CONFLICT OF INTEREST

COUNTY OFFICERS AND EMPLOYEES SERVING AS DIRECTORS AND
PERFORMING TASKS FOR A BUSINESS ENTITY CREATED BY THE COUNTY TO
ASSIST IN PUBLIC AND AFFORDABLE HOUSING MATTERS

To: Terrence A. Smith, Esq., Assistant County Attorney (Miami-Dade County)

SUMMARY:

A prohibited conflict of interest would not be created were county commissioners to serve as uncompensated members of the board of directors of a business entity created by the county to assist in public and affordable housing matters. Considering that the official duties of the county commissioners will include serving on the board of directors, and that the business entity will function exclusively for the support of the county, there will be a unity of interest between the county and the entity such that Section 112.316, Florida Statutes, will operate to negate any conflict of interest under Section 112.313(3). And without compensation, the county commissioners will not have an employment or contractual relationship with the business entity, as would be needed to violate Section 112.313(7)(a). Similarly, if the job responsibilities of county employees were expanded to include performing duties for the business entity, but the business entity does not compensate them and they have no personal contractual relationship with it, they would not have a conflict of interest under Section 112.313(7)(a). See CEO 21-7, CEO 20-13, CEO 20-3, CEO 19-25, CEO 18-13, CEO 18-12, CEO 14-12, CEO 09-1, CEO 06-26, CEO 99-13, CEO 96-30, CEO 95-28, CEO 95-16, CEO 95-13, CEO 90-70, and CEO 85-59.

QUESTION 1:

Would a prohibited conflict of interest be created were members of a county commission to serve as uncompensated directors of a business entity created by the county to assist in public and affordable housing matters?

Under the circumstances presented, Question 1 is answered in the negative.

In your letter of inquiry and additional information provided to our staff, you indicate you are asking, on behalf of a County Commissioner, whether any County Commissioner or County employee will have a prohibited conflict of interest were the County to create—in the specific manner described in your inquiry—a business entity to assist in public and affordable housing matters. Your inquiry is proactive in that that the County has not yet created the business entity. However, the County Commissioner may sponsor legislation creating the business entity, and she wonders what ethics issues, if any, would be created were it established in the manner that you describe.¹

The following comments are provided as background concerning the County's public and affordable housing responsibilities. You indicate that, since 1968, the County has served as a public housing agency, allowing it to own public housing properties and oversee public housing projects. The County's authority to serve as a public housing agency is found in the County's Home Rule Amendment and Charter and certain federal laws, such as the United States Housing Act of 1937. As a public housing agency, the County also is subject to requirements promulgated by the United States Department of Housing and Urban Development (HUD).² You state that, in all regards concerning the County's service as a public housing agency, the Board of County Commissioners serves as its governing body and a County agency—the Miami-Dade Housing and Community Development Department (MDHCD)—manages the County's day-to-day public and affordable housing operations.

You relate that, in the past, the County has relied on outside assistance in its development efforts regarding public and affordable housing. In particular, the County has partnered with private-sector developers who, unlike the County, are eligible to apply for funding, including low-income housing tax credits. However, you indicate the County Commissioner who asked you to bring this inquiry is interested in exploring more cost-effective means to develop the County's remaining public and affordable housing, possibly without the need to partner with the private sector. This brings us to the subject of your inquiry, which is the County Commissioner's desire to sponsor legislation creating a business entity to act as a general partner with the County in public and affordable housing efforts. You state that, if created, the purpose of this business entity—and any project-specific subsidiaries that it creates—"would be to develop, acquire, lease, construct, rehabilitate, apply for certain types of financing, and manage or operate multifamily or single-family residential projects, including, but not limited to, the redevelopment of the County's public housing developments through the [Rental Assistance Demonstration] programs."

Key to the analysis herein is how you indicate the business entity would be structured and staffed. In terms of its governance, you state the entity would be owned by the County, and that the Board of County Commissioners would serve without compensation as its board of directors. You emphasize that service on the entity's board would be considered "an integral part of [the] official duties" of County Commissioners, although you state that—if the entity is created—the Commissioners' additional duties as board members would not affect or increase their public salaries.

And in terms of its staffing, you indicate the County would enter into a shared services agreement with the business entity whereby it would provide County staff, likely from the MDHCD, to perform the work required. In other words, the business entity would have no employees and its work would be completely performed by County staff pursuant to the shared services agreement. You relate the shared services agreement would be between the County and the business entity—not between any individual County employee—and that its terms would expand the public duties of certain County employees to include conducting work for the business entity. However, you emphasize the business entity would not be compensating these County employees, and they would remain salaried employees of the County alone, collecting their W-2 Federal tax form from only the County.

