An advisory opinion has been requested concerning whether a member of a local Property Tax Assessment Appeals Board (PTAB or the Board) may be actively involved in real estate in his County. Based on the information provided regarding the functioning of these boards and the nature of the real estate activity, we advise the individual (the Member) and the Board that this employment would be inconsistent with the provisions of the Public Ethics Law, if he continues to serve on the Board.
The Property Tax Assessment Appeals Board was established in 1977 (Tax-Property Article, §3-101 et seq., Annotated Code of Maryland). The Board consists of 24 separate Appeals Boards, one for each county and Baltimore City, which are authorized to hear appeals in their respective jurisdictions concerning property tax assessments set by local assessors. Board members are appointed by the Governor based on recommendations of the county governing body or chief executive. They serve five-year terms and are paid an hourly fee plus expenses. Hearings are conducted pursuant to the Maryland Administrative Procedure Act, though according to the PTAB Administrator the proceedings are informal and non-technical.
The Member has been serving on his local PTAB for 7--8 years. He went into real estate a year ago and has since been employed by a nationally organized real estate company that is one of the three largest in his County. According to the Member, he is a full-time agent engaged in residential sales primarily in the County. He indicates that though the amount of the property taxes paid on a property are sometimes a fact that is identified in the context of a sale, this does not often translate into an issue about the assessment itself. According to the Member, evaluating a property and advising a client about the appropriate asking price would involve actual recent market sales within the area, rather than assessment figures. A property can be reassessed as a result of a sale, however, as the assessment office has the authority to reassess when property changes hands, and home owners may bring the real estate printout and private appraisals, including those of real estate agents, to the appeals board as evidence of the value of the property.
This request raises questions under the outside employment provisions of §3-103(a)(1) of the Public Ethics Law (Article 40A, §3-103(a)(1), Annotated Code of Maryland, the Ethics Law). Section 3-103(a)(1)(i) includes a strict prohibition against employment by officials with entities that are under their authority or that of their agency, or that have contractual dealings with the agency. In an early Opinion (No. 80-19) involving the PTAB, we concluded that an entity came under the Board's authority only when it filed an appeal, but was not under the authority solely because it owned property that could potentially be subject to an appeal action before the Board. Since his employer does not own property or appear before the Board, or apparently contract with the Board, we do not believe that there would be a basis for application of this strict prohibition here.
It is our view, however, that the more generally applicable provision of §3-103(a)(1)(ii) is of concern here. This section prohibits any other employment that would impair an individual's impartiality or independence of judgment in carrying out his State duties. We have in the past looked to a person's official duties to evaluate whether there is any relationship between those duties and the private activity that would result in a conflict of interest or the appearance of conflict. More particularly, we have in the past considered application of this provision to members of the PTAB. In Opinion No. 83-28, for example, appraisal activities of a Board member were found to be inconsistent with continued PTAB service, to the extent that the individual's privately appraised properties became issues before the Board.
Opinion No. 83-41 directly involved real estate sales activity, rather than appraisals. We concluded there that there was a relationship between the member's private and official activities, but that the person's real estate work in that particular situation was not within §3-103(a)(1)(ii). The individual there was retired and his real estate work and that of his company was extremely minimal. We specifically said in that Opinion that it "should not be read to reflect the view that participation in the real estate process would generally be treated as allowable employment" under the impairment provision. The situation presented here involves much more significant activity by both the Member and his employer, and we believe as a general matter that the more likely involvement here of customers or other agents of the employer requires a different conclusion than the one in Opinion No. 83-41. Specific concerns are raised by the fact that appellants who come before the Board all own, have bought, and probably will buy real property, and could very well do business with his employer (which is the third largest realtor in the County).
Moreover, we note that the general purpose expressed in §1-102 of the Ethics Law is to enhance the credibility of and confidence in the agencies of government with which citizens must deal. We are concerned that professionals in the real estate industry should be serving as members of a board that so significantly involves the interests of citizens and of the taxing authorities of the State as to real property matters. Though we allowed the very limited activity of a retired individual in our earlier Opinion, we do not believe as a general matter that these appeals boards should be opened up to the industry most significantly involved in transactions related to their area of jurisdiction.
These concerns are reinforced by the views of other State agencies involved in this process. In the past appointing authorities have consistently expressed the view that those involved in the real property industry should not serve on PTAB's. Also, both the PTAB Administrator and the Director of the Department of Assessments and Taxation have expressed some concern about real estate professionals being involved in the appellate process. They both see the appeal process as a lay review that is to reflect a determination based on the facts presented by the various parties. They are concerned that professionals in the property transaction may begin to substitute their own expertise and specialized knowledge resulting from their continuing and regular involvement in activities that involve property evaluation.
In view of all of these considerations, it is our view that this type of employment relationship is not appropriate to preserving the credibility of the assessment and appeal process. We recognize that the Member has served in this position with integrity for many years and brings certain experience in the Board itself to his service. We do not in any way impugn the good faith of the Member or his dedication to his public service. The Ethics Law, however, expresses concern about the appearance of conflict as well as actual conflicts of interest, and mandates us to interpret its terms liberally in order to accomplish its purposes. In our view, this situation presents the types of appearance and inconsistent employment problems discussed in §1-102 and intended to be addressed by the employment prohibitions of §3-103(a)(1)(ii). We therefore advise the Member that his continued service on the Board while he continues his current real estate activities is inconsistent with the Ethics Law.
Barbara M. Steckel, Chairman
William J. Evans
Reverend John Wesley Holland
M. Peter Moser
Betty B. Nelson
Date: May 14, 1987