Advisory Opinion No. 96-74

Re: John T. Gannon, Esq.

A. QUESTION PRESENTED

The petitioner, Pawtucket City Tax Assessor, requests an advisory opinion as to whether he may purchase certain commercial real estate given that the petitioner is a tax assessor and that the Deputy Tax Assessor had contact with the tenant at that location regarding the tangible taxes on that property.

B. SUMMARY

The Code of Ethics does not prohibit the petitioner from purchasing commercial property based on the following representations: (1) the petitioner did not obtain any confidential information through his position as Tax Assessor regarding the property; (2) that if the petitioner ultimately purchases the property, neither he nor his subordinates will assess the subject property in the future; (3) that if the petitioner purchases the property, an independent outside source such as a commercial appraiser and an assessor from another town will be responsible for the initial as well as subsequent valuations of the real estate; (4) the tenant is responsible for the tangible property tax and does not involve the petitioner as owner; and (5) that the tenant may take appeals of the tangible property tax through the tax assessor's office, Board of Tax Review and the Superior Court..

C. DISCUSSION

1. Facts

The petitioner is the Pawtucket City Tax Assessor and is responsible for assessing real estate and tangible property. In the tangible tax area, his office only becomes involved if and when an item that was on a previous year's return is not on it in the succeeding year. In that case, someone in his office contacts the tangible property owner to determine if there was a mistake. If the owner disputes an assessment, the owner can appeal it with the Tax Assessors Office, Board of Tax Review and the Superior Court.

The petitioner is interested in purchasing the shopping strip that had an Almacs as its anchor. It is located at 300 Barton Street in Pawtucket. The petitioner represents that he made contact with both Citizens Bank, the current owner of the property, and Olympus Group, who was managing the potential sale for Citizen's Bank, regarding purchasing the property. His first contact was with Citizen's Bank on September 28, 1995.

The Town Solicitor represents that some months ago, but well after September, 1995, a representative of Seder Foods telephoned the Tax Assessor's Office for information on the tangible property tax bill at two former Almacs locations. Apparently, Seder Foods had obtained an option to purchase the Almacs leases for these locations from the Bankruptcy Court in New York and needed to respond by the following day. The Seder Foods representative spoke with the Director of Planning, the Deputy Tax Assessor, and Mayor Metivier regarding the tax bill. Mr. Burns, the Deputy Tax Assessor, advised Seder Foods that the Almacs located on Barton Street has a tangible tax assessment of $1,480,000 with a tax bill of $77,093. Mr. Burns inquired of Seder Foods what they would be doing with the former Almacs furniture, fixtures, and equipment. Based on the information provided by Seder Foods, which indicated that they would be carrying less taxable property, the City projected a tax bill of $40,000. The petitioner was not present during these conversations as he was not in the office that day nor was he aware that Seder would be contacting his office. The petitioner represents that he had no knowledge of Seder Foods interest in the property until after the phone call to this office. Additionally, the petitioner represents that he later read a newspaper article stating that Seder was purchasing the Almacs lease in Bankruptcy Court. Seder Foods has taken over the Almacs lease and the location is currently operating as the Family Marketplace.

The petitioner represents that he had no knowledge that Seder was interested in purchasing the Almacs lease when he became interested in purchasing the property and that he had made inquiries of Citizen's Bank and Olympus Group before Seder's contact. The petitioner represents that he was interested in purchasing the property because he knew that Almacs was leaving and that he thought he would be able to obtain the property at a good price since the anchor location would be vacant. He requests an advisory opinion as to whether he may purchase the property based on the foregoing facts.

