01.01

OPINION NO. 01-01

Ethics Commission advice has been requested as to whether an employee of the Department of Housing and Community Development (DHCD) may also serve as a part time elected council member in a local municipality (the City) should he be elected in the general election. We advise based on the information provided regarding the interaction between DHCD and the City that his service with the City would be inconsistent with the employment limitations of the Ethics Law.1

The DHCD, created in 1987, has a variety of missions related to revitalizing communities, encouraging home ownership, expanding affordable housing opportunities, and promoting Maryland's historical and cultural heritage. The Department uses a variety of tools such as credit enhancements, mortgage insurance, financing programs, block grants to local governments, and grants to private businesses, lending institutions, local governments, non-profit groups to carry out its programs. The Requestor is employed at DHCD as a Regional Representative (formerly Regional Customer Manager) in the Office of Special Programs and Planning in the Neighborhood Revitalization Program Division. His duties include providing information to local and county government officials, non-profit organizations, businesses, and individuals about DHCD services and resources. He may also provide guidance and advice on housing and revitalization techniques and strategies. He works with appropriate staff of DHCD to refer potential applicants, grantees and others to DHCD programs. Although, he does not make DHCD funding decisions, he may provide technical assistance to applicants, including local governments.

The unit with which the requestor is affiliated (Special Programs and Planning) administers a series of financial assistance programs for assistance to governments, housing developers, non-profits organizations and businesses. The City has participated in several of the programs and is expected to continue to compete for grants and funding. The DHCD indicates that it has "a good working relationship" with the City. DHCD funds have also been provided to various non-profit organizations in the City and the county where the City is located. The City has also participated in programs administered by other DHCD divisions.

The Requestor works out of his home and services a five county region. DHCD has indicated that it could remove all his duties relating to individuals, businesses, municipal governments, and the county government in the county where the City is located if he is elected to the City Council. The Requestor states that if he is successful and becomes a City Councilman he will also recuse himself from all DHCD matters coming before the city council. The City Council consist of five members who serve four year terms. The City Charter indicates that the Council has express ordinance making powers related to such things as auctioneers and the regulation of auctions in the City; buildings and signs to be erected, constructed, or renovated in the town and building codes; community services in town; cooperative agreements with other municipalities, counties and governments; creation of town departments and agencies; the assessment and collection of taxes; the regulation of franchises and utilities; the acceptance of gifts and grants of federal and State funds; and licenses for businesses and traders. The minutes of the City Council meetings reflect discussions of various economic and housing issues, including the Downtown Master Plan, residential and/or upscale housing, historic preservation goals, and promotion of downtown merchants and businesses. The minutes also reflect proposals for city council endorsement of various redevelopment projects.

The primary legal issue presented arises under the secondary employment prohibitions of §15-502 of the Ethics Law (State Government Article, §15-502, Annotated Code of Maryland). This section bars an official or employee from having any secondary employment with an entity that contracts with or is under the authority of their agency (subsection (b)(1)), and from having any other employment that would impair their impartiality or independence of judgment (subsection (b)(2)). For purposes of the strict employment prohibition of subsection (b)(1), the Law specifically defines the term "entity" to include government entities, and this definition was included in the code revision process specifically to reflect the Commission's long-standing interpretation of this of this provision to apply to employment with county, municipal and other levels of government.

In reviewing questions presented regarding political activity of State employees this Commission has consistently advised that service in an elected position would constitute employment with the local jurisdiction that could come within the limitation of §15-502. This was suggested in our first opinion on this subject (No. 80-2), in which the general advice was that political activity (including running for office) is generally permitted for State employees, but that if elected, the position would be employment subject to the Ethics Law requirements. In a later opinion involving a hearing examiner for the Public Service Commission (Opinion No. 85-13), the individual was advised that his service on a County Council would not be permitted, given the nature of the person's constituent responsibilities as an elected member of the County's governing body, as well as the sensitivity of his PSC duties. This advice was based largely on application of the Law's employment impairment section, as it was not clear that there were direct regulatory or contractual relationships between the County and the PSC.

A different approach was taken in subsequent informal advice where an individual, employed by the Maryland Environmental Service, was advised that he could not if elected serve on the governing body of a municipality that contracted with the MES for his agency's operation of the municipality's water treatment and sewer system. This was based on the conclusion that the contractual relationship brought the situation within the strict employment prohibition. Another informal advice situation involved an employee of the Comptroller's Office who served on the Baltimore City Council. This was found to be permissible because his official duties related solely to another local jurisdiction, and an analysis of his City duties as a part time councilman.

