Filing Number: 05-02
Subject: Representation of Private Interest
Keywords: appearance of impropriety, conflict, construction, contractor, Department of Land Use, disclosure, employee, financial interests, land use, realty, recusal, representation, supervisor, undue influence
Decision By: Commissioners: Dennis Clower, Loren Grober, Eugene McCoy, John McMahon, Ernest Price
Contact Email: admin@nccethics.org
 
Status: Active

Question:

          Whether a high ranking employee in the Department of Land Use may act as his own general contractor and apply to his Department for approval of subdivision plans, building permits, and inspections for the construction of an outbuilding and addition to his personal residence.

Conclusion:

           The employee may act as general contractor and represent himself before his department for the necessary approvals, permits, inspections, and certificates if his department has or establishes a procedure ensuring that approvals of all such applications are issued only on the personal authority of an employee of higher rank than the requesting employee and that no subordinate, peer, or agent for anyone in the employee's chain of supervision discusses any matters related to the construction with him other than those topics discussed with any other County resident in the personal role of general contractor. Additionally, during the five-year estimated duration of this project, the requesting employee must recuse himself from the planning, discussion or implementation of any proposed regulations or ordinances which could affect his conduct as a general contractor on this particular project.

Facts:

          A highly ranked employee in the Department of Land Use with current broad responsibility for supervision of land use code review, licensing, and enforcement and who has other administrative responsibilities including assisting with drafting and interpreting regulations and ordinances, wants to act as his own general contractor in the construction of a detached building on his residential property within the next year and the construction of an addition to his existing home on the same property within the next two to five years. The construction will require the submission of a minor land development plan to the Engineering and Planning sections of his department as well as applications for permits to those sections. The Planning section will also review zoning considerations and all construction will be monitored for compliance with the County Code through inspections conducted by the Inspection section. With successful completion of inspections, the employee will make applications to the Department for certificates of occupancy.

Code or Prior Opinion:

Code provisions
 
          The Ethics Code has two general and one specific provision affecting the employee's request for guidance. The general provisions are conflict of interest and appearance of impropriety and the specific provision is the prohibition on representation of a private enterprise before an employee's department.
 
Conflict of Interest
 
          Section 2.03.l03(A)(1) of the Ethics Code sets forth the activities prohibited as a conflict of interest, as follows:
 
No County employee or County official shall use the authority of his or her office or employment or any confidential information received through his or her holding County office or employment for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated. This prohibition does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the County official or County employee, a member of his or her immediate family or a business with which he or she or a member of his or her immediate family is associated.1   . . .
 
Appearance of Impropriety
 
          Section 2.03.104(A) of the Code prohibits conduct which would create an appearance of impropriety, as follows:
 
No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.03.l03 (A)(l) [Conflict of Interest], undermines the public confidence in the impartiality of a governmental body with which the County employee or county official is or has been associated by creating an appearance that the decisions or actions of the County employee, County official or governmental body are influenced by factors other than the merits.
 
Representation
 
          Section 2.03.103(B)(1) of the Code prohibits employees from assuming representation of a private entity before the Department in which he or she is employed. It states as follows:
 
B. Restrictions on representing another's interest before the County.
 
1.     No County employee or County official may represent or otherwise assist any private enterprise with respect to any matter before the County Department with which the employee or official is associated by employment or appointment.
. . .
 
3.     This subsection shall not preclude any County employee or County official from appearing before the County or otherwise assisting any private enterprise with respect to any matter in the exercise of his or her official duties.
 
          The broad conflict of interest and appearance of impropriety provisions provide notice to employees and officials that the public interest requires them to refrain from activities in which they, their families, or their associates profit from their exercise of official authority and that they must refrain even from conduct which creates the appearance that they are so profiting. The provision on representation is very specific: the prohibition on personal interaction with one's own department serves to eliminate such conflicts or appearances entirely.
 
Commission Precedent
 
          Three prior Commission opinions shed light on the instant request for guidance. In Advisory Opinion 97-07, a planner was permitted to review a plan from a club in which the planner had membership as well as a plan affecting the general area in which he resided. No violation of the Ethics Code was found because the planner did not have authority to grant final approval, his discretion was limited to collective review with colleagues, full disclosure of the planner's connections to the projects were made, and an aggrieved party could appeal. It was implicit in this opinion that residence within a geographic area of authority was not unexpected. The Commission's finding that the employee was did not have authority to render final approval and that full disclosure was made are particularly relevant to the instant question.
 
          In Advisory Opinion 01-07, a Land Use inspector wanted to personally construct an addition to his own residence despite the need for permits from and inspections and reviews by his department. The Commission found no violation of the Code as long as the inspections were not performed by the inspector, inspections were not conducted by his subordinates, the work performed by the employee was for his personal residence and not for a third party or a business, and his superiors in the Department were aware of his activities. The Commission cited the general bar of employees' inspection of each other's for-profit work, but found "limited construction on one's home distinguishable from [construction as] secondary employment." The Commission emphasized the use of the safeguards of disclosure and removal of supervisory authority in order to protect against an appearance that the employee was benefiting from his associations within the Department rather than from the merits of his project. The Commission determined that,
 
Under such limited circumstances, where the inspector is not undertaking the construction primarily for a for-profit purpose, but is doing so for his own use, the following safeguards would drastically decrease, if not eliminate, the creation of an appearance of impropriety [in coworker inspection]: (1) the inspector discloses the fact that he will be making the improvements to his home to the Inspection Division Supervisor; and (2) the Inspection Division Supervisor assigns an inspector, who is not a subordinate of the inspector performing the construction, to inspect the construction and also can notify other Land Use personnel who oversee the individuals issuing any relevant permits. In such limited circumstances, such safeguards decrease the risk that the public will perceive the issuance of any permit and the approval of plans and inspection to be a result of the co-worker relationship, as opposed to approval on the merits of the plans and construction.
 
