Advisory Opinion No. 2021-8 Rhode Island Ethics Commission Advisory Opinion No. 2021-8 Approved: January 12, 2021 Re: Walter B. Mahony III QUESTION PRESENTED: The Petitioner, a member of the Charlestown Planning Commission, a municipal elected position, requests an advisory opinion regarding whether the Code of Ethics prohibits him from participating in the Planning Commission’s discussions and voting relative to applications associated with a proposed subdivision to be located on land that partially abuts a road owned by a private homeowners’ association to which the Petitioner belongs. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Charlestown Planning Commission, a municipal elected position, is not prohibited by the Code of Ethics from participating in the Planning Commission’s discussions and voting relative to applications associated with a proposed subdivision to be located on land that partially abuts a road owned by a private homeowners’ association to which the Petitioner belongs. The Petitioner is the second alternate member of the Charlestown Planning Commission (“Planning Commission”), having been elected to that position in November of 2020. The Petitioner represents that it is the duty of the Planning Commission to ensure the orderly and environmentally sound growth of the Town of Charlestown (“Town” or “Charlestown”) through the implementation of various municipal, state, and federal land development and subdivision regulations when reviewing and evaluating pertinent applications. The Petitioner states that he resides at 27 Stumpy Point Lane in Charlestown, a property located at the very eastern end of Stumpy Point Lane, consisting of lots 15 and 16, Assessor’s Plat 7, which he purchased in 2012. He further states that he is one of 77 lot owners whose properties are located in the private Arnolda development, which is owned by the Arnolda Improvement Corporation (“AIC”), a private homeowners’ association. The Petitioner represents that the Arnolda development is unique because, unlike many other private subdivisions located in Rhode Island, the individual homeowners in the Arnolda development do not own an interest in the common property. He informs that the common property is owned by the AIC and includes one tennis court, five docks, and all of the roads within the Arnolda development. The Petitioner further informs that the AIC’s affairs and property are managed by a Board of Directors whose members are also property owners in the Arnolda development. The Petitioner states that all homeowners automatically become members of the AIC upon purchasing property in the Arnolda development and are required to pay annual assessments and fees to the AIC for the maintenance, improvement, insurance, and taxes on the common areas. The Petitioner represents that these obligations are not recorded in his deed, nor was he required to sign an agreement with the AIC memorializing these obligations. The Petitioner states, however, that he does not have the ability to opt out of either membership in the AIC or payment of the annual assessments. He represents that the AIC normally presents each homeowner with a bill reflecting the particular homeowner’s annual assessment. The Petitioner informs that, to the best of his knowledge, no one has ever asked to discontinue his/her membership in the AIC. The Petitioner represents that currently before the Planning Commission is a pre-application plan submitted by the 4772 Old Post Road, LLC for a major subdivision of cluster design known as Summer Winds (“Summer Winds” or “Subdivision”) on lot 51, Assessor’s Plat 7 in Charlestown. The Petitioner informs that, prior to his election to the Planning Commission, he had testified relative to Summer Winds at two virtual public hearings before the Planning Commission in his capacity as a resident of Charlestown. He further informs that the Subdivision is located on a lot outside the boundaries of the AIC homeowners’ lots. The Petitioner states that lot 51 abuts approximately 2,000 feet of Arnolda Round Road, one of the private roads owned by the AIC and used by homeowners in the Arnolda development. He further states that his property does not abut lot 51, but rather is located approximately 1,476.6 feet from it, and that he has not received an abutter’s notice regarding the pre-application plan for the Subdivision. The Petitioner adds that he is neither on the Board of Directors for the AIC nor is he a member of any of its advisory committees. The Petitioner states that the alternate members of the Planning Commission are not voting members unless and until a regular member is absent. However, the alternate members have been asked to participate in the hearings and discussions relative to all of the applications relating to the Subdivision. Given this set of facts, the Petitioner requests an advisory opinion regarding whether the Code of Ethics prohibits him from participating in the Planning Commission’s discussions and voting relative to the Subdivision application(s). Under the Code