Advisory Opinion No. 2016-12 Rhode Island Ethics Commission Advisory Opinion No. 2016-12 Approved: March 22, 2016 Re: John R. Pariseault, Esq. QUESTION PRESENTED: The Petitioner, a member of the Bonnet Shores Fire District Council, a quasi-public municipal elected position, requests an advisory opinion regarding whether the Code of Ethics prohibits him from participating in the Fire District Council’s consideration of a request for a sewer line easement for the Bonnet Shores Beach Club Condominium Association, given that the Petitioner and other members of his family are members of the Beach Club and reside within the Fire District. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Bonnet Shores Fire District Council, a quasi-public municipal elected position, is not prohibited by the Code of Ethics from participating in the Fire District Council’s consideration of a request for a sewer line easement for the Bonnet Shores Beach Club Condominium Association, given that the circumstances herein justify the application of the class exception as set forth in Rhode Island General Laws § 36-14-7(b). The Petitioner resides in Bonnet Shores, a small community located in the northern part of the Town of Narragansett (“Town”). The facts relevant to this advisory opinion revolve around Bonnet Shores’ southern boundary, which is comprised of a private barrier beach that separates Wesquage Pond from Narragansett Bay. The western end of the beach is accessible by foot to the residents of a neighboring community and is managed by the Wesquage Beach Association. The center and majority of this beach is owned and operated by Bonnet Shores Beach Club Condominium Association (“Beach Club”), a private club that has been in existence since 1928. The eastern end of the beach, known as Kelly Beach, is managed by the Bonnet Shores Fire District (“Fire District”) and is accessible by foot to the residents of the Fire District. The Petitioner’s primary residence is located within the Fire District on Dunes Road, abutting Kelly Beach and in close proximity to the Beach Club. The Petitioner is a member of the Bonnet Shores Fire District Council (“Fire District Council”), the governing body of the Fire District. The Petitioner is also a member of the Beach Club, which recently asked the Fire District Council for an easement to install a sewer line below one of the Fire District’s roads. The Petitioner seeks guidance from the Ethics Commission regarding whether he can participate in the Fire District Council’s consideration of the Beach Club’s request for an easement. In order to answer this question, we must first examine the nature of the two unusual entities of which the Petitioner is a member: the Beach Club which is not a club, per se, but a condominium association; and the Fire District, which does not provide fire protection services. The Petitioner states the Beach Club is unique because it is not structured like a typical club. He informs that the Beach Club does not have a membership committee or a nomination process to join; but, rather, one becomes a member by purchasing one of the Beach Club’s 930 condominium units.[1] Thus, the Petitioner and his mother, who co-own a bathhouse condominium at the Beach Club, are members of the Beach Club by virtue of this ownership interest. He represents that each Beach Club condominium unit is privately owned and sold in the real estate market similar to any other condominium. He states that the Beach Club’s 924 bathhouses and cabanas are unusual because they are not residential condominiums; they do not contain bathrooms and can only be accessed during the Beach Club’s business hours in the summer season.[2] However, he states that these small condominiums are considered real estate and are taxed accordingly by both the Town and the Fire District. Finally, he represents that, similar to other condominium associations, Beach Club condominium owners are charged assessments based on the size of their proportional ownership interest according to a calculation set forth in the Beach Club’s condominium declaration. The Petitioner represents that all property owners within the Fire District, including Beach Club condominium owners, are voting members of the Fire District, a quasi-public authority that was created by the General Assembly in 1932.[3] The Petitioner is a member of the Fire District Council, which is comprised of seven Fire District property owners elected to serve three-year terms by the voting members of the Fire District. The Petitioner informs that the Fire District is authorized by its legislative grant to assess and collect taxes for the services that it provides to the community, including: trash removal; a summer camp at the community center; life guards and beach sweeping at Kelly Beach; and management of the harbor at Little Beach. He further informs that the Fire District owns all of the roads within Bonnet Shores. The Petitioner represents that the Beach Club has requested an easement from the Fire District Council to install a seasonal sewer line below Bonnet Point Road in order to connect the Beach Club to the Town’s sewer system. He states that the easement would extend from Beach Club’s entrance at 175 Bonnet Point Road up to an existing pump station located at the corner of Bonnet Point Road and Allagash Trail. The Petitioner invited Commission staff to speak with John A. Coletti, Esq., president of the Beach Club’s Board of Directors, regarding the Beach Club’s request for this easement. Mr. Coletti informs that the Beach Club’s existing septic system has failed and the Rhode Island Department of Environmental Management (“DEM”) has ordered the Beach Club to remediate the problem by either installing a new onsite wastewater treatment system or connecting to the Town’s sewer system.[4] He represents that the Beach Club plans to install a seasonal sewer line at a shallow depth underneath Bonnet Point Road, rather than a year-round line that must be buried below the frost line. Accordingly, he states that year-round residences, such as the Petitioner’s home, would not be able to tie in to the Beach Club’s sewer line. He informs that the Beach Club will pay for the sewer line by charging a special assessment to all condominium owners that, similar to their annual assessments, will be proportional to their ownership interest in the Beach Club. He states that he does not at this time have estimates of what either the sewer connection or onsite wastewater system would cost, but either way the Beach Club’s condominium owners will incur additional costs to remediate its failed septic system. The Petitioner states that the Fire District Council will be discussing and negotiating the terms of this easement agreement at its upcoming meetings. The Petitioner seeks guidance from the Ethics Commission as to whether he is prohibited from participating in the Fire District Council’s discussions and decision making relative to the Beach Club’s easement.