Advisory Opinion No. 99-141

Re: Thomas S. Penhallow

QUESTION PRESENTED

The petitioner, a Charlestown Planning Commission member, a municipal appointed position, who privately is employed as an agent for Randall Realtors, requests an advisory opinion as to whether the Code of Ethics requires his recusal from consideration of the following matters: 1) a developer who previously has listed homes through Randall Realtors seeks approval for a subdivision; 2) a developer for whom the petitioner previously sold a home appears before the Commission; 3) a developer seeks approval for a large subdivision where the application’s approval/denial may impact the real estate market generally; and 4) consideration of a growth management plan that would limit the number of building permits issued per month.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, a Charlestown Planning Commission member, a municipal appointed position, who privately is employed as an agent for Randall Realtors, may participate in the consideration of subdivision applications presented by developers who previously have listed homes through Randall Realtors and/or for whom the petitioner previously sold a home, provided that a) no business relationship currently exists between the parties and b) it is not reasonably foreseeable that the parties will engage in a future business relationship. We remind the petitioner that a conflict of interest is reasonably foreseeable if it is greater than “conceivable” but the conflict need not be certain to occur. See Commission Regulation 6002. Further, while consideration of large subdivision applications and growth management plans may impact the real estate market generally, the potential for a benefit or detriment affecting the petitioner’s employer, and thereby constituting a substantial interest under the law, is too remote and speculative to trigger prohibitions under the Code of Ethics. Finally, the Commission suggests that the petitioner provide notice regarding past business relationships prior to participation in such matters.

Under the Code of Ethics, the petitioner may not participate in any matter in which he has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his duties and employment in the public interest. See R.I. Gen. Laws §§ 36-14-5(a) and 7(a). He is prohibited from using his public position or confidential information received through his position to obtain financial gain, other than that provided by law, for himself, a business associate, or any business by which he is employed or represents. See R.I. Gen. Laws § 36-14-5(d). (A “business associate” is defined as any individual or entity joined with a public official “to achieve a common financial objective.” See R.I. Gen. Laws § 36-14-2(3).) Section 5(f) of the Code requires the petitioner to recuse himself from voting or participating in the consideration and disposition of a matter involving a business associate. See R.I. Gen. Laws § 36-14-5(f). A public official or employee has reason to believe or expect that a conflict may exist when it is “reasonably foreseeable.” Commission Regulation 36-14-6001.

In past advisory opinions, the Commission has required public officials to recuse from consideration of matters if the official had an ongoing or anticipated business relationship with an individual or entity appearing before his or her public body. See e.g., A.O. 98-142 (finding that a Coastal Resource Management Council member should recuse from participating in matters involving a law firm while he has an ongoing attorney-client relationship with a member of that firm); A.O. 98-117 (concluding an Exeter Town Councilor should not participate in a zoning matter where she has had and will likely have an employment relationship with an attorney appearing before her on a zoning matter); and, A.O. 94-60 (concluding that a member of the North Kingstown Planning Commission should not participate in the consideration of a subdivisions proposal submitted by an engineer where the member planned to engage in business projects within the immediate future with that engineer).

However, the Commission consistently has found that no potential for a conflict of interest exists when a prior business relationship between a public official and a private party has ended and there is no ongoing or anticipated future relationship between the parties. See e.g., A.O. 96-30 (concluding that a City Councilor could participate in a matter involving an individual he represented more than five years ago as an attorney given that there was neither an ongoing relationship with the individual nor any specific plans to represent the party in the future). See also A.O. 98-25; A.O. 97-7 A.O. 96-68, and A.O. 96-62. In such instances, a public official may participate in matters involving his or her former business associate, assuming no other conflicts are present.

Accordingly, the Commission concludes that the petitioner may participate in the consideration of matters where he previously had a business relationship with an individual appearing before the Planning Commission, provided that the relationship has terminated. Further, he must recuse himself from consideration of any matters involving former business associates where there is an expectation or reasonable likelihood of future business dealings between the parties. Notice of recusal should be filed with both the Ethics Commission and the Town of Charlestown pursuant to R.I. Gen. Laws § 36-14-(6).

Additionally, the petitioner inquires whether he may consider large subdivision applications and growth management plans, which may affect the supply of new homes and result in an increase/decrease in the sale of existing homes on the market for sale. While these and other matters that arise may impact the local real estate market generally, the potential for a benefit or detriment affecting the petitioner’s employer, and thereby constituting a substantial interest under the law, is too remote and speculative to trigger prohibitions under the Code of Ethics.

Code Citations:

36-14-2(3)
36-14-5(a)
36-14-5(d)
36-14-5(f)
36-14-6
36-14-7(a)
36-14-6001

Related Advisory Opinions:

99-134
99-117
99-95
99-78
99-26
99-11
98-159
98-142
98-141
98-117
98-25
97-112
97-103
97-7
96-100
96-68
96-62
96-30
96-20
94-60

Keywords:

Business associate
Private employment
Recusal