Advisory Opinion No. 2002-56

Re: Keith A. Lewis

QUESTION PRESENTED

The petitioner, a potential write-in candidate for the Block Island Land Trust, a municipal elected position, requests an advisory opinion as to whether, if elected, he may vote on items of business involving The Nature Conservancy, a private non-profit entity, given the fact that he and the Nature Conservancy have past and present business dealings in the form of land sales and donations.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, a potential write-in candidate for the Block Island Land Trust, a municipal elected position, if elected, may not participate or vote on items of business relating to The Nature Conservancy given his status as a business associate of The Nature Conservancy.

The petitioner represents that the Block Island Land Trust (hereinafter “the Land Trust”) is a municipal agency in the Town of New Shoreham with authority granted by the Rhode Island General Laws to levy a real estate transfer fee of up to 5% for use in the acquisition and preservation of open spaces. The Land Trust purchases or accepts donations of land and conservation easements from landowners, and also engages in partnerships with several non-profit organizations to accomplish its mission. One such organization that frequently partners with the Land Trust is The Nature Conservancy, a non-profit corporation based in Virginia with a local office in the Town of New Shoreham.

In the past, the petitioner has donated and sold land to The Nature Conservancy. In each instance where the sale price was less than fair market value, the petitioner has declared a charitable contribution on his income taxes. On November 6, 2001, he sold 9 acres of undeveloped land to The Nature Conservancy for approximately market value. At the closing, he received a partial payment plus a promissory note requiring the balance to be paid in installments by November 2004. The petitioner represents that The Nature Conservancy may pre-pay the note in September or October of 2002.

In another transaction, The Nature Conservancy purchased from petitioner an option to buy 15,000 square feet of undeveloped land by March 15, 2006. The terms of this arrangement required The Nature Conservancy to pay $100 at the signing of the option, with a balance of $900 due at closing. The petitioner will then take a charitable deduction on his income based upon the difference between the sale price and the lot’s actual market value.

In a third transaction, The Nature Conservancy currently is planning to acquire an option to purchase 13 acres of undeveloped land from the petitioner by December 1, 2014. The sum of $1,000 will be paid at the time the option is signed, with no money being due at closing. Again, the petitioner will take a charitable deduction on his income taxes at the time of closing.

The petitioner represents that he intends to become a write-in candidate for a position on the Block Island Land Trust, with a term of office from December 2002 to December 2006. He asks whether, if elected, he may participate and vote on Land Trust business involving The Nature Conservancy given the aforedescribed transactions.

Under the Code of Ethics, the petitioner 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 and employment in the public interest. See R.I. Gen. Laws § 36-14-5(a). The petitioner will have an interest in substantial conflict with his official duties if he has a reason to believe or expect that a "direct monetary gain" or a "direct monetary loss" will accrue, by virtue of his official activity, to himself, a family member, a business associate, an employer, or any business which he represents. See R.I. Gen. Laws § 36-14-7(a). A “business associate” is defined as any individual or entity joined with a public official "to achieve a common financial objective." R.I. Gen. Laws § 36-14-2(3). Section 5(f) of the Code further requires the petitioner to recuse himself from voting or participating in the consideration and disposition of a matter involving a business associate. See R.I. Gen. Laws § 36-14-5(f).

In past advisory opinions, the Commission has required public officials to recuse from consideration of a matter if the official had an ongoing or anticipated business relationship with an individual or entity appearing before his or her public body. See e.g., A.O. 94-60 (concluding that a North Kingstown Planning Commission member could not participate in a subdivision proposal submitted by an engineer where the member planned to engage in business projects with that engineer within the immediate future). See also A.O. 96-100 (finding a State Board of Registration for Professional Engineers member must recuse from participation in licensing matters of an engineering firm until he has completed his work for that firm, has been paid for his work and does not foresee any future relationship with that firm).

Similarly, the Commission has advised public officials that they may not participate in matters involving real property where he/she is the intended purchaser of the subject property. See A.O. 98-18 (opining that a Zoning Board member must recuse from participating and voting on a petition by the American Legion, Post No. 15 regarding the conveyance of a land parcel, given that the he is the intended purchaser of said parcel). However, the Commission has permitted public officials to participate in matters involving a former business associate if it is clear that the business relationship has terminated and that the parties do not anticipate any future business dealings. See A.O. 99-78 (advising a Narragansett Planning Board member that he may participate in the Board’s consideration of matters involving a personal acquaintance and/or a professional who previously represented him, provided: 1) no business relationship currently exists between the parties and 2) it is not reasonably foreseeable that the parties will engage in a future business relationship); A.O. 96-30 (concluding that a City Councilor could participate in a matter involving an individual he represented more than five years ago as an attorney given that there was neither an ongoing relationship with the individual nor any specific plans to represent the party in the future).

In the instant matter, the petitioner and The Nature Conservancy are considered business associates under the Code of Ethics based upon their present rights and obligations pursuant to the promissory note with a term until November 2004, the purchase option that expires in 2006, and the purchase option that expires in 2014. Unless and until the note is paid and the options expire or are exercised, he and The Nature Conservancy are considered active business associates. As such, the petitioner is prohibited from participating or voting in any official Land Trust business that involves The Nature Conservancy. Rather, if elected, the petitioner would be required to recuse from participation and vote in any such matters consistent with the provisions of R.I. Gen. Laws § 36-14-5(f). Notice of recusal should be filed with the Ethics Commission in accordance with R.I. Gen. Laws § 36-14-6.

Code Citations:

36-14-2(3)
36-14-5(a)
36-14-5(d)
36-14-5(f)
36-14-6
36-14-7(a)

Related Advisory Opinions:

2001-67
2000-87
2000-34
99-141
99-78
98-141
98-117
96-100
96-68
96-62
96-30
94-60

Keywords:

Business associate
Candidate
Recusal