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Thread: Is it unethical for a planner to invest in real estate?

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    Is it unethical for a planner to invest in real estate?

    I am a planning student who is hoping to launch a career in planning. I am also strongly considering buying a small real estate portfolio over the coming months. Don't worry, my family is neck-deep in all facets of the real estate business (construction, development, management, etc), so I know to expect both volatility and a lot of work. I can also structure this investment as a nights and weekends sort of thing, simply as an alternate stream of revenue.

    My question regards ethics, particularly as it regards the AICP code of conduct. I do plan on being AICP certified one day, and yet I can see situations where my real estate holdings present a conflict of interest with my professional duties. For instance, I could recommend more pedestrian infrastructure in a neighborhood I own residential properties in, thus potentially upping the value of my holdings. My superiors may not take kindly to this.

    My question is two fold:

    1.) Is real estate investing either implicitly or explicitly forbidden by the AICP code of conduct? I may have missed it in my reading of the code.

    2.) Assuming the answer to #1 is "no", how might it affect my professional prospects? Does the existence of a portfolio in of itself create a situation employers do not wish to engage in? Or should my two responsibilities be fine, provided I can still fulfill my responsibilities to my employer.

    If there are other questions I should ask that I am unaware of, I am happy to have those entertained.

  2. #2
    Cyburbian
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    Pedestrian infrastructure is a public improvement. If and when that did happen, you couldn't make the recommendations directly to a plan commission and would need to recuse yourself for those specific improvements.
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  3. #3
    Cyburbian Kingmak's avatar
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    If you own the property you can (need to) put that stuff in yourself. You need to maintain or construct your own sidewalk and pedestrian features. If you write a grant for the city to put it in on your street, yes that is very unethical if you don't fully disclose your interests. Even then, you shouldn't work on that grant or influence it in any way. That's probably just an example you were using, but in general, if you have a interest in any planning initiative or action (rezoning/variance in area), you need to recuse yourself. If you have a question from a AICP perspective, there's a guy at the national APA that answers these questions. Call him.
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    Thanks for the input. I take it this means that AICP does not forbid planners from investing in real estate, so long as the planner is not working on a project that results in actual or percieved gain for himself. Am I right?

    I want to move on to another question: Let us say that my investment portfolio and my client will never come into conflict (e.g. I work for one jurisdiction and my portfolio is in another jurisdiction). Does the presence of a portfolio normally preclude me from employment, and/or is grounds for dismissal? At what point is it necessary and/or proper to disclose to my employer that I own investment real estate?

  5. #5
    Cyburbian Veloise's avatar
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    It wouldn't

    Quote Originally posted by jimtese View post
    Thanks for the input. I take it this means that AICP does not forbid planners from investing in real estate, so long as the planner is not working on a project that results in actual or percieved gain for himself. Am I right?

    I want to move on to another question: Let us say that my investment portfolio and my client will never come into conflict (e.g. I work for one jurisdiction and my portfolio is in another jurisdiction). Does the presence of a portfolio normally preclude me from employment, and/or is grounds for dismissal? At what point is it necessary and/or proper to disclose to my employer that I own investment real estate?
    If your employer wants to know about moonlighting gigs, by all means, disclose the fact and nature of your portfolio. But in this example, it would affect your job no more than, say, owning a vacation home, or having a listing on airbnb.

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    OH....IO Hink's avatar
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    Quote Originally posted by jimtese View post
    Thanks for the input. I take it this means that AICP does not forbid planners from investing in real estate, so long as the planner is not working on a project that results in actual or percieved gain for himself. Am I right?

    I want to move on to another question: Let us say that my investment portfolio and my client will never come into conflict (e.g. I work for one jurisdiction and my portfolio is in another jurisdiction). Does the presence of a portfolio normally preclude me from employment, and/or is grounds for dismissal? At what point is it necessary and/or proper to disclose to my employer that I own investment real estate?
    The AICP code does say that you have to have disclose work to your employer:

    4. We shall not, as salaried employees, undertake other employment in planning or a related profession, whether or not for pay, without having made full written disclosure to the employer who furnishes our salary and having received subsequent written permission to undertake additional employment, unless our employer has a written policy which expressly dispenses with a need to obtain such consent.
    But I see no reason why you could not do both as long as there is no conflict of interest.
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    Cyburbian dvdneal's avatar
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    From what I know, full disclosure is always the best course of action. Most employers won't care if you own rental property even if it's in the same city. They might be a little more concerned if you own some commercial property, but you can just abstain from anything dealing with that property. As long as you don't try to alter plans to improve yourself no one will have a problem. If the plan happens to be the best for the neighborhood and you get a little extra out of it, disclose it and who cares. I just hate seeing people like one of the last planners I worked with who wanted to change a comprehensive plan from commercial to residential because she lived nearby. Sorry, but when then facts are against you, you have to do what's best for your employer, or in this case the city (FYI, she no longer works there).
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    Thanks for your help, everyone! I feel better now knowing that I can pursue both at the same time. I guess to sum things up, I should be okay both working as a planner and owning a property or two if I disclose to my employer and I do not use my position to influence my property's value, especially if it looks as if I am overriding my professional judgement or the judgement of my colleagues to personally profit.

