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Item D8BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: JUNE 15, 2011 Division: TDC Bulk Item: Yes X No Department: Staff Contact Person/Phone #:- Maxine Pacini 296-1552 AGENDA ITEM WORDING: Approval of a request to deny any request for waivers of conflict of interest by TDC Board Members or Advisory Committee Members. ITEM BACKGROUND: TDC approved same at their meeting of May 10, 2011 PREVIOUS RELEVANT BOCC ACTION: CONTRACT/AGREEMENT CHANGES: STAFF RECOMMENDATIONS: Approval TOTAL COST: NO COST BUDGETED: Yes X No COST TO COUNTY: NO COST SOURCE OF FUNDS: NO COST REVENUE PRODUCING: Yes No AMOUNT PER MONTH Year APPROVED BY: County Atty OMB/Purchasing _ Risk Management DOCUMENTATION: Included X Not Required AGENDA ITEM # Revised 11/06 DATE: May 12, 2011 TO: Monroe County Board of County Commissioners A 061 T, RE: TDC/Advisory Committee Standard of Conduct Vote/Discussion On many occasions during a fiscal year, the TDC and TDC Advisory Committee members are presented with agenda items that require them to discuss and vote of funding allocations for contracts. Examples of these would be: Capital project funding; event funding; Visitor Information Services funding; and other service contracts that require payment. A problem occurs when a TDC or Advisory Committee member serves as a Board member of an organization that is seeking funding from the TDC and Board of County Commissioners (BOCC). For example: A DAC member may sit on a Board of a Chamber of Commerce that is submitting an application for event funding, or a TDC member may work or be on the Board of Directors for an organization that is submitting for Capital Project or event funding. I requested an opinion from the County Attorney's office on whether a member of an Advisory Committee who is prohibited from voting on an item is also prohibited from discussion on the item. In Cynthia Hall's written opinion (see attached memo dated April 7, 2011), when a conflict is recognized as a violation of standard of conduct under Section 112.313.,F.S, a member of any Advisory Board, including DAC's and the TDC, would not be able to vote nor participate in discussion on the item. Although a member will not be able to vote, any TDC member or TDC Advisory Committee member currently has the option to request a waiver of conflict from the Board of County Commissioners (BOCC) which would allow them to participate in the discussion on items where there may be a conflict. Each member would be required to submit their own individual waivers, and this request would need to take place months in advance of an item coming before the TDC or TDC Advisory Committee. Although the BOCC has the ability to waive the conflict, they are not required to do so. The main reasons for the BOCC not to approve a request to waive a conflict concerning participation in discussion would be the desire to ensure that there is no possibility of an actual impropriety as well as the appearance of impropriety. The TDC at their meeting of May 10, 2011 moved approval to ask permission of the Board of County Commissioners to approve the following: In order to ensure that there is no possibility of impropriety, or the appearance of impropriety, effective June 15, 2011 the BOCC agrees that it shall not accept, or approve any request for waivers of conflict of interest that come under Section 112.313, F.S. by TDC Board Members or Advisory Committee members. MEMORANDUM Office of the Monroe County Attorney TO: Harold Wheeler FROM: Cynthia L. Hall, Assistant County Attorney DATE: April 7, 2011 SUBJECT: TDC: Voting Conflict of Interest Issue You have requested an opinion regarding whether a member of a DAC who is prohibited from voting on an item is also prohibited from participating in discussion of the item. The brief answer is that the discussion is probably prohibited under several sections of the Code of Ethics. The member can seek a waiver from the governing body, but must do so in advance of the discussion. Background Facts It is my understanding that the individual in question is a member of DAC IV, and is also an officer or director of one of the Chambers of Commerce. For more than sixteen years, the BOCC has had contracts with six Chambers of Commerce (Key West, Lower Keys, Marathon, Islamorada, Key Largo), whereby the chambers provide visitor information services to the County. I Each of the contracts was awarded as "sole source" providers, i.e., they did not go through a public procurement process. In addition to these contracts, from time to time the BOCC has awarded additional grants to all of the individual chambers with the exception of Key West to sponsor additional individual events. A. There is a Voting Conflict Under Section 2 -249 of the Monroe County Code. On May 20, 2009, the BOCC passed Ordinance No. 014 -2009, which added Section 2 -249 to the Monroe County Code. That ordinance states: No members of any ... advisory board shall vote on any matter presented to an advisory board ... on which the person sits if the board member ... has any of the ' The Chamber of Commerce is identified as the "Greater Key West Chamber of Commerce" in the contract, although its current letterhead says "Key West Chamber of Commerce." following relationships with any of the persons or entities appearing before the board: (i) officer, director, .... In enacting the ordinance, the Commissioners adopted a rule that was stronger than the State statute contained in the Florida Code of Ethics, Section 112.3143(3)(a), F.S. That section provides that no elected officials or members of an advisory board may vote on an item that inures to the "special benefit" of the official /member, or his or her principal. However, the State statute allows for a waiver under certain situations. The County ordinance only applies to voting, but does not allow for a waiver. In light of the language of the ordinance, the member of DAC IV who is also an officer or director of the Chamber of Commerce may not vote on any contracts with that Chamber of Commerce placed before the DAC for approval. B. Section 2 -249 of the Monroe County