CEO 96-7 -- January 29, 1996
CONFLICT OF INTEREST
COUNTY PROPERTY APPRAISER PERFORMING PRIVATE
APPRAISALS, INVOLVED IN RELATED BUSINESS MATTERS,
AND TEACHING AT APPRAISAL INSTITUTE
To: (Name withheld for lack of consent.)
A prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, were a county property appraiser to privately appraise property located in the county or to be an owner of a business appraising property in the county. The private appraisals could be used as bases for challenging the official appraisals of property, and the appraiser would be tempted to use or disclose information gained by reason of his official position and not available to the general public for the benefit of himself or his business. A prohibited conflict also would be created under Section 112.313(3) and Section 112.313(7)(a), Florida Statutes, were the appraiser or his business to provide services to the property appraiser's office; and Section 112.313(3) would be violated were he or his business to provide services to other county entities. No prohibited conflict would be created were the appraiser merely to hold a lien or security interest in a business appraising property in the county, provided the business is not providing services to the county property appraiser's office outside of the competitive bid exemption of Section 112.313(12)(b), Florida Statutes. No prohibited conflict of interest would be created were the appraiser or a business of which he is an owner to appraise out-of-county property, provided the business also does not appraise in-county property, and provided the business does not provide services to the county property appraiser's office outside of the competitive bid exemption. No prohibited conflict would be created were the appraiser to teach appraisal courses at a professional institute. CEO's 76-21, 80-29, 81-2, 81-50, 84-95, 88-1, 94-3, and 95-28 are referenced.
Would various relationships regarding your private appraisal business and vocation as an appraiser create a prohibited conflict of interest were you to take office as a county property appraiser?
Your question is answered as set forth below.
By your letter of inquiry and two telephone conversations between you and our staff, we are advised that you are considering becoming a candidate for the office of Sarasota County Property Appraiser. Further, we are advised that you have been a real estate appraiser in Sarasota County for twenty years and that you currently are licensed by the State as a certified general appraiser. You advise that you have a fee (charge-per-the-job) practice which is dedicated primarily to commercial real estate appraisals for private entities, including banks and individuals, and to public entities, such as Sarasota County, the City of Sarasota, and the City of Venice. Your work for the County, you advise, is for entities other than the Property Appraiser's Office, including the County Commission, the County Transportation Department, and the County General Services Department. In addition, you advise that you are under contract to the State as an appraiser/reviewer for the Department of Environmental Protection (DEP). Your work for DEP, you advise, is virtually all acquired by sealed, competitive bid, with possibly some subsequent work or "re-hiring" being done outside of a competitive bid process. Some of your work for the County, you advise, is secured without competitive bidding, with large jobs being secured by competitive bidding, which is rarely sealed. You advise that you have no input into the bidding process, other than submitting your bid and having your name placed on lists of eligible bidders.
You describe your appraisal work for both the State and the County as "nonexclusive," stating that you bid against other appraisers for this public business. Further, you state that the appraisal service you offer is not unique, in that other appraisers can and do provide similar services.
A good portion of your practice, you advise, is in the field of eminent domain and commercial litigation, which requires your appearance as a witness in court. You advise that your appraisal firm is a corporation, of which you currently are the only stockholder and officeholder, but that you contemplate bringing in another person who will assume much of the management of the business and will eventually buy an ownership interest in it, either as a stockholder or, if the form of the business is changed, as a partner. You advise that this other person, who currently is working under your licensure, shortly will become a certified general appraiser personally licensed to sign and prepare appraisals.
You advise us further that you might sell your appraisal business, relinquishing all ownership and control of the business to the new owner. You would finance the transaction via a note or other instruments, retaining a security interest or lien in the business or its assets, you advise.
Also, you advise that you have been teaching at the Appraisal Institute for over five years. The Institute, you advise, is a private entity, headquartered in Chicago, that conveys professional appraiser designations such as "Member of Appraisal Institute" (MAI) and "Senior Residential Appraiser" (SRA). You are paid by the Institute for your teaching services, which consist of instructing those seeking designations from the Institute. The course material you teach includes capitalization (subject matter concerning the appraisal of income-producing property) and basic appraising (which concerns the mechanics of generating appraisals and other fundamentals). You advise that you teach primarily in Tampa to students from Florida's west-coast area but that you occasionally teach out-of-State and in other parts of Florida. You advise that your knowledge and understanding that enables you to teach for the Institute was obtained from your private work experience and your own satisfaction of standards and criteria of the Institute.
The Code of Ethics for Public Officers and Employees provides in relevant part:
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 of 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 public duties. [Section 112.313(7)(a), Florida Statutes.]
We find that the first part of Section 112.313(3) would prohibit your purchasing, as County Property Appraiser, services from your corporation or from any business entity of which you, your spouse, or your child are an officer, partner, director, or proprietor, or in which you, your spouse, or your child, or any combination thereof, hold a material interest. "Material interest" is defined at Section 112.312(15), Florida Statutes, as follows:
'Material interest' means direct or indirect ownership of more than 5 percent of the total assets or capital stock of any business entity. For the purposes of this act, indirect ownership does not include ownership by a spouse or minor child.
Also, we find that the second part of Section 112.313(3) would prohibit your acting, in a private capacity, to sell services to the Property Appraiser's Office or to any other County entity. "Acting in a private capacity" includes situations in which one personally is involved with the sale to one's political subdivision, as well as where one is an officer, director, or material interest holder of a business entity that is doing business with his political subdivision. See CEO 81-2, CEO 81-50, and CEO 94-3.
