Advisory Opinion No. 96-61

Re: Kevin Rabbitt

A. QUESTION PRESENTED

The Pawtucket City Solicitor requests an advisory opinion as to whether a City Councilor must recuse himself from participation in a hearing where a night club owner seeks reinstatement of his entertainment license since the Council member is also a real estate broker and is the listing agent for an adjacent parcel and the night club owner is the prospective buyer of that parcel.

B. SUMMARY

The Code of Ethics requires the City Councilor to recuse himself from any participation in the consideration of a night club owner's entertainment license where the Councilor is the real estate broker for adjacent property and the night club owner is the prospective purchaser of that property. Recusal is necessary in order to avoid not only an appearance of impropriety, but also based on the petitioner's or his business associates' likelihood of receiving a financial gain by reason of his official activity (voting on the entertainment license for the adjacent property), and impairment of his independence of judgment. R.I. Gen. Laws § 36-14-1 & §36-14-5(a), (b), (d).

C. DISCUSSION

1. Facts

John Gannon, Pawtucket City Solicitor, requests an advisory opinion on behalf of Kevin J. Rabbitt, a member of the Pawtucket City Council. One of Mr. Rabbitt's duties is to consider and vote on entertainment licenses.

Mr. Rabbitt is also a real estate broker and is a listing broker for a particular parcel of real estate in Pawtucket located next to a night club with a liquor license. Mr. Rabbitt has in the past voted to revoke the entertainment license of the night club. The prospective purchaser of the parcel is the owner of the adjacent night club. This night club owner and prospective purchaser has indicated that he will seek to reinstate his entertainment license in the near future. The petitioner represents that the real estate transaction and the reinstatement of the license may occur simultaneously.

The petitioner questions whether the Code of Ethics requires Mr. Rabbitt to recuse himself from participation in the hearing relative to the night club owner's application for reinstatement of his entertainment license if he consummates the sale of the property to the night club owner.

2. Analysis

The Rhode Island Code of Ethics provides that the petitioner shall not have any interest or engage in any business, transaction or professional activity which is in substantial conflict with the proper discharge of his duties in the public interest. The petitioner has a substantial conflict with the proper discharge of his duties if he has reason to believe or expect that he or any business by which he is employed will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. R.I. Gen. Laws § 36-14-5(a), § 36-14-7(a). Additionally, R.I. Gen. Laws § 36-14-5(b) provides that the petitioner shall not accept other employment which will either impair his independence of judgment as to his official duties or induce him to disclose confidential information. And R.I. Gen. Laws § 36-14-5(d) provides that the petitioner cannot use his public office or information received through his holding of a public office to obtain financial gain.

In this matter, the petitioner, as a real estate agent, is the listing agent for property adjacent to the night club. The night club owner is seeking to purchase this property as well as apply for an entertainment license. Since the night club owner is also a prospective purchaser of the property, a financial nexus between the parties exists. The petitioner's action on the entertainment license could result in a financial benefit for either himself or the night club owner. The Commission has previously advised real estate agents and insurance agents to recuse themselves from participation in matters where their interests are affected or a client appears before them. For instance, a member of the Barrington Zoning Board of Review who is a real estate agent must recuse himself from participation in matters where the applicant has business interests conflicting with that member's interests. A.O. 93-11. And A.O. 96-5 (Commission advised Board of Underground Storage Tank Financial Responsibility Review Board members that their activities in the public interest must not conflict with their private business activities. See also A.O. 93-02 (independent contractor with a real estate company and member of a planning board could not participate in matters concerning real estate owned by the company or its owner or in any other matters benefitting his employer.) Similarly, where a insurance agent was also a member of the Middletown Town Council, he could not participate in matters where a client appeared before him. A.O. 91-81. See also A.O. 86-46 (Commissioner must recuse when client was subcontractor even though contractor appeared before the Commission because of the client's financial benefit as a result of the Board's decision).

Based on a review of petitioner's representations, the Code of Ethics, and previous advisory opinions, the Commission concludes that he must recuse himself from participation in matters concerning the night club owner while he is negotiation with the owner concerning the sale of the adjacent property. The notice and recusal should be in accordance with R.I. Gen. Laws § 36-14-6. If other issues come before the Board which may directly impact the petitioner's financial interests or those of his business associates, he should either exercise the notice and recusal provision of the Code and/or seek further guidance from the Commission.

Code Citations:

36-14-1

36-14-5(a)

36-14-5(b)

36-14-5(d)

36-14-6

36-14-7(a)

Related Advisory Opinions:

96-5

93-11

93-02

91-81

86-46

Keywords:

business associate

financial interest