Three recent opinions have been issued that deal directly with situations involving service by State employees with local units that have a variety of interactions with their State agencies. Opinion No. 00-3, for, example involved a full-time high level elected official in Baltimore City who was also employed at the Department of Business and Economic Development, a State agency with significant interactions with Baltimore City (27:9 Md. R. 913, May 5, 2000). This opinion, which rejects the dual employment, is based on the concerns presented by the individual's significant operational responsibilities in the City, as well as the many and substantial ongoing interactions between the City and the State agency. Opinion No. 00-5 (27:16 Md. R. 1575, August 11, 2000) involved an employee in the Department of Natural Resources whose agency had approval and related interactions with a local planning commission where he was an appointed member. Concluding under these circumstances that the local position would thus be barred by the strict prohibition of the Law, we further advised that an exception would not be possible. This was based on our view that, because the requestor would be a local decision maker as to matters subject to his agency's review, the relationships were not sufficiently remove to support an exception finding that there were no conflict or appearance of conflict of interest. Opinion No. 00-7 (27:24 Md. R. 2216, December 1, 2000) involved a Maryland State Police Trooper whose agency had various interagency agreements with a local police department in a municipality where the trooper had been elected to the City Council and was the council member designated Commissioner of Public Safety. We advised that this dual State Police/City affiliation was prohibited by both the strict employment prohibitions and the impairment provisions of the Law. The requestor had duties in his State position that would entail interaction with the City and his City functions included him in policy and operational functions that could impact the City's collaboration with the State in law enforcement matters.

These and other formal and informal advice situations have been based on application of the usually applied general principles for interpreting the outside employment provisions of §15-502 of the Law, including both the strict employment/exception provision and the employment impairment limitation. The Requestor's service on the City Council would be viewed as employment with the City. The City's participation in DHCD programs would, as a general matter, bring the Requestor's service with the City within the strict prohibition of subsection (b)(1). The City appears to have participated in one program (Live Near Your Work Program) directly managed by the Requestor's DHCD unit. While this program to date has not involved large amounts of money, the city remains eligible for several other programs managed by the persons in the Requestor's eight person unit (e.g. Main Street Maryland, Neighborhood Housing Services). It was noted that the City had participated in the Hot Spots program and that new legislation was enacted for a "community legacy" program administered through the Secretary's office where the City could be an applicant.

The impairment provision of the Law has been interpreted to apply in situations where an employment relationship would involve interactions with populations served by one's State agency, or general involvement in activities relating to the State agency programs and job duties, even where strict contract and regulatory relationships are not present. The Department has proposed to reassign the Requestor from any duties in the county where the City is located. He would continue to have duties related to the adjoining counties and municipalities in his region. His State duties include providing information and possible technical assistance on DHCD programs to entities which could be competitors to the City for DHCD funding and programs. These could include local and county officials with whom he may have contact by virtue of his City position as well. In his City position, the requester has indicated that he would not participate in any matters involving DHCD. It is likely however, that others in City government may look to him for information on the department programs. As we discussed with the Requestor at the advice hearing, his personal interest in public service and assisting his home City government by service on the Council could put him in a position where he could not use his expertise and knowledge for the City's benefit and limit his value to both the State and the City. The DHCD representative at the advice hearing acknowledged that even further reassignment of the Requestor to other geographic areas of the State would not fully resolve the potential for conflict.

The Requestor's situation thus suggests issues in both employments that lead us, consistent with the three recent and other prior advice situations, to conclude that this dual DHCD/City affiliation is prohibited by the employment limitations of §15-502, both as to the strict employment prohibition of subjection (b)(1) ( in view of the existing programs and likely continued activity by the City in the future) and the impairment provisions of subsection (b)(2). We therefore conclude that the Law applies to bar his elected service with the City. We note that language in §15-502(c) relating to the strict employment bar allows the Commission to grant exception in accordance with Commission regulations (published at COMAR 19A.02.01) when it determines that a situation that would otherwise be a conflict under the section would not present a conflict of interest or appearance of conflict. Basically, the regulations consider the relationships between an individual's State agency and duties with the secondary employment, and also take account of the nature of the secondary duties and whether they entail any interaction with the State agency or duties.

We have tended to take application of these criteria seriously in view of the fact that the secondary employment comes with the prohibition, as well as the statutory objective that there not be a conflict or appearance of conflict. The goal in allowing an exception is to ensure that any relationships between the State and the secondary employment functions are sufficiently remote that a conflict or appearance of conflict is likely. Under the circumstances presented here, based on the nature of the agency activities and potential activities with the City, the competition for agency funding, the Requestor's State duties related to other jurisdictions (some adjoining) competing for funds, the Requestor's State unit's dealings with the city, and the authority of the town council to act on or legislate matters related to housing and community development and its apparent activity in this area, we advise that we cannot conclude under the regulations that there would not be a conflict, or the appearance of conflict in the dual State/City employment.

Charles O. Monk, III, Chair
    Dorothy R. Fait
    April E. Sepulveda

Date: September 4, 2001

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1 The employee requestor sought advice after filing for office, but before the general election. He received the Commission advice prior to the general election and promptly withdrew from the election.