City
of San Antonio , Texas
Ethics Advisory Opinion No.
51
February 5, 2001
Issued By: City Attorney’s Office
Whether the
company in which a member of the Planning Commission owns more than 10% may
contract with various entities.
A
member of the Planning Commission has asked whether a company in which he has
an ownership interest may contract with certain entities, including, but not
limited to, the Bexar Metropolitan 911 District. The following facts are presented:
A member of the Planning Commission owns a 10% interest
in a construction company amounting to more than $10,000. The company is seeking a contract with the
Bexar Metropolitan 911 District (“the District”) for services related to its
911 Call Center. The contract is to be
awarded by competitive bid. Moreover,
the company is interested in seeking contracts for construction services with
the VIA Metropolitan Transit (“VIA”), and the Alameda Theater/Smithsonian at
the Farmer’s Market. Each of these
prospective contracts is to be awarded by competitive bid. At no time will the member appear before the
Board of Appeals or the Planning Commission with respect to any of these three
(3) contracts.
The
issue is whether the company in which the member has an ownership interest may
contract with the District, VIA, and/or the Alameda Theater/Smithsonian. Under
Chapter 171 of the Texas Local Government Code and the Ethics Code of the City
of
Section
171.003 of the Local Government Code prohibits an official from knowingly
participating in a matter if action on the matter will have a special economic
effect on the business entity in which the official has a substantial
interest. An official has a substantial
interest in a business entity if, in the previous year, he receives more than
10% or more of his gross income from the entity. Moreover, the action must have a special
economic effect on the business entity.
To
that end, the Attorney General has stated that the language of Section
171.004(a)(1), requiring an official to file an affidavit where conflict
exists, “is broadly written and does not
require that the business entity have a direct interest in the matter. It only requires that the action on the
matter have a special economic effect on the business entity.”
The
City’s Ethics Code reiterates this standard of conduct, stating that a City
official may not take official action that he knows is likely to have an effect
on, among others, his economic interest or the economic interest of a business
entity in which he holds an economic interest.
An economic interest “includes,
but is not limited to, legal or equitable property interests in land, chattels,
and intangibles, and contractual rights having more than de minimis value” and must be one that is distinguishable from
the effect on the public in general.
Should such occur, the City official is required to recuse himself
immediately, refraining from any further participation in the matter, and disclose
in writing to the City Clerk the economic interest.
In
the instant case, it is unlikely that the individual would be required to take
action as a member of the Commission on a matter involving either his company
and/or one of these three agencies.
However, should the situation arise, the member must recuse and disclose
the matter to the City Clerk, in writing, thereby avoiding any question of
conflict.
Prohibited
Financial Interest in Contract. Part B, Section 10[1] prohibits
City officers from having a financial interest in a contract with the City or
its agencies. Under this section, a City
officer includes, among others, “members
of any board or commission which is more than advisory in function.” A board or commission is more than advisory
in function where the decisions of said commission are appealable to the City
Council. All other commissions are
advisory as the decisions they render have no binding force other than to
provide the information supporting the commission’s recommendation(s). Because the Planning Commission is empowered
to “prepare, recommend and administer
rules and regulations pertaining to subdivisions and to platting in territory
outside the City limits [ ]” under the City Charter, decisions for which
are appealable to the City Council, it is more than advisory in nature, and its
members are City officers for the purposes of this section.
To be in violation of
this section, the City officer must have a financial interest in a contract
with the City. A financial interest,
includes, but is not limited to, being a party to a City contract. In the instant case, should the member’s
construction company result in the lowest bidder, the contract would be between
the company and the participating entity, the District, VIA, and/or the
Alameda/Smithsonian, none of which are City agencies.
A City agency is one
created through passage of an ordinance by the City of
The third entity, the Alameda/Smithsonian, is a non-profit corporation. The City does, however, anticipate executing a contract with this corporation for services related to the construction of the Smithsonian at the Farmers Market. Given these facts, a member of the Commission would be in violation of the Ethics Code if the company in which he has the requisite financial interest is paid for its services resulting from any contract between the City and the Alameda/Smithsonian.
SUMMARY
A Planning Commission
member must abide by the standards as set forth in Chapter 171 of the Local
Government Code and the Ethics Code, including recusal and disclosure should he
be required to take official action on a matter that may confer an economic
benefit distinguishable from the public in general on a business entity in
which he holds an economic interest.
Moreover, the company in which he owns an interest amounting to 10% or
more of the company may not contract with an entity receiving funds pursuant to
a City contract if such services result from the City contract. The company may, however, contract with other
governmental entities that are
Under the present
fact scenario, a company in which a member of the Planning Commission owns more
than 10% interest may contract with Bexar Metropolitan 911 District and the VIA
Metropolitan Transit. The company may
not, however, contract with the Alameda/Smithsonian.
FRANK
J. GARZA
City
Attorney