Advice has been requested from an industrial representative in the Department of Economic and Employment Development's Division of Business and Industrial Development as to whether she may have a real estate license and engage in real estate sales activities in Anne Arundel County. We advise the Requestor that working as a real estate sales person while she continues in her present position would be inconsistent with the outside employment impairment provision of § 3-103(a)(1)(ii) of the Public Ethics Law (Article 40A, §3-103(a)(1)(ii), Annotated Code of Maryland, the Ethics Law).
The Business and Industrial Development Division (the Division) is one of five major operating units of the recently established Department of Economic and Employment Development (DEED). The mandate of this Division, which reports directly to the Secretary, is to attract new businesses to Maryland, and to help the State to retain and assist existing businesses in the State. This is described by the Department's Deputy Secretary as primarily a marketing function, with the Division organized into three major marketing units, one directed to in-State companies, one with a focus on the international companies, and the third a national unit.
The Requestor works as an industrial representative in the national unit, and has the job of working with U.S. companies not already located in Maryland to persuade them to come to Maryland either to relocate or expand existing businesses or to establish new ones. She indicates that the unit spends about $1.4M in print advertising, and also participates in marketing functions with business associations and other entities such as the Industrial Development Resource Council. In addition, the office is included in a number of business reference materials. When a prospective business is identified and assigned by the Office Director to a particular representative, a preliminary review is made to establish that the company is legitimate and has the plans and capability to come to Maryland. If the conclusion is positive, then the representative works with the company to try to bring it to Maryland.
The Deputy Secretary describes this effort as in a way an unofficial consulting service, with a Maryland bias, addressing with the company all of the factors that are involved in a decision to relocate or establish a business. The industrial representative contacts the company to find out its need and concerns in making a decision to locate or relocate in Maryland. She then reacts to the company's needs with specific site recommendations and other information regarding their needs, using other resources within the Division, including an industrial site inventory for the state. There is also a research staff in the Division that has support background information and materials regarding work with other State agencies. The Requestor says that she may also work very closely with local officials. She indicates that the process may involve working with a firm for a few months or for one or more years.
We are advised that the Division's site inventory is limited to an inventory of industrial property, sites and buildings that are zoned for manufacturing operations. The office does not handle residential inventories or information regarding housing in general. The Requestor indicates, though, and the Deputy Secretary confirms, that the discussion of availability of housing and various issues that would be involved in relocating employees tends to be a significant aspect of the process of working with companies. Apparently the Division does not deal with this directly but would refer the company to one of the relocation units operated by some of the larger real estate firms in the area. The Requestor indicates that these entities tend not to include real estate sales people who might actually sell a residential property, but that the private relocation center would work with any relocating company to develop a relocation plan, and may end up referring persons to sales offices of the real estate firm.
This request is presented in view of the Requestor's interest in working in the residential real estate business in the Annapolis area. She has taken the real estate course and taken and passed the licensing exam, but not yet applied for a license. In order to actually sell real estate, she would need to affiliate with a broker, and has considered one of the larger real estate agencies in her area. Apparently she originally considered working in a relative's small firm, but has concluded that a larger entity that generated more business would be preferable. The firm she is considering does have a relocation center with which she would work and has worked in coordinating relocation plans with prospective Maryland businesses. She says that she has never worked with this firm or one of the other large general real estate firms with regard to industrial property directly involved in her official dealings with a prospective business. These properties tend to be listed with a specialized industrial brokerage house.
The issue here involves application of the outside employment provisions of the Ethics Law, particularly the impairment provision of §3-103(a)(1)(ii). FT#(1). This section prohibits an employee from having any outside employment that would impair his impartiality or independence of judgment. 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. In applying this prohibition to the situation presented here, the question is thus whether the Requestor's particular proposed activity as a real estate sales person would be related to potentially impact on her responsibilities as an industrial representative to create a conflict or appearance of conflict as contemplated in this section.
The Deputy Secretary has expressed the view that this type of private work would have a relationship to the Requestor's agency duties and would create a potential conflict problem and appearance problem, as issues regarding housing for employees of relocating companies can be significant parts of the process. An industrial representative in the Requestor's position works with the prospective business and with the local real estate relocation center in addressing the company's relocation issues. The Deputy Secretary has expressed concern about appearance problems if representatives of private companies considering various Maryland locations were to discover themselves to be dealing with a person engaged in private real estate sales within a particular area or working for a particular real estate firm to which the business may have been referred by the DEED. He has also pointed out that the activities of the industrial representatives are highly confidential, and expressed concern about the potential for use of this type of information for one's own benefit or that of a private brokerage house employer.
Moreover, in view of the breadth of the real estate activity, we are not convinced that it would be possible for the Requestor to disqualify herself or avoid a conflict should it develop that a private real estate client or employer has some relationship with a business with which she is working as an industrial representative. This situation is similar to the circumstances we considered in our Opinion No. 87-9, which involved the real estate activities of a member of a local Property Tax Assessment Appeals Board. We considered there the likely involvement of private real estate customers with the person's agency, and the appearance issues presented by members of the real estate profession serving in a State position that dealt significantly with real property matters. Though this situation differs in its details from the one presented in this and earlier Opinions involving real estate activities, we have here the same concerns about the breadth of the real estate activity and the difficulty in controlling the private individuals that one would serve in the sales activity.
Under all of these circumstances, and particularly in view of the concerns expressed by the Requestor's agency, we believe that the relationship between her agency's program and her official duties and the real estate business presents a sufficient potential for impact of the private activity on her State job that §3-103(a)(1)(ii) would apply to bar the activity while she continues in this position. We advise her, however, that this limitation applies to being actively engaged in real estate sales activities. It would not prohibit the Requestor from proceeding to obtain her license based on the course work and exam she has recently completed, and having the license held as inactive while she continues her current State service.
M. Peter Moser, Chairman
William J. Evans
Rev. C. Anthony Muse
Barbara M. Steckel
Date: March 29, 1988
1 In our past dealings with this agency it has appeared that it does not have significant regulatory authority. Also, the units of the former Department of Economic and Community Development that would be expected to work more directly with the real estate industry were placed in the Department of Housing and Community Development. As it does not seem that the Requestor's private activity would involve an entity that is subject to her agency's authority or contracts with her agency, we do not further consider the strict prohibitions of §3-103(a)(1)(i) here.