Advisory Opinion No. 2007-53 Advisory Opinion No. 2007-53 Re: Hank Kniskern QUESTION PRESENTED: The petitioner, Chairperson of the Newport Waterfront Commission (“the Waterfront Commission”), a municipal appointed position, requests an advisory opinion as to whether the Waterfront Commission is a municipal agency whose members are subject to the Code of Ethics, and if so, if the petitioner is prohibited by the Code of Ethics from participating in discussions and voting on a recommendation to the Newport City Council (“the City Council”) on a mooring fee increase, given that he: 1) leases a commercial mooring; 2) has been on the waiting list for a private mooring for approximately five years; and 3) is a member of various associations who themselves utilize private or commercial moorings, including the International Yacht Restoration School, Sail Newport, and the Newport Yacht Club. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Newport Waterfront Commission (“the Waterfront Commission”) is a municipal agency subject to the Code of Ethics, but that the petitioner is not prohibited by the Code from participating in discussions and voting on a recommendation to the Newport City Council (“the City Council”) on a mooring fee increase, notwithstanding the fact that the petitioner: 1) leases a commercial mooring; 2) has been on the waiting list for a private mooring for approximately five years; and 3) is a member of various associations which themselves utilize private or commercial moorings, including the International Yacht Restoration School, Sail Newport and the Newport Yacht Club. The petitioner represents that he is the Chairperson of the Newport Waterfront Commission. The Waterfront Commission is composed of nine members, appointed by the City Council. The Waterfront Commission is charged with making policy recommendations to the City Council in regard to the organization of the harbor and related marine affairs and is specifically mandated, amongst other things, to: make recommendations on harbor and marine matters when directed to do so by the City Council; prepare specific proposals on harbor and marine matters; advise the City Council on marine-related matters that would impact Newport Harbor; recommend areas to be designated for anchorages and moorings as well as suggested rules and regulations governing the placement and administration of assigned moorings; review all applications to the Rhode Island Coastal Resources Management Council, as well as the Army Corps of Engineers, for permits to build or alter waterfront property in the city, and provide recommendations which shall be submitted to the City Council; provide advice on marine related issues to other boards and commissions; and, most pertinent to this petitioner’s request, hear appeals by “[a]ny person aggrieved by any decision of the harbor master . . . .” Codified Ordinances of the City of Newport §§ 2.88.030 & 12.28.130(J). The petitioner states that the Waterfront Commission is in the middle of processing its recommendation on a proposed annual fee rate increase for city mooring permits for private residents, non-residents, and commercial permits. The petitioner’s initial request for an advisory opinion asked whether a number of different members of the Waterfront Commission were prohibited by the Code of Ethics from participating in discussions and voting on this matter, based on their holding of mooring permits in a variety of factual scenarios; as to these inquiries, the Commission is constrained by regulations and practice not to respond, given that those members of the Waterfront Commission have not authorized the petitioner to request advisory opinions on their behalf. See A.O. 99-25 (opining that, the Commission was constrained by regulations and practice not to respond to the petitioner’s inquiry about whether members of the Coventry School Committee could attend events sponsored by the Coventry Teachers’ Alliance, given that the members of the School Committee had not authorized the petitioner to request an advisory opinion on their behalf). The petitioner may, however, request an advisory opinion as to whether he himself is prohibited by the Code of Ethics from participating in discussion and voting on the recommendation for a mooring permit fee rate increase, given his representations that he leases a commercial mooring, has been on the waiting list for approximately five years for a private mooring, and is a member of various associations that themselves utilize moorings, including the International School of Yachting, Sail Newport and the Newport Yacht Club. Apropos of the petitioner’s first question of whether the Waterfront Commission is a municipal agency subject to the Code of Ethics, § 36-14-2(8)(ii) of the Code of Ethics defines a "municipal agency" as “any department, division, agency, commission, board, office, bureau, authority quasi-public authority . . . within Rhode Island, other than a state agency and any other agency that is in any branch of municipal government and exercises governmental functions other than in an advisory nature.” Regulation 36-14-2002(4)(b), a provision promulgated by the Ethics Commission in 1999, defines "municipal agency" using the same language as statutory Section (2)(8)(ii), except that it adds “and whether comprised of officials and employees from a single or multiple municipalities, and any other agency that is in any branch of municipal government and which exercises governmental functions other than in a purely advisory nature.” Finally, Regulation 36-14-2001(22), another regulation promulgated by the Ethics Commission, states that a "municipal agency" shall include any entity that: “(a) exercises governmental functions other than in an advisory nature, and expends public funds in excess of $10,000 yearly, or; (b) those entities whose directors or other governing members are appointed by or through the governing body or highest official of state or municipal government.” Most relevant to the instant advisory opinion is the fact that both the statutory and regulatory definitions of “municipal agency” exempt purely advisory bodies. It should be noted that the Ethics Commission’s predecessor agency, the Conflict of Interest Commission, previously