, or the municipality come before the District Board of Commissioners. CEO's 92-27, 88-43, 87-95, 86-41, 85-20, 85-19, and 84-1 are referenced.
Would a prohibited conflict of interest be created were the engineering firm of a commissioner of the Florida Inland Navigation District to provide engineering services to a municipality receiving funding from the District?
Under the circumstances presented, your question is answered in the negative.
By your letter of inquiry, telephone conversation between you and our staff, and other materials and information sent from your office to our staff, we are advised that . . . . serves on the Board of Commissioners of the Florida Inland Navigation District ("FIND") and that he is an engineer who is president and part owner of an engineering firm. FIND is an independent special district, created by special act of the Legislature, addressed in Chapter 374, Florida Statutes, governed by an appointed board of commissioners, and which territorially encompasses all of the counties on the State's east coast with the exception of Nassau County. Pursuant to legislative authority, FIND has developed a Waterways Assistance Program under which local governments may receive FIND funding (on a reimbursement basis) for designated projects along the Intracoastal Waterway. In the application process for funding in fiscal year 1992-93, FIND received an application from a particular municipality for assistance/funding, and the Board has voted to assist that project; the Commissioner did not cast a vote in that matter.
The Commissioner's firm is retained by the municipality as its engineering consultant, this relationship having existed for the last five or six years or more. The firm, due to the longstanding relationship, normally would provide engineering services to the municipality with respect to the project for which FIND reimbursement is sought. You relate that this relationship between the Commissioner's firm and the municipality has been disclosed by the Commissioner to the District. All eligible projects, including the municipality's project, were funded for the upcoming year.
Under the Waterways Assistance Program, eligible local governments whose projects are selected enter into a standard form contract with FIND that specifies the details of the project, the reimbursement method, and other conditions. Once the FIND Board of Commissioners has selected the projects to be funded for any fiscal year, the only other possible involvement they might have is in the event an extension of the funding agreement is sought; for example, you relate that projects have encountered delays due to permitting problems and that requests for extensions, at least to date, have been granted in all instances where made. You relate that once projects are approved for assistance, District staff investigate and monitor the project for compliance with applicable criteria in its implementation and that a project likely would come back before the Board only if an extension of its completion deadline were sought. You relate that you cannot recall a project ever coming back before the Board for alleged noncompliance.
The engineering firm is a corporation, the Commissioner owns 37.6 percent of its stock and serves as its president, there are five other shareholders (none of whom is a relative of the Commissioner), and the corporation's directors and other officers come from the ranks of the other shareholders. The corporation's work for the municipality on the District-reimbursed project would constitute approximately eight tenths of one percent of the corporation's business. The corporation's contractual relationship would be between it and the municipality, not between it and the District, and payment for its services would not be contingent upon the municipality actually being reimbursed by the District. The municipality would have undertaken the project with or without District assistance/reimbursement, and the corporation would be hired and paid by the municipality for the project regardless of whether the project were District-assisted.
You question whether the foregoing scenario would violate Sections 112.313(3) or 112.313(7)(a), Florida Statutes, which provide, respectively, in relevant part:
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 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.
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(3) would prohibit the Commissioner from purchasing services for the District from his engineering corporation and it would prohibit him from selling those services in a private capacity to the District. However, since under the scenario you put forth the services of the engineering firm would be sold to the municipality (a separate and distinct agency from the District), the Commissioner would not be in violation of Section 112.313(3) because his firm would not be doing business with the District. See, for example, CEO 88-43 and our opinions cited therein.
Section 112.313(7)(a) prohibits public officers from holding contractual relationships with business entities or agencies which are subject to the regulation of, or which are doing business with, their public agencies, and it prohibits the holding of contractual relationships that will create a continuing or frequently recurring conflict between an officer's private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. Under your scenario, the Commissioner would have a contractual relationship with his engineering firm (a business entity), but he would not have such a relationship with the municipality (the agency or entity arguably subject to the regulation of, or doing business with, his agency--the District). See, for example, CEO 88-43 and our opinions cited therein. Thus, we find no prohibited conflict under the first clause of Section 112.313(7)(a). In addition, due to the likely limited involvement of the District Board of Commissioners with the project, other than voting to fund or approve the project, the District-assisted project's business being a small percentage of the Commissioner's firm's total business, and the fact that the firm's compensation for its services to the municipality is not contingent upon the District's aid to the project, we find that the situation you present is one that would not pose a continuing or frequently recurring conflict or impediment to duty under the second clause of section 112.313(7)(a). See, for example, CEO 92-27, Question 2, and our opinions cited therein.
In addition, Section 112.3143, Florida Statutes, is applicable to the Commissioner as a local (see CEO 87-95 and CEO 85-19) public officer and he should be mindful of its applicable provisions should a measure involving possible special private gain to him, his firm, or the municipality (a principal retaining him) present itself to the District Board of Commissioners in the future. See CEO 86-41, CEO 85-20, and CEO 84-1, Question 2. That section provides in relevant part:
No county, municipal, or other local public officer shall vote in his official capacity upon any measure which would inure 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. [Section 112.3143(3)(a), Florida Statutes.]
No appointed public officer shall participate in any matter which would inure 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; or which he knows would inure to the special private gain of a relative or business associate of the public officer, without first disclosing the nature of his interest in the matter.
(a) Such disclosure, indicating the nature of the conflict, shall be made in a written memorandum filed with the person responsible for recording the minutes of the meeting, prior to the meeting in which consideration of the matter will take place, and shall be incorporated into the minutes. Any such memorandum shall become a public record upon filing, shall immediately be provided to the other members of the agency, and shall be read publicly at the next meeting held subsequent to the filing of this written memorandum.
(b) In the event that disclosure has not been made prior to the meeting or that any conflict is unknown prior to the meeting, the disclosure shall be made orally at the meeting when it becomes known that a conflict exists. A written memorandum disclosing the nature of the conflict shall then be filed within 15 days after the oral disclosure with the person responsible for recording the minutes of the meeting and shall be incorporated into the minutes of the meeting at which the oral disclosure was made. Any such memorandum shall become a public record upon filing, shall immediately be provided to the other members of the agency, and shall be read publicly at the next meeting held subsequent to the filing of this written memorandum.
(c) For purposes of this subsection, the term 'participate' means any attempt to influence the decision by oral or written communication, whether made by the officer or at his direction. [Section 112.3143(4), Florida Statutes.]
Accordingly, we find that no prohibited conflict of interest would be created were the subject Commissioner's engineering firm to perform work for a municipality on a project funded or assisted by the Florida Inland Navigation District.