A request has been received from the Department of Assessments & Taxation regarding whether an employee involved in administering the Homeowners' and Renters' Tax Credit Program (the Employee) may have secondary employment as the Executive Director of a private nonprofit business development organization (the Corporation). We advise, based on the current factual situation, that this affiliation is not barred by the Ethics Law.
The Department of Assessments and Taxation (DAT) is established in Title 2 of the Tax-Property Article of the Annotated Code. It is charged with general statewide responsibility for assessment of real property in the State. It has authority over corporations or other entities registered to do business in the State to the extent that it is involved in the registration and chartering of such entities, and in connection with its assessment and collection of personal property taxes. Under the homeowners' and renters' tax credit program, homeowners liable for real property taxes may file application for a real property tax credit. They provide income and asset information which is compared with their total tax bill in accordance with a statutory formula. Where, in accordance with the formula, it is determined that the amount of taxes paid is more than is appropriate for their income, then a credit is allowed. The renters' program functions on the same principle, assuming that a certain amount of rent paid reflects payment of real property tax by the landlord.
The Employee performs a variety of administrative functions in connection with the tax credit program. More particularly, we are advised that he works primarily with the renters' program. He handles difficult and unusual cases, and works on cases that have not been properly submitted. The Employee indicates that he works with individual applicants, particularly elderly persons living on fixed incomes, and may assist in correcting errors in information submission such as failure to include interest income. He says that he works with other government units such as the Income Tax Division, which provides tax return information. According to the agency his access to income tax information is limited to individuals, and does not involve any access to confidential income or other information related to the tax assessment process.
According to the Employee, his dealings with local governments are limited; he says he may coordinate information where a case also involves a local government subsidy, and needs to know where public housing is located since tax credits are not available to renters in public housing. In the renters' program he would also have occasion to deal with the local offices on aging since this program focuses primarily on the elderly. His primary dealings outside the agency tend to be with landlords, who may verify rent and provide other information. According to the agency's Special Program Director, the Employee also performs public information activities regarding the tax credit program.
The Corporation is described by its President as a nonprofit corporation serving as a local economic development entity, organized to promote the growth and improvement of the downtown business area of a community within a Maryland county. Membership is open, though the organization tends to be composed primarily of developers and business organizations. It is managed by an Executive Committee which includes four officers and other committee chairpersons who generally represent organizations or entities that have contributed financially to the organization. They include local colleges, utilities, attorneys, developers and businesses. The group currently is supported primarily by member contributions. Its efforts involve promoting general development goals in the area, doing specific projects, and sponsoring events in the area, including, for example, issues regarding area business and employment prospects, market studies in the area, public appearance enhancements, sponsoring a local garden day, working for growth incentives for residential development, and finding a new museum or art gallery for the area.
According to its President, the Corporation seldom has any dealings with State government except possibly in the transportation area relating to streets and highways and rapid transit/light rail. The organization's primary interaction is with County officials, particularly with the Economic Development Commission. They function in some ways as a community sounding board, and may work with County officials to accomplish certain objectives or implement projects. They have apparently occasionally proposed zoning amendments and been asked their views as to particular zoning proposals. The Employee replaces a previously full-time Executive Director for the Corporation, and was identified by a search committee based on his familiarity with the Corporation's area of interest, his community involvement, and his communications and other skills. The position is part-time with limited compensation. His duties are to serve as a facilitator for the organization, scheduling meetings, and handling correspondence and reports, as well as preparation of comments and project descriptions. He also would represent the organization in meetings and other activities within the community.
According to both the Employee and the Corporation President, the organization has not interacted with the DAT or been involved in any issues relating to taxation in general or assessments in particular. The DAT has reviewed this situation and generally concurs in this view, indicating that the Corporation is not an organization with which it is likely to have any dealings in the assessment program. The Department has indicated that it therefore does not have a problem with this employment, as long as it is clear that it is done entirely on the Employee's own time or leave time, and as long as it involves no use of State equipment (including telephone) or materials. Guidelines reflecting this position have been agreed upon by the Employee and his supervisors, and the Department advises that it believes these requirements will be adhered to by the Employee and carefully monitored by his supervisors.
Section § 3-103(a) of the Public Ethics Law (Article 40A, § 3-103(a), Annotated Code of Maryland, the Ethics Law) prohibits an employee from being employed by an entity that contracts with or is subject to the authority of his agency (subsection (a)(1)(i)), and, further, bars any other employment that would impair the individual's impartiality or independence of judgment (subsection (a)(1)(ii)). As discussed above, the DAT has pervasive authority over property owners (as to assessments), and over corporations and businesses (as to corporate registration and personal property taxes). We believe, however, that the Corporation's filing of incorporation papers and related dealings with DAT's Charter Division would not result in a relationship between the Employee's private employment and his agency that would be barred by this section, as long as the Corporation is in compliance with these filing requirements and no issues or disputes with the agency arise. In any case, the Employee should not be involved on behalf of his private employer in preparing filings or other submissions to DAT.
Nor do we believe that the facts indicate there are other direct or indirect relationships between the Employee's two employers that would present issues under the strict employment or impairment provisions of § 3-103(a) of the Ethics Law. The Corporation does not, from the description of its programs, seem to engage in activities that involve the taxation or tax assessment process, or interaction with the DAT or its programs or offices. Nor does DAT generally, or the Employee's tax credit program in particular, focus on the general development and promotional activities that are of concern to the Corporation. Though there could be an issue here if the Employee's Corporation and DAT activities were to involve significant dealings with the same individuals, either in the private sector or in State and local government units, these facts do not appear to be present in the situation as presented. We thus conclude that the Employee's affiliation with the Corporation is not, as described, prohibited by the employment prohibitions of § 3-103(a) of the Law.
Other provisions of the Law that could have application here are § 3-104, which bars the use of the prestige of one's office for one's own economic gain or that of another, and §3-107, which prohibits the use of confidential information to advance one's own economic interests or those of another. These sections have generally not been viewed as absolute bars to a relationship, but as provisions designed to control an individual's conduct in the context of his State employment. As to §3-104 in particular, we have advised that this provision can be applied to establish Ethics Law limitations on the improper use of State time, equipment (including phones), materials or other resources in connection with the pursuit of private economic interests. We have also, however, recognized that as a general matter these kinds of concerns are more properly handled in the context of agency administrative and personnel rules. We are advised that the agency has addressed this situation and established written controls. Also, the Employee apparently has only limited potential for access to confidential information, and is aware that no information to which he does have access may be used in his private capacity.
We therefore advise the Employee and the Department that under all of these circumstances, the employment provisions of the Ethics Law would not apply to strictly prohibit this employment. Nor, given the facts as presented, would the other provisions of the Law apply on their face to prohibit this affiliation, as long as the agency's administrative controls are complied with and carefully monitored, and the Employee is not being given preferential treatment in these controls.
William J. Evans, Chairman
Shirley P. Hill
Mark C. Medairy, Jr.
Robert C. Rice, Ph.D.
Mary M. Thompson
Date: January 12, 1993