Advisory Opinion No. 2006-9 Advisory Opinion No. 2006-9 Re: John A. L. Sisto QUESTION PRESENTED The petitioner, a member of the New Shoreham Town Council, a municipal elected position, requests an advisory opinion as to whether he may participate in the Town Council's review of either Class A or Class B alcoholic beverage licenses given that his landlord is the holder of a Class A alcoholic beverage license and the petitioner is employed by a Class B licensee. RESPONSE It is the opinion of the Rhode Island Ethics Commission that the petitioner, a member of the New Shoreham Town Council, a municipal elected position, may not participate in the Town Council's review of Class A alcoholic beverage licenses given that his landlord is the holder of one of two licenses in the Town. In addition, the petitioner may not participate in establishing alcoholic beverage license caps for either Class A or Class B alcoholic beverage licenses given his landlord/tenant relationship with a Class A alcoholic beverage license holder and his employment relationship with a Class B alcoholic beverage holder.[1] The petitioner is a member of the New Shoreham Town Council. The Town Council sits as the Board of License Commissioners (the Board) to review new and renewal applications for liquor licenses. The petitioner informs that among the licenses the Board issues and supervises are those of retail alcoholic beverage dealers in package stores (Class A licenses) or per drink on premises licenses (Class B licenses). The petitioner advises that in his private employment, he is an assistant chef at a restaurant which is the holder of a Class B license. The petitioner represents that a business he operates is a tenant of a company whose principal is Councilor Mary Jane Balser (Councilor Balser), another member of the Town Council. The petitioner informs that in addition to being his landlord, Councilor Balser’s corporation is the holder of one of only two Class A licenses in the Town.[2] Finally, the petitioner advises that in the near future, the Town will be reviewing the establishment of caps on the number of alcoholic beverage licenses granted by the Town. Given these representations, the petitioner asks whether and to what extent he may participate in the Town Council's review of Class A or Class B licenses and whether he is precluded from participating in the establishment of a cap on the number of alcoholic beverage licenses in the Town. 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). The Commission has previously determined that a landlord and tenant are considered to be business associates under the Code. See A.O. 2002-70 (member of North Kingstown Town Council is business associate of person from whom she rents retail space, and may not participate in Council matters that would financially impact her landlord); A.O. 2001-57 (Central Falls City Councilor could not participate in matters that would have a financial impact upon his tenants, who are his business associates under the Code of Ethics); A.O. 98-16 (Chief Judge of Family Court may enter into lease with Rhode Island Juvenile Officer’s Association, but must recuse when Association's Board of Directors appear before him). Consistent with these past advisory opinions, the Commission concludes that the petitioner and Councilor Balser are business associates by virtue of their landlord/tenant relationship. Accordingly, applying sections 5(a), 5(d) and 7(a) of the Code, the petitioner must recuse on any Class A license matters that are likely to result in a direct financial impact upon his business associate, Councilor Balser. This would include matters pertaining to the Class A license held by Councilor Balser and/or her company. This would also include matters pertaining to the other Class A licensee in the Town, since alcoholic beverage licensing issues relating to Councilor Balser’s sole competitor are also likely to impact her finances. See A.O. 2004-38 (New Shoreham Town Council member required to recuse from licensing matters involving his employer’s direct competitors, as such matters are also likely to financially impact petitioner’s employer). Further, the petitioner must recuse on any matters involving the establishment of alcoholic beverage license caps since any official action taken by the petitioner on this matter would have a direct financial impact on his business associate and his employer. The petitioner is advised that notice of recusal must be filed with the Town Council and the Ethics Commission pursuant to R.I. Gen. Laws § 36-14-6. Code Citations: 36-14-2(3) 36-14-5(a) 36-14-5(d) 36-14-6 36-14-7(a) Related Advisory Opinions: 2005-49 2004-38 2004-13 2002-30 2002-23 2001-57 2000-62 99-122 99-9 98-151 96-70 96-61 96-24 Keywords: Business Associate Employer Competitors Licensing