found, in Advisory Opinion 82-5, that the Newport Waterfront Commission was strictly an advisory body whose members were not subject to the Code of Ethics. That opinion, however, provides little reasoning as to why this conclusion was reached, other than to state that the then Waterfront Commission had no authority to expend public funds and only had the power to advise and submit recommendations to the City Council. We expressly reject this prior opinion, based on the current appellate jurisdiction of the Waterfront Commission, which expands its powers beyond the purely advisory. This appellate jurisdiction was created in 1992, long after the issuance of Advisory Opinion 82-5, when the City Council adopted Ordinance No. 24-92, which amended the Harbor Rules and Regulations (Section 234.14 of the 1980 City Code Revision) and adopted the section on Appeals, which is currently § 12.28.130(J) of the Codified Ordinances of the City of Newport. Furthermore, since the adoption of A.O. 82-5, the Ethics Commission has consistently found that other boards and commissions exercising similar authority to that of the Newport Waterfront Commission are not merely advisory in nature and are indeed “municipal agencies” as defined by the Code of Ethics, and as such, their members must comply with the Code of Ethics. See A.O. 2000-37 (opining that the Town of Warren Harbor Management Commission, charged with making recommendations for regulations relating to moorings and fees, and for penalties for violations of the regulations, and which also sits as a board of appeals for those disputing decisions of the harbor master, is a municipal agency whose members are municipal appointed officials subject to the Code of Ethics); A.O. 2000-48 (opining that the City of Warwick Harbor Management Commission, whose powers center on recommending regulations, fees and penalties relating to the city harbor management plan to the city council, reviewing and revising the harbor management plan for city council and CRMC approval, and sitting as a board of appeals for any person aggrieved by decisions of the department of parks or the harbormaster, is a municipal agency whose members are subject to the Code of Ethics. Here, the Newport Waterfront Commission, in addition to its policymaking role in making recommendations to the City Council, also serves as an appellate body, affecting the rights of persons aggrieved by decisions of the harbormaster or staff. Such actions are not “purely advisory” in nature. Therefore, the Newport Waterfront Commission is a “municipal agency” and the petitioner is a “municipal appointed official” within the meaning of Code of Ethics and is subject to the Code of Ethics. The petitioner represents that he currently leases a commercial mooring on a seasonal basis and that any annual mooring permit fee rate increase enacted by the Newport City Council would have a financial impact upon him, as the lease rate that he personally pays would increase. He further states that there are approximately 750 total moorings in the harbor that would be impacted by a permit fee rate increase, including private resident moorings, private non-resident moorings, and commercial moorings. The petitioner states that while in the past these different categories of moorings have been subject to varying fee rate increases, the Waterfront Commission is preparing to submit a recommendation for a uniform increase of 15% across the various categories. The petitioner further states that he has been on the waiting list for a private mooring for approximately five years. He represents that while it is the Waterfront Commission which makes an initial recommendation to the City Council as to a proposed rate increase, it is the City Council itself that chooses to adopt or reject the proposed increase. The Code of Ethics provides, inter alia, that a public official may not participate in matters where he has a substantial conflict of interest, may not use his office for pecuniary gain, and may not accept employment that would impair his independence of judgment as to his official duties. See R.I. Gen. Laws §§ 36-14-5(a), (b), (d). A substantial conflict of interest exists if the public official has reason to believe or expect that he, or a business associate, or any business by which the official 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). In the facts of this petitioner’s request, there is no dispute that the petitioner will be financially impacted by any mooring permit fee rate increase. However, in this instance, the petitioner leases one of approximately 750 existent moorings, all of which will be impacted by the permit fee rate increase. Section 36-14-7(b) of the Code, sometimes referred to as the "class exception," states that a public official will not have an interest which is in substantial conflict with his official duties if any benefit or detriment accrues to him “as a member of a business, profession occupation or group, or of any significant and definable class of persons within the business, profession, occupation or group, to no greater or lesser extent than any other similarly situated member of the business, profession, occupation or group, or the significant and definable class of persons within the business, profession, occupation or group.” R.I. Gen. Laws 36-14-7(b). The Commission will determine whether a proposed class is sufficiently "significant and definable," so as to justify an exception to what is otherwise a clear prohibition, by considering the totality of the circumstances. See, e.g., A.O. 2004-16. Among the important factors considered are: (1) the description of the class or subclass; (2) the size of the class; (3) the function or official action being contemplated by the public official; and (4) the nature and degree of foreseeable impact upon the class and its individual members as a result of the official action. See A.O. 2005-22 (opining that an Exeter Town Councilor may participate and vote on a proposed tax freeze ordinance which may be available to married couples when the older spouse reaches 65 years of age, notwithstanding that his spouse was 65 years of age and he could benefit from the ordinance if passed, as he was one of 250-300 people likely to be