Given this context, you ask whether County Commissioners may serve on the board of the business entity, and whether County employees may perform duties for the business entity, without having a prohibited conflict of interest under any prohibition over which the Commission has jurisdiction.³ The following provisions are relevant to your inquiry:

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 or any agency thereof, if he or she is serving as an officer or employee of that political subdivision . . . 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, any 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]

Turning first to whether County Commissioners will have a conflict, Section 112.313(3), Florida Statutes, has two parts. The first part prohibits any County Commissioner from acting in his or her official capacity as a public officer to purchase realty, goods or services for the County from a business entity where he or she is an officer, partner, director, or proprietor, or holds a material interest.⁴ This can occur, for example, if the County Commission purchases goods or services from a business entity where a Commissioner serves on the board of directors. See CEO 99-13, Question 1, and CEO 95-13. The second part of Section 112.313(3) prohibits a County Commissioner, acting in a private capacity, from selling any realty, goods, or services to his or her "agency" or "political subdivision," which for County officers and employees would be the County itself. See § 1.01(8), Fla. Stat. (defining a "political subdivision" to include one's county). In the past, the Commission has found that a violation of the second part of the statute would occur when a private business entity where a public officer serves as a director is selling realty, goods, or services to his or her political subdivision. See CEO 09-1.

At first blush, it appears that the County Commissioners would be in violation of both parts of Section 112.313(3) were they to simultaneously serve as directors of the business entity. If the business entity is formed, you indicate the County will cover its costs. In particular, the County budget will include extra funds for MDHCD to be used as a loan or a payment for services from MDHCD to the business entity. Because the County Commissioners presumably will be involved in reviewing and approving the County's budget, they essentially will be authorizing the purchase of the business entity's services, which would place them in violation of the first part of Section 112.313(3). Similarly, due to their status as directors of the business entity, they will be overseeing an entity selling services to the County, which would place them in violation of the second part of Section 112.313(3). In essence, the business entity will be filling the role of the private sector developers who partner with the County and who are able to secure certain affordable housing funds and incentives that the County may not be eligible to receive.

That being said, we find there would be a unity of interest between the County and the business entity that would negate any conflict for the County Commissioners under Section 112.313(3). In the past, we have applied Section 112.316, Florida Statutes,⁵ to negate the strict application of Section 112.313(3) when an agency and an outside entity have a unity of interest. See CEO 85-59 (finding a unity of interest would negate any conflict under Section 112.313(3) were trustees and staff of a municipal preservation board to serve as unpaid directors of a nonprofit direct support organization operating for the preservation board's benefit). The unity of interest consideration has been used when there is organizational alignment—such as a seat on the board of directors of a private entity being reserved for a public agency to appoint a member (See CEO 14-12 and CEO 96-30)—coupled with actual alignment of interests.

A clear example of this occurred in CEO 19-25. In that opinion, we found a unity of interest under Section 112.316 to negate a violation of Section 112.313(3) where a county commissioner was seeking to serve as an uncompensated director of a nonprofit organization providing financial and managerial support for a county park. An agreement between the county and the nonprofit required the county to provide funding and gave the county the right to designate a county commissioner or another person to serve on the nonprofit's board of directors.⁶ We found the fact that the County could appoint a member to a reserved seat on the nonprofit's board demonstrated an organizational alignment. We also found the interests of the county and the nonprofit were actually aligned, as both entities were invested in the proper stewardship and care of the county park. Accordingly, we found any conflict under Section 112.313(3) presented by a county commissioner serving on the nonprofit's board would be negated, given the unity of interest between the entities.

Similarly, if the business entity here is created in the manner that you describe, it appears there would be organizational alignment with the County, given the fact that the County Commission would constitute the entity's entire board of directors, the County would own the business entity, and any work for the entity would be performed by County employees through a shared use agreement. Also, given that the business entity's sole purpose would be to assist the County in managing its public and affordable housing developments, it appears their interests would be practically aligned as well. For this reason, if County Commissioners serve as directors for the business entity, we find a unity of interest would exist under Section 112.316 to negate any conflicts for them under Section 112.313(3).

The other conflict of interest statute noted above—Section 112.313(7)(a)—also has two parts. First, it prohibits a County Commissioner from having an employment or contractual relationship with any business entity or agency that is subject to the regulation of, or is doing business with, the County Commission. Second, it prohibits a County Commissioner from holding employment or a 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. See CEO 18-12.

Of note, both parts of the statute require a public officer or employee of an agency to hold an employment or contractual relationship in addition to their primary public office or public employment. See CEO 18-13. We have consistently found that uncompensated service (without compensation or consideration) on a corporate board of directors, including uncompensated service on the board of directors for a nonprofit organization, will not constitute the type of employment or contractual relationship contemplated by the statute. See CEO 21-7, Question 1, CEO 20-13, and CEO 06-26, n.5. Here, you indicate the County Commissioners will not be compensated for their service as directors of the business entity. Indeed, you relate that serving on the board will not even affect their public salaries as County Commissioners. Because it does not appear the County Commissioners will have an employment or contractual relationship with the business entity, we find no prohibited conflict will be created under Section 112.313(7)(a).