          In Advisory Opinion 04-03, a supervisory employee of the Department of Community Services wanted to contract for roof replacement on his private residence with a business that participated in his Department's housing rehabilitation program. The Commission noted that the employee was "like any other homeowner who needs to maintain the physical condition of his personal residence." The Commission found that the unique circumstances relating to the employee's relationship with the contractor negated an appearance of impropriety so long as the employee did not exercise official authority over the contractor and the department had a procedure in which
 
any employee with supervisory, contractual, or regulatory responsibility in relation to an approved contractor, or any contractor currently performing services in departmental programs, would be required to disclose to the General Manager the proposed private relationship with the approved or performing contractor, the circumstances under which that relationship arose, and expected duration of the relationship. The General Manager, in turn, shall take appropriate precautions to see that the employee has no involvement or official authority over departmental matters concerning the contractor for the duration of the private relationship with the contractor.
 
          Such a disclosure and recusal procedure prevents conflicts from arising, demonstrates that the private financial interest of the employees do not conflict with the public trust, and comports with the spirit of section 2.03.103A(2) restrictions on the exercise of official authority.

Analysis:

          Section 2.03.103(B)(1) of the Ethics Code prohibits County employees, other than in the context of their official duties, from representing private enterprises (including themselves as owners of real property) before the department or agency in which they are employed.2 The rationale underlying this prohibition is that an employee in such a position cannot adequately protect the public's interest because of inherent conflict between his own private concerns and his official obligation to act for the benefit of the public on department matters. Clearly, the most effective remedy for this problem is the prohibition recited in Code Section 2.03.103(B)(1).
 
          However, as the Commission recognized in its earlier opinions, in the very fundamental area of physical shelter, the public interest must be moderated to permit the employee or official, like any other citizen, to repair, replace or improve his home. That moderation is delineated by strict safeguards which must be carefully implemented and followed by the employee. Thus, in the limited circumstance of repairs or construction on a personal residence, a Land Use employee may represent himself before his department as a general contractor provided his department has or establishes a procedure ensuring the following three conditions: 1) that approvals of his applications are issued only on the personal authority of an employee of higher rank than the requesting employee; 2) that no subordinate, peer, or agent for anyone in the employee's chain of supervision discusses any matters related to the construction with him other than those topics discussed with any other County resident in the personal role of general contractor; and 3) that during the duration of the project, in this case estimated to be five years, the requesting employee recuses himself from the planning, discussion or implementation of any proposed regulations or ordinances which could affect his conduct as a general contractor on this particular project.3

Finding:

          The Commission finds that if the procedures recited above are put in place and strictly followed, the employee may act as his own general contractor because the public interest will be protected, the employee will be unable to profit from his official position, and an appearance of impropriety cannot be created. If these restrictions are not followed, the employee's representation of himself before his department would violate Section 2.03.103 (B)(1) the Ethics Code.
 
          In issuing this Advisory Opinion, the Ethics Commission is applying the New Castle County Code of Ethics, which establishes the minimum level of ethical conduct required of County officials and employees. The Commission cautions, however, that each County department, board, or other unit of County government is free to, and may impose as part of its own policy, additional or greater restrictions on its officials and employees than those set forth in this Opinion.
 
          BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 9th DAY OF FEBRUARY, 2005.
 
_____________________________
Dennis S. Clower, Chairperson
 
Decision: Unanimous

Footnotes:

1 Immediate family is defined in Section 2.03.102 and means a spouse, child whether by blood or operation of law, parent, step-parent, spouse's parent or child, or sibling of the whole or half-blood.

2 Sec. 2.03.102 defines Private Enterprise:

Private enterprise means any activity conducted by any person, whether conducted for profit or not for profit and includes the ownership of real or personal property. Private enterprise does not include any activity of the Federal, State or local government or of any department, authority or instrumentality of the Federal, State or local government.

3 Recusal is required because delegation of authority is possible in this situation. Sec. 2.03.103A(2) provides that in any case where a person has a legal and/or statutory responsibility with respect to action or nonaction on any matter where the person has a personal or private interest and there is no provision for the delegation of such responsibility to another person, the person may exercise responsibility with respect to such matter, provided that promptly after becoming aware of such conflict of interest, the person files a written statement with the Commission fully disclosing the personal or private interest and explaining why it is not possible to delegate responsibility for the matter to another person. If the matter is one in which the legal and/or statutory responsibility requires the person to vote upon the issue, the written statement filed with the Commission shall be read into the public record prior to the time the person's vote is cast. Any person choosing to abstain from voting on an issue where he or she has a conflict shall state the reasons for his or her conflict on the record: an abstaining voter need not file the written statement with the Commission required when acting on, rather than abstaining from, an issue involving a conflict.