[5] A person subject to the Code of Ethics may not participate in any matter in which he has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his duties in the public interest. R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest occurs if the Petitioner has reason to believe or expect that he or any family member or business associate, or any business by which he is employed, will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. Section 36-14-7(a). Additionally, the Petitioner may not use his office for pecuniary gain, other than as provided by law, for himself, a family member, employer, business associate, or a business that he represents. Section 36-14-5(d). In order to determine whether the above provisions of the Code of Ethics are implicated the Commission must ascertain whether the Petitioner and/or members of his family will be financially impacted by the official action that is under consideration. Here, the Petitioner represents that he and members of his family have ownership interests in four Beach Club condominium units (two bathhouses and two cabanas), and will incur special condominium assessments to pay for the Beach Club’s DEM-ordered remediation of its failed septic system. Additionally, the Petitioner represents that his primary residence and three residences owned by members of his family are located within the Fire District. However, given that these facts suggest that any financial impact resulting from the Fire District’s decision to grant or deny the Beach Club’s easement request will likely be substantially similar among all of the condominium owners of the Beach Club and all of the residents of the Fire District, we will consider whether the “class exception” applies to this unique set of circumstances. Section 36-14-7(b) of the Code of Ethics, referred to as the “class exception,” allows a public official to participate in official action that could result in a financial benefit or detriment to himself, or any member of his family, provided that he and his family members are part of a significant and definable class of persons and neither he nor his family members would be impacted to a greater extent than any other similarly situated member of that class.[6] The Commission considers the totality of the circumstances when determining whether the class exception applies. Among the important factors considered are: 1) the description of the class; 2) the size of the class; 3) the function or official action being contemplated by the public official; and 4) the nature and degree of foreseeable impact upon the class and its individual members as a result of the official action. The Commission has previously considered and applied the class exception to similar fact patterns related to wastewater treatment and water quality. Most recently, in Advisory Opinion 2015-4, the Commission applied the class exception and opined that a Charlestown Town Council member, who owned one of the 800 houses that were affected by high levels of nitrate in the ground water, was not prohibited by the Code of Ethics from participating in discussions and decision making relative to remediating ground water pollution. There, the petitioner represented that it was reasonably foreseeable that the financial impact upon the entire class would be substantially similar in the form of equal or proportional assessments to connect to community water and/or wastewater systems, or a Town-wide tax increase to subsidize improvements to the water and sewer infrastructure to prevent pollution and salt water intrusion. See also A.O. 2009-42 (applying the class exception and permitting the Portsmouth Town Solicitor to advise the Town regarding its consideration of the installation of sewage or some other form of community wastewater treatment that may affect approximately 4,000 lots, notwithstanding that he owned one of the lots that might be impacted); A.O. 2005-13 (applying the class exception and opining that a Jamestown Planning Commission member could participate in the Planning Commission’s consideration of zoning ordinance changes related to the protection of critical lands containing freshwater, high ground water table, and/or shallow impervious layer, notwithstanding that his property was located within the overlay district containing these lands, which is where approximately 45-50% of the island’s population resided). Contra A.O. 2012-17 (declining to apply the class exception and opining that a Westerly Town Council member was prohibited by the Code of Ethics from participating in the Town Council’s consideration of a resolution to fund a sewer expansion to the Misquamicut Beach area, given that the Town Council’s deliberations and vote at that time would directly impact whether his mother-in-law’s property would be included in the sewer expansion plans). In the instant matter the Petitioner is a member of two separate classes: 1) the owners of the Beach Club’s condominium units; and 2) the owners of the residences within the Fire District. We must consider the nature and degree of foreseeable impact upon each of these classes prior to determining whether the Petitioner is permitted to participate in the Fire District Council’s consideration of the Beach Club’s easement request. The Petitioner states that, if permitted, he would be able to participate in the Fire District Council’s review of the easement in a fair and objective manner. First, we will consider whether the class exception applies to the owners of the Beach Club’s 930 condominium units. The Petitioner and some of his family members are members of this class due to their ownership interests in four of the Beach Club’s 930 condominium units. Here, the Beach Club has been ordered by DEM to replace its existing failed septic system and must take action whether or not it is granted the easement by the Fire District Council. At this point in time, the Beach Club is pursuing the Town sewer connection option and has requested this