Further, we find that the first part of Section 112.313(7)(a) would prohibit your simultaneously serving as Property Appraiser and holding employment or a contractual relationship with your corporation or with any other business entity if it is doing business with (i.e., providing paid services to) the Property Appraiser's Office. Employment exists where one is compensated, or is an owner, partner, or proprietor of a business (see CEO 76-21, CEO 80-29, and CEO 84-95), and holding stock in a corporation constitutes a contractual relationship.
Additionally, and probably most importantly, we find that you would have a prohibited conflict of interest under the second part of Section 112.313(7)(a) were you to perform, in your private capacity, appraisals of property located in Sarasota County, while serving as Sarasota County Property Appraiser. We consistently have recognized that private appraisals of property could be used as a basis for challenging the official appraisal of the same property, and that property appraisers or their employees who are engaged in private appraisal work would be tempted to privately use or disclose information gained by reason of their public positions and not available to the general public. See CEO 95-28, in which we found that a prohibited conflict existed where private appraisals of in-county property were conducted under the licensure or certification of a private appraiser who served as county property appraiser, and CEO 88-1, in which we found that in-county private appraisal work by employees of the county property appraiser would be conflicting. In essence, it is our opinion that a county property appraiser should not "wear two hats" (one public and one private) in relation to the same parcel of property. See Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982).
In addition, we find that the second part of Section 112.313(7)(a) would be violated were you to serve as Property Appraiser while retaining an ownership interest in a corporation or other business appraising property in Sarasota County, whether or not the appraisal work is performed for your public agency (the Property Appraiser's Office), whether or not you are personally involved in producing the appraisals, and whether or not the appraisals are prepared under your licensure or certification. Though not personally performing the appraisal work nor having your licensure attach to the work, you would be an owner of a business the private product of which might conflict with your public valuation of property and the private interests of which would create temptation to use or disclose "inside information," as was of concern to us in CEO 88-1 and CEO 95-28.
Further, we do not view the sealed, competitive bidding exemption of Section 112.313(12)(b) as being applicable to negate conflicts grounded in the second part of Section 112.313(7)(a) which, in your situation, concern your appraisal of property located in Sarasota County or your ownership of a business appraising property located in the County. Section 112.313(12)(b) provides that
. . . 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 his 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 Department of State, 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.
From the terminology used in the exemption, it can be seen that it is directed at situations in which the essence of the conflict is grounded in an official's ability to influence the award of business to himself or to his company. We do not view it as being applicable to situations in which the conflict is based in the potential for divided loyalty and nonobjective performance of public duty not grounded in the award or transaction of business between the official's public agency and his private professional endeavor or company (i.e., a conflict based upon appraising property in dual roles or based upon temptation to use or disclose "inside information").
Further, we find that Section 112.313(7)(a) would not be violated were you to sell the business (even if the business thereafter appraises property located in Sarasota County), provided the business's appraisals are not conducted under your licensure or certification and provided that the business is not providing services to the Property Appraiser's Office without the benefit of the sealed, competitive bidding exemption of Section 112.313(12)(b), Florida Statutes. We find that mere retention of a security interest or lien in a business in conjunction with its sale is a far different situation or relationship than ownership and control of the business.
Additionally, we find that your personal appraisal of property located outside Sarasota County, including work for other public agencies such as DEP, would not create a prohibited conflict under Section 112.313(3) or under either part of Section 112.313(7)(a), provided that you do not hold employment or a contractual relationship with a business entity or agency that is subject to the regulation of, or that is doing business with, the Sarasota County Property Appraiser's Office, without the benefit of the sealed, competitive bidding exemption.
Further, we find that your continued teaching at the Institute would not be violative of Section 112.313(3) or of either part of Section 112.313(7)(a). We see no indication that the Institute would be providing services to the Property Appraiser's Office, no indication that you would be acting to sell the Institute's services to any entity of the County, and no indication that the Institute would be subject to the regulation of, or would be doing business with, the Property Appraiser's Office. Also, we perceive no frequently recurring conflict or impediment to duty under the second clause of Section 112.313(7)(a) by virtue of your teaching for the Institute. Instruction in appraising is not synonymous with actually appraising property, particularly property located in Sarasota County. Further, your teaching is based upon information and expertise gained in your private capacity.
Inasmuch as your status as a candidate, as opposed to that of a holder of a public office, is not subject to Sections 112.313(3) and 112.313(7)(a), we cannot guide you in your actions as a candidate, save admonishing you to be aware of Section 112.313(2), Florida Statutes, which provides:
SOLICITATION OR ACCEPTANCE OF GIFTS.--No public officer, employee of an agency, local government attorney, or candidate for nomination or election shall solicit or accept anything of value to the recipient, including a gift, loan, reward, promise of future employment, favor, or service, based upon any understanding that the vote, official action, or judgment of the public officer, employee, local government attorney, or candidate would be influenced thereby. [Emphasis supplied.]
For information about laws or other requirements relating to your possible candidacy, your State professional licensure, and/or your general business concerns, you should contact the Division of Elections of the Department of State, the Department of Business and Professional Regulation, and/or your private attorney.
Your inquiry is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on January 25, 1996, and RENDERED this 29th day of January, 1996.
William J. Rish