DOING BUSINESS WITH ONE'S AGENCY

RECREATION DISTRICT BOARD CHAIR SERVING ON AN LLC'S MANAGEMENT
COMMITTEE WHERE THE RECREATION DISTRICT AND THE LLC DO BUSINESS

To: Mark P. Barnebey (Manatee County)

SUMMARY:

The Chair of a Recreation District Board may not serve on the Management Committee of an LLC that actively does business with the Recreation Board where the role of the Management Committee is akin to that of a Board of Directors. Referenced are CEO 21-7; 21-4; CEO 10-4; CEO 09-1; CEO 90-24; CEO 81-40; CEO 80-29.

QUESTION:

Does a conflict of interest arise if a Board Supervisor and Chair of a Recreation District serves, uncompensated, on the Management Committee of an LLC that does business with the Recreation District?

This question is answered as follows.

According to your inquiry, you represent the University Park Recreation District (the District), a special district created pursuant to Chapter 418, Florida Statutes. The residents of the District are members of a homeowners association, the University Park Community Association, Inc. (the HOA). In 2019, the HOA created a limited liability company, Park Boulevard Management, LLC. (PBM) to provide management services to both the District and the HOA. The District contracts with PBM for its professional management services for the University Park Country Club.

PBM is a "captive" management company serving no other entities, and the HOA is PBM's sole member and manager. According to PBM's Operating Agreement, the HOA, through its seven-person Board of Directors, has the sole authority to appoint a three-person Management Committee for PBM. The Management Committee, pursuant to PBM's Operating Agreement, has the full authority to hire, terminate, compensate, supervise, and direct the Executives of PBM, which include a General Manager, a Deputy General Manager, and a Director of Finance. In turn, the Executives of PBM have the full authority to make all decisions affecting matters within the ordinary course of business of PBM, subject only to the Management Committee's directives.

Since PBM's inception in 2019, the Management Committee has traditionally been composed of the HOA Chair, the District Board Chair,¹ and a community resident of the HOA who does not serve on either the HOA Board or the District Board. You, on behalf of the District, ask whether a prohibited conflict of interest would be created by the uncompensated service of the District Board Chair on PBM's Management Committee.

Section 112.313(3), Florida Statutes, contains two provisions. Both provisions forbid doing business with one's own agency:

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.

The first provision in Section 112.313(3) focuses on the actions of public officials in their public capacities, and prohibits the District Chair from, on behalf of the District,² purchasing services from business entities on which he or she serves as an officer, partner, director, or proprietor, or in which he or she has a material interest. See CEO 10-4. The second provision focuses on the private business interests of public officials, and prohibits the District Chair from, in his or her private capacity as an officer, partner, director, or proprietor of a business entity, selling services to the District. We have opined in the past that one acts in a private capacity to sell services where one serves as an officer or director of a business that is selling to the agency or political subdivision. CEO 09-01.

The question here is whether, by serving on PBM's three-person Management Committee, the District Chair would be serving as an officer or director of PBM. Assuming the District and PBM continue to do business with one another, if the role of a Management Committee Member amounts to the functional equivalent of the role of an officer or director, the District Chair's service on the Management Committee would implicate both provisions of Section 112.313(3).

We have considered this question before and have opined that one can act functionally as a director or officer of a business entity regardless of one's formal title. In CEO 90-24, we determined that a city commissioner who served as a deacon of his church was acting as a corporate director of the church for purposes of Section 112.313(3). There, the church was deciding whether to sell property it owned to the city. Though the board of deacons was an advisory board with no decision-making powers, it was tasked with both presenting the issue to the congregation and with making a recommendation on whether to sell the property. We determined that, in this respect, his role on the board of deacons was "similar to that of a corporate director," and that both provisions of Section 112.313(3) would be violated if the city purchased the land from the church on which the commissioner served as a deacon.

Similarly, in CEO 81-40, a school board member inquired as to whether she could serve, in an uncompensated, volunteer capacity, as a Trustee of the Florida School Boards Association Insurance Trust, a non-profit self-insurance program for school districts, if her own school district itself participated in the Trust. We determined that her role as a Trustee was significantly similar to the role of a director, and, as a result, noted that, absent an exception, both provisions of Section 112.313(3) would be violated by her service as a Trustee of the Trust if her school district participated in that Trust.

To determine whether, in the current case, serving on PBM's Management Committee is the functional equivalent to serving on PBM's board of directors, we must determine both what role the Management Committee plays for PBM and where within PBM's organizational structure the Management Committee lies.

PBM is a manager-managed limited liability company. In manager-managed LLCs, matters relating to the activities and affairs of the LLC are decided exclusively by the manager or managers. See § 605.0407(3), Fla. Stat. However, managers have the power and authority to delegate their rights and powers to manage and control the company's business and affairs, "including the power and authority to delegate to agents, boards of managers, members, or directors." § 605.04071, Fla. Stat.

