Advisory Opinion No. 2017-32 Rhode Island Ethics Commission Advisory Opinion No. 2017-32 Approved: June 20, 2017 Re: Kim Salerno QUESTION PRESENTED: The Petitioner, a member of the City of Newport Planning Board, a municipal appointed position, requests an advisory opinion regarding whether she may participate in matters before the Planning Board involving the development of boutique hotels, given that in her private capacity she is an architectural designer who is working with the developers of a particular boutique hotel proposal in Newport. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the City of Newport Planning Board, a municipal appointed position, is required to recuse from participation in matters before the Planning Board involving hotels or other short-term rental properties that are in close proximity to, or direct competition with, the boutique hotel she is helping to develop. This restriction applies until the Petitioner has concluded her business relationship with the hotel and its owners. The Petitioner is a member and the Chairperson of the City of Newport Planning Board (“Planning Board”). She states that in Newport there has recently been an increased interest in the development of smaller boutique hotels that are unrelated to national hotel chains. She states that developers of boutique hotels frequently come before the Planning Board for preliminary review and to seek relief from zoning ordinance limitations on room number density and site dimensions. In her private capacity, the Petitioner is an architectural designer. She states that she recently agreed to work with a local developer to design a 12-room boutique hotel in Newport. The Petitioner represents that the developer will not seek any dimensional or density relief for the project, but states that she would recuse from any Planning Board matters related to the project. The Petitioner asks whether her work on this project creates a conflict of interest such that she should recuse from the Planning Board’s consideration of other boutique hotel proposals. Under the Code of Ethics, the Petitioner may not participate in any matter in which she has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of her duties and employment in the public interest. R.I. Gen. Laws § 36-14-5(a). The Petitioner will have an interest in substantial conflict with her official duties if she has a reason to believe or expect that a “direct monetary gain” or a “direct monetary loss” will accrue, by virtue of her official activity, to herself, a family member, a business associate, an employer, or any business which she represents. Section 36-14-7(a). She is also prohibited from using her public position or confidential information received through her position to obtain financial gain, for herself, her family, employer or business associates, other than that provided by law. Section 36-14-5(d). A business associate is defined as a person joined together with another person or entity to achieve a common financial objective. Section 36-14-2(3) and (7). Applying these provisions of the Code of Ethics, the Ethics Commission has previously stated that recusal is required when an issue before a public body either directly impacts the business related to the public official, or involves a competing business that is in reasonably close proximity. A somewhat analogous set of facts was presented in Advisory Opinion 96-24. There, a member of the Newport Zoning Board of Review who was a part owner of a Newport hotel asked whether he could participate in matters involving, among other things, hotels or bed and breakfast establishments. The Ethics Commission opined that the petitioner must recuse from Zoning Board matters involving both hotels or bed and breakfast establishments that are within 500 feet of his hotel, or that otherwise directly impact his business. Since then, the Commission has issued numerous other opinions advising public officials to recuse from matters involving businesses that are either in close proximity or direct competition with their own. See A.O. 2004-38 (member of New Shoreham Town Council, who works at a restaurant with a liquor license, must recuse on any liquor licensing matters that are likely to result in a direct financial impact upon his employer or on its direct competitors, as such matters are also likely to financially impact the petitioner's employer); A.O. 2002-23 (CRMC member who is an owner of Brown & Howard Wharf Marina on Newport Harbor may not participate in CRMC matters pertaining to Waites Wharf, a competitor within 1,500 feet of the petitioner's property); A.O. 2000-62 (concluding, inter alia, that the Providence Tourism Council Deputy Director, also a minority stockholder in a Providence restaurant, may participate in matters involving the restaurant industry in Providence, or individual members of that industry, provided that such matters do not directly impact his restaurant and/or his personal financial interests); A.O. 99-9 (Narragansett Town Councilor who owns restaurant holding liquor license could not participate in matters directly affecting his business, and further advising that direct impact is presumed for any establishment within a close proximity to or otherwise in direct competition with his restaurant); A.O. 96-101 (Chief of Police for City of Pawtucket, who is also a part-owner of a Pawtucket establishment holding a Class B liquor license, must recuse on liquor enforcement activities affecting his own establishment and any of its direct competitors); A.O. 96-70 (requiring Newport City Councilor/Board of License Commissioner who owns a restaurant holding a liquor license to recuse himself from zoning or licensing matters that concern competitors). Consistent with these prior advisory opinions, the instant Petitioner is required to recuse from participation in matters before the Planning Board involving hotels or other short-term rental properties that are in close proximity to, or direct competition with, the boutique hotel she is helping to develop. This restriction applies until the Petitioner has concluded her business relationship with the hotel and its owners. Given that the Petitioner also serves as the Chair of the Planning Board we note that her recusal, when required, includes presiding as Chair even if she does not otherwise participate in the matter. Upon recusal, the Petitioner is required to file a statement of conflict of interest pursuant to 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: § 36-14-2(3) § 36-14-2(7) § 36-14-5(a) § 36-14-5(d) § 36-14-6 § 36-14-7(a) Related Advisory Opinions: A.O. 2004-38 A.O. 2002-23 A.O. 2000-62 A.O. 99-9 A.O. 96-101 A.O. 96-70 A.O. 96-24 Keywords: Business Associate Competitors