| Advisory Opinion request from Peter G. Bowen, Deputy CAO for the Office of Business and External Services with the City of New Orleans, regarding his ownership of stock in Sonder USA, Inc. |
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In July of 2020, Peter Bowen was hired by the City of New Orleans ("City") as Deputy Chief Administrative Officer within the Office of Business & External Services ("OBES"). Mr. Bowen reports to Chief Administrative Officer Gilbert Montaño. OBES provides oversight and administrative support to several City departments, including the Department of Safety & Permits ("DSP").
The Short-Term Rental Division is responsible for permitting and enforcement of the City's Ordinance No. 28157, concerning application procedures, permit types and fees, operating regulations, enforcement parameters and penalties with respect to short term rentals. The Short-Term Rental Division is housed within DSP and is overseen by Administrator Celeste Sparks. Ms. Sparks reports directly to the Chief Zoning Official, who reports to DSP Director Tammie Jackson. Per Ordinance No. 28157, Ms. Jackson, as DSP Director, has the power to determine compliance with the ordinance and is the ultimate legal authority and decision-maker for short-term rental administration and enforcement. While Mr. Bowen is informed about different aspects of the short-term rental division, his role has been to support the improvement of the overall functionality of all DSP enforcement activities, the leadership development of the DSP, as well as the general workflow and process improvement as part of a broader realignment of DSP.
Sonder USA, Inc. ("Sonder") is a privately held, international company which primarily leases property to be operated as lodging as either short-term rentals or hotel licenses. As part of its business, Sonder routinely seeks permits DPS and is subject to the operating regulations and possible enforcement action by the Short-Term Rental Division within DSP.
Prior to working for the City, Mr. Bowen was employed by Sonder as General Manager in New Orleans. As part of his compensation package, Mr. Bowen was given the opportunity to purchase stock in Sonder. As part of the Stock Option Agreement, Mr. Bowen was required to exercise the option agreement within 90 days of the end of his employment. In February 2019, Mr. Bowen ended his employment with Sonder. On April 29, 2019, Mr. Bowen executed the Option Agreement. Bowen's stock ownership presents an interest of less than 1% in Sonder. As part of the agreement, Mr. Bowen is prohibited from transferring the stock while Sonder is a privately-held company.
Sonder is currently planning on merging with a publicly held company, Gores Metropoulos II, Inc. In addition to the transfer prohibition while Sonder is a privately held company, the Option Agreement prohibits any transfer of stock until there is a completed liquidity event, such as the merger, and through a subsequent "lock up" period. At that point, Sonder will have the ability to promulgate rules with further restrictions related to the disposition of stock. As a result, Mr. Bowen currently has no means to dispose of his stock ownership.
Mr. Bowen stated that he has not interacted with any transactions specifically involving Sonder as an employee of the City.
The City has submitted a disqualification plan that proposes that DSP Director Tammie Jackson will handle all transactions involving Sonder, per the requirements of the City's Charter. In the event any oversight or further action is necessary, Chief Administrative Officer Gilbert Montaño will handle those matters in which Sonder may have a substantial economic interest as defined by La. R.S. 42:1102(21).
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La. R.S. 42:1112A: No public servant … shall participate in a transaction in which he has a personal substantial economic interest of which he may be reasonably expected to know involving the governmental entity.
La. R.S. 42:1112B: No public servant … shall participate in a transaction involving the governmental entity in which, to his actual knowledge, any of the following persons has a substantial economic interest:
(2) Any person in which he has a substantial economic interest of which he may reasonably be expected to know.
(5) Any person who is a party to an existing contract with such public servant … or who owes anything of economic value to such public servant … and who by reason thereof is in a position to affect directly the economic interests of such public servant.
La. R.S. 42:1102(21) defines "substantial economic interest" to mean an economic interest which is of greater benefit to the public servant or other person that to a general class or group of persons.
La. R.S. 42:1112C: Every public employee, excluding an appointed member of any board or commission, shall disqualify himself from participating in a transaction involving the governmental entity when a violation of this Part would result.
La. R.S. 42:1111C(2)(d): No public servant … shall receive any thing of economic value for or in consideration of services rendered, or to be rendered, to or for any person during his public service, unless such services are neither performed for nor compensated by any person who: (1) has a contractual, business, or financial relationship with the public servant's agency; or (2) conducts operations which are regulated by the public employee's agency;
La. R.S. 42:1102(2)(a) defines "agency" to mean a department, office, division, agency, commission, board, committee, or other organizational unit of a governmental entity. For purposes of the Code, "agency of the public servant" and "his agency" when used in reference to the agency of a public servant shall mean: (vi) for public servants of political subdivisions, the agency in which the public servant serves.
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Adopt the proposed advisory opinion.
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| Assigned Attorney: |
David Bordelon |
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