easement from the Fire District for permission to install a seasonal sewer line below Bonnet Point Road. After considering the facts represented herein, we find that it is reasonably foreseeable that, whether or not this easement is granted, the Beach Club’s compliance with DEM’s order will result in a substantially similar financial impact upon all of the owners of the Beach Club’s 930 condominium units who will all be charged proportional special assessments to cover the costs of upgrading its failed septic system. Second, we will consider whether the class exception applies to the owners of the residences within the Fire District, who are entitled to access Kelly Beach, may walk the entire length of the barrier beach in front of the Beach Club below the mean high tide line, and who pay taxes to the Fire District for life guards and beach sweeping at Kelly Beach. There are approximately 925 residences within the Fire District, including the Petitioner’s primary residence and three other residences owned by members of his family. Here, the Beach Club has a duty to properly dispose of its wastewater and, as long as that is done, the means selected will not financially impact the value of real estate within the Fire District, not even those properties in close proximity to the Beach Club, such as the Petitioner’s residence. Furthermore, the Beach Club plans to install a seasonal sewer line to which year-round properties, such as the Petitioner’s residence, would not be able to connect. If the Fire District Council grants this easement to the Beach Club, all of the residents of the Fire District will be impacted by some traffic disruption due to the installation of the sewer line below a portion of Bonnet Point Road. However, this is a temporary inconvenience that will occur outside of the busy summer season. If the Fire District Council rejects this easement, there will be no visible impact to the residents of the Fire District because construction of the onsite wastewater treatment system will occur on the Beach Club’s property. Thus, we find that it is reasonably foreseeable that either course of action by the Beach Club would result in little to no financial impact upon the property values of the residences within the Fire District. See A.O. 2014-12 (applying the class exception and opining that a North Kingstown Town Council member, who owned one of 124 houses in a subdivision abutting a golf course, could participate in the Town Council’s consideration of proposed comprehensive plan and zoning amendments that would permit a portion of the golf course to be developed as a compact village development, or if the amendments were rejected develop the entire golf course into a residential subdivision, because it was reasonably foreseeable that either plan would only have a general financial impact upon the residences in the petitioner’s subdivision). In conclusion, after considering all of the representations herein, and consistent with prior advisory opinions, we find that the totality of the circumstances justifies the application of the class exception to both classes: the owners of the Beach Club’s condominium units, and the owners of the residences within the Fire District. Accordingly, it is the opinion of the Ethics Commission that the Petitioner is not prohibited by the Code of Ethics from participating in the Bonnet Shore Fire District Council’s consideration of a request for a sewer line easement for the Bonnet Shores Beach Club Condominium Association. 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(8)(ii) § 36-14-5(a) § 36-14-5(d) § 36-14-7(a) § 36-14-7(b) Commission Regulation 36-14-2002 Related Advisory Opinions: A.O. 2015-4 A.O. 2014-12 A.O. 2012-17 A.O. 2009-42 A.O. 2005-13 Keywords: Class Exception Property Interest [1] There are 639 bathhouses and 285 cabanas. There are also six residential units that are only accessible to their owners during the summer season. [2] The Beach Club is open weekends in May, full time from Memorial Day weekend to Labor Day weekend, and weekends in September. [3] The Code of Ethics defines municipal agency as: any department, division, agency, commission, board, office, bureau, authority, corporation or subsidiary, quasi-public authority, or school, fire or water district within Rhode Island, other than a state agency, and whether comprised of officials and employees from a single or multiple municipalities, and any other agency that is in any branch of municipal government and which exercises governmental functions other than in a purely advisory nature. Commission Regulation 36-14-2002(4)(b) (emphasis added); see also R.I. Gen. Laws § 36-14-2(8)(ii). [4] Mr. Coletti informs that the sewer system connection is the preferred plan because it is better for the environment and will likely be more cost effective than installing an onsite wastewater treatment system large enough to accommodate the Beach Club’s needs. He further informs that the Rhode Island General Assembly granted the Beach Club a special exception to CRMC’s regulations, which generally prohibit sewer connections to barrier beaches. See 2009-LA077, enacted July 16, 2009. http://webserver.rilin.state.ri.us/PublicLaws/law09/acts09/act09077.htm. [5] It is significant to note that, including the Petitioner, a total of five of the seven Fire District Council members own a Beach Club condominium unit. Thus, recusal out of an abundance of caution by all Fire District Council members who are also Beach Club condominium owners would render the Council unable to reach a quorum or take any official action on the Beach Club’s easement request. [6] Section 36-14-7(b) provides: A person subject to this Code of Ethics does not have an interest which is in substantial conflict with the proper discharge of his or her duties in the public interest and of his or her responsibilities as prescribed by the laws of this state, if any benefit or detriment accrues to him or her or any person within his or her family or any business associate, or any business by which the person is employed or which the person represents, as a member of a business, profession, occupation or group, or of any significant and definable class of persons within the business, profession, occupation or group, to no greater extent than any other similarly situated member of the business, profession, occupation or group, or of the significant and definable class of persons within the business, profession, occupation or group.