Advisory Opinion No. 2000-28

Re: Geoffrey Rousselle

QUESTION PRESENTED

The petitioner, a West Warwick Town Councilor, a municipal elected position, who also is a business owner in that municipality, requests an advisory opinion as to whether he may participate in a Community Development Block Grant (CDBG) Business Assistance Loan program administered by the Town.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, a West Warwick Town Councilor, a municipal elected position, who also is a business owner in that municipality, may participate in a Community Development Block Grant (CDBG) Business Assistance Loan program administered by the Town, provided that he may not receive a loan allocated from the Town’s 1999 grant funds upon which he voted. In the event that he receives a loan under the program, he may not participate and/or vote on salaries and/or personnel matters involving the members of the Town’s administration who process and approve the individual loan applications.

The petitioner advises that his family owns and operates a Class A liquor package store in the Arctic section of West Warwick. He has applied for a $10,000.00 Business Assistance Loan through the Town’s Office of Community Development for renovations to his business. The loan program is part of the Community Development Block Grant (CDBG) funding received through the state. To qualify for the program, a business owner must be located in a low/moderate income area or serve a low/moderate income population. The petitioner meets the criteria, which were established prior to his election to the Council. He represents that the Town Clerk and the Council approve and vote on the initial loan program application and contract, and the Town’s administration approves all individual loans processed under the contract.

On April 6, 1999, the petitioner participated in the Council’s vote on Resolution 99-103, which approved the filing of the Town’s application for the loan program in the amount of $500,000.00. The program activities for which contract funds are utilized include the “Arctic Revitalization Project”, of which $30,000.00 is appropriated for “business assistance”. The petitioner represents that loan program funds are still available from 1997 and 1998, prior to his election to the Council. Although it is expected that a current grant recipient will expend the 1997 balance of $2,995.00, the 1998 grant program has a balance of $50,000.00. Presently, the petitioner is the only applicant for the 1998 grant funds. Further, it is the general policy of the Town to expend its earliest funding prior to drawing upon more recently funded programs.

Under the Code of Ethics, a public official may not have any interest, financial or otherwise, direct or indirect, which is in substantial conflict with the proper discharge of his duties in the public interest. See R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest occurs if he has reason to believe or expect that he or any family member or business associate, or any business by which he is employed or represents will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. See R.I. Gen. Laws § 36-14-7(a). He also is prohibited from using his public position or confidential information received through his position to obtain financial gain, other than that provided by law, for himself, a family member, business associate, or any business by which he is employed or represents. See R.I. Gen. Laws § 36-14-5(d). Further, no person subject to the Code or any business associate of said person may enter into a contract with a municipal agency unless “the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded.” R.I. Gen. Laws § 36-14-5(h).

The Commission consistently has concluded that public officials and employees may not bid on contracts where they have participated in the bid development process. Under the Code, participation in the bid specification process places the public official or employee in a privileged and/or advantageous position with respect to other bidders. See A.O. 98-65 (finding that Town employees who provided substantive input into a decision to put property to tax sale, or as to requirements of the bids, may not bid on the property).

Additionally, the Commission and the Supreme Court has generally concluded that where a public official’s or employee’s participation in a matter ultimately results in an outcome that will affect him/her, family, business associates, or employers, that the public offcial or employee is required to recuse or not reap the benefit of their prior action. For instance, the Supreme Court in Celona v. Rhode Island Ethics Commission, 544 A.2d 582, 586 (R.I. 1988), held that the members of the North Providence Town Council violated the Code of Ethics when they enacted a preliminary resolution granting themselves $100 in monthly expense money. Although the resolution required final approval by the General Assembly, the Court found that the Council members had reason to believe or expect that the passage of a resolution would result in a personal financial benefit since, but for, their participation, the General Assembly would not have had the opportunity to consider the amendment to the Town Charter. See also A.O. 99-35 (advising Governor’s Justice Commission VAWA Planning Committee’s members that should recuse where their organizations may be recipient of program grant funds since although the VAWA Planning Committee is not the ultimate decision maker as to subgrant awards, it is an essential step in the process that narrows and directs where funding will be allocated); A.O. 97-51 (advising a legislator serving as a member of the Rhode Island House of Representatives that he may not introduce legislation adding public library funding to fulfill a state imposed mandate given he is employed by a public library); A.O. 98-86 (concluding that Town Councilor could participate in School Department open and public bidding process for a lease provided that if he has not participated in or otherwise influenced the bid development process such as affecting the funding available to the School Department for any such leasing arrangement).

The Commission concludes that the petitioner may participate in the CDBG Business Assistance Loan program administered by the Town, provided that any loan funds awarded to him would not be allocated from the 1999 grant funds. The petitioner participated in the Council’s April 6, 1999 vote to approve the filing of the Town’s 1999 loan program application. The Code prohibits him from receiving 1999 funds, since he would thereby receive a financial benefit from a program that would not be available but for official action in which he participated as a Town Council member.

Here, sufficient funds remain available from the 1998 grant program to fund the petitioner’s loan application. He represents that he presently is the only applicant for such funds and that the Town processes the applications in the order in which they are received. Given that it is the Town’s general policy to expend its earliest funding prior to drawing upon more recently funded programs, the petitioner may receive a loan allocated from the 1998 funds. Here, he had no involvement in processing and approving the individual loan applications. Further, he would not be receiving funds upon which he had voted since the 1998 funds were allocated prior to his election to the Council. Therefore, absent some other prohibited involvement or interest, the Code does not prohibit his receipt of a loan award merely because the petitioner is a Town Councilor.

The Commission further concludes that the petitioner should recuse himself from participation and/or vote on salaries and/or other personnel issues involving the members of the Town’s administration who process and approve the individual loans. Determining said salaries or participating in other personnel matters would constitute a substantial conflict of interest and would likely impair the petitioner’s independence of judgment. Notice of recusal should be filed with both the Town Council and the Ethics Commission pursuant to R.I. Gen. Laws § 36-14-6.

Code Citations:

36-14-5(a)
36-14-5(d)
36-14-5(h)
36-14-6
36-14-7(a)

Related Advisory Opinions:

99-83
99-46
99-35
98-124
98-123
98-95
98-86
98-65
98-50
98-46
98-22
97-66
97-51
97-50
97-48
95-105
95-90
95-29
95-24

Related Case Law:

Celona v. Rhode Island Ethics Commission, 544 A.2d 582, 586 (R.I. 1988)

Keywords:

Family: business interest
Financial interest
Grants
Government loans