Advisory Opinion No. 2016-18 Rhode Island Ethics Commission Advisory Opinion No. 2016-18 Approved: April 26, 2016 Re: Daniel M. Gendron QUESTION PRESENTED: The Petitioner, a member of the Woonsocket City Council, a municipal elected position, requests an advisory opinion regarding whether the Code of Ethics prohibits him from participating in the City Council’s consideration of a Payment in Lieu of Taxes Agreement for Mount Saint Charles Academy, a private Catholic junior-senior high school attended by the Petitioner’s daughter. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Woonsocket City Council, a municipal elected position, is not prohibited by the Code of Ethics from participating in the City Council’s consideration of a Payment in Lieu of Taxes Agreement for Mount Saint Charles Academy, a private Catholic junior-senior high school attended by the Petitioner’s daughter. The Petitioner is a member of the Woonsocket City Council (“City Council”). He represents that the Mount Saint Charles Academy (“Mount St. Charles”), a private Catholic junior-senior high school located in the City of Woonsocket (“City”), entered into a Payment in Lieu of Taxes Agreement (“PILOT Agreement”) with the City in September 2015 for Fiscal Year (“FY”) 2015 and FY2016. Given that FY2016 ends on June 30, 2016, Mount St. Charles has asked the City to extend this agreement through FY 2017 (July 1, 2016 to June 30, 2017) and FY2018 (July 1, 2017 to June 30, 2018). The Petitioner states that the City Council’s consideration of the PILOT Agreement extension will be scheduled for a City Council agenda following the Petitioner’s receipt of an advisory opinion from the Ethics Commission. He further informs that Mount St. Charles is also pursuing a statutory tax exemption from the Rhode Island General Assembly (“General Assembly”), which if enacted would apply to all taxes due and payable on and after July 1, 2018, for the real and tangible property of Mount St. Charles located in the City.[1] The Petitioner represents that his daughter is a freshman at Mount St. Charles. He states that his only financial link to Mount St. Charles is the tuition that he pays for his daughter. He represents that he is not a Mount St. Charles employee, and he is not a member of its Board of Directors. He informs that the extension or expiration of Mount St. Charles’ PILOT Agreement with the City will not result in a corresponding increase or decrease in tuition rates for the 2016-2017 academic year because those rates have already been established and are listed on the school’s website.[2] He states that any potential impact on tuition rates for the following academic years is speculative and indirect. He further states any impact on future tuition rates would be substantially similar for all of the families of the 624 students currently attending Mount St. Charles.[3] Under the Code of Ethics, a public official may not participate in any matter in which he has an interest, financial or otherwise, that is in substantial conflict with the proper discharge of his duties or employment in the public interest. R.I. Gen. Laws § 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). Additionally, the Code prohibits a public official 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. Section 36-14-5(d). 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, we must consider whether the Petitioner and Mount St. Charles are “business associates.” The Commission has previously stated that persons are “business associates” of the entities for which they serve as either officers or members of the Board of Directors, or in some other leadership position that permits them to affect the financial objectives of the organization. See, e.g., A.O. 2012-28 (opining that a Tiverton Planning Board member, who was also a member of the Board of Directors of the Tiverton Yacht Club (“TYC”), was a business associate of the TYC and, therefore, was required to recuse from participating in the Planning Board’s consideration of a proposed amendment to the Tiverton Zoning Ordinance that was requested by the TYC). In contrast, however, the Commission has generally held that mere membership in an organization, as opposed to the holding of a position as a director, officer, or other position of leadership, does not create a business association requiring recusal. See A.O. 2015-2 (opining that a Barrington Town Council member was not a business associate of the East Bay Rowing Club (“EBR”), notwithstanding that he paid a fee for his dependent son to be on the EBR crew team each season, based upon his representations that he had no financial interest in EBR and would not be financially impacted by any modifications to EBR’s contract with the Town Council); A.O. 2013-26 (opining that a Newport City Council member was not prohibited from participating in City Council matters involving the Newport Yacht Club (“Yacht Club”), notwithstanding