Advisory Opinion No. 94-105

Re: Edward F. Sanderson

A. QUESTIONS PRESENTED

Whether employees and members of the Historical Preservation & Heritage Commission may apply for and receive loans from a fund operated by said Commission.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that employees(1) of the Historical Preservation & Heritage Commission may apply for loans made available through said Commission provided that said employees do not use their official positions or confidential information obtained through said positions to influence their selection for the loans. In addition, in the event that HPHC employees apply for said loans, those employees should (a) notify HPHC, in writing, of the nature of their interest in the matter, and (b) refrain from participation in said matter. This Commission has previously allowed an employee of the Department of Transportation to apply to a program operated and administered by his employer provided that the petitioner did not use his official position to influence the status of his application. See Advisory Opinion 90-55.

However, we conclude that the Code of Ethics bars Commissioners of HPHC from applying to the loan program. This finding is based on the fact that Commissioners of that agency play a vital discretionary role in the loan application process; serving on the Loan Committee, making recommendations to the full Commission concerning applications, and voting as a full Commission to provide the final approval of each loan application. Given this pervasive involvement in every aspect of the program, the Commissioners may not simultaneously place themselves in positions to benefit financially from the program by applying for loans. Furthermore, in view of the powers and duties which fall under the jurisdiction of that Commission--including establishing criteria for historical and architectural structures and granting and loaning funds for the restoration and preservation of such structures--Commissioners so empowered should not benefit from the resources and policies which are generated as a result of their official actions.

C. DISCUSSION

1. Facts

Edward F. Sanderson,(2) the Executive Director and Deputy State Preservation Officer of the Historical Preservation & Heritage Commission (HPHC), requests an advisory opinion as to whether HPHC members and employees may apply for loans from a fund operated by this agency. The petitioner advises that HPHC administers a $2 million low-interest loan fund designed to assist owners of significant and historic buildings with preservation and restoration. Operating procedures for the loan program are carried out in accordance with the Rhode Island Administrative Procedures Act. Loan applicants are required to carry out the following: (a) propose a restoration project for a property listed in the State Register of Historic Places, and (b) submit personal financial information demonstrating ability to repay the loan.

The petitioner also advises that each loan application is reviewed by staff and a Loan Committee comprised of three Commissioners. The Commission's staff includes two senior fiscal staff and two historical architects. The fiscal staff reviews financial information provided by the applicant and prepares a recommendation as to whether the applicant would be able to repay the loan. The architectural historian prepares a recommendation as to the property's historical significance while the staff architect determines the merits of the desired project. The Executive Director advises that, at the staff level, only he has the power to reject applications. The Loan Committee makes recommendations regarding each application to the full Commission, which then votes to provide final approval. After the loans are approved, they are processed by Commission fiscal staff, and the restoration work is reviewed by a Commission staff architect. The Commission's Executive Director represents the Commission at loan closings and approves each loan disbursement payment.

Mr. Sanderson also advises that several members of the Commission's staff are qualified to review loan applications and to assist the Loan Committee in its review of applications. Staff members are not authorized to approve loans. As a result, the petitioner states, it is possible to assign staff so that a Commission employee would not review or process his or her own loan application.

Pursuant to R.I. Gen. Laws § 42-45-5, among the powers and duties provided to the seventeen-member Historical Preservation & Heritage Commission are the following: establish criteria for evaluating historical, architectural, or cultural sites, buildings, places, landmarks, or areas so as to determine their value in terms of national, state, or local importance and to determine their worthiness for inclusion in the state register; grant or loan state and federal funds to towns or cities or private groups for the purpose of acquiring, restoring, relocating, or otherwise preserving land or buildings designated in the state register; receive on behalf of the state such grants or loans as may be made by the federal government or by private persons or groups. In addition, the Commission is the designated agency of the state in applying for the aforementioned grants.

2. Analysis

The question at issue in this advisory opinion request is whether members and employees of the Historical Preservation & Heritage Commission (HPHC) may apply for and receive loans from a fund operated by said Commission. Relevant provisions of the Code of Ethics include the following:

R.I. Gen. Laws § 36-14-5(a). No person subject to this Code of Ethics shall have any interest, financial or otherwise, direct or indirect, or engage in any business, employment, transaction or professional activity, or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his or her duties or employment in the public interest and of his or her responsibilities as prescribed in the laws of this state, as defined in section 36-14-7.

R.I. Gen. Laws § 36-14-5(d). No person subject to this Code of Ethics shall use in any way his or her public office or confidential information received through his or her holding any public office to obtain financial gain, other than that provided by law, for him or herself or any person within his or her family or business associate or any business by which the person is employed or which the person represents.