affected, and thus fell within the 7(b) class exception); A.O. 2002-10 (in which the Commission applied section 7(b) to determine that town councilors over age 65 could participate and vote on a proposed Town of East Greenwich tax freeze ordinance that would affect 660 out of 4,000 East Greenwich homeowners). Here, the proposed class consists of all those persons utilizing moorings (whether owners or leaseholders) who would be impacted by a permit fee rate increase, which petitioner estimates to total approximately 750 mooring users. The official action contemplated by a member of this class is the participation and vote on a proposed recommendation for a mooring permit fee rate increase to the City Council, which the Council may elect to accept or reject. This official action will affect all those paying the mooring fee by a rate increase of 15%. Considering these circumstances, the Commission finds that the affected class is significant and definable, and that therefore the application of the 7(b) class exception is warranted and appropriate. Additionally, the petitioner’s official action in participating in the formulation of a recommendation as to a permit fee rate increase is at least one step removed from the decision-making that actually enacts the final rate increase, as the Waterfront Commission only recommends a proposed rate increase to the City Council, which the City Council may then elect to accept, reject, or modify as part of the city fiscal budgeting process. Next, the petitioner inquires whether the fact that he has been on the waiting list for a private mooring for approximately five years prohibits him from participating in the Waterfront Commission’s submission of a recommended fee rate increase to the City Council. It is the opinion of the Ethics Commission that the fact that the petitioner has a position on a waiting list for a private mooring does not prohibit him from participating in the proposed action, as any potential financial impact upon him because of this is too hypothetical and remote to be “reasonably foreseeable,” given the fact that he has already been waiting for five years to obtain a private mooring to no effect. See R.I. Gen. Laws § 36-14-7(a) and Commission Regulation 36-14-6001. See also A.O. 99-98 (opining that an Exeter Town Councilor was not prohibited from voting on a elderly tax exemption for persons at least 65 years of age, as any financial impact to him was too remote, given that he was only 64 years old at the time of the official action). Finally, the petitioner inquires whether his memberships in the International Yacht Restoration School, Sail Newport, and the Newport Yacht Club, all of which utilize moorings that will be impacted by a fee rate increase, prohibit him from participating in the Waterfront Commission’s submission of a recommended permit fee rate increase to the City Council. An 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 public official's actions, to the official, a family member, a business associate, an employer, or any business which the public official represents. See R.I. Gen. Laws § 36-14-7(a). Thus, if petitioner is considered a “business associate” of any of these organizations, he must recuse from participation in matters that would result in a direct financial impact on the organizations; however, if he is not a “business associate” of the organizations, barring any other relationship with them that would implicate the Code of Ethics, he need not recuse. As the petitioner is not on the board of directors, or an officer, or in any type of leadership position that would allow him to affect the financial objectives of any of these organizations, and is merely an ordinary member with no greater power or privileges than other ordinary members, he is not a “business associate” of these organizations and need not recuse from taking official action because of his memberships. See A.O. 2007-45 (opining that, as the petitioner was not an officer in any of the political organizations of which he was a member, nor in any other leadership position within the organizations, nor in any way able to affect the financial objectives of the organizations, he was not a “business associate” of those organizations such that §§ 5(a) and 7(a) would be implicated); A.O. 2002-06 (opining that mere membership in the Chamber of Commerce does not rise to the level of a business association that would trigger the prohibitions set forth in R.I. Gen. Laws §§ 36-14-5(a) and 5(f), and thus, Westerly Town Councilors who were members, but not officers, of the Greater Westerly-Pawcatuck Chamber of Commerce were not prohibited from voting on the granting of a tax exemption for the Chamber of Commerce); A.O. 96-54 (in which the Commission concluded that Town of Westerly Zoning Board members, who were also members of the YMCA, could participate in matters concerning rezoning for the YMCA, based upon the fact that mere membership, without the ability to affect the YMCA’s financial objectives, did not rise to the level of a “business association” requiring recusal). Based on the petitioner's representations, pertinent provisions of the Code of Ethics, and prior advisory opinions, we conclude that: 1) the Newport Waterfront Commission is a municipal agency subject to the Code of Ethics; and, 2) that the petitioner is not prohibited by the Code of Ethics from participating in discussions and voting on a recommendation to the City Council on a mooring fee increase, notwithstanding the fact that the petitioner leases a commercial mooring, has been on the waiting list for a private mooring for approximately five years, and is a member of various associations who themselves utilize private or commercial moorings including the International Yacht Restoration School, Sail Newport, and the Newport Yacht Club. Code Citations: 36-14-2(8)(ii) 36-14-5(a) 36-14-5(b) 36-14-5(d) 36-14-7(a) 36-14-7(b) Regulation 36-14-2002(4)(b) Regulation 36-14-2001(22) Other Statutory Citations: Codified Ordinances of the City of Newport §§ 2.88.030 & 12.28.130(J) Related Advisory Opinions: A.O. 82-5 A.O. 96-54 A.O. 99-25 A.O. 99-98 A.O. 2000-37 A.O. 2002-06 A.O. 2002-10 A.O. 2004-16 A.O. 2005-22 A.O. 2007-45 Keywords: Business Associate Class Exception Memberships