New York State
Ethics Commission

Advisory Opinion No. 93-10: Application of Public Officers Law §73(4)(a) to a State employee leasing real property to a State agency.

Introduction

The following advisory opinion is issued in response to an inquiry from an employee of [a State facility] under the jurisdiction of the State Education Department whether it would be a conflict of interest for him to lease his home to the Office of Mental Retardation and Developmental Disabilities ("OMRDD").

Pursuant to Executive Law §94(15), the State Ethics Commission ("Commission") concludes that the requesting individual may lease his home to OMRDD because OMRDD followed standard public notice and competitive bidding procedures, there were two other State agencies involved in assessing the property and reviewing the contract, and there is no evidence that the individual exerted any influence over the State employees involved in the decisions.

Background

The requesting individual is [an employee] at [the State facility] and serves in a non-policy-making position. He and his spouse own a home in [ ], New York, which they are attempting to sell or lease.

In November 1992, the requesting individual responded to an advertisement placed in a local newspaper by the [ ] Developmental Disabilities Services Office ("DDSO"), a facility of OMRDD, seeking to lease local private residences for the placement of some of the DDSO's clients.(1) A representative from the DDSO inspected the requesting individual's residence and found it to be suitable for the needs of the DDSO's clients. The requesting individual and the DDSO would like to commence negotiating the price and terms of a lease.(2) Leases are generally for five years, renewable, and are valued at greater than $25. Both the State Comptroller and the Attorney General must approve such leases.

According to OMRDD, before the DDSO enters into any lease negotiations, two important steps take place. First, the DDSO conducts an individual residence alternatives ("IRA") home assessment review under criteria established by OMRDD's central administration for IRAs of eight beds or fewer. These criteria are contained in a nine-page "OMRDD IRA Home Assessment Checklist" which establishes "baseline" safety requirements for the proposed residents of the home.(3)

Second, the New York State Facilities Development Corporation ("FDC"), as OMRDD's leasing agent, conducts a rental study of the property to determine the property's fair market rental value.(4) When negotiating with a property owner, DDSO officials are limited by FDC's findings as to the fair market rental value of the property. The Division of the Budget subsequently reviews the negotiated price.

Applicable Statute

Public Officers Law §73(4)(a) provides:
No . . . state officer or employee . . . shall (i) sell any goods or services having a value in excess of twenty-five dollars to any state agency . . . unless such goods or services are provided pursuant to an award or contract let after public notice and competitive bidding. (emphasis added.)

Public Officers Law §74(3)(d) provides:

No officer or employee of a state agency . . . should use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others.

Public Officers Law §74(3)(h) provides:

An officer or employee of a state agency . . . should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust.

Discussion

The Commission notes that Public Officers Law §73(4)(a) directs that a contract between any State agency and a State officer or employee involving the sale or lease of goods or services valued at more that $25 may be let only pursuant to public notice and competitive bidding. The Commission need not determine whether those conditions are intended to apply to the lease of real estate, since it finds that the procedures followed in the instant case did indeed include public notice and competitive bidding. Specifically, in the instant case, the DDSO advertised for rental property in two newspapers. This is the normal business practice of OMRDD when it leases houses. OMRDD assesses property by the comprehensive criteria established in the "OMRDD IRA Home Assessment Checklist." FDC reviews the property and establishes the fair market rental value which the DDSO must use in its negotiations with the property owner. Thus, while OMRDD does not "bid out" in the traditional sense (because real estate is, by nature, unique) public notice and inspection of the property against FDC criteria are, for purposes of our review, tantamount to a competitive bid. Consequently, the award process met the strict procedural standards of the ethics law.

Furthermore, the Commission does not find that this State employee used his State position to gain some advantage or use undue influence in the leasing process or that he otherwise engaged in activities in violation of his public trust, actions prohibited by Public Officers Law §74(3)(d) or (h). The State employee leasing his property is neither an employee of the DDSO, OMRDD or FDC nor designated as a policymaker and, there is no evidence that he or his wife have any business or social relationship with any of the State employees involved in the lease arrangement.

Conclusion

The Commission finds that [the State facility] employee may lease his home to the [ ] DDSO because the State agencies involved followed procedures for assessing and selecting real property to lease which included public notice and competitive bidding, and because there is no indication that any of the standards of the Code of Conduct of Public Officers Law §74 have been violated.

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the person who requested it and who acted in good faith, unless material facts were omitted or misstated by the person in the request for opinion.

All concur:

Joseph M. Bress, Chair

Barbara A. Black
Angelo A. Costanza
Robert E. Eggenschiller, Members

Dated: March 8, 1993

Endnotes

1. According to the DDSO, the facility placed advertisements in the real estate sections of the [ ] newspapers. About 75-80 individuals responded to the advertisements. The DDSO anticipates leasing approximately 6 sites.

2. For example, one term subject to negotiation is whether the requesting individual or the DDSO is responsible for snow removal.

3. A team of individuals knowledgeable in three areas--the needs of the people who will live in the home, construction and building codes--is assembled. Those with a maintenance/construction background check the building condition, e.g., foundation, walls, roof, plumbing, bathroom, kitchen, ventilation, electric, etc., to decide whether renovations will be required. A Plant Superintendent/Code Compliance Representative compares the property to a "home accommodations checklist" to determine if it meets baseline requirements for IRA certification. Emphasis is placed on the condition of sleeping space, electrical service, smoke detection, water supply, exterior property, etc. Finally certain "individualized environmental modifications" may be funded such as those to allow easier access to improved functioning (e.g., ramps, lifts, water faucet controls).

4. Pursuant to Mental Hygiene Law §13.11, the Commissioner of OMRDD is authorized to lease facilities in which services for the mentally retarded and developmentally disabled are to be provided and may delegate this authority to FDC.

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