CEO 95-26 -- August 31, 1995
CONFLICT OF INTEREST
CITY DEPARTMENT DIRECTOR SERVING ON BOARD OF DIRECTORS
OF BANK DOING BUSINESS WITH CITY
To: Mr. Robert Michael Eschenfelder, Assistant City Attorney (St. Petersburg)
No prohibited conflict of interest exists where a city department director serves on the board of directors of a bank which has business relationships with the city through departments other than that overseen by the department director. Although Section 112.313(3), Florida Statutes, prohibits a city employee from acting in his private capacity as a bank director to sell services to his and any other city agency, the purchases of such services are largely within the province of employees in other city departments and this department director plays no role in that process. Nor is Section 112.313(7)(a), Florida Statutes, violated because the city department director would not have a contractual relationship with a bank that was doing business with his agency, the city's economic development and property management department. No impediment to public duties or continuing or frequently recurring conflict would be created since the department director would not use any city resource to fulfill his duties as a bank director, the department director's public duties do not include assisting new and existing businesses with obtaining private financing, and he is not called upon to steer business to any financial institution.
Does a prohibited conflict of interest exist where a city department director serves on the board of directors of a bank doing business with the City?
Under the circumstances presented, your question is answered in the negative.
In your letter of inquiry you advise that . . . is employed by the City of St. Petersburg as the Director of the Economic Development and Property Management Department. His department is one of four overseen by the Community Development Administrator. In this position, his duties include attracting new businesses to locate within the City, helping existing businesses expand their customer base, helping businesses within the City to apply for "enterprise zone" status and other tax credits, and overseeing the maintenance and sales of City-owned property. In addition, you advise that the Department Director is one of several City Directors who work on the City's redevelopment plan, which is a partnership between the City and a private developer to redesign and redevelop various areas within the City.
You further advise that this Department Director has accepted a directorship on the board of directors of an area bank. The directorship is a compensated position and, as a board member, he will be considering and voting on long-term goals and policy issues for the bank. Bank directors are not involved in voting on specific loans or other transactions, you relate, although directors are informed of significant new loans or other transactions warranting their attention.
We are advised that the City has numerous banking relationships with this particular bank, in addition to its serving as the depository of the City's payroll funds. Given the prominence of the bank, you anticipate that the City will continue to have various banking relationships with it in the future. However, you represent that the City Department of this employee has no direct dealings with the bank. The bank does not sell its services to the Economic Development and Property Management Department, and the Department Director's duties do not include the purchase of such services. That responsibility rests largely with the City's Finance Director and the City's Purchasing Director, both of whom work under the Fiscal Services Administrator. Further, although the Department Director is engaged in promoting the formation of new businesses and advancing existing businesses within the City, those duties do not include helping businesses obtain financing; nor does the Department Director suggest, recommend, or steer business to any financial institution.
The applicable provisions of the Code of Ethics for Public Officers and Employees state:
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.
[Section 112.313(3), Florida Statutes (1993).]
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(7)(a), Florida Statutes (1993).]
In a number of opinions we have examined the "agency" of different city employees in light of the definition of "agency" contained in Section 112.312(2), Florida Statutes. Consistent with CEO 84-15, we find that the "agency" of this particular City employee would be the Economic Development and Property Management Department. See also CEO 89-61, CEO 90-17, and CEO 91-28.
With regard to Section 112.313(3), this provision would prohibit the Department Director from acting in his official capacity to purchase services for the Economic Development and Property Management Department from a bank where he is an officer or director. Clearly, this part of Section 112.313(3) is not applicable, since the Department Director is not purchasing any banking services for the Department he oversees. However, Section 112.313(3) also prohibits a public employee from acting in his private capacity to sell services to either his agency or any subdivision thereof. In CEO 94-17 and the opinions referenced therein, we opined that a public employee is acting in his private capacity when a corporation of which he is a director takes action. Thus, the question posed is whether the banking relationship between the bank and other City departments creates a violation of this provision. In CEO 84-43, Question 1, we construed Section 112.313(3) in conjunction with Section 112.316, Florida Statutes, to permit a city employee to sell services to an agency of the city where the employee was not in a position to supervise or regulate the provision of those services or to give advice or recommendations regarding contracts for those services. Based upon the rationale of that opinion and the circumstances presented, we conclude that the Department Director's service on the bank's board of directors would not violate Section 112.313(3), Florida Statutes.
Turning now to Section 112.313(7)(a), Florida Statutes, that provision appears not to be implicated since the Department Director will not have an employment or contractual relationship with a business entity doing business with the Economic Development and Property Management Department. Nor do we believe that the situation creates a potential conflict under the second part of Section 112.313(7)(a), Florida Statutes, since the Department Director is not in a position to favor the bank in his public position or refer business to the bank. Further, there is no suggestion that the Department Director's public duties will be impeded by his service on the bank board, or that there will be any temptation or ability to use public resources in carrying out his duties on the board of directors. We would caution that such actions could violate Section 112.313(6), Florida Statutes.
Accordingly, we find that the Code of Ethics does not prohibit the Director of the City's Economic Development and Property Management Department from serving on the board of directors of a local bank doing business with the City.
ORDERED by the State of Florida Commission on Ethics meeting in public session on August 31, 1995, and RENDERED this _____ day of September, 1995.
William J. Rish