An advisory opinion has been requested concerning whether the Director of the Student Union on the campus of a State University (the University) may have a private rental property business in which he leases space to student tenants, including some who are employed at the Student Union. Based on the information provided by the Requestor and his agency, we conclude that the individual's rental activities are inconsistent with the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law), to the extent that they involve the leasing of space to students employed at the Student Union. Rental of rooms to students not working in the Requestor's unit does not present the type of situation that would come within the Ethics Law prohibition.
The Student Union at this university performs a variety of campus functions. It operates cafeterias for faculty, staff and commuter students under a general University contract with a private catering service. It also runs a bowling center and a snack bar. There is an art services department that does custom art work such as signs and advertising for students, faculty and staff, as well as for outside groups on a very limited basis. There is also a laundry, a TV movie lounge and a game room. The Union also operates a ticket office primarily for the purpose of selling tickets to student activities (except for sports events). The Union operates a Rathskeller four nights a week and a Friday night nightclub, and also works with a Student Activities Board which consists of student volunteers who determine what activities will be eligible for program funding. The Requestor's office is additionally responsible for the general maintenance and security of the entire facility, as well as budget and other administrative matters.
As the Director of the Union, the Requestor is responsible for management and direction of the Union, which employs approximately 25 full-time professional employees either as regular university employees or as contractual employees. There are also about 200 student employees. The student employees work as cashiers, office assistants, waitresses, event managers (primarily security staff), building managers (also primarily security), bowling mechanics, game room attendants, student artists and general clerical workers. The Requestor indicates that regular employees include the associate director and the operational managers and assistant managers. He says that there are three building managers, who are students; they report to the evening operations manager (a full-time employee) who in turn reports to the Director. He says he has very close contact with these people because they are responsible for managing the building on the evenings and weekends when he is not there.
Student workers are employed through a general application process initiated by the student by filling out a general application advising of his area of interest. The application is screened by the appropriate department head who brings the individual in for an interview if there is an opening. According to the Requestor, the department head makes a tentative decision to hire, with final hiring approval by the Director. The process regarding the building managers that are responsible for the building during the evenings is different, as the Union is very selective as to these positions. They are the top student positions on campus in terms of responsibility, status and pay. This selection is through a group interview process in which the Requestor as the Union Director is one of ten participants. The other members include the other building managers, the evening operations manager, and the Associate Director. All of these individuals are employed by and supervised by the Union Director.
The Commission understands that most students work from 10 to 15 hours per week. They have a salary range of from $3.35 per hour (the minimum wage) to the $5.00 per hour that applies to building managers, the business manager and the nightclub manager. Given the nature of the student population there is a constant turnover in the student employment situation. The Requestor says that he does not like to overmanage and that he does not get directly involved in hiring decisions. He says that he relies on his managers to do the direct day-to-day supervision of employees. Both his immediate supervisor and the Associate Dean responsible for the Student Union, however, point out that he is responsible to sign and approve all hiring and promotion determinations and for payroll purposes signs all time cards. Also, his supervisor indicates that as Union Director the Requestor regularly meets with and gets involved in staff meetings with the building managers. Both of these University officials maintain that if the Director does not get involved in the management of these employees he should.
The issue presented here arises as a result of a real property business activity in which the Requestor engages. He owns five properties either individually or jointly with another individual. He rents space to approximately 20 students in these properties, which include his own personal residence. The Requestor says that given the student character of his tenants, there is a lot of turnover. A potential tenant is advised of the house rules and meets with the people who live in the particular house and a decision to rent is made by the Requestor based on his own intuitive process and the reactions and views of other students living in the property. According to the Requestor, his decision does not involve an investigation of the student's ability to pay or an inquiry into whether the student is employed.
We are advised that there is no general and mandatory regulatory system for off-campus housing. Students who want to live off-campus may live anywhere they want and do not have to live in housing that is approved or otherwise sanctioned by the University. There is an off-campus housing coordinating office, which serves as a clearing house for students and persons wishing of offer property to students. Those offering housing for rent may register there, and must meet established requirements. Registration with the University is not required, however, and the Requestor indicates that though he registered when he first began to rent to students, he has not done so in the past few years. The Requestor advises that his rents vary by property and the size of the particular room, from $140 per month to $195 per month. This is in comparison to approximately $300 per month to share a double in a campus residence with the additional cost of a required meal ticket. Though this would seem to be in competition with the University, apparently there is a need for housing and the availability of off-campus housing near the University is generally viewed as a benefit to the students.
Four of the approximately 20 students that live in the Requestor's properties are students that work in the Student Union. Two are building managers, one is a student artist in the Art Shop, and one is an event manager (primarily a security position). He says that he does not conduct this business in his office, that he does not accept calls or deal with his student tenants about this and that he has directed his secretary of this. Both the Requestor's immediate supervisor and the Associate Dean, however, have expressed concerns that he does in fact do this, and have indicated that this is a difficult situation to monitor, especially as to students that would be in the Union facility and possibly dealing with the Director as employees.
