Advisory Opinion No. 97-8 Re: Stanley P. Wojciechowski A. QUESTION PRESENTED The Narragansett Town Solicitor requests on behalf of the Petitioner, a Narragansett Town Councilor, a municipal elected position, an advisory opinion as to whether a conflict of interest would occur if the Petitioner participated in issuing sewer permits given that the principal of the developer is also the real estate broker for property on which the Petitioner has placed a bid to purchase, albeit property unrelated to the applications pending before him. Additionally, the Petitioner requests whether he may vote on matters where various developers, brokers, and owners of real estate appear before him given that he is in the real estate business. B. SUMMARY It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a Narragansett Town Councilor, a municipal elected position, may participate in issuing sewer permits to a developer for Canochet Farms. Although the Petitioner has bid on other property which is now listed by a broker, who is the same person as the applicant before him, the property is owned by a third party and, and because of the attenuated relationship between the broker and the Petitioner they are not "business associates" as that term is defined in the Code of Ethics. However, in the event the Petitioner and applicant do begin negotiating on purchase of property, this relationship may rise to the level of a "business association" requiring recusal. As to the Petitioner's general question, the Commission cannot anticipate all the factors that may be part of a situation where developers, brokers, and owners of real estate appear before the Narragansett Town Council and recommends that the Petitioner when faced with a specific situation should seek further guidance from the Commission. C. DISCUSSION 1. Facts The Petitioner was recently elected to the Narragansett Town Council. The Town Council considers recommendations made by a Subcommittee as to whether certain sewer permits should be issued. In December, 1996, sewer permits were recommended by the Subcommittee to be issued for a development known as Canochet Farms. At that time the Petitioner recused based on a possible conflict of interest and the Council deadlocked on the recommendation. The Petitioner requests an advisory opinion as to whether he may vote on this matter. Prior to being elected to the Town Council, the Petitioner sent a "contract" to a property owner as a bid on the property. The property owner did not respond. Since then, the property owner has listed this property with a real estate broker. The Petitioner has talked with the broker about the property. Additionally, the Petitioner believes that his offer is still open and may, at some point, be acted upon. The real estate broker for the property is a principal in the Canochet Farms development for which sewer permit recommendations are pending before the Petitioner. 2. Analysis The Code of Ethics provides that the Petitioner shall not have any interest, financial or otherwise, direct or indirect, or engage in any employment or transaction which is in substantial conflict with the proper discharge of her duties in the public interest. A substantial conflict of interest occurs if the Petitioner has reason to believe or expect that he/she or any family member or business associate, or any business by which he/she is employed will derive a direct monetary gain or suffer a direct monetary loss by reason of his/her official activity. R.I. Gen. Laws §§ 36-14-5(a), 7(a). Additionally, the Code provides that the Petitioner should not use his position for pecuniary gain for himself, his family or a business associate. R.I. Gen. Laws § 36-14-5(d). Section 5(f) of the Code prohibits the Petitioner from participating in a decision where his business associate appears before him. In a related advisory, AO 96-61, the Commission concluded that a City Councilor must recuse himself from participation in the granting of an entertainment license where the Councilor was the real estate broker for an adjacent parcel of property and the applicant was a potential buyer of that property. This opinion was based on the petitioner's or his business associate's likelihood of receiving a financial gain by reason of his official activity (voting on the entertainment license) and impairment of his independence of judgment. This matter is similar in that the Petitioner has an interest in property that the applicant has listed and who may, if it is sold, earn a commission on the sale. However, it is also quite different in that the property is owned by a third party who is not before him and will not be affected by his participation on the sewer permits. If, in the future, the broker were to either waive his fee or cause the third party to significantly reduce the selling price that the Petitioner is seeking, other questions would need to be answered given Sections 5(g) and (i) of the Code relating to giving/accepting gifts in order to influence a public official's judgment or decision. Additionally, if the Petitioner were engaged in active negotiations with the applicant to purchase the property, his relationship may be that of "business associate"requiring recusal. Absent those factors, however, the Petitioner's relationship with the developer/broker is not such that the Code of Ethics prohibits his participation and voting regarding the sewer permits. As to the Petitioner's second and more general request, the Commission cannot anticipate all the factors that may be part of a situation where developers, brokers, and owners of real estate appear before the Narragansett Town Council. However, the Commission has generally found that where a public official had an interest in real estate and the owner of the real estate appeared before him/her, the public official should recuse since it may result in a financial gain to himself or business associate. It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a Narragansett Town Councilor, a municipal elected position, may participate in issuing sewer permits to a developer for Canochet Farms. Although the Petitioner has bid on other property which is now listed by a broker, who is the same person as the applicant before him, the property is owned by a third party and, because of the attenuated relationship between the broker and the Petitioner they are not "business associates" as that term is defined in the Code of Ethics.. However, in the event the Petitioner and applicant do begin negotiating on purchase of property, this relationship may rise to the level of a "business association" requiring recusal. As to the Petitioner's general question, the Commission cannot anticipate all the factors that may be part of a situation where developers, brokers, and owners of real estate appear before the Narragansett Town Council and recommends that the Petitioner when faced with a specific situation should seek further guidance from the Commission. Code Citations: 36-14-5(a) 36-14-5(d) 36-14-5(f) 36-14-5(g) 36-14-5(i) 36-14-7(a) Related Advisory Opinions: 96-112 96-61 95-83 93-11 93-14 Keywords: property interest regulatory decisions