We also note that, without compensation, it does not appear that votes before the County Commission concerning the business entity will create a voting conflict for any County Commissioner, even if they are serving on its board of directors. The portion of the voting conflict law applicable to County Commissioners is found in Section 112.3143(3), Florida Statutes. It states:

No county, municipal, or other local public officer shall vote in an official capacity upon any measure which would inure to his or her special private gain or loss; which he or she knows would inure to the special private gain or loss of any principal by whom he or she is retained or to the parent organization or subsidiary of a corporate principal by which he or she is retained, other than an agency as defined in s. 112.312(2); or which he or she knows would inure to the special private gain or loss of a relative or business associate of the public officer.

The provision prohibits a County Commissioner from voting on a measure that will result in "special private gain or loss" (defined in Section 112.3143(1)(d), Florida Statutes, as an "economic benefit or harm") to himself or herself, or that he or she knows will bring "special private gain or loss" to a principal who retains them, a relative, or a business associate.

Here, there is no indication that any votes affecting the business entity will financially affect the County Commissioners, even if they are serving on its board. Nor will the business entity be considered the Commissioners' "principal" as they will have no equitable interest in it, will have no employment relationship with it, and will not be accepting compensation from it. See CEO 20-3, Question 3; see also CEO 21-7, Question 3 (finding uncompensated service on the board of directors of a nonprofit does not constitute a "principal" relationship). Moreover, while the Commissioners will be serving together on the board of directors, it does not appear they will be considered "business associates" for purpose of Section 112.3143(3), considering that the business entity does not appear to fall within any category enumerated in the statutory definition for that term.⁷ And even if their service on the board of directors does qualify them as "business associates," the voting conflict statute still will not apply, given that their service is unpaid, because any votes taken by the County Commission concerning the business entity will have no financial effect on them.

In short, assuming the business entity is established in the manner that you have described, it does not appear the County Commissioners will have a prohibited conflict of interest under any prohibition discussed herein, even considering they will be serving on its board of directors.⁸

Question 1 is answered accordingly.

QUESTION 2:

Would a prohibited conflict of interest be created were county employees to perform duties for a nonprofit entity created by the county for the purpose of assisting in public and affordable housing matters?

Under the circumstances presented, Question 2 is answered in the negative.

Turning to County employees who will be assigned to perform tasks for the business entity, we find the unique way the entity will be formed will alleviate any conflicts of interest. You indicate the County will enter into a shared services agreement with the entity by which the job responsibilities of certain County employees will be expanded to include performing work for the entity. However, they will not be accepting any compensation from the entity and will only be considered salaried employee of the County.

Given this context, it does not appear that Section 112.313(3) will apply. The County employees will not be performing work for the business entity in their private capacities, but, rather, their responsibilities regarding the entity will be considered part of their public duties. Nor will Section 112.313(7)(a) apply, as there would be no "employment or contractual relationship" between the business entity and the County employees. The business entity will not be providing the employees with compensation or any form of consideration, as is needed to constitute "employment" under Section 112.313(7)(a). See CEO 95-28 and CEO 95-16. And because you indicate the County employees are not parties to the shared services agreement between the County and the business entity, there will be no "contractual relationship" on which to base the statute's application.

There is a parallel between this situation and the facts in CEO 18-13, which involved an employee with Florida State University (FSU) performing duties as the Deputy Secretary for the Department of Health. The University and the Department had entered into an interagency agreement—to which the employee was not a party—by which he was to perform additional responsibilities for the Department. However, the University remained his sole employer and he did not receive any payment or W-2 Federal tax from the Department. We wrote:

Essentially, the interagency agreement simply expanded the scope of [the employee's] duties as an FSU employee to include the responsibilities typically performed by the Deputy Director for Health. Assuming the facts you describe remain materially unchanged, [the employee is] not prohibited by Section 112.313(7)(a) from serving as Deputy Director for Health while maintaining [his] employment at FSU.

See also CEO 90-70 (finding no prohibited conflict of interest was created by a county adding the responsibility of serving as jail contract monitors to the duties of two sheriff's office employees). The same situation would occur here, as the shared services agreement will simply expand the public duties of certain County employees to encompass performing work for the business entity, although their employment will remain solely with the County. Considering this dynamic, and assuming the business entity is formed in the manner that you describe, it does not appear the County employees will have a prohibited conflict of interest if they perform additional tasks for the business entity.

Question 2 is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on April 25, 2025, and RENDERED this 30th day of April 2025.

____________________________________

Luis M. Fusté, Chair

^[1] You indicate in your inquiry that it is not clear yet whether the business entity will be set up as a nonprofit corporation, a limited liability company, or another type of business organization. The business organization used will not affect the analysis herein, assuming the entity is structured in the manner that you describe.