Ethics Advisory Opinion No. 48
October 11, 2000
Issued By: City Attorney’s Office
Whether a City employee who owns and operates a company may contract with an entity that has received funding through another City Department.
An employee with the Neighborhood Action Department has asked whether his company may contract with an entity that has received funding through another City Department and whether prior approval is needed for each of his company’s clients. The following facts are presented:
The Department of Housing and Community
Development provides Community Development Block Grant ("CDBG")
monies to qualified entities for the repair and rehabilitation of affordable
housing for low and moderate income families, among others. One of the
qualified entities that receives the CDBG monies is the Alamo Area Mutual
Housing Association ("AAMHA"), a 501(c)(3) nonprofit corporation
created in 1990. The AAMHA provides such housing for families in
EGL is a company owned and operated by an employee of the Neighborhood Action Department ("NAD"). The employee, a Construction Inspector II, is required to, among other things, inspect the construction of public works projects to ensure compliance with plans and specifications. In addition, the employee is responsible for monitoring the CDBG monies for the rehabilitation of rental units under the NAD Rental Housing Rehabilitation Program. The Program "provide[s] incentives to private-sector owners of single and multi-family rental housing to finance needed improvements to their properties, in order to increase rental housing opportunities affordable to lower income families." Although currently not a recipient, the AAMHA may, in the future, seek funding under the Program.
The issue is whether EGL Consulting may
contract with the AAMHA given its owner’s position with the City. Under the
Ethics Code of the City of
Improper Economic Benefit. As a general rule, a City employee may not take any official action that he knows is likely to have an effect on, among others, his economic interest or the economic interest of his outside employer. The effect must be one that is distinguishable from the effect on the public in general or a substantial segment thereof. Should such occur, the City employee is required to recuse himself immediately, refraining from any further participation in the matter, and disclose in writing to the City Clerk the economic benefit. If he is a supervised employee, he must also notify his immediate supervisor. The supervisor may then reassign the responsibility to another employee.
Under the facts presented, the employee currently is able to influence the funding under the Program. Therefore, should his company contract with the AAMHA and should the AAMHA apply for funding under the Program, the employee is required to recuse himself from any participation in the selection process and disclose in writing with his supervisor and the City Clerk the conflict.
Unfair Advantage of Private Interest. Part B, Section 2 of the Code prohibits all City employees from using their position "to unfairly advance or impede private interests, or to grant or secure, or attempt to grant or secure, for any person (including himself [ ]) any form of special consideration, treatment, exemption, or advantage beyond that which is lawfully available to other persons." Pursuant to this section, the individual may not use his City employment to advance the interests of the AAMHA or give the impression of such. It is advised that, when an issue involving the AAMHA arises, the employee recuses himself from participating in the discussion, thereby eliminating any perception of impropriety.
Confidential Information. All City employees are prohibited from using their position to release confidential information for purposes other than the performance of their duties and/or from intentionally or knowingly disclosing such information gained as a result of their position. Given that the two positions, City employment and contracting services with the AAMHA, are interrelated, the employee must remain cognizant of this standard of conduct, maintaining any confidential information that, if known, would benefit the AAMHA in receiving monies from the City.
Representation of Private Interests. Part B, Section 5(b) of the Code prohibits City employees from representing for compensation private interests before the City. Representation before the City includes all forms of communication with city officials and/or employees on matters of a private interest. Pursuant to this section, the employee may not represent the AAMHA before any City Department. Failure to abide by this section is a violation of the Code, subject to the penalties therein.
Conflicting Outside Employment. Generally, a City employee may not engage in outside employment that may influence the performance of his official duties. More specifically, "a City . . . employee shall not provide services to an outside employer related to the . . . employee’s City duties." In determining what services conflict with the employee’s City duties, both the skills of the employee and the projects he is involved with must be examined. Conflicts arise where the skills and projects of the outside employer require action by the City employee that compromise the skills and projects he provides the City.
Moreover, all employees who engage in outside employment must comply with Administrative Directive 4.47. A.D. 4.47 requires the employee to obtain written approval from the Department Director prior to engaging in outside employment, a copy of which is filed in the employee’s personnel folder. If written approval is not granted prior to engaging in outside employment, the employee may be subject to disciplinary action.
As stated above, the employee is considering
providing consulting services to the AAMHA. The services he would provide to
his outside client are similar, if not the same, services he provides the City
Public Property and Resources. Part B, Section 7 of the Code prohibits City
employees from using "City facilities, personnel, equipment or supplies
for private purposes." The employee must not use City of
Prohibited Interest in Contract. Part B, Section 10 prohibits City employees from having a financial interest in a contract with the City or its agencies. Under this section, a City employee includes those individuals required to file financial disclosure reports under Section 1(a) of Part G. Because the individual at issue is not an employee as defined, this section of the Code does not apply.
City employees are governed by the standards
of conduct as set forth in the Ethics Code of the City of
FRANK J. GARZA