CEO 75-50 -- March 14, 1975

VOTING CONFLICT OF INTEREST

POSSIBLE VOTING CONFLICT OF INTEREST DOES NOT REQUIRE ABSTENTION

To: Cecil T. Farrington, General Counsel, Downtown Development Authority, Ft. Lauderdale

Prepared by: Gene L. "Hal" Johnson

SUMMARY:

Provisions of the Code of Ethics, part III, Ch. 112, F. S., as amended by Ch. 74-177, Laws of Florida, do not prohibit a public officer from voting on any matter; however, full written disclosure must be made to appropriate officials when the matter under consideration places in conflict the officer's public duty and private interests. In the situation described by Mr. Farrington, three members of the Downtown Development Authority are officers with competitive banks voting on a matter beneficial to the authority and to one of the banks. In keeping with the Code of Ethics, none of the three officers may be disqualified from participating in discussions, deliberation, or voting on the proposed matter. However, since each bank officer is committed to his bank's interest, the matter places in conflict the officer's public duty and his private interest; written disclosure is therefore required in accordance with the Code of Ethics. Further, the authority member whose bank stands to benefit from this matter may elect to abstain from voting, as may the other two authority members who are bank officers. The commission urges all three authority members to voluntarily recuse themselves from any involvement in any matter which hampers objective and unbiased functioning, regardless of disclosure or public knowledge of actual or potential conflict.

QUESTIONS:

1. Is a director or officer of either the LFN Bank or the BN Bank, or both, who serves on the DDA board disqualified from participating in the DDA board discussions and deliberations on the proposal of the LFN Bank set out in the statement of facts?

2. Is a director or officer of either the LFN Bank or the BN Bank, or both, disqualified from voting as a DDA board member on the proposal of the LFN Bank?

3. If a DDA board member who is also an officer of the LFN Bank or BN Bank is called upon to vote at a DDA board meeting upon the LFN parking garage proposal, does the private interest of the board member as an LFN Bank or BN Bank official create a conflict between that board member's private interests and his public duties so as to entitle the board member to abstain from voting on the matter under s. 112.314(2), as amended?

STATEMENT OF FACTS:

The Downtown Development Authority (DDA) exists under Ch. 69- 1056, Laws of Florida, as a special improvement taxing district for the purpose of redevelopment of the central core business district of Fort Lauderdale. The DDA is governed by a five member board.

The Landmark First National Bank (LFN Bank) proposes to donate to the DDA a 3 acre site adjacent to its high rise banking facility and office building for the construction of a DDA public parking garage. Such parking garage would require payment at regular rates. It is proposed that the parking garage construction be financed as an assessable improvement under s. 18 of the DDA law with a pledge of special assessments only on the LFN Bank property and by pledge of parking revenue. The LFN Bank will be especially benefited by the parking garage should it be constructed on the donated site.

The Broward National Bank (BN Bank), which is also located within the DDA jurisdictional area, vigorously objects to this LFN Bank parking garage proposal and has publicly urged the DDA to reject the LFN Bank proposal.

The proposal has been publicly aired in a public hearing, by paid newspaper advertisements, by mail-outs to property owners, and by news media reporting.

One DDA board member is a ranking executive officer of the LFN Bank. A second board member is a ranking executive officer of the BN Bank. A third board member is a director of BN Bank. None owns 10 percent of the stock in the bank with which he is associated.

It should also be noted that s. 5 of the DDA special law requires that a DDA board member be a real property taxpayer or officer of a corporate taxpayer. Further, s. 13, which defines "conflicts of interest," specifically prohibits a board member from voting in case of a conflict of interest.

Question 1 is answered in the negative.

Section 112.314(2), F. S., as amended by Ch. 74-177, Laws of Florida, states the procedure that shall be followed when a voting conflict of interest arises:

No public officer shall be prohibited from voting on any matter in his official capacity. However, when the matter being considered directly or indirectly inures to the public officer's particular private gain, as opposed to his private gain as a member of a special class or creates a conflict between such officer's private interests and his public duties he may abstain from voting on the matter and shall file a statement explaining the conflict with the appropriate officials.

Thus, while a voting conflict of interest such as that existing here does require the official to file a statement explaining the conflict, the question of abstention is left in his discretion and judgment under the provisions of Ch. 74-177.

Question 2 also is answered in the negative.

Beyond what has been stated above in answer to your first question, you have called our attention to s. 13 of Ch. 69-1056, supra, under which it is required that an officer disqualify himself when a conflict of interest exists. It is our position that s. 112.314(2) supersedes s. 13.

While in most instances a special act retains its effectiveness notwithstanding a subsequent general act on the same subject, the courts have ruled that "where a general act is an overall revision or general restatement of the law on the same subject, the special act will be presumed to have been superseded." Town of Palm Beach v. Palm Beach Loc. 1866, I.A.F.F., 275 So.2d 247, 249 (Fla. 1973).

Based on this rule of statutory construction, it is our conclusion that the Code of Ethics, part III, Ch. 112, F. S., as amended by Ch. 74-177, Laws of Florida, supersedes conflicting sections of special acts. Thus, s. 112.314(2) is controlling in this situation, and an officer having a voting conflict of interest is not required to disqualify himself from voting on the proposal.

Question 3 is answered in the affirmative.

In deciding whether a voting conflict of interest exists in regard to a particular officer, s. 112.314(2) advances a twofold test: The matter must either inure to the officer's particular private gain or it must create a conflict between such officer's private interests and his public duties.

An examination of the facts leads us to the conclusion that a voting conflict of interest does arise in regard to the three board members in question. This finding is based on the fact that each of the officers has both a personal and financial interest in the bank he represents. And, while a conflict does not appear to exist under the "particular-private-gain" test, since each officer's financial interest is indistinguishable from the special class comprised of those persons holding stock in their respective banks, we must conclude that a conflict does arise under the second test.

The second test requires disclosure when the matter being considered creates a conflict between the officer's private interest and his public duties. Besides having a direct financial interest in the banks involved in the proposal under consideration, these DDA board members also hold an office or directorship in their respective banks. As such, each is under an obligation to further his bank's interest. Since the proposal being considered is one which will necessarily "benefit" one bank over the other, we must conclude that due to the proposal's close relationship to the private positions and financial interests of these DDA board members, their private interests are in conflict with their public duty to render an impartial decision in the matter.

As heretofore pointed out, this conflict does not require that the board members abstain from voting on the proposal; they are, in fact, permitted to do so if they should so choose. If only one abstention would be involved, the officer would likely choose this course. Abstention, however, would involve three-fifths of the board members, resulting in the legal problem of constituting a quorum. In the event that abstention is determined to be the most advisable course of action, you may wish to seek declaratory relief through appropriate judicial procedures to resolve the question of reconstituting a quorum.

We hasten to say, however, that a relationship between a public agency and conflicting private interests such as in the instant case is a relationship likely to foster conflicts of such nature as to impede one's ability to function totally objectively in carrying out his public duties as a member of his respective agency. When one wears simultaneously the hat of a public officer and also that of private enterprise directly involved with his discretion as a public officer, the very highest of moral and ethical standards must be adhered to. Accordingly, persons finding themselves in such a situation as the three persons who are the subjects of this opinion should impose upon themselves the very strictest of self-examination and, in the event of even the minutest of doubt as to their ability to function objectively and without the slightest of bias, should voluntarily recuse themselves from any involvement in such matters, regardless of disclosure or public knowledge of actual or potential conflict.