Both of the Requestor's supervisors have expressed concern about his rental activities to the extent that they involve students who work at the Student Union. They indicate that they recognize that the availability of good housing near the campus is a benefit to the students and the University, and they do not believe his rental business presents a problem as to the general student population. Both have expressed concern where the tenants are employees working under the Requestor's supervision, though. The concern is about the general appearance that this presents for the University given the authority and responsibility he has over the student employees, and also about the problems that could occur if the private business activities spill over onto the University time and location.
Consistent with our prior Opinions, this Requestor's holding and use of real property for business and investment purposes results in the existence of an entity in which he has both an employment and interest relationship.1 These activities would therefore be subject to the employment and interest prohibitions of § 3-103(a) of the Law. Subsection (a)(1)(i) of this section is a strict prohibition that applies to financial interests and employment with an entity that is subject to the individual's or his agency's authority or that contracts with the agency. As long as the Requestor is not listing his properties with the off-campus housing registry, and as long as there is no requirement that he do so, his rental business would not itself appear to have these kinds of relationships with the University. Nor do we believe that the fact that his student tenants contract with the University would bring the business under the authority of his agency for purposes of this subsection.
We are convinced, however, that a clear application of the §3-103(a) prohibitions arises under the impairment provision of subsection (a)(1)(ii). This provision forbids any other employment relationship that would impair the individual's impartiality or independence of judgment. This provision was added to the Law to allow the Commission to address situations where the strict contractual and regulatory relationships are unclear, but where the situation presents relationships that clearly present a conflict of interest or appearance of conflict. In applying this provision we have generally looked at the private activity and the relationships it has to the individual's agency or employment circumstances to evaluate whether the private work could impact on the individual's job performance.
We have considered this provision as well as other limitations in the Law in connection with the university setting in other Opinions. In particular, our earlier Opinion No. 83-25 dealt with the private business relationships of university staff to students. In that case, a faculty member was advised that he could not continue in a private business activity that involved selling music, instruments and other materials to his own students for whose progress and grades he was responsible. It was concluded that this activity was employment that would impair his impartiality and independence of judgment, and would create an appearance of conflict, given the significant influence that a teacher would have in advising a student of the need to purchase the very materials and equipment being offered by his private business.
Opinion No. 83-25 also dealt with other provisions of the Law that could be relevant in this situation. Section 3-101, for example, prohibits participation by an official or employee in any matter involving as a party an entity with which he has certain contractual or other business relationships. In addition to applying this provision to an individual whose teaching duties involved advice regarding materials and equipment to be purchased from a private business, we have also in the past applied this disqualification provision to situations where an employee had supervisory responsibilities over persons with whom he had private business relationships. (Opinion No. 85-18.) Also, we have said that personnel actions do come within this provision (Opinions No. 85-8 and No. 84-8), and also that the required sign-off as a supervisor or person in the formal review chain constitutes participation for purposes of this provision (Opinion No. 81-37).
The Commission also considered in Opinion No. 83-25 §3-104 of the Law (which bars the use of prestige of office for one's own gain or that of another), concluding that there were considerable issues raised where the situation involved supervision of a student who was a client of a private business. This provision has been applied also where there is supervisory authority over a person, as well as where an official or employee uses official time, materials or personnel in connection with a private business activity.
In the situation here it is our view that, to the extent that he rents to employees of the Student Union, the Requestor's private activity has some relationship to his official duties which could raise issues under the §3-103(a)(1)(ii) outside employment provision, as well as other provisions of the Law that we have discussed above. Approximately 20% of his tenants are his employees, while the employees represent a significantly smaller proportion of the total student body (there are 200 student employees and 15,000 students). Also, whether he exercises them or not, the Requestor has operational supervisory responsibilities over the employees. He plainly is responsible to sign time records, and participates in hiring, promotion and other personnel decisions as to students that are his tenants, thereby presenting concerns under the participation provisions of §3-101.
Also, we believe that there could be significant issues under §3-104 relating to the substantive relationships here. A person responsible for personnel decisions such as hiring, firing, and hours worked could use the prestige of his office in private tenant relationships through his ability to impact on the personnel status of students who are his tenants. This could result in both benefits and detriments to student tenants. They could possibly be benefited in their employment by actions taken by him or could be subject to pressures as tenants that result from the fact that he has authority over their employment.
Considering all of these factors, we conclude that the Requestor's private business, to the extent that it involves rental to students who are employed in the Union that he directs, results in employment which is prohibited by the impairment provision of §3-103(a)(1)(ii) of the Ethics Law, and which presents significant issues under other provisions of the Law. Though the Requestor's rental to other University students does not appear to bring the activity within the proscription of the Law, we advise that he should discontinue the practice of leasing to students who work in the Union and should make clear to any new tenants that subsequent employment with the Union would require severing the rental relationship.
M. Peter Moser, Chairman
William J. Evans
Betty B. Nelson
Barbara M. Steckel
Date: February 22, 1988
1 See, for example Opinion No. 87-18.