of Ethics, a public official 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 conflict of interest exists if a public official has reason to believe or expect that he, his family member, his business associate, or his employer will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. Section 36-14-7(a). The Code of Ethics also 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 member, his business associate, or any business by which he is employed or which he represents. Section 36-14-5(d). Finally, under Commission Regulation 520-RICR-00-00-1.2.1 Additional Circumstances Warranting Recusal (36-14-5002) (“Regulation 1.2.1”), a public official must recuse from participation in any matter if his business associate appears or presents evidence or arguments before the public official’s state or municipal agency. 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). In determining whether a relationship between two parties constitutes an ongoing business association as defined in the Code of Ethics, the Ethics Commission examines the nature of the association and the scope of the business dealings between the parties and looks to, among other things, whether the parties are conducting ongoing business transactions, have outstanding accounts, or there exists an anticipated future relationship. See A.O. 2010-16 (opining that an East Greenwich Planning Board member, who in his private capacity was the publisher of a local news and information website, was required to recuse when a business associate appeared before the Planning Board, specifically, if the business associate currently advertised on the petitioner’s website, had outstanding accounts, or when there was an anticipated future relationship between the parties). Recently, the Ethics Commission reviewed four complaints filed against members of the Bonnet Shores Fire District Council who owned condominium units at the Bonnet Shores Beach Club (“Beach Club”).[1] There, the Ethics Commission ultimately found that all of the Respondents were business associates of the Beach Club, given that they all owned condominium units at the Beach Club and were obligated to pay annual assessments to the Beach Club for property maintenance.[2] The Ethics Commission also recognized a continuous business relationship between a petitioner and the customers to whom he sold fire alarm systems, under circumstances where the petitioner also provided inspection and service of said alarm systems on a quarterly basis after installing them. See A.O. 2008-25. The Ethics Commission determined that such a continuing service relationship between the petitioner and his customers evidenced the existence of an ongoing business association. See id. Further, the Ethics Commission has established that a landlord and tenant are business associates under the Code of Ethics. See A.O. 2002-70 (opining that a member of North Kingstown Town Council was a business associate of the person from whom she rented retail space, and could not participate in Council matters that would financially impact her landlord); A.O. 2001-57 (opining that a Central Falls City Councilor could not participate in matters that would have a financial impact upon his tenants, who were his business associates under the Code of Ethics). Here, the Petitioner represents that he does not have an ownership interest in the common areas owned by the AIC and that his obligation to pay annual assessments to the AIC, which in return maintains such common areas including all of the roads used by the Petitioner to access the Arnolda development and his own property, does not originate from his deed or a subsequent written agreement between him and the AIC. However, the Petitioner acknowledges that his membership in the AIC is directly related to, and not severable from, his homeownership in the Arnolda development and that he is required to pay annual assessments for which he receives a bill each year. Thus, it is the opinion of the Ethics Commission that the Petitioner is a business associate of the AIC, based not on the Petitioner’s membership in the AIC, per se, but rather, because of the continuous responsibilities of the Petitioner to the AIC, and vice versa, that cannot be separated from his property ownership. Next, the Ethics Commission must ascertain whether the Petitioner or his business associate, the AIC, will be financially impacted by the official action that is under consideration. In advisory opinions involving real property, the Ethics Commission has consistently applied a rebuttable presumption that a property owner will be financially impacted by official action concerning abutting property. See, e.g., A.O. 2012-4; A.O. 2007-18; A.O. 2006-37; A.O. 2005-16. Applying this presumption, the Ethics Commission has regularly opined that public officials may not participate in the discussion or vote on decisions concerning abutting property, absent reliable evidence that their official action would not affect the financial interests of the public official, either positively or