CEO 95-8 -- March 9, 1995
CONFLICT OF INTEREST; VOTING CONFLICT
SCHOOL BOARD MEMBER'S CORPORATIONS
DOING BUSINESS WITH SCHOOL DISTRICT
To: Barbara Sanders, Esquire, Franklin County School Board Attorney (Apalachicola)
Absent the applicability of an exemption under Section 112.313(12), Florida Statutes, a prohibited conflict of interest would be created under Sections 112.313(3) and 112.313(7)(a), Florida Statutes, were corporation(s) owned by a district school board member to sell automobile parts and bulk fuel to the school district. Purchases by the district from the corporation(s) on an "as needed" basis prior to the member's qualification for office would not serve to "grandfather" business between the district and the corporation(s) taking place after the member's qualification.
In addition, the member would be subject to the requirements of the voting conflicts law [Section 112.3143(3)(a), Florida Statutes] regarding measures which would inure to the gain of the corporation(s), notwithstanding the applicability of an exemption under Section 112.313(12). CEO's 74-68, 77-61, 82-10, 83-7, and 86-54 are referenced.
Would a prohibited conflict of interest be created under Sections 112.313(3) and 112.313(7)(a), Florida Statutes, were corporation(s) wholly owned by a member of a District School Board to sell automobile parts and bulk fuel to the School District?
Your question is answered in the affirmative, unless an exemption under Section 112.313(12), Florida Statutes, applies.
By your letter of inquiry and a telephone conversation between you and our staff, we are advised that J. V. Gander, Jr. (hereinafter "member") is a newly-elected member of the Franklin County School Board. Further, we are advised that the member is sole owner of two corporations, one of which is an automobile parts dealership with two locations in the County and one of which is a bulk fuel distributorship. In addition, you advise that the bulk fuel distributorship is one of only two bulk fuel distributorships located in the County.
Before the member's election to the Board, you advise, the School District routinely purchased items from the automobile parts dealership on an "as needed" basis and, every month, the District purchased fuel from one of the two bulk distributorships, with the distributorship giving the lowest monthly price quote getting the monthly business. There is, you advise, no contract between the District and either of the corporations for the provisions of goods or services that was entered into prior to the member qualifying for or being elected to office.
Sections 112.313(3) and 112.313(7)(a), Florida Statutes, 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 or 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 of 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 be violated were the District to purchase from the member's corporation(s) and would prohibit the member from acting in a private capacity to sell to the District, and Section 112.313(7)(a) would be violated were the member's corporation(s) (business entities with which the member holds a contractual relationship by virtue of his status as a stockholder) to do business with the District, absent a "grandfathering" and absent the applicability of an exemption under Section 112.313(12), Florida Statutes.
In previous opinions, we have found certain business relationships between a public officer's public agency and his private businesses to be "grandfathered in," such that those relationships would not be violative of Sections 112.313(3) and 112.313(7)(a). See, for example, CEO 76-48, CEO 82-10, CEO 83-7, and CEO 86-54. Such a grandfathering is based upon the express language of Section 112.313(3)(b), Florida Statutes, and upon our construction of Section 112.316, Florida Statutes, and is grounded in the logic that a public official has no conflict in regard to business between his public agency and his private endeavors which was entered into when he held no public position and thus had no public duties which he could have been tempted to dishonor. However, since there are no contracts in place between the District and the member's corporation(s) which provide for provision of automobile parts and fuel and which predate the member's qualification for office, we find that any business between the District and the corporation(s) would not be grandfathered.
Nevertheless, Section 112.313(12) contains several exemptions to the prohibitions of Sections 112.313(3) and 112.313(7)(a) which can be utilized to prevent conflicts of interest. The exemptions which could be applicable in the member's situation are the rotation exemption [Section 112.313(12)(a)], the sealed, competitive bid exemption [Section 112.313(12)(b)], and, in the case of as needed purchases of automobile parts, the $500 or less per calendar year exemption [Section 112.313(12)(f)]. We do not find the exemption of Section 112.313(12)(c) to be applicable since fuel not delivered to the site of consumption by fixed lines or pipelines, unlike electricity or natural gas, would not constitute "utility service."
Please pay close attention to the wording and requirements of each exemption and remember that in order to be applicable the competitive bid exemption includes a requirement that the member disclose his relationship regarding the person or entity submitting the bid prior to or at the time of submission of the bid (utilizing CE Form 3A) and that the sole source exemption requires disclosure utilizing CE Form 4A.
Accordingly, we find that a prohibited conflict of interest would exist were the member's corporation(s) to do business with the District, absent the applicability of an exemption under Section 112.313(12), Florida Statutes.
Would a voting conflict of interest exist under Section 112.3143(3)(a), Florida Statutes, requiring the member's abstention, declaration, and filing of a memorandum regarding measures to pay vendors supplying goods or services to the School District?
Under the facts presented, this question is answered in the affirmative.
Additionally, you advise that the School Board customarily approves all invoices submitted by vendors for payment for items provided to the District by a single measure concerning an agenda item dealing with the finance officer's report. However, you advise, if there is a question about a particular bill, that bill is removed from consideration in the vote dealing with the finance officer's report and is considered for payment separately. You advise that you estimate that no more than fifty vendors have items up for payment in any one measure, that fuel is a major expense of the District, and that the purchase of automobile parts on an as needed basis is a minor expense.
The voting conflicts law [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 would inure to his special private gain or loss; which he knows would inure to the special private gain or loss 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 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 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) pertains to local public officers, including members of district school boards, and requires their abstention from voting, public declaration of interest, and the filing of a memorandum (CE Form 8B) regarding measures which would inure to the special private gain of the officer or to certain other persons or entities. Further, measures which inure to the gain of corporations also inure to the gain of persons who are majority or sole stockholders of the corporations. See, for example, CEO 77-61. Therefore, the member should abstain, declare, and file CE Form 8B regarding measures to pay District vendors, including his corporation(s).
This question is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on March 9, 1995, and RENDERED this _____ day of March, 1995.
R. Terry Rigsby