that her husband was an individual member of the Yacht Club and paid annual dues to the Yacht Club, but was not an officer or member of the Yacht Club’s Board of Directors); A.O. 2009-39 (opining that the Barrington Town Planner’s general membership in the Bayside Family YMCA (“YMCA”), where he did not serve in any leadership position, did not constitute a business associate relationship with the YMCA and, thus, he was permitted to participate in Barrington’s review of the YMCA development proposal and plans). Here, similar to the above advisory opinions relating to paying a membership fee, we find that the payment of tuition alone is insufficient evidence of a business associate relationship between the Petitioner and Mount St. Charles. Furthermore, the Petitioner represents that he is neither an employee of Mount St. Charles nor a member of its Board of Directors. Accordingly, based upon the above representations, the Petitioner is not a “business associate” of Mount St. Charles as that term is defined in the Code of Ethics. Next, we must consider whether the Petitioner’s participation in the City Council’s consideration of the PILOT Agreement extension would result in a financial impact upon himself, as a parent who pays tuition for his daughter to attend Mount St. Charles. The Petitioner states that Mount St. Charles has already set its tuition rates for the 2016-2017 academic year. Furthermore, whether or not the PILOT Agreement is extended, any financial impact upon future tuition rates is speculative, and even if tuition rates did increase or decrease, the impact upon the Petitioner would be substantially similar to the impact upon the families of all of the approximately 600 students who attend Mount St. Charles each year. See § 36-14-7(b) (setting forth the “class exception,” which allows a public official to participate in official action that could result in a financial benefit or detriment to himself provided that he is part of a significant and definable class of persons and he would not be impacted to a greater extent than any other similarly situated member of that class); A.O. 2015-4 (applying the class exception and opining 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 given 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). Thus, we find that it is not reasonably foreseeable that the Petitioner’s participation in the City Council’s consideration of this PILOT Agreement would result in a direct financial impact upon himself. Accordingly, it is the opinion of the Ethics Commission that the Petitioner is not prohibited by the Code of Ethics from participating in the City Council’s consideration of a PILOT Agreement for Mount Saint Charles Academy, a private Catholic junior-senior high school attended by the Petitioner’s daughter. In his advisory opinion request letter, the Petitioner also questioned whether he could participate in the City Council’s discussion and vote on a resolution to either support or oppose the General Assembly’s proposed legislation for a tax exemption for Mount St. Charles. Given that the City Council has no authority or jurisdiction over the General Assembly, the Petitioner’s participation in the City Council’s resolution to the General Assembly would not trigger the prohibitions contained in the Code of Ethics. See, e.g., A.O. 2015-5 (opining, inter alia, that a member of the Chariho School Committee could participate in discussions regarding state-mandated tuition payments to the Kingston Hill Academy (“KHA”), a public charter school attended by his two children, given that the School Committee had no authority over KHA, which is under the direct jurisdiction of its Board of Directors and the Rhode Island Department of Education). 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(3) § 36-14-2(7) § 36-14-5(a) § 36-14-5(d) § 36-14-7(a) § 36-14-7(b) Related Advisory Opinions: A.O. 2015-5 A.O. 2015-4 A.O. 2015-2 A.O. 2013-26 A.O. 2012-28 A.O. 2009-39 Keywords: Business Associate Family [1] Senate Bill 2683, introduced by Senator Marc A. Cote on March 8, 2016, proposes an amendment to Rhode Island General Laws § 44-3-3 entitled, “Property exempt.” The proposed amendment inserts a new subsection (a)(48), which states that the following property is exempt from taxation: “Real and tangible property of Mount Saint Charles Academy located within the city of Woonsocket.” As of April 19, 2016, S 2683 has been referred to the Senate Finance Committee. [2] Tuition rates are set “each January for the following school year by the Mount Saint Charles Academy School Board. Increases in tuition reflect increased cost in salaries, programs, supplies, and utilities.” Mount St. Charles, Tuition & Financial Aid. https://www.mountsaintcharles.org/admissions/tuition_financial_aid, (last accessed Apr. 14, 2016). [3] Mount St. Charles, At a Glance https://www.mountsaintcharles.org/about/MSC_at_a_glance, (last accessed Apr. 14, 2016).