Advisory Opinion No. 2015-31 Rhode Island Ethics Commission Advisory Opinion No. 2015-31 Approved: July 21, 2015 Re: Michael C. Swistak QUESTION PRESENTED: The Petitioner, a member of the Jamestown Planning Commission, a municipal appointed position, requests an advisory opinion regarding whether the Code of Ethics prohibits him from participating in the Planning Commission’s consideration of the Jamestown Fire Department’s fire station development plan review application given that, in his private capacity, he is the co-insurance broker of a group life insurance policy written for the benefit of the members of the Jamestown Fire Department. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Jamestown Planning Commission, a municipal appointed position, is not prohibited by the Code of Ethics from participating in the Planning Commission’s consideration of the Jamestown Fire Department’s fire station development plan review application, provided that there is no corresponding financial impact to himself as the co-insurance broker for the Jamestown Fire Department’s group life insurance policy. The Petitioner is a member and chairman of the Jamestown Planning Commission (“Planning Commission”). He represents that the Town of Jamestown (“Town”) has been authorized by the voters to proceed with an expansion and renovation of the Jamestown Fire Department (“JFD”) fire station.[1] According to the Jamestown Zoning Ordinance, the Town, as owner of both the existing fire station and the land on which it is situated, and its co-applicant, the JFD, must first receive development plan approval from the Planning Commission to ensure that the project complies with the Town’s Zoning Ordinance and Comprehensive Plan. He states that the Planning Commission is scheduled to consider the JFD fire station development plan review application (“JFD development plan”) in August 2015. He informs that the Planning Commission will review the JFD development plan and vote to either recommend its approval or denial to the Jamestown Zoning Board (“Zoning Board”). He states that the Zoning Board will then hold a hearing to consider any necessary zoning relief. In his private capacity, the Petitioner is an insurance agent. He represents that he is currently the co-broker on a group life insurance policy written for the benefit of the volunteer members of the JFD. He states that this life insurance policy provides a $15,000 death benefit to all members of the JFD, while serving, and for life to all JFD members with at least 25 years of service. He states that the Town pays the monthly premium for this policy, which is approximately $600-$700 per month depending on how many JFD members there are at any given time. He states that he receives approximately $40-$60 per month as his broker commission on the JFD’s group life insurance policy. Cognizant of the Code of Ethics, the Petitioner seeks guidance as to whether he may participate in the Planning Commission’s consideration of the JFD development plan, given that he is the co-broker of the JFD’s group life insurance policy. The Petitioner states that the Planning Commission’s decision to recommend approval or denial of the JFD development plan will have no impact upon the number of members in the JFD and, therefore, no impact upon his commission on the JFD’s group life insurance policy. He further represents that he can participate in the Planning Commission’s review of the JFD development plan in a fair and objective manner. Under the Code of Ethics, a public official shall not have any interest, financial or otherwise, or engage in any business, employment, transaction or professional activity, or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties or employment in the public interest. Section 36-14-5(a). A substantial conflict of interest exists if an official has reason to believe or expect that he, any person within his family, a business associate or an employer will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. Section 36-14-7(a). A public official is also prohibited from using his public office or confidential information received through his public office to obtain financial gain for himself, his family, his business associate, or any business by which he is employed or which he represents. R.I. Gen. Laws § 36-14-5(d). Finally, a public official must recuse himself from participation when his business associate or employer appears or presents evidence or arguments before his state or municipal agency. Commission Regulation 36-14-5002(a)(2) (“Regulation 5002”); Section 36-14-5(f). A business is defined as “a sole proprietorship, partnership, firm, corporation, holding company, joint stock company, receivership, trust or any other entity recognized in law through which business for profit or not for profit is conducted.” Section 36-14-2(2). A business associate is defined as “a person joined together with another person to achieve a common financial objective.” Section 36-14-2(3). A person is defined as “an individual or a business entity.” Section 36-14-2(7). As an initial matter, section 