Advisory Opinion 94-11-1110
Property Services/Outside Employment

ISSUE: UNDER WHAT CIRCUMSTANCES WOULD EMPLOYEES IN THE PROPERTY SERVICES DIVISION INCUR A CONFLICT OF INTEREST IF THEY ENGAGED IN OUTSIDE EMPLOYMENT RELATING TO REAL ESTATE?

Opinion: Based on the question presented to the Board of Ethics, the Board concludes that outside employment in real estate and related property services could pose conflict of interest issues for employees whose official duties and responsibilities are associated with the County's real property transactions in both incorporated and unincorporated King County. In some instances, employees will have to confine their outside business activities to jurisdictions where the employee's agency does not contract or do business. However, this opinion deals with the broad application of conflict of interest issues attendant to real estate activities by employees of County agencies involved with property sales and acquisitions. The Board cautions that individual circumstances may mitigate certain restrictions and employees are advised to request an advisory opinion.

No County employee may disclose or use for personal benefit any information acquired in the course of official duties which is not available as a matter of public knowledge or public record.

Statement of Circumstances: Previous advisory opinions on outside employment in real estate have been case-specific and have always focused on individual job responsibilities and how these related to a particular outside business activity. The Board of Ethics has issued these opinions in response to inquiries from employees in the Property Services Division, Department of Assessments, and the Department of Development and Environmental Services. In this instance, the Manager of the Property Services Division seeks broader clarification of the conditions under which outside employment in the area of real estate may present a conflict of interest for employees in that division.

Analysis: The Property Services Division consists of the leasing, the acquisition, and the inventory and control sections. Although each section is responsible for a particular aspect of real estate transactions, sometimes responsibility may overlap. An overview of the sections follows:

• The leasing section negotiates leases of property and prepares related documents for the County as both lessor and as lessee. In virtually every case, the property leased is commercial, industrial, or institutional. Leasing occurs within incorporated and unincorporated King County.
• The acquisition section negotiates the purchase of land for roads and surface water facilities, and also for offices and jails. These purchases may be residential and commercial properties. Most acquisitions occur in unincorporated King County with the exception of those in suburban cities which contract with the County for road and surface water management services. This section may also acquire property inside the City of Seattle. Normally such property is high-visibility commercial property.
• The inventory and control section sells surplus County property and "tax title" property (property taken by the County for failure to pay property taxes). These properties include residential and commercial sites located in both incorporated and unincorporated King County.

Several employees, both temporary and career service, own and manage their own investment or income property within King County, as well as engaging in real estate activities outside of the County. These activities include acting as a sales agent for private real estate companies, performing appraisals, and managing and brokering properties.

The issue of outside employment in real estate, like the general issue of outside employment, often raises concern about the potential for a conflict of interest. Whether an actual or perceived conflict exists, however, is dependent on numerous factors, including the nature of business conducted by a department or division on behalf of the public, the employee's official duties and responsibilities within the County agency, his or her access to privileged information, and the level of interaction which takes place with clients or potential clients of the County. Conflicts do not necessarily arise in all instances. However, it is when a business interest intersects or overlaps an employee's official duties and responsibilities that a conflict occurs.

In the area of property services, two provisions of the Code clearly establish a basis for conflict. Section 3.04.030 A concludes that a County employee shall be deemed to have a conflict of interest if the employee directly or indirectly:

Receives or has any financial interest in any purchase, sale or lease to or by the county of any service or property when such financial interest was received or obtained with the prior knowledge that the county intended to purchase, sell or lease such property or service;

or if the employee,

Is beneficially interested, directly or indirectly, in any contract, sale, lease, option or purchase that may be made through, or under the supervision of the employee, in whole or in part, or accepts, directly or indirectly, any compensation, gift or thing of value from any other person beneficially interested therein; (3.04.030 B)

The Board has narrowly interpreted these sections. That is, whenever an employee has a financial interest in a transaction with the County, or is beneficially interested in a County action, and when such interest is directly related to the official duties and responsibilities of the County agency where the employee works, there is, at the very least, a perception of a conflict of interest. Based on this interpretation, the Board of Ethics has advised employees to confine their outside business activities to areas where private interests cannot conflict with the administration of public interests by their agencies. (Advisory Opinions 1055, 1057, and 1063)

In the specific area of real estate and property services, this often entails a complete separation of official duties and outside business activities, with the result that such outside activities must be confined to jurisdictions where an employee's agency does not contract or do business. Given the overall responsibilities of the Property Services Division, conflicts of interest could occur on several levels:

(1) A conflict of interest is most likely to result if an employee were engaged in real property transactions in unincorporated King County.

(2) Although less likely, conflict could result in incorporated areas of the County if the County had an interest in a property or was likely to have an interest.

(3) Conflict is least likely to result when real property transactions are limited to single family residential properties, as long as the County has no interest in a particular residential property, or when confined to counties other than King.

In the absence of specific information, however, the Board cannot categorically determine whether one activity would pose a conflict, while another one would not. Conflict of interest issues arising from outside employment are frequently complex and fact-specific and therefore need to be determined on a case-by-case basis.

All County employees, especially those engaged in outside employment relating to their official duties and responsibilities on behalf of the County, are reminded that it is a violation of the Code of Ethics to disclose or to use for personal benefit, any information acquired in the course of official duties which is not available as a matter of public knowledge or public record. (K.C.C. 3.04.030 Q)

References: King County Code of Ethics, section 3.04.030 (A, B, and Q), Advisory Opinions 1055, 1057, and 1063.

ISSUED THIS ___________ DAY OF ___________________, 199__.

Signed for the Board: Timothy G. Edwards, Chair

Members:

Dr. J. Patrick Dobel, Chair
Timothy Edwards, Esq.
Rev. Paul Pruitt

JPD/mag

cc:

Gary Locke, King County Executive
Metropolitan King County Council Members
Susan Baugh, Director–Ombudsman, Office of Citizen Complaints
Robert I. Stier, Senior Deputy Prosecuting Attorney and Counsel to the Board of Ethics
Mike Wilkins, Manager, Property Services Division
Kamma Kure, Administrative Assistant, Property Services Division