Pursuant to PBM's Operating Agreement, PBM's sole member and manager is the HOA, which itself is directed by a seven-person Board of Directors. The HOA, as the sole member and manager of PBM, "has full, exclusive, and complete authority and discretion to manage and control the business of the Company and to make all decisions affecting the business of the Company, including the exclusive right to conclusively approve transactions outside the ordinary course of business, "[e]xcept as expressly set forth in this Agreement or the Act." In other words, the Operating Agreement permits the HOA to expressly delegate its authority to manage and control the company.

The Operating Agreement goes on to create three tiers of leadership: Officers, a Management Committee, and Executives. First, the Officers of PBM are the Officers of the HOA, and include a President, Vice President, Secretary, Vice Secretary, and Treasurer. The Operating Agreement does not explicitly delegate any authority to the Officers other than to note that the Officers "have the same authority and responsibility with respect to the Company as the corresponding officer of a Florida corporation would have with respect to the corporation."

Second, the Management Committee exists separate and apart from the Officers, and consists of three people who are appointed by, and serve at the pleasure of, the HOA. The Operating Agreement explicitly grants the Management Committee the "full, exclusive, and complete authority and discretion to hire, terminate, compensate, supervise, and direct the Executives."

Third, the Executives consist of a General Manager, a Deputy General Manager, and a Director of Finance. The Operating Agreement explicitly provides the Executives with the "full, exclusive, and complete authority and discretion to manage and control, and to make all decisions affecting, matters within the ordinary course of business of the Company." The Executives, in wielding this authority to manage and control the matters within the ordinary course of PBM's business, are subject "only to" the directives of the Management Committee. And, again, the Management Committee has the "full, exclusive, and complete authority" to "direct" the Executives.

Where the Operating Agreement delegates the authority to manage all matters within PBM's ordinary course of business to the Executives, and delegates the sole authority to manage and direct those Executives to the Management Committee, the Management Committee's role in PBM is akin to the role of a director in a corporation.

Because in this case the Management Committee functionally serves in the role of a board of directors, the District Chair's service on PBM's Management Committee would implicate both provisions of Section 112.313(3) if PBM provides management services to the District. Contrary to the first provision of Section 112.313(3), the District Chair would be acting in his or her public capacity on behalf of the District to purchase services from a company on which he or she serves in the capacity of a director. And, contrary to the second provision of Section 112.313(3), the District Chair would be acting in his or her private capacity in a role analogous to that of a director of PBM to sell PBM's management services to his or her agency, the District.

Also relevant to this inquiry is Section 112.313(7)(a), which prohibits a public officer from having or holding employment or a contractual relationship that conflicts with his or her public duties:

CONFLICTING EMPLOYMENT OR CONTRACUTAL 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.

However, for either provision of Section 112.313(7)(a) to be implicated, the public officer must be employed by, or have a contractual relationship with, a business entity or agency. The District Chair would not be considered to be employed by PBM because, per your facts, his or her service on the Management Committee would be uncompensated. CEO 80-29. Likewise, the District Chair would not have a contractual relationship with PBM because we have long held that uncompensated service does not constitute a contractual relationship. CEO 21-07, Question 1. Where the District Chair's service on PBM's Management Committee would constitute neither employment nor a contractual relationship with PBM, Section 112.313(7)(a) would not be violated.

We conclude our guidance here by noting that the Code of Ethics for Public Officers and Employees is generally organized around the principle that a public officer or employee cannot serve two masters. Here, simultaneous service on the District Board and on PBM's Management Committee ultimately amounts to serving two masters with separate, and potentially competing, interests. While your inquiry seems to emphasize the closeness of the District and PBM, it is apparent that the two entities lack organizational alignment. While the HOA allows the District to name someone to PBM's Management Committee, that board seat is not reserved for the District in PBM's Operating Agreement and the HOA reserves all rights to fill the board seat.³ It is also apparent that the District and PBM lack an actual alignment of interests. PBM is solely owned by the HOA, and the HOA and the District, which were created for different purposes, cannot be expected to always be in alignment.⁴

Thus, though the District Chair would not currently violate the second part of Section 112.313(7)(a) by his or her simultaneous uncompensated service on PBM's Management Committee, where PBM provides management services to the District, that simultaneous service would ultimately created a prohibited conflict of interest under Section 112.313(3). To avoid implicating Section 112.313(3), the District Chair should either decline the opportunity to serve on PBM's Management Committee or leave his or her public position with the District.

Your question is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on June 5, 2026, and RENDERED this 10th day of June 2026.

____________________________________

Jon M. Philipson, Chair

^[1]The current District Board Chair resigned from the PBM Management Committee on January 28, 2026, so currently, no member of the District's Board of Supervisors serves on PBM's Management Committee.