36-14-5 of the Code of Ethics requires the Petitioner to recuse from taking any official action as a member of the Planning Commission that will result in a direct financial impact to himself. Here, the Petitioner represents that his insurance commission relative to the JFD’s group life insurance policy, which fluctuates with the number of JFD members, will not be impacted by the Planning Commission’s recommendation to approve or deny the JFD development plan, because the purpose of the expansion is not to recruit more firefighters but to consolidate personnel and accommodate standard-size fire trucks. Accordingly, based upon the facts represented above, there is no indication that the Petitioner’s participation in the Planning Commission’s review of the JFD development plan would result in a direct financial impact to himself. Next, the Code of Ethics requires the Petitioner to recuse from participating in the Planning Commission’s consideration of any matters in which his business associate would be directly financially impacted, or in which his business associate appears or presents evidence or arguments before the Planning Commission. Thus, the question is whether the JFD is the Petitioner’s “business associate.” The answer to that question hinges on whether or not the JFD constitutes a “municipal agency” because, under the Code of Ethics, a municipal agency is not considered a “business.” See, e.g., A.O. 2015-27; A.O. 2015-24; A.O. 2014-23; A.O. 2012-1; A.O. 2011-29; A.O. 2011-10. The Code of Ethics defines “municipal agency” as “any department, division, agency, commission, board, office, bureau, authority quasi-public authority, or school, fire or water district within Rhode Island, other than a state agency and any other agency that is in any branch of municipal government and exercises governmental functions other than in an advisory nature.” Section 36-14-2(8)(ii). The Code of Ethics further provides that a municipal agency: Shall also include any group of persons, or corporations, organization, or other entity, however created, which: (a) exercises governmental functions other than in an advisory nature, and expends public funds in excess of $10,000 yearly, or; (b) those entities whose directors or other governing members are appointed by or through the governing body or highest official of state or municipal government. Commission Regulation 36-14-2001(9) (“Regulation 2001”). In order to determine if the JFD is a “municipal agency” or a private business, we have conducted a review of the following sources: the Jamestown Town Charter (“Town Charter”); the Jamestown Code of Ordinances (“Code of Ordinances”); the By-Laws of the JFD (as amended May 2011); JFD corporate records from the Office of the Rhode Island Secretary of State; and representations from the Petitioner and the JFD Fire Chief, James R. Bryer, Jr. (“Chief Bryer”). According to the Secretary of State’s corporate records, the JFD is a private, non-profit corporation which was established in 1897. Notwithstanding the JFD’s non-profit status, the Town Charter and Code of Ordinances explicitly address the Jamestown Town Council’s (“Town Council”) fiscal and jurisdictional control over the JFD. Through the Code of Ordinances, the Town has delegated its authority over fire and emergency services to the JFD and its decision-making authority to the Fire Chief: It shall be the duty of the chief and of each of the officers and members of the fire department to do and perform every act and service required of such person to prevent or extinguish fires and to provide such other emergency services within the town and obey and carry out the orders of the chief and the board of fire wardens relative to such services. Code of Ordinances, 26-28. Furthermore, section 26-29(a) of Code of Ordinances provides that the Fire Chief, “under the ordinances of the town and the rules and regulations of the board of fire wardens, shall have immediate control, management, supervision and direction of the fire department, and shall be obeyed accordingly.” The Town Charter both provides for the existence of the JFD and sets forth the Town Council’s fiscal authority over the JFD. Section 418 of the Town Charter provides: There shall be a Jamestown volunteer fire department the organization of which shall be consistent with its current operating Charter of incorporation and the fire department ordinance established by the town council. (1) Budget. The fire department shall submit budget estimates in the same manner as other departments. The fire department shall operate under the same budget constraints as every other department. (2) Annual report. The volunteer fire department shall make a written annual report to the town council of the condition of all fire stations, fire apparatus, fire alarm systems and of all matters and property relating thereto and such other matters as the town council may request. Similar to all other Town departments, the JFD receives its entire budget from the Town which, Chief Bryer represents, totals approximately $800,000 for both fire and emergency medical