Code Does Not Prevent "Participation" (or Discussion). Section 112.3143(4), F.S. Prevents Participation When The Matter Would Inure To The Special Gain Of The Member or His Principal. As noted above, a separate section in the Code of Ethics, Section 112.3143(4), F.S., addresses "participation" (or "discussion ") conflicts. This subsection states: (4) No appointed public officer shall participate in any matter which would inure to the officer's special private gain or loss; which the officer 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; 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, without first disclosing the nature of his or her interest in the matter. Section 112.3143(4) (emphasis added). The term "public officer" is specifically defined in Section 112.3143(1)(a) to include anyone sitting on an advisory body. See Section 112.3143(1)(a), F.S. ( "'Public officer' includes any person elected or appointed to hold office in any agency, including any person serving on an advisory body. "). Under the plain language of the statute, then, for there to be a participation conflict, either (a) the public officer must derive a special private gain or loss, or (b) the officer must by "retained" by the third parry company. The term "special private gain or loss" has been defined by the courts to mean a financial interest. George v. City of Cocoa, Florida, 78 F.3d 494496 -97 (11 Cir. 1996) ( "A `special Private gain' described by the voting conflicts statute almost always (if not always) refers to a financial interest of the public official that is directly enhanced by the vote in question. "). The term "retained" is not defined in the statute. However, the Florida Commission on Ethics has taken the position that the term "retained" means "employed ", i.e., the person must receive compensation from the third party company. See, e.g., CEO 01 -17 (Section 112.314' did 2 not apply to a county commissioner, where the county commissioner was an unpaid member of an educational /networking forum). Attorney General Opinions construing Section 112.3143 have taken the same position. See AGO 96 -63 ( "Thus the statutes contemplate a final benefit to either the employee, the employer, or a person with whom the employee is engaged in a business enterprise. "); see also City of Miami v. Gaynor, 11 th Jud. Circ. Aug. 1, 1997, Case No. 94 -109, cent. denied, 699. So.2d 695 (Fla. 3 rd DCA Sept. 9, 1997) (no violation of Section 112.3143(3)(a) where the appellant had not shown that a member of the municipal code enforcement board who voted in favor of appellee "had any pecuniary interest in the outcome of this case. "). Thus, based on the current language of the statute, if the public officers (including appointed members of advisory boards) do not have a financial interest in the contracts, and are not employed by the third party entity that is seeking the contract with the BOCC, there is no voting (or participation) conflict of interest. (Conversely, any public officers who either have a financial interest in the contracts or the company, or who are employed by — received remuneration from — the company, would be required to abstain from voting, disclose the conflict at the meeting, and file a Commission on Ethics Form 8A within 15 days of the meeting. Public officers who participate in discussions either directly or indirectly or by oral or written commissions must disclose the potential conflict and file a Commission on Ethics Form 8A prior to the public officer's participation.) C. There Is Probably A Violation of Standard of Conduct Under Section 112.313 Even if there is not a participation conflict, the participation probably still runs afoul of another section of the Code of Ethics. Section 112.313, F.S., provides a standard of conduct for public officers, employees, and local government attorneys (apart from voting). In pertinent part, subsection (3) provides: (3) DOING BUSINESS WITI 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.... Section 112.313(3) (emphasis added). Unlike Section 112.3143, the rules in Section 112.313(3) apply to all public officers who have any kind of relationship with a third -party company doing business with the County — not merely those who receive remuneration. The Florida Commission Ethics has also interpreted this subsection to bar situations in which advisory board members might receive an indirect financial benefit. See CEO 99 -2. This conflict was recognized as far back as 1989. in the Final Report of Grant Jury filed April 11, 1989, the Grand Jury stated: `Evidence presented to this Grand Jury has shown that the appearance of a conflict of interest among those participating in the T.D.C. System, who also sit on applicants- for -funds boards or businesses that receive direct funding from the T.D.C. System, has bee an item of controversy since the formation of the T.D.C. System." (Report, Section H, at p. 21.) The Grand Jury recommended at that time that the BOCC ensure that all TDC participants strictly comply with Florida Statutes Sections 112.313 and 112.314 (Section 112.3143 did not exist at the time). Section 112.313(7) provides: (7) CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. -- (a) 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, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, county, or other political subdivision of the state; 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 I I2.313(7)(a) (emphasis added). The subsection (7) is slightly broader than the voting conflict statute, in that it bars a public officer from having either an employment or contractual relationship with the third party company doing business with the agency but still requires one or the other (in this case, the DAC or TDC or BOCC). See CEO 99 -11 (prohibited conflict of interest existed where member of a District Health and Human Services Board for the Department of Children and Family Services was employed by a private university providing services to the district). Based on the plain language of the statute, it would appear that any member of an advisory board who participates in any way (including discussion) on