  9. #9
    Lol, don't concern yourself with AICPs rules of conduct. All they care about is that you give them money. Whatever rules of conduct they have is just to help construct a semblance of legitimacy. Worry about who you are working for and what professional role you are playing in the workplace. I think most would agree that it would not be professional of you to be working on a project for others' interests and then inserting ideas to benefit yourself financially. And if you did that as a public servant, of course, you'd be going against whatever code of ethics your organization has, and rules within the state. For example, in California we have the Fair Political Practices Commission, which can prosecute and fine public office holders (not just elected or appointed officials, but employees) involved in decision making.

  10. #10
    Cyburbian Masswich's avatar
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    I think it's OK but if the property is in the place you work, you should at least disclose it.

    By the way, I am not sure I consider a small portfolio an "outside line of work" as much as an investment. I suppose it's a matter of scale.

  11. #11
    Cyburbian
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    Quote Originally posted by chocolatechip View post
    Lol, don't concern yourself with AICPs rules of conduct. All they care about is that you give them money. Whatever rules of conduct they have is just to help construct a semblance of legitimacy. Worry about who you are working for and what professional role you are playing in the workplace.
    NOT TRUE. PLENTY US DO TAKE THIS ISSUE EXTREMELY SERIOUSLY.

    As PDO, I provided confidential, though informal, AICP ethics advice on multiple occasions for planners in my chapter during my tenure. Saying that we only care about money is an outright insult to the mission of AICP and those who strive for a higher standard in ethics.

    Moderator note:
    We all get your point without you having to "scream" it. I left the caps, but reduced the font size to an appropriate size. mendelman
    Last edited by mendelman; 09 Jan 2014 at 11:07 AM.
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    Quote Originally posted by chocolatechip View post
    Lol, don't concern yourself with AICPs rules of conduct. All they care about is that you give them money. Whatever rules of conduct they have is just to help construct a semblance of legitimacy. Worry about who you are working for and what professional role you are playing in the workplace. I think most would agree that it would not be professional of you to be working on a project for others' interests and then inserting ideas to benefit yourself financially. And if you did that as a public servant, of course, you'd be going against whatever code of ethics your organization has, and rules within the state. For example, in California we have the Fair Political Practices Commission, which can prosecute and fine public office holders (not just elected or appointed officials, but employees) involved in decision making.
    Are you trying to say that California employers frown upon this sort of thing? If so, would you generalize this to other states?

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    Cyburbian dw914er's avatar
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    Quote Originally posted by jimtese View post
    Are you trying to say that California employers frown upon this sort of thing? If so, would you generalize this to other states?
    Investing in property is not really a concern. However, if you are using your position to directly influence decisions (let say, signing off on things) in order for your benefit, then there will be issue.
    And that concludes staff’s presentation...

  14. #14
    Cyburbian DetroitPlanner's avatar
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    I have REITS, and a vacation home as investments. I also have a condo as a residence. The only property I actively manage is a vacation home in a 75 square mile township with less than 1,000 people that I do not rent out. I see no issues.

    If I was a slumlord, and looked the other way when I had issues that concerned my property then I would be in violation. I do not plan on being a slumlord.

    If I ever get elected to the condo board, I will make it clear to the association that I will not abuse my authority in anyway prior to the election.
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  15. #15
    Quote Originally posted by jimtese View post
    Are you trying to say that California employers frown upon this sort of thing? If so, would you generalize this to other states?
    I'm saying that you can be prosecuted for this kind of thing if you are using public office to benefit yourself financially. I don't know why that's hard to understand.

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    Quote Originally posted by chocolatechip View post
    I'm saying that you can be prosecuted for this kind of thing if you are using public office to benefit yourself financially. I don't know why that's hard to understand.
    Whoops! I never defined what "this" referred to in my sentence. I should have written, "Does the state of California frown upon its planners investing in property?" I would hope they prosecute planners who abuse their positions for financial gain. We sure as hell aren't Russia.

  17. #17
    Cyburbian Doberman's avatar
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    This would be a difficult line to walk. On the one hand, if you live within your own jurisdiction you can; in many ways, increase your property value in subtle and not so subtle ways. Deliberately doing so when the facts don't add is clearly unethical.

    However, on the other hand, by simply avoiding anything that would remotely increase the value around you for the sake paranoia's sake, or the AICP's, then you are doing a disservice to your own neighbors which is also unethical.

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