services (“EMS”) for Fiscal Year 2016. Chief Bryer informs that the JFD’s expenses and operating costs are paid with funds budgeted to the JFD by the Town. He states that he sends monthly requests for bill payments to the Town Finance Director, who then pays the bills directly. The Town Council exercises further fiscal control over the JFD through its appointment of the members of the Compensation Committee, which consists of three members of the JFD and two persons who are not members of the JFD. Code of Ordinances § 66-89(a). The Compensation Committee allocates the stipends and reviews qualifications for tax abatements for the JFD volunteer firefighters and EMS providers. Chief Bryer advises that, if the Board of Fire Wardens proposed any changes to the volunteer stipend calculation, such changes would have to be approved by the Town Council. See Code of Ordinances § 66-89(c). Chief Bryer represents that the JFD coordinates with the Town to provide all necessary EMS and fire services. He informs that, in accordance with both the Code of Ordinances (§§ 26-21 to -39) and the JFD’s By-Laws, the JFD is operated by the Board of Fire Wardens, which is comprised of the Chief, Deputy Chiefs, Captains and Lieutenants of each company and division. JFD By-Laws § 6.1. He represents that all of the officers serving on the Board of Fire Wardens are elected by the members of the JFD. He informs that the members of the JFD are volunteers but are paid stipends for their services as firefighters or EMS providers. He states that he and the Fire Marshall are paid bi-weekly through the Town’s payroll, but are not technically Town employees, and that the JFD has a civilian dispatcher who is a full-time Town employee. Finally, he states that the JFD writes the annual stipend checks with funds distributed to the JFD by the Town from the JFD budget. In the present matter, the JFD is authorized by the Town to prevent and extinguish fires, provide emergency services and enforce the fire code. The Town Council has delegated decision-making authority to the Fire Chief relative to the control, management and supervision of the JFD and the provision of fire and emergency services. Thus, through its extensive coordination with the Town, the JFD essentially serves as a branch of Town government. Furthermore, the JFD’s approximately $800,000 annual budget is funded by the Town, similar to any other Town department. The JFD Fire Chief and Fire Marshall are paid through the Town’s payroll. The stipends for JFD fire and EMS personnel are allocated by the Town Council-appointed Compensation Committee and paid with Town funds. Finally, the Town owns the existing fire station and the land on which it is situated. After considering all of these representations, we conclude that the JFD constitutes a “municipal agency” as that term is defined in the Code of Ethics. Given that the JFD is a “municipal agency,” the Code of Ethics does not consider the insurance broker relationship between the Petitioner and the JFD to be that of “business associates.” See A.O. 2002-63 (opining that a member of the Exeter Town Council could participate in the Exeter Town Council’s matters relating to or even benefitting the State and/or its departments, notwithstanding that he was then in negotiations with the Rhode Island Department of Environmental Management to sell land that he owned to the State, because the State is not considered to be a “business” under the Code of Ethics). Accordingly, the “business associate” prohibitions contained in section 36-14-5 and Regulation 5002, which would otherwise constrain the Petitioner while carrying out his official duties as chairman of the Planning Commission, are not implicated here with respect to the JFD. For all of these reasons, absent any other relevant fact that would implicate provisions of the Code of Ethics, it is the opinion of the Ethics Commission that the Petitioner is not prohibited by the Code of Ethics from participating in the Planning Commission’s consideration of the Jamestown Fire Department’s development plan, provided that there is no corresponding financial impact to himself as the co-insurance broker for the Jamestown Fire Department’s group life insurance policy. This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, or canon of professional ethics may have on this situation. Code Citations: § 36-14-2(2) § 36-14-2(3) § 36-14-2(7) § 36-14-2(8) § 36-14-5(a) § 36-14-5(d) § 36-14-5(f) § 36-14-7(a) Commission Regulation 36-14-2001(9) Commission Regulation 36-14-5002 Related Advisory Opinions: A.O. 2015-27 A.O. 2015-24 A.O. 2014-23 A.O. 2012-1 A.O. 2011-29 A.O. 2011-10 A.O. 2002-63 Keywords: Business Associate [1] The Petitioner represents that the JFD fire station expansion project would expand the current facilities to provide for: facilities for the EMS (Emergency Medical Services) division; consolidation of JFD personnel and services into a single building; and the purchase of standard-size fire equipment rather than the more expensive custom equipment that is currently required due to the small size of the fire station.