Advisory Opinion No. 2016-3 Rhode Island Ethics Commission Advisory Opinion No. 2016-3 Approved: January 12, 2016 Re: Charles A. Collins, Jr. QUESTION PRESENTED: The Petitioner, a member of the Scituate Town Council, a municipal elected position, requests an advisory opinion regarding whether the Code of Ethics prohibits him from participating in the Town Council’s consideration of a tax stabilization agreement for the Hope Mill, given that he owns two rental properties within close proximity of the Hope Mill. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Scituate Town Council, a municipal elected position, is prohibited by the Code of Ethics from participating in the Town Council’s consideration of a tax stabilization agreement for the Hope Mill, given that he owns two rental properties within close proximity of the Hope Mill. The Petitioner is a member and current president of the Scituate Town Council (“Town Council”). He informs that on January 14, 2016, the Town Council is scheduled to consider a tax stabilization agreement for the Hope Mill property located at 1-15 Main Street in Scituate on the Pawtuxet River.[1] He states that the Hope Mill has been in state court receivership since 2010. He informs that the Hope Mill’s receiver recently entered into a “Purchase & Sale Agreement” to sell the property to BMP, LLC, (“BMP”) for $650,000 and BMP’s assumption of more than $600,000 in liens, including an accruing Scituate real estate tax lien with a current balance of approximately $455,000. At this time, the Petitioner represents that BMP’s proposed tax stabilization agreement for the Hope Mill property is an essential component of BMP’s plan to buy and develop the Hope Mill into affordable housing units. He states that the Town Council is considering whether to grant BMP a fifteen-year agreement to forego the collection of back taxes on the Hope Mill provided that BMP develops the property, beautifies the property, and allows public use of an area along the Pawtuxet River. He informs that the tax stabilization agreement would be subject to “clawback” if BMP defaults on any terms of the agreement, resulting in the reinstatement of the tax lien. The Petitioner represents that the Hope Mill has been abandoned and in poor condition for more than ten years; but the successful development of the Hope Mill would likely increase property values of neighboring real estate which, in turn, would result in higher taxes on that real estate. He informs that he owns two rental properties within 300 feet of the perimeter of the Hope Mill property, 14-16 Main Street and 25-27 Mill Street. He informs that 14-16 Main Street is located directly across the street from the mill buildings and it directly abuts a smaller lot that provides access to the Hope Mill’s dam and sluice-way. He represents that 25-27 Mill Street is located four houses north of the mill buildings. He states that, although the Town Council’s consideration of the tax stabilization agreement does not require notice to be given to neighboring property owners, he owns two of the approximately fifty-seven properties that would be required to receive notice of any zoning application involving the Hope Mill.[2] Given the close proximity of the Petitioner’s rental properties to the Hope Mill, the Petitioner seeks guidance as to whether he can participate in the Town Council’s consideration of BMP’s request for a tax stabilization agreement for the Hope Mill, an essential component of the sale and development of that property. 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, any family member, 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, a public official 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 the present matter, the Petitioner concedes that the tax stabilization agreement for the Hope Mill is likely to have a financial impact upon neighboring properties, including his own rental properties, as part of a larger plan to develop the abandoned mill into affordable housing units, beautify the vacant acres of open space along the Pawtuxet River, and allow public access to part of the vacant land along the River. The Petitioner’s rental properties are located within 300 feet of the perimeter of the two central lots containing the Hope Mill structure, and his property located at 14-16 Main Street is directly across the street from the mill buildings and abuts a small lot that provides access to the Hope Mill’s dam and sluice-way. Additionally, the transformation of the once industrial property of the Hope Mill into affordable housing units could result in competition in the local rental market for the Petitioner. Furthermore, in advisory opinions involving real property, the Commission has consistently applied a rebuttable presumption that a property owner will be financially impacted by official action concerning abutting property.[3] Applying this presumption, the Commission has often opined that a public official may not participate in a discussion or vote on decisions concerning abutting property, absent reliable evidence that his official action would not affect the value of his own property, either positively or negatively. See A.O. 2008-41 (opining that a Burrillville Town Council member was prohibited from participating in the Town Council’s consideration of an ordinance to create a Dam Management District (“DMD”), which would allow the DMD to take title to the lakebed of the Pascoag Reservoir, given that the petitioner owned property that directly abutted the Pascoag Reservoir); A.O. 2007-41 (opining that a North Providence Town Council member was prohibited from participating in the Town Council’s consideration of a zoning change application for a property abutting the Lees Farm Commons condominium development, given that the petitioner owned a condominium in Lees Farm Commons as well as an equal undivided interest in all of the commonly owned property contained therein). Accordingly, based upon the Petitioner’s representations and consistent with the presumption of financial impact that we have applied in analogous advisory opinions, we find that it is reasonably foreseeable that the Petitioner will be financially impacted by the development of the vacant and abandoned Hope Mill, given the close proximity of his two rental properties to the Hope Mill. In addition, we note that section 36-14-7(b)[4] of the Code of Ethics, commonly referred to as the “class exception,” is inapplicable to the instant matter. Here, the development of the Hope Mill will affect a class of approximately fifty-seven properties that are located within the 300-foot zoning notice area surrounding the Hope Mill. The Petitioner owns two of the fifty-seven properties in this very small class, which may be further divided into subclasses given the existence of many multi-family homes, a few single family homes, and a few businesses surrounding the Hope Mill. Furthermore, our prior analogous advisory opinions have highlighted the difficulty of applying the class exception to real property, given the unique nature of each discrete piece of real estate and the fact that actions affecting real property and its value will likely create a dissimilar impact on each property owner. See, e.g., A.O. 2008-63 (declining to apply the class exception and opining that a Narragansett Town Council member was required to recuse from the Town Council’s consideration of a Zoning Ordinance amendment that would create a village zoning district that impacted approximately seventy properties, including two properties owned by the petitioner, given the small size of the class and the unique nature of each discrete piece of real estate). For all of these reasons, it is the opinion of the Ethics Commission that the Petitioner is prohibited by the Code of Ethics from participating in the Town Council’s consideration of a tax stabilization agreement for the Hope Mill, given that he owns two rental properties within close proximity of the Hope Mill. Notice of recusal shall be filed with the Commission in accordance with section 36-14-6. 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: § 36-14-5(a) § 36-14-5(d) § 36-14-6 § 36-14-7(a) § 36-14-7(b) Related Advisory Opinions: A.O. 2015-11 A.O. 2008-63 A.O. 2008-41 A.O. 2007-41 Keywords: Financial Interest Property Interest