CEO 98-3 -- March 5, 1998
CONFLICT OF INTEREST
TOWN COMMUNITY REDEVELOPMENT AGENCY BOARD MEMBER
SEEKING TO PARTICIPATE IN LOW INTEREST LOAN PROGRAM SPONSORED
BY REDEVELOPMENT AGENCY
To: Name Withheld at Person's Request (Town of Davie)
A prohibited conflict of interest is created under Section 112.313(7)(a), Florida Statutes, where a member of a community redevelopment agency is a partner in a real estate partnership that applies to participate in a low interest loan program sponsored by the redevelopment agency. The member would have a contractual relationship with a business entity--the real estate partnership--which is doing business with his agency. CEO's 77-65, 88-52, and 90-76 are referenced.
Is a prohibited conflict of interest created where you, a member of a town's community redevelopment agency, are a principal in a real estate partnership that has submitted an application to participate in a loan subsidy program sponsored by the community redevelopment agency?
Under the circumstances presented, your question is answered in the affirmative.
In your initial letter of inquiry and through supplemental information provided to our staff, we are advised that you serve as a Governing Board member for the Town of Davie Community Redevelopment Agency ("CRA"), a community redevelopment agency created pursuant to Section 163.356, Florida Statutes. In addition to your public position, you also are a C.P.A. in a professional association with offices in a building owned by a real estate partnership in which you and your wife each own a 25 percent interest and your two accounting partners own the remaining interest.
We are advised that the Town of Davie CRA has established a loan program whereby participating banks make low interest loans to qualifying businesses within the CRA's jurisdictional area. The purpose of the loans is to promote new business growth and encourage commercial property owners to upgrade and invest in their properties. You relate that, to obtain a loan, an applicant usually submits an application to a participating lending institution to determine whether the applicant otherwise meets the lending institution's criteria. Once the lending institution approves the application, the matter is then placed on the CRA's agenda for approval and you indicate that all of the applications that receive lending institution approval have subsequently received CRA approval. You also have indicated that the CRA loan subsidies are approved on a first-come, first-served basis and, once approved, the participating financial institution consummates the loan transaction with the borrower. The CRA then allocates certain funds to the financial institution to offset the institution's costs in offering the low interest loan.
We are advised that your office building is located within the CRA's jurisdictional area and the real estate partnership of which you are a principal has submitted an application to participate in the CRA's Commercial Loan Subsidy Program. You relate that if your application is approved for the amount requested--$12,000--it will exhaust the funds currently available under the program. However, you state that no subsequent applications have been filed which would affect the amount that is being held for your project pending our decision. Thus, you question whether these circumstances create a conflict of interest prohibited by the Code of Ethics for Public Officers and Employees.
The applicable provision, Section 112.313(7)(a), Florida Statutes, provides:
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 (1995).]
The first part of Section 112.313(7)(a) prohibits a public officer from having a contractual relationship with a business entity doing business with his agency. The second part of Section 112.313(7)(a) prohibits a public officer from having a contractual relationship which creates a continuing or frequently recurring conflict between his private interests and the performance of his public duties, or which impedes the full and faithful discharge of his public duties.
Where a Board member, as a partner in a partnership that owns an office building, applies to the CRA to participate in its subsidized loan program, the member would have a contractual relationship with a business entity which is doing business with his agency. Section 112.313(7)(a) prohibits this type of conflicting contractual relationship. In CEO 77-65, the Commission opined that Section 112.313(7)(a) would be violated where a member of the Florida Bicentennial Commission was employed by a university that sought a grant from the Commission. Similarly, in CEO 88-52, the Commission concluded that Section 112.313(7)(a) would be violated where a city employee applied for a rental rehabilitation loan administered by the city program which employed him. A prohibited conflict of interest was also found to exist in CEO 90-76, where a county solid waste authority member applied for a grant from a program administered by the authority. To hold otherwise would provide the opportunity and strongly suggest to the public that a public officer is permitted to benefit privately because of his public position, which is antithetical to the principles underlying the Code of Ethics for Public Officers and Employees.
Accordingly, we find that a prohibited conflict of interest is created where you are a partner in an office building partnership that has applied to the Community Redevelopment Agency to participate in its low interest loan program.
ORDERED by the State of Florida Commission on Ethics meeting in public session on March 5, 1998 and RENDERED this 10th day of March, 1998.