R.I. Gen. Laws § 36-14-5(e). No person subject to this Code of Ethics shall:

(1) Represent him or herself before any state or municipal agency of which he or she is a member or by which he or she is employed. In cases of hardship the Ethics Commission may permit such representation upon application by the official and provided that he or she shall first:

(a) advise the state or municipal agency in writing of the existence and the nature of his or her interest in the matter at issue, and

(b) recuse him or herself from voting on or otherwise participating in the agency's consideration and disposition of the matter at issue, and

(c) follow any other recommendations the Ethics Commission may make to avoid any appearance of impropriety in the matter.

(4) Shall engage in any of the activities prohibited by subsection (e)(l), (e)(2) or (e)(3) of this section for a period of one year after he or she has officially severed his or her position with said state or municipal agency; provided, however, that this prohibition shall not pertain to a matter of public record in a court of law.

R.I. Gen. Laws § 36-14-7(a) Interest in conflict with discharge of duties\l1. A person subject to this Code of Ethics has an interest which is in substantial conflict with the proper discharge of his or her duties or employment in the public interest and of his or her responsibilities as prescribed in the laws of this state, if he or she has reason to believe or expect that he or she or any person within his or her family or any business associate, or any business by which the person is employed or which the person represents will derive a direct monetary gain or suffer a direct monetary loss, as the case may be, by reason of his or her official activity.

It is the opinion of the Rhode Island Ethics Commission that the employees of the Historical Preservation & Heritage Commission may apply for loans made available through said Commission provided that said employees do not use their official positions or confidential information obtained through said positions to influence their selection for the loans. In addition, in the event that the applications of HPHC employees appear before that body, those employees should (a) notify HPHC, in writing, of the nature of their interest in the matter, and (b) recuse themselves from participation in said matter. This Commission has previously allowed an employee of the Department of Transportation to apply to a program operated and administered by his employer provided that the petitioner did not use his official position to influence the status of his application. See Advisory Opinion 90-55.

However, we conclude that the Code of Ethics bars Commissioners of HPHC from applying to the loan program. We base our conclusion on the fact that Commissioners of that agency play a vital discretionary role in the loan application process; serving on the Loan Committee, making recommendations to the full Commission concerning applications, and voting as a full Commission to provide the final approval of each loan application. Given this pervasive involvement in every aspect of the program, the Commissioners may not simultaneously place themselves in positions to benefit financially from the program by applying for loans. Furthermore, in view of the powers and duties which fall under the jurisdiction of that Commission--including establishing criteria for historical and architectural structures and granting and loaning funds for the restoration and preservation of such structures--Commissioners so empowered should not benefit from the resources and policies which are generated as a result of their official actions. Therefore, we conclude that for the members of HPHC to participate in, and thereby benefit from, the loan program would constitute a violation of R.I. Gen. Laws § 36-14-5(a) and 5(d) and, depending on the nature of the application process, subsection 5(e), as well.

Although the Ethics Commission has previously permitted both employees and Commission members of the Historic Preservation Commission to avail themselves of a historical preservation residential tax credit when the same agency reviews applications for the credit, we find the facts presented in the previous matter were distinguishing. In that instance, the review of applications was carried out by professional architects and historians on the Commission staff and certification of the credit was issued by the Executive Director. Thus, employees of the Commission, not members responsible for determining Commission policy, were responsible for reviewing applications and issuing credits. See Advisory Opinion 90-47.

Further, in a previous advisory opinion addressing Pthe issue of whether members of the Building Code Standards Committee--statutorily charged with developing and supervising a continuing education program for local officials and inspectors--could teach in the same program for compensation, the Commission opined and concluded that the members of said Committee may not teach such courses in view of the fact that they administered the program. See Advisory Opinion 92-49. That advisory opinion highlighted the fact that a public official involved in determining the requirements of a program may not benefit from the same program. Similarly, in the present matter, the Commissioners' role in establishing criteria for defining significant structures and in attracting resources for the preservation of such structures should preclude them from participating in the loan program.

Footnotes

(1)The petitioner, the Executive Director of the Historical Preservation & Heritage Commission, advises that he does not intend to apply for a loan from this program.

(2)While the Executive Director's request pertains to individuals other than himself, this advisory opinion has been considered due to the fact that the question presented relates to a program which is directly under his supervision.

Keywords

Government Benefits

Government Loans

Confidential Information

Discretionary Authority