Advisory Opinion No. 2008-59 Rhode Island Ethics Commission Advisory Opinion No. 2008-59 Re: Robert M. Ericson, AICP QUESTION PRESENTED: The petitioner, the Zoning Officer for the City of Woonsocket, a municipal employee position, requests an advisory opinion regarding whether he may participate in a hearing before the City of Woonsocket Zoning Board on a petition for a variance brought by CVS Caremark Corporation, given that the petitioner owns 400 shares of CVS common stock. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the petitioner, the Zoning Officer for the City of Woonsocket, a municipal employee position, may participate in a hearing before the City of Woonsocket Zoning Board on a petition for a variance brought by CVS Caremark Corporation, notwithstanding that the petitioner owns 400 shares of CVS common stock. The petitioner is the Zoning Officer for the City of Woonsocket. In that capacity, he provides background and technical information to the Woonsocket Zoning Board of Review (“Zoning Board”) in matters coming before that entity, as well as making professional recommendations to the Zoning Board, when requested. The petitioner advises that in December of 2008, the Zoning Board will be considering a variance application by CVS Realty, a subsidiary division of CVS Caremark, which will likely request more signage and retail area than the Woonsocket Zoning Ordinance currently allows in the MU-1 zoning district in which the proposed store site is located. The petitioner states that he owns approximately 400 shares of the common stock of CVS which, at the time of his request for this advisory opinion, was valued at approximately $12,000. Given his CVS stock ownership, the petitioner asks whether the Code of Ethics prohibits his participation in the Zoning Board's consideration of the variance. 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. See R.I. Gen. Laws § 36-14-5(a). An official will have an interest in substantial conflict with his official duties if it is reasonably foreseeable that a "direct monetary gain" or a "direct monetary loss" will accrue, by virtue of the public official's activity, 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); Commission Regulation 36-14-7001. Section 36-14-5(d) further prohibits an official from using his position or confidential information received though his position to obtain financial gain, other than that provided by law, for himself, business associate(s), or any person within his family. The Code of Ethics defines the term "business associate" as "a person joined together with another person to achieve a common financial objective." R.I. Gen. Laws § 36-14-2(3). A "person" is defined as "an individual or business entity." R.I. Gen. Laws § 36-14-2(7). The Ethics Commission has recently adopted, in Advisory Opinion 2008-53, a totality of the circumstances analysis in situations in which a public official or employee must take action in a matter regarding an entity in which the official or employee has a publicly held stock ownership interest, regardless of the value of the public official's stock holdings. That advisory opinion explicitly rejected the notion that the relationship between a public official and a publicly traded corporation in which he or she holds stock is per se a business association as defined in the Code of Ethics. We opined that in such instances the analysis should turn on whether the market value of the official’s stock is likely to be impacted by the decision before the official’s agency, and if so, then sections 5(a) and 5(d) of the Code would require his or her recusal. We further stated that “[w]hile it may be a fair presumption that most, if not all, shareholders of a privately held business are capable of influencing the business's financial objectives, this presumption would not accurately describe the relationship between a large, publicly traded corporation and its average shareholders.” Id. In that same advisory opinion, we based our analysis of whether the official was prohibited from participating in the matter before her on the consideration of a number of factors, including: (1) the identity of the person whose financial interest is involved; (2) the type of financial interest (e.g. stock); (3) the value of the financial interest; (4) the predictable change in market value of the financial interest given the governmental decision to be made; (5) the nature and importance of the employee's role in the matter, and the amount of discretion involved; and (6) other relevant factors such as the importance of the employee's participation, and whether adjustments could be made to the employee's duties to reduce any appearance of impropriety. Accordingly, we advised that the petitioner, a member of the Tiverton Zoning Board of Review, was not prohibited from voting on a variance application from CVS Caremark, notwithstanding that she held 450 shares of CVS stock, given that it was unlikely that her financial interest in CVS would be impacted by the decision before the Tiverton Zoning Board. See id. We find the facts of this petitioner’s request to be highly analogous to those presented in A.O. 2008-53. Applying the above factors to the instant case, we note that the petitioner is the Zoning Officer for the City of Woonsocket and in that capacity, advises the Zoning Board of Review, which is being asked to grant CVS a variance relative to allowable signage and retail space at a single CVS retail location. The petitioner's financial interest in CVS is in the form of ownership of approximately 400 shares of CVS stock. We believe that it is unlikely that CVS's share price will be impacted by a decision relative to signage and retail space at one of CVS's approximately 6,200 retail stores. Thus, considering the totality of the circumstances, we find that it is not reasonably foreseeable that the actions of the Petitioner as Zoning Officer and the decision of the Woonsocket Zoning Board of Review relative to CVS's variance application will financially impact the petitioner. The petitioner's interest in CVS is not so substantial as to be deemed likely to affect the integrity of his public service or the decision of the Woonsocket Zoning Board. Accordingly, it is the opinion of the Rhode Island Ethics Commission that the Code of Ethics does not require the petitioner to recuse from his duties as Zoning Officer in the Zoning Board's consideration of CVS's request for a variance. Code Citations: 36-14-2(3) 36-14-2(7) 36-14-5(a) 36-14-5(d) 36-14-5(f) 36-14-6 36-14-7(a) Related Advisory Opinions: 2008-53 Keywords: Business associate Financial interest