a proposed contract to purchase goods or services from a business entity of which the member (or his spouse or child) would violate Section 112.313(3). The action would also violate Section I I2.313(7)(a) if the public officer had an employment or contractual relationship with the third party company. See also Section 286.012, F.S. (member of state, county or municipal government board should z Section 112.313, subsection (6), on its face appears to create a conflict. That subsection, which is titled "Misuse of Public Position ", reads: "No public officer, employee of an agency, or local government attorney shall corruptly use or attempt to use hi or her official position or any property or resource which may be within his or her trust, or perform his or her official duties, to secure a special privilege, benefit, or exemption for himself, herself, or others." The term "corruptly" is defined in the statute to mean "done with a wrongful intent and for the purpose of obtaining, or compensating or receiving some compensation for, any benefit resulting from some act or omission of a public service which is inconsistent with the proper performance of his or her public duties." Section 112.312(9). However, the intent necessary to meet the standard necessary to prove a violation under this subsection does not appear to be present here. See, e.g., Bennett v. Commission on Ethics, 871 So.2d 924 (Fla. 5 DCA 2004) (no violation of 112.3 1 where town council chairman's suggestions for changes in zoning map benefited his property, because he was "invited [ ] to make suggested changes to the map ... "; Blackburn v. State Commission on Ethics, 589 So.2d 431, 434 (Fla. V DCA 1991). 4 abstain from voting when there is a possible conflict under Sections 112.311, 112.313, or 112.3143); AGO 87-17. D. None of The Exemptions In Section 112.313(12) Appear To Apply Section 112.313(12) states that no person shall be held in violation of subsections (3) or (7) in ten instances. Those most applicable in this instance are: (a) situations in which the "business is awarded under a system of sealed, competitive bidding "; and (b) situations in which the business entity involved is the "only source of supply within the political subdivision of the officer or employee" (this category also requires the full disclosure of the conflict by the officer to the governing body of the political subdivision prior to the transaction). In this instance, it is my understanding that the business was not awarded under a system of sealed competitive bidding. The vast majority of the scope of services defined in the contract consists of responses to telephone and internet inquiries. The only work within the scope of services other than telephone and internet work is the responsibility to provide "Visitor Information Services to visitors walking into the facility" during working hours. It is not at all clear that the chambers are the only source of supply within the political subdivision. E. The BOCC Has The Ability To Waive The Conflict But Is Not Required To Do So. Section 112.313(12) creates a procedure to waive the conflict. The waiver must be done after a full disclosure of the transaction prior to the waiver and an affirmative vote of two- thirds of the governing body. The statute provides: The requirements of subsections (3) and (7) as they pertain to persons serving on advisory boards may be waived in a particular instance by the body which appointed the person to the advisory board, upon a full disclosure of the transaction or relationship to the appointing body prior to the waiver and an affirmative vote in favor of waiver by two - thirds vote of that body. ... 3 Section 112.313(12). The required disclosure is made by using Commission on Ethics Form 4A. There are reasons not to waive the conflict and reasons not to waive the conflict. Reasons not to waive the conflict include the desire to ensure that there is no possibility that a member could be voting on something that would give a financial benefit to a third party organization of which he or she is a member (even if that member is not an employee, and therefore receives no financial remuneration). In other words, not waiving the conflict avoids any possibility of actual impropriety as well as the appearance of impropriety. If the BOCC chooses not to waive the conflict, the member sitting on the advisory board simply does not participate either in votes or in discussions on the agenda items involving possible conflicts or grants to the member's third party organization. Reasons to waive the conflict include the recognition that the TDC and the BOCC offer a "check and balance" that can control any s There are no cases defining what is meant by the term "in a particular instance." Arguably, it means on a case -by- case basis. impropriety that might exist by refusing to approve proposed contracts (including grants) are sent forward to the TDC and the BOCC by the DACs. The above rule does not simply apply to the DACs or the TDC. Both the BOCC and all of the advisory boards within the County are composed of members who may have Section 112.313 conflicts from time to time. It is important that the County apply the policy uniformly and consistently. Chapter 112 also allows local governments to enact ordinances more stringent than the state statute, e.g., to prohibit public officials from voting on agenda items concerning contracts or grants to the third party organizations of which the official is a member, even if the official does not receive remuneration. Section 112.326, Florida Statutes. F. Conclusion Based on the facts presented, it appears that (a) there is no voting conflict of interest for members of advisory boards who receive no remuneration from their third party organizations under Section 112.3143; (b) there is probably a conflict under Section 112.313, the standard of conduct statute; (c) no exemptions under Section 112.313(12) appear to apply; and (d) the conflict can be waived. However, in the case of a DAC or TDC member, the process is cumbersome, because the wavier needs to be obtained in advance of the vote on the matter.