Advisory Opinion No. 2011-45 Re: Edward F. Yazbak, CPA, MST QUESTION PRESENTED The Petitioner, a member of the North Smithfield Town Council, a municipal elected position, requests an advisory opinion regarding whether he may participate and vote in the Town Council’s consideration of matters relating to the approval of a condominium development project, given that his business associate has been engaged by the developer to serve as an architect on a different real estate development project. RESPONSE It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the North Smithfield Town Council, a municipal elected position, may participate and vote in the Town Council’s consideration of matters relating to the approval of a condominium development project, provided that his business associate is not involved and will not be financially impacted. The Petitioner is a member and current President of the North Smithfield Town Council (“Town Council”), having been elected in November 2010. In his private capacity, the Petitioner is a self-employed Certified Public Accountant. He represents that DAS Contracting Corporation (“DAS Contracting”) has developed a parcel of land into 64 residential condominium units called Silver Pines Phase I. He informs that a prior Town Council approved an additional 64 units called Silver Pines Phase II, which have not yet been built. He states that some residents have asked the Town Council to review the validity of the original approval and issues of compliance for Phase II. He advises that the Town Council may be asked to take a position as to the approved plan for Phase II and/or take legal action or enter into negotiation to settle the matter. He states that this matter is on the agenda for the October 17, 2011 meeting. The Petitioner represents that he recently learned that John O’Hearne is working with DAS Contracting on a separate project to build some type of elderly housing. He states that Mr. O’Hearne is an architect and the owner and sole proprietor of O’Hearne Associates. He represents that Mr. O’Hearne and O’Hearne Associates have been his clients since at least 2001. He also informs that he has a 50% interest in real estate that has been rented to O’Hearne Associates for the past 10 years, and for the foreseeable future. He informs that Mr. O’Hearne has no professional affiliation with or financial interest in the Phase II condominium project presently in dispute before the Town Council. Based upon the above representations, the Petitioner seeks guidance as to whether he may participate and vote in the Town Council’s consideration of matters related to DAS Contracting’s Silver Pines Phase II condominium development, given that his Mr. O’Hearne has been engaged by DAS Contracting to serve as an architect on a different real estate development project. 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. R.I. Gen. Laws § 36-14-5(a). The Petitioner will have an interest in substantial conflict with his official duties if he has a reason to believe or expect that a “direct monetary gain” or a “direct monetary loss” will accrue, by virtue of his official activity, to himself, a family member, a business associate, an employer, or any business which he represents. Section 36-14-7(a). He is also prohibited from using his public position or confidential information received through his position to obtain financial gain, for himself or his family or business associates, other than that provided by law. Section 36-14-5(d). Additionally, no business associate of any person subject to the Code of Ethics shall represent him or herself, or any other person, or act as an expert witness before the municipal agency of which the person is a member unless the agency is advised of the nature of the relationship and the official recuses himself from voting or otherwise participating in his agency’s consideration of the matter at issue. Section 36-14-5(f). A business associate is defined as “a person joined together with another person to achieve a common financial objective.” Section 36-14-2(3). In the present matter, it is clear that Mr. O’Hearne and the Petitioner are business associates. However, the Commission has previously concluded that a public official is not automatically a business associate of a third entity with which his business associate has an independent business association. See A.O. 2011-36 (opining that that a Providence City Plan Commission member was not a business associate of his tenant’s client absent an independent financial nexus between the Petitioner and the individual client); A.O. 2002-76 (opining that the Narragansett Town Solicitor is not a business associate of his client’s business associate). Thus, the fact that the Petitioner is Mr. O’Hearne’s business associate does not automatically render him a business associate of Mr. O’Hearne’s business associates, including DAS Contracting. Absent an independent financial nexus between the Petitioner and DAS Contracting, the relationship between the Petitioner and DAS Contracting is too attenuated to trigger the prohibitions contained in the Code of Ethics, given that Mr. O’Hearne is not providing architectural services for the Silver Pines Phase II project. Therefore, the Petitioner may participate in the Town Council’s consideration of matters relating to DAS Contracting’s Silver Pines Phase II project, provided that Mr. O’Hearne is not involved and will not be financially impacted.[1] Code Citations: § 36-14-2(3) § 36-14-5(a) § 36-14-5(d) § 36-14-5(f) § 36-14-7(a) Related Advisory Opinions: A.O. 2011-36 A.O. 2006-27 A.O. 2002-76 Keywords: Business Associate Recusal [1] Compare to Advisory Opinion 2011-44, where this same Petitioner sought advice regarding a development project that Mr. O’Hearne was directly involved in. There, the Commission opined that the Petitioner must recuse from participation and vote in the Town Council’s consideration of any matters related to a zoning change for a proposed elderly housing development, given that Mr. O’Hearne was engaged to provide architectural services for that development, which included appearances before the Town Council.