Advisory Opinion No. 2004-13

Re: Michael J. Marcello

QUESTION PRESENTED:

The petitioner, a Scituate Town Council member, a municipal elected position, requests an advisory opinion as to whether he may participate and vote in the Town Council’s issuance of a Class C liquor license, given that he and his father are officers in a corporation which leases commercial property to the Countryside Restaurant, a Class BV liquor licensee within the Town.

RESPONSE:

It is the opinion of the Rhode Island Ethics Commission that the petitioner, a Scituate Town Council member, a municipal elected position, may participate and vote in the Town Council’s issuance of a Class C liquor license, notwithstanding the fact that he and his father are officers in a corporation which leases commercial property to the Countryside Restaurant, a Class BV liquor license within the Town.

The petitioner advises that his father, Dominic F. Marcello, is the President of DJ Realty, Inc., a closely held Rhode Island corporation that owns a commercial piece of real estate located at 1115 Hartford Pike, Scituate. The petitioner is Vice President of said corporation. He represents that Michael and Robert Martino currently lease the property from DJ Realty and operate the Countryside Restaurant at that location. The Countryside Restaurant is a family establishment holding a Class BV liquor license, which permits it to serve alcoholic beverages with meals on the premises. The petitioner indicates that the Messrs. Martino pay DJ Realty a monthly rent for their lease of the property. He states that he does not hold any stock in or receive any monies from DJ Realty and that his father owns all such corporate stock.

The petitioner informs that Richard Lang previously submitted an application to the Scituate Town Council for issuance of a Class C liquor license relative to property he owns at 84 Hartford Pike. The petitioner further advises that DJ Realty’s property is located approximately three miles from Mr. Lang’s parcel. After some delay, the Council is scheduled to resume its consideration of the application. The petitioner seeks guidance as to whether he may participate and vote in the Council’s consideration of Mr. Lang’s application, given that DJ Realty’s tenants operate a family restaurant which holds a Class BV liquor license within the municipality.

Under the Code of Ethics, a public official may not participate in any matter in which he has an interest, financial or otherwise, that is in substantial conflict with the proper discharge of his duties or employment in the public interest. R.I. Gen. Laws § 36-14-5(a). A public official will have an interest in substantial conflict with his official duties if he has reason to believe or expect that a “direct monetary gain” or a “direct monetary loss” will accrue, by virtue of the official’s activity, to himself, a family member, a business associate, or any business by which the official is employed or represents. R.I. Gen. Laws § 36-14-7(a). The Code further prohibits an official from using his public office or confidential information received though his holding public office to obtain financial gain, other than that provided by law, for himself or any person within his family, any business associate or any business by which he is employed or represents. R.I. Gen. Laws § 36-14-5(d). A business associate is defined as “a person joined together with another person to achieve a common financial objective.” R.I. Gen. Laws § 36-14-2(3).

In previous advisory opinions, the Commission has concluded that the Code of Ethics does not prohibit members of city and town councils with interests in restaurants/liquor establishments from serving on city and town councils and, generally, from considering matters relating to the zoning or licensing of restaurants and bars. However, a public official would be required to recuse from participation when an issue came before the council involving a competing business that was in reasonably close proximity to the official’s own, or that otherwise directly impacted the business in which the official had an economic interest. See e.g., A.O. 99-9 (opining that a Narragansett Town Councilor who owns a restaurant holding a liquor license could not participate in matters directly affecting his business, and further advising that a direct impact is presumed for any establishment within a close proximity to or otherwise in direct competition with his restaurant); A.O. 96-70 (requiring a 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); See also A.O. 2000-62 (concluding, inter alia, that 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).

Pursuant to sections 5(a) and (d) of the Code, the petitioner may not take any official action as a Town Council member that likely would have a direct financial impact upon DJ Realty. This is based both upon his business association with that entity as its Vice President and his father’s financial interests as the President and sole stockholder of DJ Realty. Therefore, the Commission must determine whether it is reasonably foreseeable that the financial interests of DJ Realty would be impacted by the Town Council’s consideration of the subject application for a Class C liquor license. See R.I. Gen. Laws §§ 36-14-5(a) and 5(d); Commission Regulation 7001.

Based upon the petitioner’s representations, Mr. Lang’s parcel does not abut the commercial property owned by DJ Realty and is, in fact, located nearly three miles from said location. Further, the Class BV liquor license held by the Countryside Restaurant is clearly distinct from the Class C liquor license sought by Mr. Lang. A Class BV liquor license permits the service of alcoholic beverages with food on the premises. In contrast, Mr. Lang’s application seeks issuance of license that only would authorize the service of pre-packaged food prepared off the premises (e.g., popcorn, pretzels & potato chips) with alcoholic beverages. Given the diverse nature of the two establishments and the respective fare each would be permitted to offer (family restaurant vs. saloon), the Commission concludes that it is not reasonably foreseeable that the Council’s consideration of Mr. Lang’s application would financially impact DJ Realty or its financial interests. Accordingly, the Code of Ethics does not prohibit the petitioner’s participation and vote in the Council’s issuance of the Class C liquor license at issue.

Code Citations:

36-14-2(3)

36-14-5(a)

36-14-5(d)

36-14-6

36-14-7(a)

36-14-7001

Related Advisory Opinions:

2002-30

2001-57

2000-62

99-122

99-9

98-151

96-70

96-61

96-24

Keywords:

Business Associate

Competitors

Family: Business interest

Licensing