negatively. Instances in which the presumption was found to be sufficiently rebutted include the following: A.O. 99-148 (presumption rebutted where a petitioner provided independent evidence from a licensed appraiser that his property would not be financially affected by a proposed zoning change); A.O. 98-92 (presumption rebutted where only a small fraction of the petitioner’s back yard was within 200 feet of the area at issue; the proposed cul-de-sac would not be visible from her property; and where she represented that there would be no financial impact on her property); A.O. 98-58 (presumption rebutted where the petitioner represented that he did not believe a zoning change would financially impact his property); A.O. 98-35 (presumption rebutted where the requested height variance was minor; the subject dwelling was not adjacent to the petitioner’s property; and the petitioner represented that the variance would have no financial impact on his property). Just as the Ethics Commission has presumed a financial impact for abutting property, the Ethics Commission has applied the opposite presumption of no financial impact relative to property that is near, but not abutting, a subject property. See A.O. 2003-44 (opining that a member of the Cranston Town Council could participate in the Safety Services and Licensing Committee’s consideration of a proposed license for the Krispy Kreme Donut franchise, notwithstanding that the proposed location was approximately 500 feet from his residence, in the absence of evidence indicating a reasonable foreseeability of financial impact); A.O. 2002-30 (opining that a Jamestown Town Council member could participate in the determination of the location for a highway garage, notwithstanding that two of the location options were 1000 and 900 feet away from her land). Based upon the above representations, the Petitioner’s property neither adjoins lot 51, nor did he receive an abutters’ notice. Rather, the Petitioner states that his property is located 1,476.6 feet from lot 51, and that the development of lot 51 will have no financial impact on the value of his property. Accordingly, it is the opinion of the Ethics Commission that the Petitioner is not an abutter and, therefore, there is no presumption of financial impact upon the Petitioner. However, the Petitioner represents that a portion of Arnolda Round Road, a private road owned by the AIC, his business associate, does directly abut lot 51. Therefore, there is a rebuttable presumption that the AIC would be financially impacted by the Petitioner’s official actions relative to the proposed Subdivision. Nonetheless, the Petitioner represents that Arnolda Round Road is a private road to which the Subdivision would not have access. He informs that the Subdivision is required by law to be accessible by a public road and that the Subdivision has such access through Old Post Road located to the north of both the Subdivision and the Arnolda development. Thus, the Petitioner does not expect any increase of vehicular traffic on Arnolda Round Road nor does he believe that the AIC will be financially impacted by the proposed Subdivision. Accordingly, it is the opinion of the Ethics Commission that the Petitioner’s representations are sufficient to rebut the presumption that his business associate, the AIC, will be financial impacted by his official actions. Thus, the Petitioner may participate in the Planning Commission’s discussions and voting relative to applications associated with the proposed Subdivision. However, the Petitioner is advised that, if any of the circumstances change, he must recuse consistent with section 36-14-6, and/or seek further guidance from the Ethics Commission. 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) 520-RICR-00-00-1.2.1 Additional Circumstances Warranting Recusal (36-14-5002) Related Advisory Opinions A.O. 2012-4 A.O. 2010-16 A.O. 2008-25 A.O. 2007-18 A.O. 2006-37 A.O. 2005-16 A.O. 2003-44 A.O. 2002-70 A.O. 2002-30 A.O. 2001-57 A.O. 99-148 A.O. 98-92 A.O. 98-35 Keywords Business Associate Recusal [1] See In re: Janice McClanaghan, Complaint No. 2019-15; In re: Michael Vendetti, Complaint No. 2019-16; In re: Chris Mannix, Complaint No. 2019-17; and In re: Natalie McDonald, Complaint No. 2019-18 (“Bonnet Shores Complaints”). [2] Five years prior to rendering its decision in the Bonnet Shores Complaints, the Ethics Commission issued Advisory Opinion 2015-11 to another member of the AIC under similar circumstances. There, the Ethics Commission recognized no business associate relationship between the petitioner and the AIC because the petitioner was not an officer or member of the AIC’s Board of Directors. In concluding that the petitioner’s payment of annual assessments to the AIC did not constitute a business relationship, the advisory opinion was silent regarding the petitioner’s inability to opt out of either membership in the AIC or the payment of the mandatory annual assessments, a fact which carried much weight in the decision addressing the Bonnet Shores Complaints.