CEO 01-4 -- March 20, 2001






To:       Mr. Angel Gonzalez, Executive Director, Allapattah Business Development Authority, Inc. (Miami)




Under the circumstances, the exemption regarding 501(c) organizations codified at Section 112.313(15), Florida Statutes, is inapplicable to negate a conflict under Section 112.313(7)(a), Florida Statutes, regarding a city commission member's employment with a community development organization contracting with the city.  CEO's 89-29 and 96-10 are distinguished; CEO's 89-58, 97-5, and 98-11 are referenced.




Would a prohibited conflict of interest be created under Section 112.313(7)(a), Florida Statutes, were you to be elected to serve as a city commissioner while remaining an employee of a tax-exempt organization which contracts with the city?


Under the scenario presented, your question is answered in the affirmative.


By correspondence between you and our staff and additional written materials, we are advised that you are employed as the executive director of an organization which is tax-exempt under Section 501(c) of the Internal Revenue Code and which contracts with the City of Miami to perform housing and economic development activities.  You advise that you are a salaried employee of the organization, that your salary is neither increased nor decreased based on the organization's being awarded City funds, that you are a long-term employee of the organization, and that you were promoted to the position of executive director because of your credentials and performance, not because you might become a City Commissioner who could influence City funding on behalf of the organization.  The organization and you have been successful in improving the community, you advise, and you further advise that many of the organization's board members believe that your becoming a member of the City Commission is necessary for the community to complete its positive transformation.  In addition, you advise that  if you run for and are elected to the City Commission, you would take office on November 7, 2001, and that the first potential contract between the City and the organization entered into after your taking office would be for the contract period starting October 1, 2002.

Regarding the organization's funding, you advise that it receives administrative monies (community development block grant funds of $150,000 and federal home funds of $50,000) to carry out its activities, that ninety-five percent of the organization's administrative budget (which funds salaries of the organization's administrative staff, including yourself) comes from the City, and that the organization's board has limited its fundraising appeals directed at outside (non-governmental) sources to the raising of project monies which are not applied to administrative staff salaries.

The Code of Ethics for Public Officers and Employees provides in relevant part, with emphasis supplied:


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.]


ADDITIONAL EXEMPTION.--No elected public officer shall be held in violation of subsection (7) if the officer maintains an employment relationship with an entity which is currently a tax-exempt organization under s. 501(c) of the Internal Revenue Code and which contracts with or otherwise enters into a business relationship with the officer's agency and:

(a)        The officer's employment is not directly or indirectly compensated as a result of such contract or business relationship;

(b)        The officer has in no way participated in the agency's decision to contract or to enter into the business relationship with his or her employer, whether by participating in discussion at the meeting, by communicating with officers or employees of the agency, or otherwise; and

(c)        The officer abstains from voting on any matter which may come before the agency involving the officer's employer, publicly states to the assembly the nature of the officer's interest in the matter from which he or she is abstaining, and files a written memorandum as provided in s. 112.3143.   [Section 112.313(15), Florida Statutes.]


Inasmuch as the organization which is your employer will be doing business with your public agency if you are elected and take office, and inasmuch as the organization will be entering into or renewing City contracts after you take office, we find that a prohibited conflict of interest will be created under Section 112.313(7)(a), unless the exemption set forth above is applicable.

We have had few occasions to construe the exemption and even fewer occasions to construe the meaning of paragraph (a), the portion of the exemption which is most important to your inquiry.  In CEO 89-29, we concluded that the exemption applied to  a city commissioner's employment as an executive director of a chamber of commerce contracting with the city, where (as is not the case in your situation) the commissioner's compensation (a base salary and annual bonus) was paid from membership dues and other revenues of the chamber which did not include any public funds.  In CEO 96-10, we concluded that the exemption applied to a school board member's employment with an area council on aging, where (as also is not the case in your situation) the program of the council for which the member was employed as coordinator did not involve school board funds.[1]

In view of our decisions in these two opinions[2] and in view of the reality that your salary is part of the administrative expenses of the organization which are funded substantially via City contract monies, we find that your employment would be directly or indirectly compensated as a result of the contracts/business relationship between the City and the organization, and thus that the exemption would not apply.  In arriving at this conclusion, we are not unmindful of your and the organization's positive contributions to the community; however, we are legally bound to narrowly construe exemptions to prohibitions, lest the exemption swallow the rule or prohibition.  See State v. Nourse,340 So. 2d 966 (Fla. 3d DCA 1976).

Accordingly, we find that a prohibited conflict of interest would be created were the organization employing you to contract with the City after your assumption of office as a City Commissioner.


ORDERED by the State of Florida Commission on Ethics meeting in public session on March 15, 2001 and RENDERED this 20th day of March, 2001.




Howard Marks


[1]Further, in CEO 96-10, the contract/agreement/doing of business between the private entity (corporation) and the public agency (school board) merely consisted of an annual agreement giving the private program access to school students; in contrast, your situation involves contracts for many thousands of dollars between the City and your organization.

[2]Our other opinions construing the exemption (CEO's 89-58, 97-5, and 98-11) did not construct the language of paragraph (a); they dealt with other aspects of the exemption.