Advisory Opinion No. 2018-15 Advisory Opinion No. 2018-15 Approved: February 27, 2018 Re: Carol Guimond QUESTION PRESENTED: The Petitioner, a member of the Tiverton Planning Board, a municipal appointed position, who in her private capacity is a real estate agent affiliated with Century 21 Topsail Realty in Tiverton, requests an advisory opinion regarding whether she may participate in the Planning Board’s consideration of a land development project brought by another real estate agent at Century 21 Topsail Realty in Tiverton. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Tiverton Planning Board, a municipal appointed position, who in her private capacity is a real estate agent affiliated with Century 21 Topsail Realty in Tiverton, must recuse from participating in the Planning Board’s consideration of a land development project brought by another real estate agent at Century 21 Topsail Realty in Tiverton, given that the Petitioner and this other agent are business associates under the Code of Ethics. The Petitioner is a member of the Tiverton Planning Board (“Planning Board”). In her private capacity she is a real estate agent affiliated with Century 21 Topsail Realty (Topsail) in Tiverton. She represents that another local real estate agent, Thomas Chace (“Chace”), recently joined the Topsail office. While the Petitioner states that she has never done any business with Chace previously, she notes that as real estate agents in the same office it is reasonably foreseeable that she and Chace will work together on certain real estate listings such that she will receive a financial benefit from the sale of a property that Chace has listed, or vice versa. For example, if the Petitioner or Chace bring a buyer to purchase a property for which the other has a listing, they will share the commission. Chace, who is also a land developer, has recently filed a subdivision application for a land development project in Tiverton. This development project will come before the Planning Board for review and approval. Due to the fact that she and Chace both work at Topsail in Tiverton, and given the foreseeability that she and Chace may have financial interests in each other’s listings, the Petitioner seeks guidance from the Ethics Commission as to whether the Code of Ethics requires her recusal from the Planning Board’s review and decision-making relative to Chace’s land development project. Under the Code of Ethics, a public official may not participate in any matter in which she has an interest, financial or otherwise, that is in substantial conflict with the proper discharge of her duties or employment in the public interest. R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest exists if an official has reason to believe or expect that she, any person within her family, a business associate or an employer will derive a direct monetary gain or suffer a direct monetary loss by reason of her official activity. Section 36-14-7(a). The Code of Ethics also prohibits a public official from using her public office or confidential information received through her public office to obtain financial gain for herself, her family, her business associate, or any person by which she is employed or whom she represents. Section 36-14-5(d). Finally, a public official must recuse herself from any matter in which her business associate appears or presents evidence or arguments before the municipal agency of which she is a member or by which she is employed. Commission Regulation 36-14-5002(a)(2). A “business associate” is defined as an individual or business entity joined together with another person to achieve a common financial objective. Section 36-14-2(3), (7). In determining whether a relationship between two parties constitutes an ongoing business association, the Ethics Commission examines the nature of the association and the scope of the business dealings between the parties, and looks to, among other things, whether the parties are conducting ongoing business transactions, have outstanding accounts, or there exists an anticipated future relationship. A.O. 2015-49 (opining that a Zoning Official who had done private electrical work for the Fort Adams Trust in the past, and who planned to bid on future work, was a business associate of the Trust under the Code of Ethics). The impact of an anticipated real estate listing was at issue in Advisory Opinion 2003-12. There, an East Greenwich Town Council member was a part owner of a real estate business along with her brother-in-law, who also acted as a real estate agent for the business. Her brother-in-law had acted as an unpaid advisor to a local developer on a particular development project, and he hoped to obtain the real estate listing for the project. When the developer brought the project before the Town Council for a requested zoning change, the petitioner asked whether she was permitted to participate and vote on the matter. The Ethics Commission opined that the Town Council member must recuse because under the circumstances it was reasonably foreseeable that her brother-in-law would obtain the listing on the property. Here, the Petitioner indicates that, as fellow real estate agents in the same office, it is reasonably foreseeable that she and Chace will work together on certain real estate listings such that one of them will receive a financial benefit from a property that the other has listed for sale. Such repeated and ongoing financial ties between agents in the same office amount to a business association between the Petitioner and Chace, requiring that the Petitioner recuse from any matters before the Planning Board that involve or financially impact Chace, such as Chace’s land development project. See Regulation 36-14-6001 (defining a “reasonably foreseeable” conflict of interest). Accordingly, it is the opinion of the Rhode Island Ethics Commission that the Petitioner is prohibited by the Code of Ethics from participating in the Planning Board’s consideration of Chace’s land development project, or of any other matters before the Planning Board that involve or financially impact Chace. A notice of recusal shall be filed with the Ethics Commission pursuant to section 36-14-6. This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, or canon of professional ethics may have on this situation. Code Citations: § 36-14-2(3) § 36-14-2(7) § 36-14-5(a) § 36-14-5(d) § 36-14-6 § 36-14-7(a) Commission Regulation 36-14-5002 Commission Regulation 36-14-6001 Related Advisory Opinions: A.O. 2015-49 A.O. 2003-12 Keywords: Business Associate