2. Analysis

This advisory concerns the issue of whether a Tax Assessor can purchase commercial property given his position as Tax Assessor for the City of Pawtucket, particularly in light of the fact that the tenant contacted his office regarding the tangible tax bill. The Rhode Island Code of Ethics provides that a public official shall not have any interest, financial or otherwise, direct or indirect, which is in substantial conflict with the proper discharge of his or her duties in the public interest. R.I. Gen. Laws § 36-14-5(a). The petitioner has a substantial conflict with the proper discharge of his duties or employment in the public interest if he has reason to believe or expect that he or any business associate will derive a direct monetary gain by reason of his official activity. R.I. Gen. Laws § 36-14-7(a). Additionally, the Code prohibits the petitioner from accepting other employment which will either impair his independence of judgment as to official duties or employment or require or induce him to disclose confidential information acquired by him in the course of and by reason of his official duties. R.I. Gen. Laws § 36-14-5(b). And R.I. Gen. Laws § 36-14-5(d) provides that the petitioner shall not use his public office or confidential information received through his public office to obtain financial gain, other than that provided by law, for himself, his family, business associate, or any business that he represents.

The first issue is whether the petitioner obtained any information about the property he intends to purchase that was not available to the public. The petitioner represents that he learned of the property's availability through Citizen's Bank and the Olympus Group. The petitioner only became aware that there was an interested tenant, Seder, sometime after he had inquired about purchasing the property. In A.O. 80-76, the Commission found no conflict issue for a member of the Providence Heritage Commission who purchases tax-reverted real estate from the City given that the property was not purchased on the basis of confidential information acquired or obtained by him through his office. In this matter, the petitioner did not obtain any confidential information regarding the property before he began exploring its purchase. The petitioner learned of a possible tenant's interest through his office and possibly before the rest of the public, but after he had made inquiries. Given that the petitioner already had an interest in the property before Seder was in place as the tenant, it does not appear that he obtained confidential information or that any information he did receive, all of which is now public, was in any way used to obtain a financial gain. R.I. Gen. Laws § 36-14-5(d).

The next area of concern is how the property will be handled by the Tax Assessor's office assuming the City Tax Assessor purchases the property. The petitioner represents that an independent assessor will be responsible for valuation purposes for the real estate. The petitioner also represents that the tenant is responsible for completing the tangible tax form on which that tax is based. Disputes of either tax determination proceed from the tax assessor's office to the Board of Tax Review and the Superior Court. The Commission has previously found that a substantial conflict of interest would result where a Tax Assessor had interests in his or her jurisdiction. In A.O. 91-66, the Commission found that the Tax Assessor could not assess any property owned by a financial institution where he served as a Board of Director due to potential conflicts. Based on the petitioner's representations, it appears that he will not be in a position to either use his position at the assessor's office to receive a financial gain, for example, a reduced assessment, or that his independence of judgment will be impaired given that his office will not be performing the assessments on the real estate and that the tenant has the opportunity to appeal its tangible taxes. R.I. Gen. Laws § 36-14-5(b), (d).

It is our opinion that, after a review of the petitioner's representations and the Code of Ethics, the petitioner is not prohibited from purchasing the property located at 300 Barton Street in Pawtucket. This conclusion is based on the following: (1) the petitioner did not obtain any confidential information through his position as Tax Assessor regarding the property; (2) that if the petitioner ultimately purchases the property, neither he nor his subordinates will assess the subject property in the future; (3) that if the petitioner purchases the property, an independent outside source such as a commercial appraiser and an assessor from another town will be responsible for the initial as well as subsequent valuations of the real estate; (4) that the tenant is responsible for the filing the tangible tax form on which the tax is based, and (5) that the tenant may take appeals of the tangible property tax through the tax assessor's office, Board of Tax Review and the Superior Court. In the event that the petitioner should be faced with an issue regarding the Barton Street property in his position as the Pawtucket City Tax Assessor, he should file a Section 6 notice and recusal form with the City and the Ethics Commission notifying them of the nature of his interest and recuse himself from participation in the issue.

Code Citations:

36-14-5(a)

36-14-5(b)

36-14-5(d)

36-14-6

36-14-7(a)

Related Advisory Opinions:

91-66

80-76

Keywords:

business interest

confidential information

purchasing